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Harley-Davison

Case 40
Lowe’s Companies, Inc.

I. CASE ABSTACT

As the second-largest U.S. “big box” home improvement retailer (behind Home Depot), Lowe’s competes in a highly fragmented industry. The company has grown with the increase in home ownership and has no plans to expand internationally. With over 1,000 stores in 2004, Lowe’s intends to increase its U.S. presence with 150 store openings per year in 2005 and 2006. Are there limits to Lowe’s current growth strategy?

II. CASE ISSUES AND SUBJECTS

Home Improvement Retailing “Big Box” Retailer
Industry Analysis Fragmented Industry
Industry Value Chain Competitive Strategy
Core Competence SWOT Analysis
Horizontal Growth Strategy Marketing Strategy
Domestic vs. International Growth

EXAMPLE OF STUDENT INTERNET RESEARCH PROJECT
• STUDENTS WERE REQUIRED TO GET Lowe’s SEC 10-K, 10-Q., Annual Report, Stockholder’s Proxy, and news releases and articles.

CURRENT SITUATION

A. Current Performance

• Current market share estimated at 9%
• 2nd largest home improvement retailer
• Operates over 1,000 stores in 48 states as of 9/30/2004
• Net earnings increased 28% in 2003
• Profit Margin: 5.97%
• Current Ration: 1:22
• Acquired Eagle Hardware and Garden in early 1999

B. Strategic Position

4 1. Mission

“To be our customers’ first choice for home improvement in each and every market we serve.”

2. Objectives
• To expand domestic square footage at 16%-17% a year
• Providing valued solutions with the best prices, products and services.

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Copyright © 2005 and 2007 by Thomas L. Wheelen and J. David Hunger. Reprinted by our permission only for the 10th and 11th Editions of Strategic Management and Business Policy and Cases in Strategic Management.

3. Strategies
• To build...