Loblaw Companies Limited Acquiring Shoppers Drug Mart Case Study Solution

Business is presently one of the most significant food chains worldwide. It was established by Henri Loblaw Companies Limited Acquiring Shoppers Drug Mart in 1866, a German Pharmacist who initially introduced "FarineLactee"; a combination of flour and milk to feed babies and reduce mortality rate.
Business is now a global business. Unlike other international companies, it has senior executives from various nations and attempts to make choices thinking about the whole world. Loblaw Companies Limited Acquiring Shoppers Drug Mart currently has more than 500 factories worldwide and a network spread across 86 nations.

Purpose

The function of Business Corporation is to improve the quality of life of individuals by playing its part and supplying healthy food. While making sure that the company is being successful in the long run, that's how it plays its part for a much better and healthy future

Vision

Loblaw Companies Limited Acquiring Shoppers Drug Mart's vision is to supply its clients with food that is healthy, high in quality and safe to eat. Business visualizes to develop a trained labor force which would help the business to grow
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Mission

Loblaw Companies Limited Acquiring Shoppers Drug Mart's objective is that as presently, it is the leading company in the food market, it thinks in 'Excellent Food, Great Life". Its mission is to offer its consumers with a variety of options that are healthy and best in taste as well. It is concentrated on providing the best food to its clients throughout the day and night.

Products.

Business has a large range of products that it uses to its clients. Its items consist of food for babies, cereals, dairy products, snacks, chocolates, food for animal and mineral water. It has around four hundred and fifty (450) factories around the globe and around 328,000 workers. In 2011, Business was noted as the most rewarding company.

Goals and Objectives

• Remembering the vision and mission of the corporation, the business has set its goals and objectives. These goals and goals are noted below.
• One objective of the company is to reach no garbage dump status. (Business, aboutus, 2017).
• Another goal of Loblaw Companies Limited Acquiring Shoppers Drug Mart is to squander minimum food during production. Usually, the food produced is wasted even before it reaches the customers.
• Another thing that Business is working on is to enhance its packaging in such a method that it would help it to lower the above-mentioned problems and would also guarantee the delivery of high quality of its products to its clients.
• Meet worldwide requirements of the environment.
• Construct a relationship based upon trust with its customers, business partners, employees, and federal government.

Critical Issues

Recently, Business Company is focusing more towards the method of NHW and investing more of its revenues on the R&D technology. The country is investing more on acquisitions and mergers to support its NHW strategy. Nevertheless, the target of the company is not accomplished as the sales were anticipated to grow greater at the rate of 10% annually and the operating margins to increase by 20%, given up Exhibition H. There is a need to focus more on the sales then the development technology. Otherwise, it might result in the declined profits rate. (Henderson, 2012).

Situational Analysis.

Analysis of Current Strategy, Vision and Goals

The current Business technique is based upon the principle of Nutritious, Health and Health (NHW). This method deals with the concept to bringing modification in the consumer choices about food and making the food things healthier worrying about the health concerns.
The vision of this strategy is based on the key approach i.e. 60/40+ which simply suggests that the products will have a rating of 60% on the basis of taste and 40% is based on its nutritional worth. The items will be manufactured with additional nutritional value in contrast to all other products in market gaining it a plus on its nutritional material.
This technique was adopted to bring more yummy plus nutritious foods and drinks in market than ever. In competitors with other companies, with an objective of retaining its trust over customers as Business Company has acquired more trusted by costumers.

Quantitative Analysis.

R&D Costs as a percentage of sales are declining with increasing actual amount of spending shows that the sales are increasing at a higher rate than its R&D spending, and enable the company to more invest in R&D.
Net Revenue Margin is increasing while R&D as a percentage of sales is declining. This indication also reveals a green light to the R&D costs, mergers and acquisitions.
Debt ratio of the company is increasing due to its costs on mergers, acquisitions and R&D development rather than payment of debts. This increasing debt ratio posture a risk of default of Business to its investors and might lead a declining share costs. In terms of increasing debt ratio, the firm should not spend much on R&D and should pay its existing financial obligations to decrease the threat for investors.
The increasing danger of investors with increasing financial obligation ratio and decreasing share prices can be observed by huge decrease of EPS of Loblaw Companies Limited Acquiring Shoppers Drug Mart stocks.
The sales development of business is likewise low as compare to its mergers and acquisitions due to slow understanding structure of consumers. This sluggish growth likewise hinder company to more invest in its mergers and acquisitions.( Business, Business Financial Reports, 2006-2010).
Keep in mind: All the above analysis is done on the basis of estimations and Charts given up the Displays D and E.

TWOS Analysis

2 analysis can be utilized to obtain numerous techniques based upon the SWOT Analysis offered above. A brief summary of TWOS Analysis is given up Exhibition H.

Strategies to exploit Opportunities using Strengths

Business ought to introduce more innovative products by large quantity of R&D Costs and mergers and acquisitions. It could increase the market share of Business and increase the earnings margins for the business. It could likewise offer Business a long term competitive advantage over its competitors.
The international growth of Business need to be concentrated on market recording of establishing countries by growth, attracting more consumers through customer's loyalty. As establishing countries are more populated than industrialized nations, it might increase the customer circle of Business.

Strategies to Overcome Weaknesses to Exploit Opportunities

Loblaw Companies Limited Acquiring Shoppers Drug Mart needs to do mindful acquisition and merger of companies, as it might impact the consumer's and society's understandings about Business. It needs to get and merge with those companies which have a market credibility of healthy and healthy business. It would enhance the understandings of customers about Business.
Business should not only spend its R&D on innovation, rather than it ought to likewise focus on the R&D spending over evaluation of cost of different nutritious products. This would increase cost efficiency of its products, which will result in increasing its sales, due to decreasing costs, and margins.

