GUIDANCE TO STUDENTS: You will find the Lidl UK 2015 annual report and financial statements for 2015 and statements relating to their core purpose and values on the following link:
http://www.lidl.co.uk/en/8413.htm
The purpose of the assignment is to apply the managerial economic concepts and techniques of the module to the analysis of the retail industry and on the operations and strategies of one of its leading players. There is a wealth of material on Lidl, its main competitors and the retail industry on the internet. The issues raised by the Lidl annual report will require you to examine the following:
• Demand and supply conditions
• Competitive strategies-pricing and non-price competition
• Price elasticities of demand and supply
• Market structure
• Porters five forces and competitors analysis
• The role of ethics in economic decision making
• Uncertainty and its impact on strategy formulation
TASKS:
Q1: The Lidl UK financial statements for 2015 refer to the company’s principles as follows:
‘’As a retailer we value the continued trust placed in our company and our products. Our commitment to our core principles of simplicity and customer focus together with responsible use of natural resources and respectful relations with our customers, employees and business partners is key to our success as a business’’.
Critically evaluate the significance of such extensive and inclusive value statement in determining the competitive advantage enjoyed by Lidl in the United Kingdom supermarket industry (25%)
Q2: Assess the attractiveness of the UK supermarket industry and Lidl’s current competitive position. (50%)
Q3: Given the changes currently taking place in the UK supermarket industry what strategies would you like to recommend to Board of Lidl in order to improve their profitability and image in the public (25%)
Notes from me:
Q1: This question refers to the objective of Lidl (Profit Maximisation).. Please reference relevant theories like the 3 below (please focus on Williamson theory)… Lidl introduced Living wage – above minimum salary..These things increase the cost structure of Lidl therefore is against profit maximisation..Butis this profit maximising for the long term?! What is the view of the shareholders?and what business strategy managers are perusing? Please reconcile relevant theories&business strategy of Lidl with profit maximising and satisfying behaviour.
1) William Baumol – sales maximization
2) Oliver Williamson – management utility maximisation
3) Herbert Simon – satisfying behaviour
Q2: Porters 5 forces analysis is needed here (Please put Porters 5 forcers on appendix) and elaborate on the main part..Please elaborate about risk and uncertainty.. Can they collude? Any ethical dilemmas?
Analysis on the main part should also include an analysis on the oligopolistic market structure of supermarket (with evidence). Current competitive position, innovation, differentiation, market share, price wars, growth, business model (eg in city centre locations), target market, they have their own labels (they benefit from economies of scale), smaller than Tesco, very competitive after the recession etc could be included..
Q3: Consumers are changing their behaviours (Price sensitivity)… Rice of the internet (massive big stores are not needed anymore because everyone is shopping online now and Lidl must build a platform for online shopping).. Continue to differentiate and therefore decrease the chances of newcomers to join the industry (maintain their position somehow by reinventing their image).. Some ideas
Please split words accordingly (Eg Q1 700 – Q2 1400 – Q3 700)
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