Loblaw Companies Limited case
Loblaw Companies Limited
Introduction
Loblaw Companies Limited were founded in 1919 with two distinct business operations, food processing, and food distribution. As the leader in the Canada grocery industry, Loblaw earned $23.1 billion in 2002, improving scale advantages and being different in its stores and products are the two goals of their strategy. On October 1, 2003, Wal-Mart determined to launch its wholesale brand “Sam’s Club” for changing its weak performance, and achieved the objective of establishing Supercenter in Canada. Under the threat of the world largest retailer’s new actions, it was necessary for Loblaw to adjust its strategy to compete with Wal-Mart and other groceries.
External Analysis
Canadian food retailing reached a high point of $66.8 billion in 2002, but the margin of the supermarket is the lowest of all the industry. In order to increase barging power at the demand side, Canadian grocery stores were often involved in mergers and acquisitions. Overall, consumers’ bargaining power is in middle, even though most customers are loyal, and the food prices already low, but customers’ require products of a high level of identifiability and quality, and the companies need to adjust supply to satisfy the customers’ need. Furthermore, the suppliers’ power would increase by enlarging its market share. Building a good relationship between supplier and mega-grocery is important for both of them to develop. Finally, the industry is highly competitive; there were large number of competitors and substitutes in the industry. Above all, despite the difficult sustainability of the grocery industry, the profit is attractive. In order to sustain, this corporations need to achieve scale advantages, product differentiating, build image, and more integrative product lines.
Internal Analysis
Three areas of strengths contributed to Loblaw’s success. Firstly, Loblaw is successful in marketing and competition in terms of acquired strong regional stores to
Introduction
Loblaw Companies Limited were founded in 1919 with two distinct business operations, food processing, and food distribution. As the leader in the Canada grocery industry, Loblaw earned $23.1 billion in 2002, improving scale advantages and being different in its stores and products are the two goals of their strategy. On October 1, 2003, Wal-Mart determined to launch its wholesale brand “Sam’s Club” for changing its weak performance, and achieved the objective of establishing Supercenter in Canada. Under the threat of the world largest retailer’s new actions, it was necessary for Loblaw to adjust its strategy to compete with Wal-Mart and other groceries.
External Analysis
Canadian food retailing reached a high point of $66.8 billion in 2002, but the margin of the supermarket is the lowest of all the industry. In order to increase barging power at the demand side, Canadian grocery stores were often involved in mergers and acquisitions. Overall, consumers’ bargaining power is in middle, even though most customers are loyal, and the food prices already low, but customers’ require products of a high level of identifiability and quality, and the companies need to adjust supply to satisfy the customers’ need. Furthermore, the suppliers’ power would increase by enlarging its market share. Building a good relationship between supplier and mega-grocery is important for both of them to develop. Finally, the industry is highly competitive; there were large number of competitors and substitutes in the industry. Above all, despite the difficult sustainability of the grocery industry, the profit is attractive. In order to sustain, this corporations need to achieve scale advantages, product differentiating, build image, and more integrative product lines.
Internal Analysis
Three areas of strengths contributed to Loblaw’s success. Firstly, Loblaw is successful in marketing and competition in terms of acquired strong regional stores to