Loblaw Companies Limited - Acquiring Shoppers Drug Mart SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Loblaw Companies Limited - Acquiring Shoppers Drug Mart
The equity analyst for a large investment bank is in the process of evaluating a potential takeover of Shoppers Drug Mart, Canada's largest drugstore retailer, by Loblaw Companies Limited, Canada's largest grocery retailer. Rumours of the takeover have been circulating for some time, and the analyst wants to provide her buy-side clients with both her comments on the proposed transaction and her assessment of a reasonable offering price.
Swot Analysis of "Loblaw Companies Limited - Acquiring Shoppers Drug Mart" written by James E. Hatch, Gina Kalboneh includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Loblaw Shoppers facing as an external strategic factors. Some of the topics covered in Loblaw Companies Limited - Acquiring Shoppers Drug Mart case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Loblaw Companies Limited - Acquiring Shoppers Drug Mart casestudy better are - – there is backlash against globalization, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion, increasing energy prices,
cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Loblaw Companies Limited - Acquiring Shoppers Drug Mart
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Loblaw Companies Limited - Acquiring Shoppers Drug Mart case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Loblaw Shoppers, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Loblaw Shoppers operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Loblaw Companies Limited - Acquiring Shoppers Drug Mart can be done for the following purposes –
1. Strategic planning using facts provided in Loblaw Companies Limited - Acquiring Shoppers Drug Mart case study
2. Improving business portfolio management of Loblaw Shoppers
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Loblaw Shoppers
Strengths Loblaw Companies Limited - Acquiring Shoppers Drug Mart | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Loblaw Shoppers in Loblaw Companies Limited - Acquiring Shoppers Drug Mart Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Loblaw Companies Limited - Acquiring Shoppers Drug Mart Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Analytics focus
– Loblaw Shoppers is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by James E. Hatch, Gina Kalboneh can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Low bargaining power of suppliers
– Suppliers of Loblaw Shoppers in the sector have low bargaining power. Loblaw Companies Limited - Acquiring Shoppers Drug Mart has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Loblaw Shoppers to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Loblaw Shoppers in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Loblaw Shoppers is present in almost all the verticals within the industry. This has provided firm in Loblaw Companies Limited - Acquiring Shoppers Drug Mart case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Sustainable margins compare to other players in Finance & Accounting industry
– Loblaw Companies Limited - Acquiring Shoppers Drug Mart firm has clearly differentiated products in the market place. This has enabled Loblaw Shoppers to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Loblaw Shoppers to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Loblaw Shoppers are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Strong track record of project management
– Loblaw Shoppers is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Loblaw Shoppers has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
High brand equity
– Loblaw Shoppers has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Loblaw Shoppers to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Loblaw Shoppers is one of the most innovative firm in sector. Manager in Loblaw Companies Limited - Acquiring Shoppers Drug Mart Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Loblaw Shoppers is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Loblaw Shoppers is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Loblaw Companies Limited - Acquiring Shoppers Drug Mart Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Loblaw Companies Limited - Acquiring Shoppers Drug Mart | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Loblaw Companies Limited - Acquiring Shoppers Drug Mart are -
Products dominated business model
– Even though Loblaw Shoppers has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Loblaw Companies Limited - Acquiring Shoppers Drug Mart should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Loblaw Shoppers is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart, is just above the industry average. Loblaw Shoppers needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Loblaw Companies Limited - Acquiring Shoppers Drug Mart HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Loblaw Shoppers has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart, it seems that the employees of Loblaw Shoppers don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Interest costs
– Compare to the competition, Loblaw Shoppers has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Need for greater diversity
– Loblaw Shoppers has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow decision making process
– As mentioned earlier in the report, Loblaw Shoppers has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Loblaw Shoppers even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High cash cycle compare to competitors
Loblaw Shoppers has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High operating costs
– Compare to the competitors, firm in the HBR case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Loblaw Shoppers 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Loblaw Shoppers has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Opportunities Loblaw Companies Limited - Acquiring Shoppers Drug Mart | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart are -
Manufacturing automation
– Loblaw Shoppers can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Creating value in data economy
– The success of analytics program of Loblaw Shoppers has opened avenues for new revenue streams for the organization in the industry. This can help Loblaw Shoppers to build a more holistic ecosystem as suggested in the Loblaw Companies Limited - Acquiring Shoppers Drug Mart case study. Loblaw Shoppers can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Loblaw Shoppers in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Loblaw Shoppers to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Loyalty marketing
– Loblaw Shoppers has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Loblaw Shoppers can use these opportunities to build new business models that can help the communities that Loblaw Shoppers operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Loblaw Shoppers in the consumer business. Now Loblaw Shoppers can target international markets with far fewer capital restrictions requirements than the existing system.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Loblaw Shoppers to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Loblaw Shoppers to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Loblaw Shoppers to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Loblaw Shoppers can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Loblaw Companies Limited - Acquiring Shoppers Drug Mart suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Leveraging digital technologies
– Loblaw Shoppers can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Developing new processes and practices
– Loblaw Shoppers can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Loblaw Shoppers can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Loblaw Companies Limited - Acquiring Shoppers Drug Mart External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart are -
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Loblaw Shoppers in the Finance & Accounting sector and impact the bottomline of the organization.
Consumer confidence and its impact on Loblaw Shoppers demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Loblaw Shoppers will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Stagnating economy with rate increase
– Loblaw Shoppers can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Loblaw Shoppers business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Loblaw Shoppers needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Loblaw Shoppers can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Loblaw Shoppers in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Environmental challenges
– Loblaw Shoppers needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Loblaw Shoppers can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Loblaw Shoppers can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Loblaw Shoppers needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Increasing wage structure of Loblaw Shoppers
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Loblaw Shoppers.
High dependence on third party suppliers
– Loblaw Shoppers high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Weighted SWOT Analysis of Loblaw Companies Limited - Acquiring Shoppers Drug Mart Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Loblaw Companies Limited - Acquiring Shoppers Drug Mart is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Loblaw Shoppers needs to make to build a sustainable competitive advantage.