Ethics and Compliance Paper
Shalom J. Duarte, Chris Campbell, Eric Newhart, & Ron Reda
June 18, 2013
Ethics and Compliance Paper
Strategic planning and financial preparation are vital to ensure the success of big retail corporation such as Lowes. This type of planning happens when a company sets up both long term and short term goals for their strategic marketing and planning to achieve financial success. Strategic initiatives can be created in various areas, such as in the area of new products being rolled out and new departments being created. In particular a strategic plan, determines a company’s long term goals and then identifying the best approach ...view middle of the document...
The action that Lowes implements for this strategic plan is to focus in on retail relevance, value improvement and product differentiation. With this said value improvement improves the core business by improving line design and lowering cost per unit. Product differentiation draws enthusiasm in stores with great product displays and techniques.
Lowe’s 2013 initiatives will have an effect on costs and sales. It is called the Value Improvement initiative. The initiative is to enhance customer experience by focusing on product offerings, increasing labor to better serve customers, and improving information technology. The focus is on Lowe’s making these efforts simple and seamless to the customer which is a difficult task when implementing software.
Lowe’s has a budget of $1.25 billion for fiscal year 2012 (Lowe’s, 2013). Estimates of 40% of this budget will go toward improving the customer experience.
One part of this year’s project is to add labor during weekday peak hours to close sales. Lowe’s wants to add 150 hours of labor per store each week. Lowe’s currently has approximately 245,000 employees, so adding four employees to each store seems minor but when considering they have over 1,700 stores, this is over 7,000 new employees. This complimented with an effort to have higher in-stock service levels is an educated move to bolster sales during the weekday to close the gap on weekend sales.
Another big piece of this year’s initiative is improving the information technology systems they want to use. Two major components of this are for delivery and operations and will account for part of the 40% of their 2013 budget. The dispatch system will improve route planning, which in return will give them greater fleet utilization that will cut costs. The other system is for providing operational efficiencies that will consolidate labor. Better coordination will improve customer satisfaction while reducing labor.
With the economy and the housing market showing some improvement, Lowe’s is focusing more on customer’s needs and efficiencies. Lowe’s realizes stricter lending for homes will continue to slow the housing market so they are prepared for that. These are initiatives are to improve increase earnings before interest and taxes to 10% of sales in the next two years.
Risks associated with the initiative and financial effects of Lowe’s strategic planning and financial preparation for future growth
Only two years ago in 2011, Lowe’s was opening 150 stores a year. Now in 2013, only 25 projected stores are to be opened. Why the downscale of new stores being opened? Economy for one; risks, and a projected financial plan in lieu of the 3% - 3.5% commercial construction growth rate and notwithstanding a decline in the home improvement market makes Lowe’s reconsider its strategic planning and in-store product line. Despite usual risks accustomed for growth and development in the retail environment, Peter Walstrom, associate...