Implementation Plan for Lowes. Strategy, Mission, and Organizational Structure, business and finance homework help

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Implementation Plan: Part 1 Please take a look at the case studies located in your textbook. There are multiple corporations that provide a large array of services and products. Please select an organization that interests you. For Part 1, describe the company that you selected, the products/services they offer, and the history of the company. Next, analyze the company’s strategy, mission, and organizational structure. In your analysis, include the following: o • What does the strategy, mission, and organizational structure say about the company? o • What are the positive aspects of the strategy, mission, and organizational structure? o • What are the company’s short-term and long-term goals? o • What are ways to improve the strategy, mission, and organizational structure? Much of the information you will need to complete this segment can be found in the case study in the textbook. However, you are welcome to conduct further outside research as needed. Some details, such as the short-term and long-term goals, may not be explicitly stated. Please use your best judgement and analytical skills to determine that information. Your project must be a minimum of two full pages in length, not including the title and reference pages. Include an introduction paragraph. APA Formatting required. The company I chose is Lowes. This is what the text has on them and all parts of this assignment should be able to come from the following or simple internet research. Please keep in mind that this assignment is only for instructions listed in Part 1. I included the following from the textbook just to provide as much information as I could from the text. That is why it is so long. Lowe’s Companies, Inc., 2013 www.lowes.com , LOW Headquartered in Mooresville, North Carolina, Lowe’s is among Fortune’s top 50 companies and is the second-largest home improvement store in the world, trailing only Atlanta, Georgiabased Home Depot. Lowe’s operates 1,745 stores totaling 197 million square feet of retail selling space with all Lowe’s stores being located in the USA, Canada, and Mexico. Lowe’s has an agreement, as a one-third owner, with Australian Woolworths Limited to develop a Lowe’sthemed store in Australia. Lowe’s in late 2013 acquired Orchard Supply Hardware for approximately $205 million in cash, plus the assumption of payables owed to nearly all of Orchard’s suppliers. The acquisition gave Lowe’s a new customer base in California. Lowe’s plans to have Orchard operate as a separate, standalone business, retaining its brand under the leadership of Orchard’s current management team. Based in San Jose, California, and with fiscal 2012 annual revenue of $657 million, Orchard operates 91 neighborhood hardware and garden stores primarily located in densely populated markets in California. Under the terms of the transaction, Lowe’s acquired at least 60 of these stores. On average, Orchard stores have about 36,000 square feet of selling space, compared to 113,000 square feet for an average Lowe’s home improvement store. Lowe’s currently operates 110 stores in California. Lowe’s stores offer appliances, lawn and garden, lumber, plumbing, electrical, power tools, flooring, and much more for home repair and construction. Lowe’s principle goal is “to execute better than our competitors, and make the process of home improvement as seamless and simple as possible for customers.” Lowe’s customers are primarily homeowners, renters, homebuilders, and commercial construction firms. Lowe’s has 160,000 full-time employees and 85,000 part-time employees, all of whom are led by CEO Robert Niblock. Lowe’s has a chief rival, Home Depot, which reported a profit of $ 4.5 billion in 2012 on sales of $74.75 billion. Lowe’s fiscal 2012 sales increased 0.6 percent to $50.5 billion, while earnings increased 6.5 percent to $2.0 billion. But Lowe’s total customer transactions in 2012 declined to 804 million from 810 million the prior year. Lowe’s fiscal year 2012 ended January 31, 2013. Copyright by Fred David Books LLC. (Written by Forest R. David) History The first Lowe’s was opened in North Wilkesboro, North Carolina, in 1921 by Lucius Lowe as “Lowe’s North Wilkesboro Hardware.” However, from the start, in addition to hardware, the store also offered produce, groceries, tobacco products, and dry goods. Lowe died in 1940 and his daughter Ruth Buchan inherited the business and sold it the same year to her brother Jim Lowe. In 1946, Lowe’s was officially founded. Jim Lowe hired Ruth’s husband, Carl Buchan, after World War II and the two men ran the store together until 1952 when they split, with Buchan taking control of the hardware business and Jim Lowe opening up Lowes Foods in 1954, which is still operational today. After the split, Buchan began expanding Lowe’s throughout the 1950s opening stores in several North Carolina