Food Lion company analysis



By: Keith Byrns,Food Lion Inc.??2110 Executive Dr, Salisbury, NC 28147Food Lion company analysiscenter4363720 By: Keith Byrns Table of Contents Balanced Scorecard… … 2-3 SWOT Analysis … … 4-5 Porters five forces…… 6-7 Resource Similarity …… 8-9 PESTEL … … 10-11 Value Chain… … 12-13 Conclusion… … 14 References…… 15 BALANCED SCORECARDMission – Is to ensure that we remain the low price leader in the supermarket industry without compromising quality or customer satisfaction. Vision - We will produce extraordinary results by serving our customers, Associates, Shareholders, and Communities every day. Strategy – to promote growth, efficiency, and sustainability as low-cost leaderFinancialGain markupKeep profits up Learning and GrowthNew StrategySustained for long term growthUses mistakes to its advantageCustomerProvide great serviceMake shopping easy, fast, and affordableInterested in what customers wantInternal Business ProcessesProcessing Packaging DistributionTransportationFood Lion wants to be the overall low cost leader in the supermarket industry while still producing quality products and great customer service. Food Lion’s strategy is maintaining its low cost provider by following three pillars growth, efficiency, and sustainability. Food lion wants to continue to grow by expanding in current markets as well as enter new markets to meet customers’ needs. The private label brand of Food Lion “My Essentials” continues to grow and offer everyday products at a lower price. Food Lion wants to be as efficient as possible to reduce wastes and costs. The way they overview how they order, ship, stock, and sell products will help eliminate costs down the value chain to make products efficiently and affordable. Lastly food lion wanted sustainability they wanted to develop ways to work differently and see how good a supermarket can be. By offering private label products they can increase revenues without compromising their strategy. Food Lion’s sustainability focused on rebuilding based off what customers said. Surveys and research was used to help collect data to reform this new strategy. Food Lion wants to make sure they remain profitable by making sure they earn their highest potential while still maintaining the low price. Food lion has implemented a new strategy in not only being the low cost provider but by also delivering great customer service. They do not want to compromise the price of products and want to make shopping enjoyable for customers. The company is built for the long run and has just remolded all their stores as well. They are interested in what customers seek is most important in grocery stores and what Food Lion can do to make their experience an enjoyable one. Food lion has a great internal business process which makes it easy to process, pack, and distribute to their stores with efficiency. Products are rarely out of stock at warehouses because of the system Food Lion has in place to ensure that their shelves are full. They can send products to their other warehouses to ensure that all five warehouses have the appropriate products that they need for their stores. StrengthsEasy, Fast, AffordableAdapting to what customers wantLocations NationwideLow cost leader strategyWeaknessesKnown for having low end perishableHigh worker turnover ratioLower quality of productsOpportunitiesCustomer Segmentation strategyWider product selectionContinue to be low-cost providerIncreased private label salesBetter reward plans for employeesRemodeled storesThreatsWal-Mart opening of SupermarketsOther retailers offering grocery’sLabor unionsStrengthsFood lion has implemented a new strategy that is taught to employees to help customers make shopping easy, fast, and affordable. A survey taken by supermarket consumers found that being able to find what they want, finding it fast, and purchasing it at a low price is what was important to customers. Food Lion has 1,300 stores in the South East and Mid Atlantic to make shopping convenient and affordable. Food Lion’s low cost provider strategy helps bring customers in while the great customer service keeps them coming back. WeaknessesFood Lion has a bad reputation for having low end perishable. They have recently changed to prepackaged meat as well as buying local produce. Food Lion’s has a high worker turnover ratio and has added employee benefits in order to retain employees for longer. Having high ratio costs money to train and dress new employees.OpportunitiesFood lion has a customer segmentation strategy that it implements in all of its stores. There are different departments so each one can focus on what is important and deliver what the customers need. Food Lion has remolded their stores in order to gain market share that they have lost from straying away from their overall lost cost provider. They have revamped their strategy to make sure they continue to be an overall low cost provider. Offering their private brand increased sales and profitability as well as offering customers lower priced product from major brandsThreatsThe continuing trend of labor unions could eventually hurt Food Lion. As of right now they have a no union policy but laws could prohibit companies from enforcing this. Wal-Mart’s opening of a chain grocery stores could potential threaten their current market share. PORTER’S FIVE FORCESThreat of New Entrants – Low