External Environment Analysis
Threat of new entrants: The barriers to entry are high due to high fixed costs, lack of history in the local community, zoning regulation, and "not-in-my-back-yard" protests.
Power of suppliers: Funeral consolidators such as Loewen group can put a great deal of pressure on suppliers to reduce prices.
Power of buyers: The funeral home is usually the buyers first point of contact, therefore the funeral home has first chance at selling all related services and supplies.
Product substitutes: The small family owned funeral homes cannot compete with the consolidators because the consolidators offer the consumer every option available while the family owned homes cannot.
Intensity of rivalry: Although there were over 10,000 privately owned funeral homes in Canada in 1996, Loewen group maintained their share of the market because of namesake. Also only 30 percent of family businesses make it to the second generation, and only 10 percent to the third.
Competitor general analysis:
a. Future Objectives: b. Current Strategy:
Economic: Everybody dies, and because of this there will always be a market for funeral services.
Socio-Cultural: Being a consolidated funeral home they can offer cheaper services for those without a great deal of income, but they can also provide the top-of the-line funeral service for those who want to pay for it.
Global: SCI has paved the way, and Loewen Group can follow their example to move into the global market without any R&D costs, and steal some of SCI's market share.
Technological: There are not many technological advantages for a company that relies on tradition.
Political/Legal: They are legally investing their money from the accrued pre-need revenues. The fact that they are allowed to invest these revenues allows them to create more money.
Bibliography: http://www.hoovers.com http://www.wsj.com http://www.loewengroup.com