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 - – increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, increasing commodity prices, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models,
there is backlash against globalization, geopolitical disruptions, 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 -
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.
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.
Effective Research and Development (R&D)
– Loblaw Shoppers has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Finance & Accounting field
– Loblaw Shoppers is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Loblaw Shoppers in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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.
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.
Organizational Resilience of Loblaw Shoppers
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Loblaw Shoppers does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
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.
Successful track record of launching new products
– Loblaw Shoppers has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Loblaw Shoppers has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
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.
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 -
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.
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.
Increasing silos among functional specialists
– The organizational structure of Loblaw Shoppers is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Loblaw Shoppers needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Loblaw Shoppers to focus more on services rather than just following the product oriented approach.
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.
Aligning sales with marketing
– It come across in the case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Loblaw Companies Limited - Acquiring Shoppers Drug Mart can leverage the sales team experience to cultivate customer relationships as Loblaw Shoppers is planning to shift buying processes online.
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.
Lack of clear differentiation of Loblaw Shoppers products
– To increase the profitability and margins on the products, Loblaw Shoppers needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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.
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.
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.
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 -
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.
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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Loblaw Shoppers can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Loblaw Shoppers is facing challenges because of the dominance of functional experts in the organization. Loblaw Companies Limited - Acquiring Shoppers Drug Mart case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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.
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.
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.
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.
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.
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.
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 -
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.
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 .
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.
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.
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.
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.
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.
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.
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.
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.
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 .
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.
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.
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.