Differentiation Dissertation Conclusions Example
Conclusion on Loblaw and T&T Acquisition Analysis
George Weston Ltd that manages Weston Foods and its subsidiary Loblaw Companies Ltd. is an example of excellent economical management. The company’s recent acquisition of Asian grocery giant T&T has already made an impact on the supermarkets business and is expected to have tremendous changes in the future of produce companies operating in Canada. In its management, some strategies have been identified as having being key to its acquisition success.
The grocer bought T&T Supermarket Inc. in 2012 for $225 million as a means of enhancing its reach and service to a crucial market segment- Asian Canadians that has been described as the fastest growing in the country. The acquired brand T&T already runs 17 stores in British Columbia, Ontario, as well as Alberta and is planned to operate as a separate division of the Loblaw Companies Ltd. for purpose of giving some autonomy to its CEO Cindy Lee. Some of the improvements on the grocer owing to the acquisition have been identified to include the increase in bargaining power, as well as an improvement in its delivery process among other benefits.
In respect to the two brands’ differentiation, there is no much differentiation as both are premium superstores but sharing characteristics such as better quality and reputation. However, Loblaw’s operations are identified to be marked by large inventories of Western food while T&T has a focus on Asian foods mainly the Chinese products. Geographical Wise Loblaw has its supermarkets in the upper scale western community while T&T has its sores in Chinese communities. (Sengupta, 2005).
Competition and segmentation
In the analysis, the GTA market is marked by oligopolistic operations with three major players including Loblaw Companies, Metro Inc., and Empire Company. In respect to segmentation defined by pricing target market, both brands operate in high price segments where Loblaw focuses on the Western communities while T&T serves the Chinese communities.
The acquisition has been identified to have various benefits to the two brands. The first benefit is that it guarantees Loblaw’s future growth. That owes to the expected growth of the Asian communities that is expected to be the largest segment of the minority groups by the year 2030. Thus, T&T’s acquisition positions the grocer in a better position to benefit from the segment’s growth. Another benefit is that the acquisition enables Loblaw to create more economic value relative to its rival. That will be achieved by the business lowering its operation cost, and delivering is products of the market a low cost. That is because the market is marked by brands offering relatively similar products hence competitiveness can be mainly based on cost and price basis. (Sengupta, 2005).
Other effects: Benefits
Other effects to consider in the acquisition have been identified to include economies of scale, umbrella branding and effect on the brand’s efficiencies. (Keller, 2013)
Economies of scale
The acquisition will also affect the grocer’s market power through the economies of scale. That owes to the increased ability to source for raw materials and produce in large volumes hence lowering the average cost. In that respect, Loblaw will have a competitive advantage over its competitors owing to the economies of scale that is enhanced by wider market reach and large scale operations. (Keller, 2013)
Umbrella branding is a strategy commonly applied in portfolio management and in which the parent brand name; such as the Loblaws, in this case, is used for the business’ range of products. The approach assumes that the existing consumers’ familiarity, as well as positive associations with the parent brand, its credibility and service delivery, would have a “halo effect” on the whole business. In that respect, T&T’s products would benefit from associating with he already established grocery business hence enhanced performance. The business will benefit from the acquisition through umbrella branding. That is given its partnership with brands that are well recognized and successful in the market (Kotler & Keller, 2006).
The acquisition also enhances the grocer’s efficiency as it enhances its diversification strategy. That is given that acquisition arrangement that provides for some independence between the two brands. In that view, they can effectively continue serving the different segments and markets.
Although the accusation has had some benefits to the brand, it has been identified to present a risk that should be managed through suitable strategies. The major risk associated with The acquisition has been noted to be the cultural clash owing to the different segments that the brand serve as well as he difference in organizational set up targeting a the different communities. In that respect, the different brands present difference in cultural values and strategies that may make it difficult to serve a common overall corporate strategy. (Keller, 2013)
Strategic Positioning of Loblaw and T&T
In respect to the brand’s strategic positioning, the acquisition places the brand in a position to serve diverse segments hence enjoying the benefits of serving the large pie of the western and Asian communities market. It will also benefit the brand through value creation by the different avenues including operations, production and logistics of each firm. In that respect, he grocer will be beer positioned by the acquisition through the acquired synergies. That will be the case as the business will have the advantage of the two businesses’ markets and resources (Sengupta, 2005).
The food market has been identified as one faced with stiff competition given he increases in number if players as the application of various strategies as businesses seek o enhance their performance. With T&T acquisition, Loblaw has acquired the ability enter the ethnic foods market. That places the business in a more competitive position. In addition, the business expansion in the ethnic food market gives it power to deter new entrants increasing is market control and enhancing performance. Barrier to new entrants will include the low average costs ha means ha new entrants have o produce a relatively low cost to be profitable and competitive. Producing versus Buying
Businesses have a choice between buying and producing their products. The decision o produce or buy is dependent on various factors including the cost and benefits involved, and the strategic purpose that either would serve. In addition, the decision would be dependent on comparative advantage principle hence a business should only produce what it can produce at low cost compared to the alternative source. Thus, regarding the decision to buy or produce own products; T&T has large scale operations hence its production cost have been identified as being relatively low compared to its competitors. In that respect, the business has an emphasis on producing is products than buying them from other suppliers. That would offer the business more control over the quality of its goods and delivery span. Further, producing own products would offer the business the advantage in terms of products differentiation and tailoring them to its specific segments needs (Sengupta, 2005).
Keller, K. (2013). Strategic Brand Management, 4th ed. Upper Saddle River, New Jersey: Prentice Hall.
Kotler, P. & Keller, K. (2006). Marketing Management. 12th ed. New Jersey: PearsonPrentice Hall.
Sengupta, S. (2005). Brand Positioning: Strategies for competitive advantage. 2nd ed. Lake Town: Tata McGraw-Hill Publishers.
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