Kroger Company Case Study
The business had grown by this time in capacity and sales. It had forty stores and an average of $1. 75 million in sales annually. It was the first grocery store to have a bakery and a grocery under one roof. Additionally, the store introduced the butchery business in addition to the grocery and the bakery. Fred Meyer superstores dealt in jewelry and other general merchandise. The company continued its acquisitions with some stores operating under their former names. They include Dillions, Food-4-Less, and King Soopers, among others. With the acquisitions, the company continued to include other businesses like pharmaceuticals and gas stations. The company’s success can be traced to Mr. Situational Analysis SWOT Analysis Strengths The Kroger Company has a large market share due to the different stores it has across the United States and other continents.
At the same time, the company is also a reputable brand and sells diverse products and services. The management structure of the company is also a strength that ensures its success. Considering the strengths, the Kroger Company can increase its sales and its overall performance. The market share for the company covers 34 states in 49 markets. The customers have the advantage of carrying out a one-stop shopping under one roof. Any products that the consumers need are available in one store, making it easy to meet their needs effectively. This not only makes the company the largest in the United States, but also the customers’ favorite. Weaknesses Despite the stated strengths, the Kroger Company faces some weaknesses like high debt levels and deflation of food prices.
Additionally, being a food industry, it faces the risk of possible food contamination during its manufacturing. Opportunities The Kroger Company’s opportunities can enable it to increase the company’s asset base if exploited maximally. For instance, the developments in the financial market made it possible for the company to explore the ability to provide insurance for pets. Additionally, the program intends to provide financial services including but not limited to products like debit cards, credit cards, and reloaded debit cards. At the same time, customers also benefit from credit monitoring services as well as money transfer services and identity theft protection. The company has also taken on E-Commerce as it provides the possibility to reach more customers online that makes it possible for them to access different products in its stores.
For instance, Wal-Mart has seen an increase in revenue from food products, posing competition to the company. The advantage that Wal-Mat has as a competition is the economies of scale and the extensive reach to customers. Its popularity makes it difficult for Kroger Company to experience deeper market penetration. At the same time, there are other established companies such as Amazon that is getting into the grocery business, affecting Kroger Company’s market share. Apart from growing competition, there are economic factors that are likely to affect Kroger company. Research and development can also help Kroger Company to build capacities that would discourage new entrants from joining the industry. The bargaining power of suppliers is also a factor that can influence the performance of Kroger Company.
The company buys raw materials from many different suppliers. Dominant suppliers in the industry can reduce the profit margins of the Kroger Company in the market. This is because they use their negotiating power to supply raw materials at higher prices in the grocery field industry. This will also enable the company to streamline the sales and production process of the company. Rapid innovation can also limit the seeking of discounts on established products and reduce defection of customers to purchasing alternative products. With the Kroger Company’s large customer base, it is possible to reduce the bargaining power of buyers while streamlining the sales and production process. At the same time, continuous innovation to the products and services discourages customers from seeking discounts unlike if the products remain the same over a long period.
Additionally, having new products will help the company retain its customers as they will not need to defect to other companies to look for better products. International Performance The company’s international performance is also dependent on prevailing cultural conditions, political stability, and economic stability. With the main purpose of feeding the human spirit, the Kroger Company serves over nine million customers spread across different states. The company offers digital shopping experience. The supplier base is international due to the products manufactured. Foreign currency influences the company’s performance due to the rising of the US Dollar against other global currencies. The earnings per share were 39 cents and same-store sales increased by 0. 7 percent, up from the expected growth of o. 4 percent.
In the second quarter, the sales increased by 3. 9 percent. At the same time, the Restock Kroger plan enables the company to provide customer-related services that increase shareholder value. In this plan, the company intends to redefine customer experience, expand partnership, develop talent, and fulfil the purpose of the company. The success of these pillars increases the investor confidence in the company. In redefining food and grocery customer experience, the company has increased its digital and e-commerce. The company uses customer data to give personalized experience to create a great brand portfolio. The board of directors should remain to oversee the overall management of the organization. However, there should be executive vice presidents to oversee the operations of the different stores owned by the company.
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