Lowe's Case Analysis

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Case Analysis: Lowe’s Companies, Inc.

1.0 Recommendations for Lowe’s to Outperform Home Depot
Since the home improvement market is highly competitive, Lowe’s needs to apply the best strategies to deal with Home Depot’s rivalry. This rivalry is as a result of the identical nature of the products handles by the two companies. The company should structure its distribution framework to pull down costs as the firm adjusts to changes in demand. The company should set a 6-month budget for research and development projects. To outperform Home Depot, Lowe’s should seek to expand its in-store services as well as the international operations.
1.1 Expanding the In-Store Services
Lowe’s should intensify its expansion into metropolitan markets, which
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This will see the competition shift to feature prices and location.
1.2 International Operations
An expansion into markets outside the USA would appropriate for Lowe’s if it is to take Home Depot head on. This kind of strategy would require acquisition of existing businesses and stores rather than going internationally as a green-field. This would be appropriate if done within a time frame of 6 months as this would provide the company with enough time to study the foreign market environment factors that may hinder or boost its operations. Such a move would thus help neutralize the risks exposed by the US housing markets as well as the purchasing economies of scale.
2.1 Recommendations on Expansion into Canada
Lowe’s should renew its efforts to acquire Rona since opting to enter the Canadian market as a green-field is more costly. By acquiring Rona, an already established company operating 79 big box locations and 700 smaller stores, Lowe’s would avert the costs of producing French ads and signage for Quebec customers, building French website as well as changing its weight metrics and measurement units. This will also give the company a chance to penetrate the Canadian market and strengthen its distribution network and cost-effectiveness and thus boost its operating efficiency. Moreover, gaining a chunk of
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It should capitalize on the cost-leadership strategy and improve its customer service to edge out Ace and steal a chunk of its market share. Lowe’s should also seek to negotiate for favorable contracts with the major Australian suppliers on a cost-advantage level and thus increase its bargaining power. Moreover, such a strategy would create an entry barrier for Australian start-up competitors who might seek to use their home advantage to outcompete
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