markets. However, Buchan died from a heart attack in 1960 at age 44, and Lowe’s five-man executive team took the company public in 1961. The following year, Lowe’s totaled 21 stores and had annual revenues of over $32 million. During the 1960s and 1970s, the U.S. housing market expanded rapidly with professional builders becoming Lowe’s primary customer. In 1982, Lowe’s reported its first billion-dollar revenue year with a record profit of $25 million. Starting in the 1980s, however, Lowe’s, in addition to builders, started focusing on the home do-it-yourself (DIY), whose aim was for weekend projects to add value to their homes. In 1994, the “modern” Lowe’s began with all new store expansion, having stores greater than 85,000 square feet of retail space. As of 2012, Lowe’s opens two styles of stores: 117,000-square foot stores in large markets and relatively smaller 94,000-square foot stores in smaller markets. In 2007, Lowe’s opened its first stores in Canada, where it currently operates 20 stores and in 2010 the first store opened in Mexico. Lowe’s plans to open 150 stores in Australia in the next five years. Internal Issues Vision and Mission The Lowe’s mission statement is: Lowe’s Promise: We are committed to delivering better customer experiences across the entire home improvement spectrum, by pulling together the best combination of possibilities, support and value for customers wherever and whenever they choose to engage. Lowe’s vision statement is as follows: We will provide customer-valued solutions with the best prices, products and services to make Lowe’s the first choice for home improvement. Lowe’s focuses its employees on the following core values: • Customer Focused • Teamwork • Ownership • Passion for Execution • Respect • Integrity Lowe’s markets the slogan: Never stop improving. Organizational Structure As illustrated in Exhibit 1, Lowe’s operates from a divisional-by-region organizational structure. Some analysts suggest that Lowe’s may have too many top executives. Lowe’s Locations Exhibit 2 reveals where all the Lowe’s stores are located. The company plans to open 10 new stores in 2013. Supply Chain Lowe’s receives products from more than 7,000 venders with the largest single vender only supplying around 7 percent of total purchases. To facilitate product movement, Lowe’s operates 14 highly automated regional distribution centers in the USA with each distribution center serving around 120 stores. In addition, Lowe’s operates 15 flatbed distribution centers for items such as vinyl siding, ladders, lumber, and other products that require special handing. Lowe’s considers its supply chain finance (SCF) to be one of its top means for gaining competitive advantage over rival firms such as Home Depot, Ace, and True Value. Because most rival firms offer the same or similar products, maximizing SCF efficiencies can be critically important. Lowe’s considers three key areas of its SCF strategy to be (1) standardization of payment terms, (2) incentives for buying organization, and (3) break even for the suppliers. Sustainability Lowe’s emphasizes sustainability and in 2012 was awarded the ENERGY STAR Sustained Excellence Award for the third straight year and also was awarded the WaterSense award from the EPA for the fourth straight year. The awards can be attributed to Lowe’s overall mission to protect the natural environment by continually expanding product offerings that are Energy Star and WaterSense qualified as well as offering numerous solar-powered alternatives. Segments Lowe’s provides an excellent breakdown of revenues by product category. Exhibit 3 provides the most recent two years of available data. Note that no single category accounts for more than 11 percent of revenues and there have been consistent revenues across all categories over the two most recent years. Within the wide product categories, Lowe’s offers both national brandname and private-brand products. Many customers shop for brand name they know and trust to be the same regardless of the store they are sold. Private brands however do provide product differentiation from competitors in innovations, design, and are often cheaper as well. Lowe’s private brands include tools, paint, plumbing, flooring, lumber, and much more. Virtually all product categories are offered in both national brand and private-branded options. Lowe’s also offers a much larger selection of home improvement products than Home Depot, even offering designer towels, towel racks, and many more upscale home-decorating options. Lowes also offers credit financing to customers through its consumer credit card with GE Money Bank. The card allows qualified customers to receive 5 percent off all purchases, and with purchases over $299, customers can select to receive no interest financing or 5 percent off the purchase price. In addition, Lowe’s offers a commercial account for small- to medium-size businesses with minimal monthly payments and the company also provides accounts receivables for