Key Issues
The wake of global financial crisis led to many organizations to come up with strategies that would enable then to remain afloat. Many companies had to manage their expenditures, as well as moderate on related avenues that previously increase financial expenses. RONA could not comfortably withstand such emerging challenges without the help of other players. Additionally, it is also good to note that the presence of stiff competition from related market players contributed to fervidly seeking for a viable solution. Was the approach used during this period a success or a failure? What lessons can be learnt from such cases? Can the approach used be relied upon to propel the company to greater heights in the future? These are some of the fundamental questions that need to be responded to in the context of RONA.
Second, while other companies’ products were relatively rare in some given settings like in rural areas, RONA worked hard to utilize the rarity of related commodities by vehemently acquiring stores and other companies as part of its strategic expansion plan. It is noted that RONA’s stores are less than 30 minutes away, which captivates over 85 % of Canadian populace with innovatively rare products; thus no need to source for related products elsewhere. This shows high optimization of rarity stance.
Despite other related companies wanting to design their stores in similar manners as RONA, the novelty used in both the construction and interior redesign was unmatchable. This means that these companies could try as much as possible to accommodate the model used in RONA, but they would never quite match the level of acceptance of the position customers placed RONA’s modern display system. This shows that RONA had a moderate optimization level compared to other related players in the industry.
Fourth, in terms of substitutions, it is good to clarify that the market players offered seemingly similar products in the market thus it had a moderate optimization stance. For this course, RONA had to rely on strong unwavering customer care and installation system, unrivalled/ unparalleled in the industry. Finally, the ability for RONA to exploit these opportunities fervidly was a game changer since it offered the company a strong stance in the market allowing it to propel to greater heights even in the wake of the harsh reality of global financial crisis.
External analysis
The availability of Porter’s 5 forces model for company position analysis is a rich arena enabling companies to know what areas to change. Porters 5 forces consists of five aspects that need consideration. The first is the threat of new entrants. To a great extent, the new entrants in the market like Kent and Lowe’s Canada is significantly small. Better exemplification of this stance will be seen during financial analysis shortly coming below. New entrants do not seem to make such significant threats as would be perceived. However, the progress of Kent is one that needs keener interest since it is apparent that its adamancy in the market domain and continued sales even in the wake of global financial crisis is admissibly a source of concern. In general, the level of threat was moderate since it has established itself in the country.
Second, the greatest challenge that RONA is facing is the threat of substitutes. It is apparent that the available substitutes in the market, like those offered by ‘The Home Depot Canada’, seem to be stealing its market share. In sales comparison, it is clear that this challenger attains over twice what RONA sells within the same period. However, financial analysis points to the fact that global financial crisis causes a massive dent in this rival than it does to RONA’s position. The level of challenge in this category is also moderate as will be seen in financial position where RONA has superior position over rivals.
Third, in terms of threat emanating from rivalry, it is admissible that, cumulatively, rivalry exists in the market. However, RONA has been able to invest in acquisitions such that over 85 % of Canadian populace is less than thirty minutes off RONA stores. There is stiff/ high rivalry from The Home Depot Canada.
Fourth, the emergence of global financial recession led to decline in buyer power. It is apparent that this recession stance led to numerous companies having to lay off a substantial number of its employees to remain afloat through the crisis. This led to a decline in buyer power; thus calling for RONA and related companies to make serious changes in the market prices and approaches to make sales. Sales figures from financial analysis confirm these ideals since there was a ditch in major competitors although junior competitors seemed to thrive during this season. To RONA, the challenge was actually low as reflected in sales and revenue collection.
Finally, it is vital to note the contribution that supplier power has in the market. For example, while RONA malingered with innovative approaches, its rival The Home Depot Canada was a subsidiary of a FORTUNE 500 company thus drawing vast financial stream from its mother company in case of financial challenges. Suppliers posed a grave danger with The Home Depot Canada showing the greatest challenge since it has vast financial backing.
Alternatives Recommendations
Pros
It is imperative for RONA to come up with an inclusive decision-making framework that encompasses employee and customer ideas into the equation. With such a vast employee base, it is admirable to note that there may be novel ideologies that can be tapped and harnessed in that body of employee.
It is better if RONA came up with products that are for its premium clientele as well as those that live on the edge such that the market can find something useful in its stores they can afford. As such, RONA will be able to bridge the gap between the poor and the rich by providing a perceptible interactive arena. Perception change will lead to increase in sales and optimization of its vast distribution channel will aid in acquisition of more market share.
Cons
Some companies offer products set for a certain class of individuals. This might segregate conservative customer base although the impact is not expected to be significant.
Financial analysis
An eight-year sales trend comparison shows that The Home Depot Canada is the market leader. However, change in the market and buyer power seems to challenge its sales volume stance more than any other competitor. Similar results are recorded in the case of RONA, but the ditch is not as deep as in the case of The Home Depot Canada.
In terms of revenue collection, it is admirable that RONA seems to outplay The Home Depot Canada; a rather confusing stance. The reason for this confusion is in the fact that, The Home Depot Canada has higher sales figures as shown earlier, yet their revenue collection is significantly lower than that of RONA. From revenue collection, it is emergent that other players like Home Hardware Stores and Canadian Tire Corporation have significant revenue base although it is admissible that RONA leads in revenue collection for the two years in comparison during global recession.
A quick look at the market share shows that RONA has a higher market share at 16 % followed by The Home Depot Canada at 14 %, while Canadian Tire Corp. and Home Hardware tie at 12 %. It is admirable, the spirit of RONA in the market, being able to beat The Home Depot Canada in the market despite the latter having a vast financial stream from the mother company. The main reason for its ability to influence the market to such an extent is admissibly good.
It is essential for RONA to adopt a new implementation strategy for its strategic package for the remaining 24 months. To start with, the company needs to treat the implementation as a project rather than a process. As such, an implementation project team needs to be put in place such that there is addressing of all facets of a project that include, but not limited to; utilization of implementation timelines like Gantt charts, WBS schedules, and financial budgetary and disbursement committee so as to ensure smooth integration into the current system with minimal unwarranted interruption of the current system. In so doing, the top management will have achieved several positions. First, since this will include a set of employees taking an active role in change management and implementation processes, it is admirable that their contribution in edifying the company’s decision-platform will be assured. Second, the management can focus on other aspects of running the organization while offering support to the implementation team. Finally, the management will be an active partaker of change management as implemented by its valuable employee team.