Hard to enter MarketNot very profitableBargaining Power of Buyers – Medium Could shop at competitorCan switch brands Threat of Substitute – Low to MediumGrow own foodDine outBargaining Power of Suppliers – LowNeeds products on shelf’sSuppliers depend on Supermarkets to sell their productsRivalry among Existing Competitors – HighMany different companies in industryMany locations for competitorsThe threat of new entrants for the supermarket industry is considered low. It is very expensive to start a grocery store and companies do not just enter just this market without having an established company. The supermarket industry is also not very profitable and usually only make pennies for every product sold. The bargaining power of buyers is considered medium. Customers can go shop at different supermarkets that can offer either the same or similar products that Food Lion has. Since Food Lion buys their products in bulk to lower costs and to offer customers the quality of products they want at a low price. Customers can switch to private brand labels, but for food lion this would increase their sales for their private brand “My Essentials”. The threat for substitutes in the industry is medium. Depending on the economy customers may decide to grow their own food or dine out. People need to eat so there will always be supermarkets. The bargaining power of suppliers is low in this industry. Companies want their products on the shelf and for some of these products depend on supermarkets in order to make sales. Since Food Lion has many locations as well they buy products in bulk giving suppliers a good amount of business. Rivalry among existing competitors for food lion is high. Wal-mart is opening a line of grocery stores to compete in the industry. Other retail companies such as Target and K-mart selling retail merchandise as well as groceries will attract customers who want to get all their shopping done in one place. This makes it more convenient for customers and can ‘reduce Food Lions profitability. As more companies decide to offer the same products as Food Lion rivalry continues to increase as Food Lion continues to improve ways to stay ahead of the competition and make them the low cost leader. RESOURCE SIMILIARTY AND MARKET COMMONALITYHigh Market Commonality and High Resource SimilarityHarris Teeter and other super markets have the same resources and products. Both companies are high competitors and buy from the same suppliers and therefore have either the same or similar products on their shelves. The target markets are similar with a savings mentality for both grocery chains. High Market Commonality and Low Resource SimilarityWal-mart has similar resource similarity since it does offer some similar products of Food Lion. They have a high market commonality because they offer low priced products. It is important to keep an eye on Wal-Mart because in the future they could move from this area to a High Market and High Resource similarity with the launching of their new grocery stores. Low Market Commonality and Low Resource SimilarityFood Lion and 7-11 have a low resource and low market commonality. They do not offer similar products and therefore do not have the same resources.Low Market Commonality and High Resource SimilarityFamily Dollar has a high resource similarity since they both offer many of the same products. The market commonality is low because Food Lion is supermarket while Family Dollar offers products that are cheaper and a more wide variety of different products. PoliticalTariffs on international productsProduct restrictionsEconomicGlobal financial crisisUnemployment rateGas pricesSocialGenderLocal CommunitiesBuying habits/IncomeTechnological Self –checkoutOrder and PickupRapid technology growthResearch and developmentEnvironmentalClimate changeNational disastersCo2 emissionsLegalProduct recalls Food Safety/securityFood RegulationsLabor lawsFood Lion has products that are outside the country and has to monitor the taxes. If taxes rise they can reduce their profits and can sometimes compromise their low cost strategy. If products have restrictions or regulations such as cutting meat they have to follow procedures and rules which can cost time and money and reduce productivity and profits. If a global crisis consumers have less income to spend and it changed buying habits. Ensuring the affordability of products is important as to not change the low cost strategy. A high unemployment rate makes it difficult to hire quality associates that can deliver. Buying habits and gender influences the type of products that Food Lion offers. Since women usually do the grocery shopping offering a wider range of products that attract these customers will raise profits. Local communities play role for Food Lion since they locate their stores usually in low income and low populated areas to attract their market. Technology grows fast and keeping up to date with trends and the latest technology will help Food Lion to grow and be more efficient. Using the developed technology will keep ordering systems or efficient and help employees complete tasks and procedures in a more timely manner. Depending on the climate and seasons it can change the sales of products and skew the numbers that would be used for next year to estimate what to order. Food Lion produces 2.6 million tons of co2 a year which contribute to