Study questions about Lola readings

Answer

• Lola's Market: Capturing a New Generation

  1. What are the strategically relevant components of the U.S. supermarket industry macro-environment?

  Macro-environment factors in business settings refer to elements outside a single organization that affect its operation. Therefore, a company does not have control over these factors, or if they have any, it is insignificant. In the United States, the supermarket industry's macro-environment is expansive, and is influenced by six factors that comprise of;

  • Economic factors: Include economic policies and the behavior of the country's economic             practices, which influences clients' bargaining power.
  • Political facts: Focus on the political environment of the nation. Ideally, political   stability may encourage an increase in supermarket activity as many people move           around freely to shop.
  • Technological factors:  Include advances in technology that influence customer access    to supermarkets, especially in emerging online stores.
  • Socio-cultural factors: Focus on the culture of the people. In this regard, specific social    practices may encourage shopping in supermarkets while others may not.
  • Legal factors: Include requirements for supermarkets to operate as well as licensing of     their activities. Complex licensing procedures may halt the growth of          supermarkets.
  • Environmental factors: Focuses on elements that impact the surrounding. Primarily,        supermarkets should minimize environmental pollution.
  2. What is competition like in the supermarket industry? Which of the five competitive forces is strongest? Which is or are the weakest? What competitive forces seem to have the greatest effect on industry attractiveness and the potential profitability of new entrants?

  Competition in the United States' supermarket industry is very stiff. Consequently, new entrants without proper positioning strategies and differentiated models get forced out of the industry. The strongest force is the industry's competitive rivalry, where each supermarket is committed to trying to knock-out its competitors. As such, there are various mergers and takeovers. Since competition strategies sometimes involve price wars, significant players are the market leaders as they can compete favorably by utilizing their economies of scale advantage. The environment reduces the threat of new entry as new players do not affect the underlying market conditions. Moreover, the high level of competitiveness in the sector disadvantages new entrants.  However, customers have high bargaining power. As such, the industry often looks attractive to new entrants as they hope for high profitability once they can influence and attract customers.

  3. What does your strategic group map of the supermarket industry look like? Is Lola's Market well positioned? Why or why or why not?

  My strategic group map of the U.S. supermarket industry will center on analyzing competitors based on five main considerations. The considerations will comprise of;

  • Direct and indirect competitors as a means of determining those players that an entity should be worried about and those not.
  • Competitors’ marketing strategies to understand the useful techniques they use to acquire customers.
  • Competitors pricing strategies to help understand price leaders in the market while also comprehending the impact of price on consumer behaviors.
  • Competitors positioning strategies to evaluate rivals’ competitive advantages.
  • Quality of competitor's goods and services to help understand how they influence consumer choices and purchasing behaviors.

  Based on these considerations, Lola's market is not positioned properly as it has not considered any of the positioning strategies utilized by competitors.  Notably, Lola's competitors are utilizing technology extensively as a means of attracting new clients who are technology savvy. However, on the other hand, Lola only utilizes traditional marketing techniques.

  4. What do you see as the key drivers of change in the U.S. supermarket industry?

  The U.S. supermarket industry is being reshaped by three main factors. In this regard, technology is the leading agent of change. Notably, technology is pushing many supermarkets online since it is emerging as the new marketplace. As such, there is an acceleration of e-commerce shopping by various supermarkets. One main reason for the need for online presence is the ability to access more shoppers than relying entirely on in-store sales.  Moreover, online presence helps increase customer engagement.

  Another change agent in the U.S. supermarket sector is the introduction of restaurants as part of supermarkets. Ideally, many supermarkets now have fast food sections that serve clients either as they shop or those who would want a fast meal.

  Lastly, the increasing popularity of multichannel shopping reduces the perspective that supermarkets are the primary stores, and is also an agent of change. As such, most supermarkets are abolishing the conventional models as they push to have many channels instead of a single entity.

  5. What key factors may determine the success of Lola's Markets?
  1. Repositioning strategies.

   Lola can reposition appropriately to capture millennial shoppers.  Ideally, Lola risks losing its footing by holding on to its traditional model. Even as the owner recognizes, engaging the millennials in the language they most understand, such as social media, is the key to keeping Lola successful in the long run.

  1. Competitive advantage strategies.

  This involves determining Lola’s next business strategy. Ideally, Lola should consider developing various transient competitive advantages rooted in short term business strategies. The approach will make Lola flexible, and hence prevent it from falling into traps of failing to recognize change and adapt accordingly.

  6. What recommendations would you make to David Ortega to improve Lola's Market's competitiveness in the market while mitigating any current and future risks?

  The first recommendation is for David Ortega to reposition Lola's market business strategy using change management approaches that will respond to new threats from competitors while also considering the long term future of the business.

  The second recommendation should be adopting competitive advantage strategies that can offer them an edge over their competitors. The suggested approach could be a differentiation strategy which will help them provide unique product offerings, while realizing significant profits at the market defined by the equilibrium price.

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