Loblaw

Topics: Supermarket, Supply chain management, Loblaw Companies Pages: 5 (1314 words) Published: May 9, 2011
Loblaw Companies Limited: Preparing for Wal-Mart Supercenters Situation Analysis
* SWOT Analysis
Strengths| Loblaw| * One-stop shopping destination with several services, which are food, kitchen wares, furniture, home supplies, hardware, electronics, office supplies, clothing, pharmaceuticals, toys, photo shop, dry cleansing, a bank, medical clinic, women’s-only fitness center, gas station (some stores) * Strong private labels, President’s Choice brands * Market leader in the supermarket industry with 34.9% * Larger number of stores in Canada with 670 stores when compared with Wal-Mart Supercenters| | Wal-Mart| * Good information technology system, that using Electronic Data Interchange (EDI) – vendors can be assure that will receive the certain amount of orders and better payment terms * Distribution center are located close to the stores. * High rate turnover of SKUs * Financial success from 2002 – 2006| Weaknesses| Loblaw| * Has excess inventory * Poor supply chain policy * Lots of empty shelves * Brand image declines because of not doing fresh food. * High cost of interior design to build and operate * Lacking smart promotion| | Wal-Mart| * Smaller number of stores in Canada with more than 270 stores when compared with Loblaw Companies Limited| Opportunities| * Customers lead busy and budget-conscious lives| Threats| * Suppliers did not delivery on time|

* Financial Analysis
In millions of $| Loblaw Companies Limited| Wal-Mart Supercenters| Year| 2005| 2005|
Net Sales| 27,627| 1,860|

Key Issue
Should Loblaw executive team make any strategic change in order to protect market leader position of supermarket industry in Canada? If change, how? Current Strategy
Loblaw Companies Limited, which is the market leader in the supermarket industry, is using the pre-emptive defense strategy to improve the company’s weaknesses such as supply chain policy that Loblaw had announced the punishment for the suppliers, who practiced as “no-shows” and who were making any mistakes in transaction. Alternatives

There are three alternatives proposed for Loblaw Companies Limited as followed: 1. Maintaining the Pre-emptive Defense strategy with improving the inventory management and supply chain management a. Using Electronic Data Interchange (EDI) system

b. Setting up the time schedule for shipping goods from suppliers Advantages| Disadvantages|
* Vendors know our stock that can ship products on time * Knowing expired date of food * Decreasing the “no-shows” deliveries| * High cost of investment|

2. Implementing the Mobile Defense strategy along with maintaining the Pre-emptive Defense strategy c. Diversifying related business, which is restaurant
d. Improving the inventory management by using EDI system Advantages| Disadvantages|
* Providing more services * Knowing the expired date of food * Increasing revenue| * High cost of investment|

3. Implementing the Position Defense strategy by doing the strategic alliance with the Wal-Mart in order to share the information technology system and supply chain management e. Sharing information technology system, EDI

f. Sharing the transportations
g. Sharing both food and non-food
Advantages| Disadvantages|
* Increasing rate of inventory turnover * Knowing the expired date of food * Low cost of investment * Vendors know our stock that can ship products on time * Decreasing the “no-shows” deliveries| * Losing some customers to Wal-Mart|

Decision
Alternative 3: Implementing the Position Defense strategy by doing the strategic alliance with the Wal-Mart in order to share the information technology system and supply chain management Recommendations

The Loblaw Companies Limited can use the resource of information technology system, which is Electronic Data Interchange form the Wal-Mart in order...
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