national disasters. Laws are put into place that monitors their emissions and puts regulations on it. Food recalls can hurt their image as well as the products image. If a product is recalled, customers may be hesitant to purchase not only those products but also other products of that particular brand. To ensure that food is handled safely and all food regulations are met costs money to ensure that they are followed. Labor laws does not really affect food lion as they offer good employee rewards as well as treat their employees correctly. If minimum wage is raised in the future it could compromise the way they do business and not be able to offer products at low costs. VALUE CHAIN140906520320Support ActivitiesFirm InfrastructureGeneral administrationExecutive committeeDifferent management levelsHuman Resource ManagementMaintain low cost leader strategyMaintain employees that can deliverTechnology DevelopmentSystems DevelopmentProduct Research and developmentPrimary ActivitiesInbound LogisticsRaw MaterialsOperationsProgress and PackagingOutbound LogisticsDistribution NetworksDistribution and TransportationMarketing and SalesIn- Store ServiceConsumption and Disposal Food Lion’s value chain starts with both growing fresh products and extracting ingredients for processed products. Products are shipped and packed and sent to the seven different distribution centers in five states. Having their own distribution centers and warehouses allows food lion to buy products in bulk quantities and reduce costs. This enables them to offer high quality products for customers at a lower price. Trucks then deliver it to the stores where employees place the products on the shelf or prepare them depending on the departments. Food Lion’s marketing team has developed a low cost provider strategy in order to attract customers while still providing excellent customer service. Food Lion wants to make shopping easy, fast, and affordable for customers. They do not want shopping to be a chore and for customers to enjoy coming to our stores. Food Lion has many different levels of management to keep in check different departments and to ensure the store is run smoothly. The executive committee manages the board of directors and can make some authority decisions for the company. Human resources for Food Lion hire employees and make sure they receive the correct benefits and training. Human resource management has recently implemented a new training system to help deliver the expected great customer service. The systems developments for Food Lion has enhanced their resources and enabled to have a top of the line automatic ordering system. This allows them to accurately order products and to reduce errors that an employee might make. Food lion has recently acquired new computers and registers to help enhance a customer’s shopping experience. They make sure that Food Lion stays competitive in the supermarket industry by maintaining an overall low cost strategy. The research department created surveys to help better understand what’s most important when shopping at a grocery store. The way Food Lion packages their products helps reduce waste and enables the consumer to dispose of it properly and safely. ConclusionFood Lion was founded as Food Town and they wanted to provide lost cost products with great customer service. Over the years they have moved away from this strategy and have just now started to get back to their roots. If Food Lion continues to implement an overall low cost provider strategy while also offering quality products, with great customer service they will continue to flourish. Remolding all the stores and changing the experience customers get when they shop at Food Lion will be instrumental. This will help differentiate themselves from other supermarkets and will give customers a reason to shop there. They want to make shopping easy, fast, and affordable while making shopping fun and not a chore. Food Lion also needs to monitor food laws and regulations as they are a major impact in this industry. A new law or regulation could impact not only Food Lion but the supermarket industry as a whole. I recommend that Food Lion continues to head in this direction and continue to improve in areas that they have realized are weak. After Food Lion had its grand reopening last week customers have expressed their approval and satisfaction to the changes that Food Lion has implemented. If Food Lion continues this strategy I could see them as one of the top supermarkets to shop at in the country. Food Lion needs to also watch the rivalry with Wal-mart since they are opening their own version of grocery stores. Wal-Mart has a similar strategy buy being a low cost provider and they can take away some of the market share from Food Lion when they open these stores. They can expand their region locations in the future when time permits. Food lion needs to make steps is in place to ensure that they retain their strategy and do not go back to old habits. Being the low cost provider is what made them so profitable back in 1957 and they need to make sure that they do not sway away from their strategy that has worked so well. ReferencesSustainability Progress Report. (2012, November 16). Retrieved November 10, 2014, from Food Lion. (n.d.). Retrieved November 10, 2014, from ................
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