Running Head Lowes Companies Inc Busi 400

Running Head Lowes Companies Incbusi 400lowes Companies Inc

Should Lowe’s expand into Canada, or renew efforts to acquire Rona? Considering the expenses that it would cost to open a Lowe’s facility in Canada, I believe that the most cost-effective decision would be to renew 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 Commercial News & Construction Record, 2000).

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 improvement store (Boardroom Insiders, 2014). The plan would make a profitable international move and would further increase Lowe’s presence in the hardware market.

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.

What do you think are the best strategies for Lowe’s to outperform Home Depot as the housing market and the world economy continue to improve? In order for Lowe’s to outperform Home Depot as the housing market and global economy improve, it must identify the movements by Home Depot and strategize to match or outperform those strategies. Lowe’s would need to restructure their resources and allocate added value where it is best suited. One approach would be to reduce organizational layers, as Lowe’s has been noted to have too many executives (David & David, 2015), which increases costs and decreases efficiency. Implementing a divisional structure by process could facilitate focused improvements in sections such as Lighting, Electrical, Hardware, Garden, and Home.

Another strategy for Lowe’s is to forge business relationships with top-selling brands like Pittsburgh Paints and KitchenAid, or promote rebate projects supported by cities encouraging green homes. These initiatives highlight Lowe’s commitment to social responsibility and partnerships with organizations like Habitat for Humanity. Continuing to pursue the plan to open 150 new stores in Australia and acquiring Rona’s 400 locations are also vital strategic moves.

Developing comprehensive financial projections to evaluate these strategies is crucial. For example, the projected income statement for 2016 considers increased sales from new stores, gross margins, SG&A expenses, and taxes. The associated balance sheet reflects assets such as cash, inventory, property, and investments, alongside liabilities including short-term borrowings, accounts payable, and long-term debt.

Paper For Above instruction

Lowes Companies Inc has continually positioned itself as a significant player in the home improvement industry, competing closely with major firms such as Home Depot and Ace Hardware. The strategic decisions surrounding its expansion plans involve analyzing potential markets, operational efficiencies, and competitive positioning to maximize profitability and market share. This paper explores various strategic options, including expansion into the Canadian and Australian markets, store size adjustments, and competitive strategies during economic growth phases, supported by detailed financial projections.

Expansion into the Canadian market through acquisition of Rona presents a strategic opportunity for Lowe’s to accelerate its growth without the high costs associated with new store openings. Rona's extensive presence, especially its dominant market share in Quebec and substantial operations across Canada, makes it an attractive target for Lowe’s. The acquisition would provide instant access to a sizeable customer base and distribution network, enhancing Lowe’s geographical footprint and market penetration in Canada (Daily Commercial News & Construction Record, 2000).

Comparatively, opening new stores in Australia offers a different set of strategic advantages and challenges. The Australian market represents an emerging opportunity with a growing housing and renovation sector. Expansion plans to establish 150 new stores could bolster Lowe’s international presence, increase brand visibility, and create a more competitive stance against local and international competitors like Bunnings Warehouse, which dominates the Aussie market (Boardroom Insiders, 2014). The decision to proceed should consider factors such as market entry costs, cultural differences, and supply chain logistics, but the potential to tap into a growing market makes this a compelling opportunity.

Adjusting store sizes presents another strategic consideration with implications for customer engagement and operational costs. Larger stores afford Lowe’s the advantage of broad product assortments, with up to 10,000 more items than competitors like Home Depot (David & David, 2015). While smaller stores could reduce operational costs, they risk limiting product offerings and customer attraction capacity. Therefore, maintaining or even expanding store size seems preferable to capture extensive market segments and meet customer expectations for variety and availability.

During periods of economic and housing market growth, Lowe’s must adopt strategies that enable it to outperform competitors like Home Depot. One such approach involves streamlining organizational structure—reducing layers of management to boost efficiency and reduce costs. As noted by David & David (2015), Lowe’s currently maintains excessive executive layers, which may hinder quick decision-making and operational agility. An organizational restructure towards a divisional format based on product categories could enhance focus, accountability, and responsiveness.

Furthermore, fostering strategic partnerships with high-profile brands such as Pittsburgh Paints or KitchenAid can strengthen Lowe’s market position by offering exclusive products, rebates, and eco-friendly building options. Collaborations with municipalities to promote green building initiatives align with social responsibility objectives, potentially attracting environmentally conscious consumers and government support.

Financial projections for 2016 highlight the anticipated impact of these strategic initiatives. An increase in sales volume through new stores, combined with targeted reductions in costs and enhancements in product offerings, should improve profitability. The projected balance sheet indicates healthy assets, including cash reserves and investment holdings, alongside manageable liabilities such as long-term debt. Effectively managing these financial parameters will enable Lowe’s to fund expansion and operational improvements while maintaining fiscal stability.

In conclusion, Lowe’s strategic focus should center on acquiring Rona for immediate Canadian expansion, cautiously proceeding with overseas growth in Australia, preserving substantial store sizes, and streamlining organizational processes. These measures, underpinned by robust financial planning, will position Lowe’s to capitalize on ongoing improvements in the housing market and global economy, ultimately surpassing competitors in market share and profitability.

References

• David, F. R., & David, F. R. (2015). Strategic Management: A Competitive Advantage Approach, Concepts and Cases (15th ed.). Cambridge, UK: Cambridge University Press.
• Home Depot Inc. (1994). Home Furnishings Weekly, 68(7), 6.
• Daily Commercial News & Construction Record. (2000). "Home depot opens first store in Quebec." 73(165).
• Michael A. Jones. (2014). Chief Customer Officer, Lowe's Companies, Inc. San Francisco: Boardroom Insiders.
• Boardroom Insiders. (2014). Lowe’s Corporation profile. Retrieved from [URL]
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• Environmental initiatives in retail. (2020). Green Building & Design Magazine.