Case – Lowe’s Company Inc. Harvard Case Solution & Analysis

Case – Lowe’s Company Inc. Case Solution

Case Overview

                Lowe’s Company Inc. is operating in the home improvement retail industry. After the formation of the company, it performed well in the industry and now it has become the second largest in the market of home improvement. The company currently has operations in America and Canada and is now considering expanding its operations in Australia. Currently, the company has 200,000 employees.

            Anderson is a private investor and tends to invest in a company which will provide capital gains in longer term so that it will enjoy that fund in its retirement. Financial analysis and industry analysis have also been done for better investment decision.

Home renovation retail industry

          In the United States, there are about 23000 home retailers and generating the annual total revenue of around $150 billion. Lowe’s Company has 30% market share in the home improvement industry. This indicates that the company is the market leader in the industry. In the last five years, Americans tend to purchase more houses and after the ownership, they used to renovate and remodel their homes, as these trends positively affected the real estate industry as well as the home improvement industry. Moreover, the people in the US consistently want to enhance their standard of living, which is why innovation in the home improvement industry will become the key part of the industry. Independent analysts analyzed that the home improvement industry will grow at a steady pace in the future which indicates that the prospects of the industry for the market players in the industry is very high.On the other hand,the industry has high initial capital investment and complex distribution network therefore,this will become less attractive for the new market players.

Risks for Lowe

Seasonal concern:

            The environmental changes heavily affect the prospective customers regarding their decision for the home improvement. For instance, in winter season sales were at an all-time low as compared to any other seasonal sales for Lowe’s Company. This indicates that people in the US and Canada tend to face problems in the winter season. Moreover, Lowe’s company also faces difficulties when it conducts any project in the winter season.As a result,this negatively affects the esteem of the company.

Interest rate Issue:

Variations in interest rates affect the real estate market, which in turn affects the home improvement industry, hence the real estate and home improvement market depends on the country’s interest rates. For example, the US government increases the interest rates, which as a result, will decrease the purchases in real estate and home renovation as well. Moreover, it is difficult to predict the country’s interest rates as it is not based on the historical trends.

Limited development:

            As Lowe’s company is operating in the US and Canada, and that both are developed economies, therefore there are less changes of the growth in the development of new buildings and structures as compared to the developing countries such as China and Brazil. Moreover, the development of new building will help in the growth of renovation and improvement industry.

Opportunities for Lowe

American Economic Revival:

            After the recession of 2008, the stock markets recovered and the indexes reached that level before the recession. Due to the recovery of the stock markets, the economies have also improved. These developments will increases the GDPper capital as well as it will increase the per capita income as well. Thus, the purchasing power of the citizens of the US and Canada will enhance, resulting in better living standards......................

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