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Every business, company or organization always sets some goals and objectives and strives hard to achieve them. Strategic planning enables the companies or organizations to do so in an organized and systematic manner. According to Visitask (2009) strategic planning is a process through which the organizations imagine and foresee their future and then set the course of action to reach that future successfully. For this purpose, they set some goals and objectives and with a well planned and strategic management accomplish these goals effectively and on time. This paper basically discusses the current strategic planning initiatives and financial planning strategies of Lowe’s Companies Inc. which is a hardware store and also analyzes the probable influence of these plannings on the company.
According to Lowe’s (2009) Lowe’s which is now a well-known hardware store which is enjoying second position worldwide as an improvement store and in US has the standing at 7th position was basically a small store which initiated its operations in 1946. This small business was providing some of all the varieties and was located in North Wilkesboro, NC. Like many popular and globally recognized businesses today, Lowe’s also had to go through many ups and downs and its success has been struggle of many years. For this purpose, it utilized well-built and well-planned strategies in regard to strategic and financial planning. According to Lowe’s, (2009) the initial managerial decisions the main focus of the business in regard to strategic planning was to provide the customers with all the hardware, appliances and building materials which were not easily available to them whereas in regard to financial planning the company seek a direct relationship with the manufacturers instead of the wholesalers.
A number of strategies are used by the company amongst which one is to conduct sufficient research before starting any program or bringing in any facility. For example, the company planned to introduce a new co branded credit card for its customers but before doing so it looked into all the pros and cons of it. Thorough research was been conducted which proved that it will be beneficial then only the company introduced this credit card. For this purpose, the company had to see certain concerns. As per Waxer (2009) introducing this credit card needed modifications in already working systems of the company in regard to payment acceptance and processing. Simultaneously it required essential internal manpower and skills to monitor and inculcate the project.
Lowe’s believes in providing customer satisfaction in order to gain their loyalty and for this purpose it makes efforts to improve stores. Because of lack of time the customers appreciate a place where one-stop-shopping is possible. According to Lowe’s (2009) in order to give a fruitful and satisfying shopping experience the company ensures that the stores are well stocked with all the products. In addition to enhance the direct customers the company added the new signage for them.
When it comes to opening a new store, Lowe’s makes sure that the decision will be worthwhile as it is an average investment of $25 million. The Lowe’s real-estate committee sees all the pros and cons of the potential site. The ROI is also carefully forecasted and if there is a chance that ROI will be disturbed because of the presence of any other home improvement store then the company does not opt for the site. Too much care is taken that the decision is worth while in regard to time, investment of resources and enhance the goodwill of the company. Furthermore, the selection of the correct prototype is done because a wrong selection may harm the reputation and the sales of the company. Thus, all the risks are measured properly and Lowe’s’ make an analysis store-by-store, market-by-market so that everyone is benefited.
Because of the slump in economy and more awareness as per annual report of 2008 of Lowe’s showed that nowadays people prefer to save energy and therefore avoid larger home improvement projects. The consumers prefer energy conservation for both financial and nature preservation reasons. One of the major reasons of Lowe’s success is that it is able to forecast trends and benefit from them and realized the importance of energy conservation. For this purpose, it devoted it’s planning in the products that are energy saving and are of energy friendlier material. According to Lowe’s (2009) keeping in view the economic downturn Lowe’s analyzes projects so that the appropriate returns are definite. The investments are made in accordance to continued disciplined investing positions which are beneficial for both near-term and long-term market opportunities. Lowe’s has introduced Energy Star products which help in saving 20-30 % energy for the consumers in contrast to traditional products. For this purpose, it teamed up with energy saving manufacturers and trendsetters in the eco-friendly materials. For bringing in a new project preparing its feasibility is very important. To keep up with this trend Lowe’s had to forecast everything as it will also influence its costs and expenditures. The cost should be feasible enough not only for the company but is also suitable for the customers. The energy saving products offered by Lowe’s saved consumers 7 billion dollars nationwide last year. Since it was not feasible for Lowe’s alone to bear the cost, it collaborated with other companies like Due Energy to keep the costs down. According to Thompson (2009) the thoughts expressed by the president of Duke Energy Mr. Carter, stated that it was an opportunity for the company to become partner with Lowe’s(R) and by doing so the customers were able to get products which reduced their energy usage and their energy bill. By this collaboration the extra expenditure by both the companies were prevented.
Furthermore, to facilitate the consumers and to ensure them that by investing in energy saving products will get them long-term benefits. This investment of their in energy efficient products can provide them with both financial and environmentally friendly benefits. Lowe’s makes sure that it opens the stores in such locations which are easily approachable and are surrounded by the potential customers. Before opening the store the company needs to make sure that their decision is worthwhile. It may happen that by opening too many stores the financial stability of the company maybe affected which is not a good sign. The capital for long-term investments is also required. The company at times needs loans from the banks and company’s stability and available capital are very essential when the bank decides to lend money for a long-term investment. There is a chance that by opening lesser stores the risk related to financial stability can be reduced. Although by reducing the number of store openings, the expansion of the company may be slowed down but in the present economic condition it will preserve the company’s financial stability. The same happened when Lowe’s took a critical look at the capital plan for 2009 and changed it decision of opening 70 stores to 60 stores. As discussed earlier a good rate of return is required and should be by the company when it plans to open a new store in a new location, because the company wants to meet its short-term responsibilities.
To promote these home energy efficiency related products and to provide an improved shopping experience to the customers Lowe’s has planned very strategically. To provide the customers with sufficient on hand information Lowe’s updates its website regularly and impart education through classes at each Lowe’s store. According to Lowe’s (2009) that in spite of the fact that most consumers are putting off larger projects, they still are committed to maintain their home and for this purpose they will opt for the product which are cost effective. The sales were improved and maintained by offering energy efficient products. These products included Energy Star appliances, programmable thermostats and weather stripping.
To attract the customers in an efficient manner the company needed a very creative and innovative advertisement plan. This could be done by enhancing the advertising department. By bringing this innovation the costs were not much affected rather there was a greater chance that the profits will increase. According to Lowe’s (2009) the company advertised through effective displays, signage, and adjacent products that enhanced the shopping experience. With 680 million transactions a year the increase of their average ticket by a 1.31 is not really bad. Thus, Lowe’s reduced its marketing strategy but it had not to suffer much risk or financial impact.
Eventually all the successes that Lowe’s have received today are because of a well organized and well thought strategic initiative planning in various areas. Lowe’s Incorporated is considered as the leader in home improvement field and its profits and customer base is increasing day by day as the strategic planning was done by great concern, dedication and after thorough research and thinking. All those projects were been selected and implemented which were fruitful for the company itself, customers and the shareholders. The management believes that the strategic planning can provide the most of the advantage if the projects are evaluated in every aspect and must ensure that it will not affect the company’s finances including costs and sales.
Lowes (2009). Balance 2008 Annual Report. Retrieved from http://www.lowes.com/lowes2/assets/2008%20Annual%20Report%20Bookmarked- %20FINAL.pdf
Visitask (2009). Strategic planning. Retrieved from http://www.visitask.com/strategic-planning-g.asp
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