commercial customers that pay in full each month. Lowe’s does not provide a breakdown of revenues or profits by geographic region. Strategies Lowe’s initial strategy was focusing on builders but with the housing boom in the 1960s, Lowe’s added the DIY home improvement market. Lowe’s has always engaged in both market development and market penetration, adding stores across the USA and now in Canada, Mexico, and Australia. Having two store sizes is an advantage because Lowe’s tailors the respective store size market to particular markets. Lowe’s does, however, experiment with various layouts at various locations; nevertheless, having the same principle layout at most stores provides customers familiar in their shopping experience. Also, Lowe’s has slightly larger stores than rival Home Depot with an average store size of 113,000 to 105,000 square feet. Both Lowe’s and Home Depot have on average 32,000 square feet of garden space. Lowe’s also stocks 40,000 items, up to 10,000 more than certain Home Depot stores. Having wider isles, more signs, and better store lighting are also competitive advantages of Lowe’s. In addition, Lowe’s has around 69 to 89 percent fulltime employees to Home Depot’s 59 percent. Despite these “competitive advantages,” Home Depot is outperforming Lowe’s, and by what some analysts say is by alarming margins. Lowe’s is continuing its expansion and is attempting to better attract customers who normally would not visit home improvement stores. In addition, Lowe’s has implemented a new strategy to attract an increasing number of female customers. Lowe’s has over 190,000 products online and recently started shipping items to customers from service stores and regional distribution centers. Historically, Lowe’s only shipped online purchased items from its dedicated Internet warehouse. This new strategy enables Lowe’s to provide faster deliveries, reduce order filling costs, and improve profitability overall. Building on the increased online presence, Lowe’s plans to reduce its brick-and-mortar expansion plans by 15 stores annually thereafter, or around a 50 percent reduction in planned new stores. The Economy Home prices are slowly rising in the USA and home construction too is rising, both good news for Lowe’s. June 2012 new home sales in the USA were up 15.1 percent over the prior year. Sales of existing homes are increasing, up to 4.37 million units in June 2012 from 4.18 units in June 2011 or a 4.5- percent increase. Unemployment rates have fallen to just below 8 percent in the USA, and are trending downward, good news for Lowe’s. More and more people are remodeling their homes, also good news for Lowe’s. The top four homebuilders in the USA are: D.R. Horton Inc., KB Homes, PulteGroup Inc., and Lennar Corp.; all four companies are growing and this is good news for Lowe’s. The 30-year fixed mortgage rate is over 3 percent and rising. Despite low rates however, banks are still reluctant to lend. Throughout much of the previous decade, banks would allow someone to purchase a home with as little as 5 percent down, but now banks are commonly requiring 20 percent cash down. In addition, banks are also requiring higher credit scores to qualify for a mortgage. Scores as high as 720 would historically be automatic for a loan, but scores as high as 755 are now not automatic for approval. Low interest rates are allowing many people to refinance their homes, thus providing them with additional cash to potentially spend on home improvement projects. CEO Frank Blake of Home Depot in October 2012 said: “This housing market has been very very bad and it’s going to take some time to recover.” Blake’s comments were on the heels of the Federal Reserve blaming the U.S. housing situation for the country’s overall slow economic recovery. In Blake’s opinion, when customers start to consider home improvement projects, such as installing a new granite countertop as a home investment rather than a cost, then the housing market is likely heading for a more sustainable recovery. Competition Largely dependent on the state of the economy and especially the state of the housing market, competition is intense in the home improvement industry. Major players Lowe’s and Home Depot have the greatest market share, but many other firms such as True Value Hardware, Ace Hardware, and even Walmart all facilitate increased competition. For example, Ace markets its business as a one-stop place where a customer can receive friendly help with an appropriated size store that enables customers to find everything they need “without the use of a gps.” This marketing strategy is clearly aimed at behemoths Lowe’s and Home Depot and suggests that by being large warehouse stores, customers do not receive the personal attention Ace can deliver. True Value positions its business model around each store being independently owned and operated, providing customers with a store that offers products more tailored to local needs.
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