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The Loewen Group Case Study

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Memo

Peter Aybar

Pepperdine University


The Loewen Group Inc.

Date: 6/9/2019

To: Chief Executive Officer

From: Strategic Manager - Peter Aybar

Subject: $43 per Share Recommendation

Loewen Group Inc. has been recognized among the leading funeral services centers for quite a long time. Besides, the Corporation has been performing well in this service despite the stiff competition in the industry ("The Loewen Group Inc. - Company Profile, Information, Business Description, History, Background Information on The Loewen Group Inc.", 2019). At this point of operation, it is essential to acknowledge the investors’ return on investment at this point as a mechanism to attract more investors to allow business expansion to new markets across North America continent. I, therefore, recommend the $43 per share capital move to attract more investor to the corporation. As a strategist, I have identified a series of fundamental tools that are essential in justifying the business performance. These business performance tools measure the internal and external performance of the firm.

First, Michael five porter’s forces is a powerful analysis tool that aids in understanding the competitive aspect of the business environment and the potential profitability index. Thus, this strategic business tool objectively analyses the forces in the surrounding the business that could alter the profitability value. In this case, this tool critically examines five essential components on competitive rivalry, bargaining power of the suppliers, the bargaining power of the buyers, threats of substitution, and the threat of new entry. For instance, Loewen Corporation is recognized as the second largest funeral service providers after Service Corporation International. It is enjoying a competitive advantage in North America with different services at the choice of the clients. In this case, the company offers a wide range of services and funeral arrangements such as embalming, chapel, music, caskets, and burial plots. Therefore, this has increased the number of loyal customers in case of death in the future. Secondly, the power of suppliers’ analysis is another crucial proponent that has led to the success of Loewen Group Inc. For instances, the casket suppliers depend on the Loewen Group Inc. as their buyers. Therefore, Loewen Group Inc. has a more significant impact on dictating the prices of caskets due to several suppliers available in the market. In this case, the corporation can acquire caskets at a lower price and determine a price to clients. Thirdly, Leowen Group Inc. bargaining power of buyers is lower due to the wide range of services. Thus this attracts more customers to the services as the death rate is increasing on daily. The threat of substitution presents is low since the customers prefer unique and broad scope of services. This translate to higher profit margin since Loewen Group the number one funeral service. Finally, a threat to new entry is high since the industry is highly fragmented several opportunities are available in the funeral service industry. In this case, several investors are attracted to the industry.  Loewen Group Inc. has a broad scope of services and a well-established market share in North America.

The second, PESTEL analysis presents the political, economic, social, technological, environmental, and legal factors surrounding the business. The business is enjoying political stability in North America under a regulated environment of licensing of the services. The economic factors have positively supported the company with an increasing number of clients in North America. The Loewen Group Inc. social factors accommodate different clients’ beliefs, and cultural values such as the tradition services, simple services, and cremations. The technological factors present the efficiency of managerial functions of the corporation. In this case, Loeweon Group Inc. has a systematic approach to its services from the funeral home inquiries and the funerals arrangements. The environmental factor of the corporation entails the ethical sustainability of the business. In this aspect, Loewen Group Inc. has raised environmental concerns with the increasing populations and immigration. Cremation service projection has increased from 41% since 2007. The legal factors entail the legal rules which govern the funeral service industry. The government regulation comprises of licensing of interment services.

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