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Loblaws Business Strategy Business Level Strategic Analysis External Environment Porter's Five Forces (Appendix A) The grocery industry is a commoditized industry,
Loblaws Inc Executive Summary Loblaw Companies Limited must develop a corporate strategy in response to Wal-Mart's upcoming expansion in the Canadian market through
of the Oshawa Group, which included the IGA stores. This had a profound effect on the strategy employed by Loblaws, the market leader that reacted to this move by
for the company and its design, Murphy has to date embarked on a cost-cutting management strategy that has seen store numbers and often sizes reduced, plus renegotiated
5s Model Structure Loblaw's structure should be closely aligned to the changes in its strategy and the operating environment. The new structure should involve
Submitted by Prakruti on November 22, 2007
Category: Business
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Business Level Strategic Analysis
External Environment
Porter's Five Forces (Appendix A)
The grocery industry is a commoditized industry, which makes it difficult for grocers to sustain through differentiation. Buyer power is high and thus, cost leadership and operational efficiencies are critical. There is fierce competition amongst various grocery stores, with the main players such as Loblaw and A&P holding multi-banner stores in various market segments. Traditional grocery stores also lose some of their market share to drug stores, convenience stores and other retailers who have entered the industry. Threat of substitutes from fast-food and take- away outlets is not as prevalent, since many grocery stores have started stocking ready-to-eat meals and have deli services available for consumers. Competitive pressures are increasing in the industry with the potential entry of Wal-Mart and new delivery methods such as the internet.
Key Success Factors of the grocery industry include the following:
Low cost operations; leading to lower prices
Convenient locations and large stores
Wide product ranges; good quality
Value added services; customer loyalty programs
Cutting-Edge technology, both front-end and back-end
Looking at the above factors, there are many opportunities for Canadian grocers to improve on their services such as vertical integration as supplier/distributor, innovative technologies like RFID, and global expansion (See SWOT Analysis Appendix B).
Internal Environment
As mentioned above, the grocery industry is heavily commoditized and competitive. The Canadian market leader, Loblaw, serves a broad target market and integrates a low cost strategy with product and process differentiation. Through their multi-banner approach, they leverage their core competencies across multiple businesses.
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