Lowe's Individual case analysis

Case 9: Lowe's Companies, Inc., 2013

1. Should Low’es expand into Canada, or renew efforts to acquire Rona?

Considering the expenses that it would cost to open a Lowe’s facitility in Canada, I believe that the most cost effective decision would be to renew the efforts in acquiring Rona. Home Depot followed a similar pathway “by buying a 75 percent stake in Aikenhead’s Home Improvement Warehouse, owned by Moslon Cos.” (Home Depot Inc., 1994). Rona’s presence in Canada presents a valuable opportunity for Lowe’s since Rona has “400 stores of all sizes including 110 in Ontario, its annual sales are about $2 billion and it dominates Quebec with a 34-percent market share” (Daily Commerical News & Construction Record, 2000).

2. Would you recommend Lowe’s enter the Australian market with 150 new stores as currently planned in an attempt to match Ace’s international presence?

It would definitely be beneficial for Lowe’s to push forward with the plan to open 150 new stores in Australia to bring competition to Ace Hardware Store. Recently in 2014 the Boardroom Insiders stated that Lowe’s was the number two home improvent store (Boardroom Insiders, 2014). The plan would make a profitable international move and would further increase Lowe’s presence in the hardware market.

3. Would you recommend Lowe’s reduce the size of its stores to match Home Depot, and even smaller stores such as Ace and True Value?

The recommendation to reduce the size of Lowe’s stores to match Home Depot and other stores such as Ace and True Value would not be worth the effort and could possibly drive down sales more than it is currently experiencing. Having a bigger space allows Lowe’s to stock up to 10,000 more items than Home Depot (David & David, 2015). A considerable advantage to attract customers.

4. What do you think are the best strategies for Lowe’s to outperform Home Depot as the housing market and world economy continue to improve?

In order for Lowe’s to outperform Home Depot as the housing market and world economy continue to improve, it would be to identify the movement by Home Depot and strategize to match or one up the competition. Lowe’s would need to restructure their resources and allocate added value wher it is suited best.

One strategy would be to reduce the organizational structure. The textbook even comments that Lowe’s has too many executives (David & David, 2015). This is one of the contributing reasons to an unproductive team and is also costly because each member requires wages. A divisional structure by process might be best suited for Lowe’s because it will only teams to make improvements in sales by sections such as Lighting, Electrical, Hardware, Garden, Home, and other such sections of Lowe’s.

Another strategy that Lowe’s could consider is generate business relationships with top selling brands like Pittsburgh Paints, Kitchen Aid, or even better, promote rebate projects offered by city’s that are willing to support building a “green” homes. This would highlight Lowe’s commitement to social responsibility and their partenreship with Habitat for Humanity.

A last but not least suggestion would be for Lowe’s to continue with projections to open 150 new stores in Australia and acquire Rona’s in Canada with 400 locations.

5. Develop the projected financial statements that fully assess and evaluate the impact of your proposed strategy.

References