Strategies to use strengths to overcome threats

Business must relocate to not only establishing however likewise to developed nations. It must broadens its geographical expansion. This broad geographical expansion towards developing and established countries would minimize the danger of prospective losses in times of instability in numerous countries. It needs to broaden its circle to numerous countries like Unilever which operates in about 170 plus countries.

Strategies to overcome weaknesses to avoid threats

Loblaw Companies Limited Acquiring Shoppers Drug Mart needs to carefully control its acquisitions to prevent the threat of misconception from the consumers about Business. It ought to get and combine with those nations having a goodwill of being a healthy company in the market. This would not just enhance the perception of consumers about Business however would likewise increase the sales, earnings margins and market share of Business. It would likewise make it possible for the business to use its prospective resources effectively on its other operations instead of acquisitions of those companies slowing the NHW method growth.

Segmentation Analysis

Demographic Segmentation

The market segmentation of Business is based on 4 elements; age, gender, income and occupation. Business produces a number of products related to children i.e. Cerelac, Nido, etc. and related to adults i.e. confectionary products. Loblaw Companies Limited Acquiring Shoppers Drug Mart products are rather affordable by almost all levels, however its significant targeted clients, in terms of income level are middle and upper middle level consumers.

Geographical Segmentation

Geographical division of Business is composed of its presence in nearly 86 countries. Its geographical division is based upon 2 main elements i.e. average earnings level of the customer in addition to the environment of the region. For instance, Singapore Business Company's division is done on the basis of the weather of the area i.e. hot, warm or cold.

Psychographic Segmentation

Psychographic segmentation of Business is based upon the character and lifestyle of the consumer. For example, Business 3 in 1 Coffee target those customers whose lifestyle is rather busy and do not have much time.

Behavioral Segmentation

Loblaw Companies Limited Acquiring Shoppers Drug Mart behavioral segmentation is based upon the mindset knowledge and awareness of the customer. Its highly nutritious products target those consumers who have a health mindful mindset towards their usages.

Loblaw Companies Limited Acquiring Shoppers Drug Mart Alternatives

In order to sustain the brand name in the market and keep the customer intact with the brand name, there are 2 alternatives:
Option: 1
The Business should spend more on acquisitions than on the R&D.
Pros:
1. Acquisitions would increase total assets of the company, increasing the wealth of the company. However, costs on R&D would be sunk expense.
2. The business can resell the gotten units in the market, if it fails to implement its strategy. Nevertheless, amount spend on the R&D might not be revived, and it will be thought about totally sunk cost, if it do not offer possible results.
3. Investing in R&D provide slow development in sales, as it takes very long time to introduce an item. Acquisitions offer fast outcomes, as it supply the company currently developed item, which can be marketed soon after the acquisition.
Cons:
1. Acquisition of company's which do not fit with the company's worths like Kraftz foods can lead the business to face mistaken belief of customers about Business core values of healthy and healthy items.
2 Big costs on acquisitions than R&D would send a signal of company's ineffectiveness of developing ingenious items, and would results in consumer's discontentment too.
3. Big acquisitions than R&D would extend the product line of the company by the items which are already present in the market, making business unable to present new innovative items.
Alternative: 2.
The Business ought to spend more on its R&D rather than acquisitions.
Pros:
1. It would allow the company to produce more innovative items.
2. It would offer the company a strong competitive position in the market.
3. It would make it possible for the business to increase its targeted clients by introducing those products which can be used to a completely brand-new market section.
4. Ingenious products will offer long term benefits and high market share in long term.
Cons:
1. It would reduce the earnings margins of the business.
2. In case of failure, the whole costs on R&D would be considered as sunk expense, and would impact the company at big. The threat is not when it comes to acquisitions.
3. It would not increase the wealth of business, which might offer a negative signal to the investors, and might result I decreasing stock costs.
Alternative 3:
Continue its acquisitions and mergers with significant spending on in R&D Program.
Pros:
1. It would allow the company to introduce brand-new ingenious items with less threat of transforming the spending on R&D into sunk cost.
2. It would provide a favorable signal to the financiers, as the overall properties of the business would increase with its significant R&D spending.
3. It would not affect the earnings margins of the business at a large rate as compare to alternative 2.
4. It would supply the business a strong long term market position in terms of the company's general wealth along with in terms of ingenious items.
Cons:
1. Danger of conversion of R&D spending into sunk expense, higher than option 1 lesser than alternative 2.
2. Danger of misunderstanding about the acquisitions, higher than alternative 2 and lesser than option 1.
3. Introduction of less variety of ingenious products than alternative 2 and high variety of ingenious items than alternative 1.

Loblaw Companies Limited Acquiring Shoppers Drug Mart Conclusion

Business has actually remained the top market gamer for more than a decade. It has actually institutionalized its techniques and culture to align itself with the marketplace modifications and customer habits, which has actually ultimately allowed it to sustain its market share. Business has actually established substantial market share and brand identity in the city markets, it is suggested that the company must focus on the rural areas in terms of establishing brand loyalty, awareness, and equity, such can be done by developing a particular brand name allotment strategy through trade marketing techniques, that draw clear distinction in between Loblaw Companies Limited Acquiring Shoppers Drug Mart items and other rival products. Loblaw Companies Limited Acquiring Shoppers Drug Mart must utilize its brand name image of safe and healthy food in catering the rural markets and also to upscale the offerings in other classifications such as nutrition. This will enable the business to establish brand name equity for recently presented and currently produced products on a greater platform, making the efficient usage of resources and brand image in the market.

Loblaw Companies Limited Acquiring Shoppers Drug Mart Exhibits