All of the questions relate to each other so answer ALL of them. 1. Should Lowe’
ID: 462965 • Letter: A
Question
All of the questions relate to each other so answer ALL of them.
1. Should Lowe’s expand into Canada, or renew efforts to acquire Rona?
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?
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?
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?
5. Develop the projected financial statements that fully assess and evaluate the impact of your proposed strategy.
Explanation / Answer
1) As per my opinion, Lowe's expansion to Canada is not a right decision. It needs to wait till it becomes financially stable, considering the expenses that would cost Lowe to start a new facility in Canada. Instead, it could renew efforts to acquire Rona. Rona has a presence in over 400 stores in Canada and its annual sales are about $2 billion. By acquiring Rona, Lowe's market presence and expansion in Canada would substantially increase to three times. So, acquiring Rona is a better option.
2) Lowe's enter into the Australian market with 150 new stores as per the plan is definitely beneficial and that would bring competition to Ace Hardware store. As per records, Lowe is in number two position in the market, with this expansion plan, it would really be a profitable international move and further increase Lowe's presence in the market
3) Not necessary. It is not recommended. Lowe's stores are better the way they are. There is no need to further reduce the store size. A business should always try to expand, but not try to match competitors which are smaller than its business.
By reducing the size of the Lowe's stores to match the Home department and other smaller stores such as Ace and True value will drive down the sales.
4) Best strategies for Lowe to outperform home depot are - a) Lowe should restructure all its resources and allocate an added value where ever necessary. b) Lowe has too many executives, it should reduce them and also reduce the organizational structure. c) System should be kept lean and Just-in-time procedures have to be implemented. d) Making the organization a Divisional structure thus ensuring each product they deal come under a different division. This ensures the sales team to concentrate and increase the sales of one or two products at a time.