Loblaw Companies Limited - Acquiring Shoppers Drug Mart SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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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 - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, technology disruption, increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing,
increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, 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 -
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.
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.
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.
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.
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.
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.
Training and development
– Loblaw Shoppers has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Loblaw Companies Limited - Acquiring Shoppers Drug Mart Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Loblaw Shoppers digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Loblaw Shoppers has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
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.
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.
Highly skilled collaborators
– Loblaw Shoppers has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Loblaw Companies Limited - Acquiring Shoppers Drug Mart HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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 -
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.
No frontier risks strategy
– After analyzing the HBR case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Skills based hiring
– The stress on hiring functional specialists at Loblaw Shoppers has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Loblaw Shoppers supply chain. Even after few cautionary changes mentioned in the HBR case study - Loblaw Companies Limited - Acquiring Shoppers Drug Mart, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Loblaw Shoppers vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart, in the dynamic environment Loblaw Shoppers has struggled to respond to the nimble upstart competition. Loblaw Shoppers has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the segment, Loblaw Shoppers needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High bargaining power of channel partners
– Because of the regulatory requirements, James E. Hatch, Gina Kalboneh suggests that, Loblaw Shoppers is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
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.
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.
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.
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.
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 -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Loblaw Shoppers can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Loblaw Shoppers can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Loblaw Shoppers can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Loblaw Companies Limited - Acquiring Shoppers Drug Mart, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Loblaw Shoppers can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Loblaw Shoppers can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
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.
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.
Using analytics as competitive advantage
– Loblaw Shoppers has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Loblaw Shoppers to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
Building a culture of innovation
– managers at Loblaw Shoppers can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Loblaw Shoppers.
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 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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology acceleration in Forth Industrial Revolution
– Loblaw Shoppers has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Loblaw Shoppers needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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.
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.
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 .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart, Loblaw Shoppers may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Shortening product life cycle
– it is one of the major threat that Loblaw Shoppers is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Loblaw Shoppers with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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.
