Lowe’s: a Structural Analysis Essay

Custom Student Mr. Teacher ENG 1001-04 2 October 2016

Lowe’s: a Structural Analysis

Lowe’s was originally started in 1921 by Lucius S. Lowe in the town of North Wilkesboro, North Carolina and was called Lowe’s North Wilkesboro Hardware Store. The first version of Lowe’s had a different product mix that also included notions, dry goods, horse tack, snuff, produce, and groceries. This was when it was run by Lucius S. Lowe. The business was inherited by his daughter, Ruth, when Lucius died in 1940. She in turn sold the company to her brother James Lowe.

In that same year that Jim bought the store him and Ruth’s husband Carl Buchan served in World War II, during the war Ruth and her mother ran the store. After Carl was injured and honorably discharged in 1943 Jim took him on as a partner. Lowe’s was founded in 1946; Lowe’s has grown from a small hardware store to the second-largest home improvement retailer worldwide. This is when Carl Buchan took management over and the store started to focus primarily on hardware and building materials. Carl Buchan later bought-out his brother-in-law and partner, James Lowe, and foreseeing the post-World War II building boom.

By eliminating wholesalers and dealing directly with manufacturers, Lowe’s established a lasting reputation for low prices. Sales began to grow over time and additional Lowe’s stores opened in neighboring towns throughout western North Carolina. In 1960, Carl Buchan died of a heart attack at age 44. His five-man executive team, which included Robert Strickland and Leonard Herring, took the company public in 1961. By 1962 Lowe’s operated 21 stores and reported annual revenues of $32 million. In 1979, Lowe’s began trading on the New York Stock Exchange (NYSE:LOW).

During this time, U. S. housing starts soared and professional builders became Lowe’s loyal customers, accounting for the majority of Lowe’s business. In 1982, Lowe’s had its first billion-dollar sales year, earning a record profit of $25 million. Lowe’s stores then reported serving a new type of customer: do-it-yourself homeowners seeking to improve the value of their properties. Anticipating their needs while still accommodating contractors, Lowe’s began to enlarge its stores and expanded its merchandise offerings.

The modern Lowe’s began in 1994, when their new store expansion consisted of only large stores, which they defined as stores with greater than 85,000 square feet of selling space. Expansion continued as Lowe’s opened a new store on average every week with our 117,000-square-foot (117K) stores in the nation’s larger metro markets and our newer 94,000-square-foot (94K) stores in the nation’s small to mid-sized markets. Lowe’s opened its first stores in Canada in December 2007 and opened its first stores in Mexico in February 2010.

Lowe’s stores stock 40,000 products in 15 product categories ranging from appliances to tools, to paint, lumber and nursery products. Lowe’s has hundreds of thousands of products available by Special Order – offering everything customers need to build, maintain, beautify and enjoy their homes. Lowe’s operates more than 1,745 stores in the United States, Canada and Mexico. Lowe’s announced on August 25, 2009, that it had entered a joint venture with the Australian retailer Woolworths to enter the Australian market with 150 big box style superstores.

Trading under the brand Masters Home Improvement, the first store opened in Braybrook, Victoria, to tradesmen on August 31, 2011, and the general public on September 1, 2011. Today Lowe’s is the second largest home improvement retailer worldwide and the 7th largest retailer in the U. S. Although times have changed since Lowe’s first opened its doors in 1946, Lowe’s values have not – the company remains committed to offering quality home improvement products at the lowest prices, while delivering superior customer service. Lowe’s major competitors include Home Depot and Ace Hardware.

In a functional structure the company maintains a CEO with a small corporate staff along with managers in organizational areas such as production, accounting, marketing, R&D, engineering and human resources. Separating the organizational areas of a company allows for specialization in each functional area. However, this separation can have a negative effect as it makes communication between these areas more difficult. This is the type of structure that Lowe’s uses today. Lowe’s shows cost leadership by their low price guarantee, where they will beat any competitors price by 10% on any in stock product.

Lowe’s also uses a differentiation strategy to separate themselves from Home Depot by trying to appeal more to women, with the thought that women make most home design decisions. It is believed within the company that Lowe’s stores are cleaner and that their blue and red colors are more welcoming than Home Depot’s bold orange and black. They are also very customer focused by having “expert” employees who can give customers the knowledge needed to do projects themselves, shown by their “let’s build something together” advertisements. This is what helps to keep Lowe’s on top and a constant competitor.

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