Loblaw Companies Limited Harvard Case Solution & Analysis

A.      Identification

  1. People now are becoming more health conscious and the retail focus is now on shelving organic foods. The organic food market is growing 20% per annum as people are now shifting their consumption from high calorie foods to the low calorie organic ones.
  2. Cost cutting through the size and operational efficiencies was another strategic objective that should be accomplished  towards the road map of success.
  3. The company is now focusing on sustaining its market share and competition from other major retailers such as Wal-Mart.
  4. Develop a more formal, structured and real time demand forecasting method.

B.     Recommendation

The strategic recommendations for Loblaw according to the opportunities identified include vertical integration in which the company can start manufacturing its own brands and sell other brands. It can increase Loblaw brand image in the market place and establish a new brand identity for it. As there is high demand for organic meals; hence, Loblaw can offer home meal replacements in its stores under its own brand name. This suggestion is in coherent with the vertical integration suggested above. Moreover, as the number of consumers using internet is increasing in Canada, therefore, the utmost priority of Loblaw should be to have an active presence on the web. It should build an interactive website and offer discounts based on data collected by the ERP systems. An online shopping exercise can give a boost to existing grocery sales.

In addition to that, the Real Canadian Superstore acquisition is overcoming most of the competition. The Loblaw should focus on its expansion as it encompasses almost everything into one place. Not only this, but the Real Canadian Superstores need to be expanded regionally and location wise. The supply chain management needs to be utilized such that the consumer tastes, preferences, habits, and other characteristics help the company in order to develop a unique customer profile. Offer promotions and discounts on bulk purchases and new sample trials will help the company in incentivizing the consumers to visit the stores and try new products. The new entries in the industry by the corporate giants can be prevented by capitalizing on acceptance nationwide. Moreover, Loblaw must also use fair labor policies to being sustainability to its business. As retailers such as Wal-Mart etc. do not have sufficient experience in the perishables, therefore, Loblaw can kick it out from the market by developing competence in this area.

Company Analysis

A.    Internal analysis

Internal analysis of the organization is a depiction of its current state as compared to its desired state. Analysis of the firm’s strengths and weaknesses along with what are the opportunities and threats to its existence are major contributors in the decision making process. For this very purpose the SWOT analysis and the VRIO analysis are being conducted for Loblaw Limited Company.

I.            SWOT ANALYSIS

Strengths

1.      Market leader in Canadian Grocery with market share greater than the combined market share of the competitors

2.      24th Largest grocery retailer in the world

3.      Company owned real estate that helps in future flexibility in business

4.      Use of multi format approach to maximize market share

5.      Major ownership in the Weston family’s hands

6.      Customer loyalty through the control label program

7.      Operates over 100 gas stations in Canada

8.      Focus on increasing share per store

  • Weakness 
  1. Focus on serving a narrow target market
  2. Judgment driven demand forecasts
  • Opportunities 
  1. High degree and dense market concentration
  2. Canadian market is the most advanced grocery market in the world
  3. Focus shifting to organic food market, which is growing annually by 20%
  4. Technology and ERP as a means of gaining leverage over peers
  5. Supply chain management through ERP data
  6. Increase in double income families fuelling demand for readymade food
  7. The profitable format of wholesale club in Canada
  8. As in 2000, there were approximately 57% internet users in Canada
  • Threats 
  1. Arrival of Sam’s club in Canada suggested looming arrival of Supercenters.
  2. Presence of high levels of discount stores
  3. Downscaled competitors
  4. Limited market size and lower margins
  5. Threat of takeover by global firms
  6. Sustainability and ecosystem introduction by competitors

II.            VRIO ANALYSIS

The Value Rare Imitable Organized analyses show that Loblaw has many valuable, rare and inimitable resources that have helped it sustaining a competitive advantage over other industry incumbents. The valuable resources that have helped the Loblaw limited company in achieving a sustainable competitive advantage includes: low pricing strategy e.g. everyday low pricing, strong supply chain management and technological advancements, Weston family’s major ownership, cost differentiating and the President’s Choice. However, the multi-format approach and the power and wide assortment over non-food items are resources that are not sustainable competitive advantages for the company. In essence, the below listed resources are analyzed in the VRIO analysis..............

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