Schulich MBA SGMT 6000 Loblaw


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Schulich MBA SGMT 6000 Loblaw

  1. 1. Group:Kiran ChadaramNianjiu LiVi NgoSebastien RosnerVarun SharmaJeremy Wong
  2. 2. History of the FirmBusiness Definition•  Founded in 1919; Loblaw Grocetarias•  By 1947, 113 stores in Ontario; sales of $50M•  Controlled by third generation of Weston family•  Largest food distributor in Canada•  24th largest grocery retailer in the world•  Sales of $23.1B in 2002 •  122,300 employees
  3. 3. Industry Definition & Strategic ProblemBusiness Definition•  Canadian grocery retail industry•  Mature industry; low margins (0.5 - 2%), modest growth (4% per year),and strong price competitions•  Loblaw’s existing strategy has been successful: drive down costs +product & store differentiation•  Wal-Mart, largest retailer in the world, may bring Supercentres to Canada•  If Wal-Mart competes in Canadian grocery, maintaincurrent strategy or adopt new strategy? Loblaw leadsthe marketwith 32%market share
  4. 4. PESTLE AnalysisEnvironmental Analysis•  Canada: lowest food prices in the world; 2% inflation•  Rise of double income families•  Immigration and ethnic grocery•  Organic foods•  Online grocery shopping•  Standardization for ERP systems and ECCnet
  5. 5. Porters’ 5 ForcesIndustry Analysis•  Suppliers: national brands and “loss leaders” vs. shelf space,promotion execution, and private labels•  Consumers: low switching cost, price sensitivity vs. brand loyalty•  Competitors: high concentration, top 5 chains, low margin & strong competition in all segments•  New Entrants: small independents, acquisition by global giants•  Substitutes: fast-foods, restaurants, take-outs
  6. 6. Key Success FactorsIndustry Analysis•  Operational efficiency ! lower costs, lower prices"  Integration: supply chain, logistics"  Information Technology "  Process innovation•  Accessibility & geographic presence•  Product & service offerings ! customer loyalty"  Differentiated or value-added"  Breadth of selection and stock availability•  Brand equity ! customer loyalty
  7. 7. Resources, Capabilities, & Core CompetenciesFirm Analysis•  Brand equity and loyalty; President’s Choice•  Experience and expertise in fresh groceries; rigid integration•  Real estate ownership; operational flexibility and location•  Low costs from scale advantage•  Multi-banner & multi-format; covers all price points and segments•  Regional appeal and community character retained•  Differentiated products & services•  PC customer loyalty programs; shoppers data
  8. 8. A Quick Look at Wal-MartCompetitor Analysis•  Largest retailer and 6th largest grocery retailer in the world•  Cost leadership; "Every Day Low Prices" strategy •  Scale economies and superior resources (e.g. finance, IT)•  Questionable labour practices and issues with UFCW •  Bargains hard with suppliers•  Limited expertise in perishables•  Failed to penetrate German and Japanese markets (why?)
  9. 9. Wal-Mart’s Value Chain & Value PropositionValue ChainSalesInfrastructureProcurementOutbound LogisticsOperationsInfrastructureTechnologyProcurementInbound LogisticsMarketingOperationsProcurement
  10. 10. Loblaw’s Value Chain & Value PropositionValue ChainSalesInfrastructureProcurementOutbound LogisticsOperationsInfrastructureTechnologyProcurementInbound LogisticsCustomer ServiceOperationsProcurement
  11. 11. Zero-Sum GameIndustry LifecycleIncludes:Low marginSlow growthPricecompetition
  12. 12. Alternatives & Business StrategiesStrategic Recommendations•  Challenge Wal-Mart’s cost leadership?•  Avoid head-on competition? Differentiate?•  Exploit Wal-Mart’s weaknesses/Loblaw’s strengths"  Loblaw’s resources & capabilities; core competencies"  Relevant to success factors?"  Imitable or unique? Transferable or replicable?"  Sustainable competitive advantage?Think aboutthe fates ofTarget and K-Mart
  13. 13. Expanding the Pie?Strategic RecommendationsInclude:Ethnic groceryOrganic foodsLocal sourcingCookingclasses
  14. 14. So what actually happened?Loblaw Today•  2006: Launch of Joe Fresh brand•  2009: Acquired largest Asian food retailer T&T for $225M CDN•  2011: Opened store in Maple Leafs GardenOver 1,100 new control label products•  2012: Banished artificial colours and flavours from PC products•  2011 market shares: Loblaw 29.9%, Wal-Mart 4.3%•  Now 181 Wal-Mart Supercentres in CanadaLoblawcontinues todominate theCanadiangrocerybusiness
  15. 15. … according to Wal-MartThe World
  16. 16. thank you!merci!