External Factors
A. Natural Physical Environment: Sustainability Issues
1. Lowe’s decision to advance in domestic metropolitan areas brings up the concern of
urban spread. Limited space and destruction of natural habitats are some factors affecting Lowe’s
expansion. A future threat may be ensuring they are protecting any endangered habitats with
their expansion or ensuring they do not build on protected land. The natural environment offers
many opportunities to Lowe’s as long as they continue to preserve the resources they sell. An
example of this would be to ensure their lumber suppliers are being provided from companies
that are replanting after cultivating the raw product. Since lumber was the second highest sales
area for this study, ensuring reforestation would be essential in sustainability.
a) By evaluating their carbon footprint and electricity usage, Lowe’s could play a
significant role in keeping global climate change to a minimum. Significant global warming may
also affect sales pertaining to new insulation technology to air conditioners.
b) Severe storms will positively affect Lowe’s sales due to the need for reconstruction of
damaged homes. These events from Mother Nature will positively affect sales, but will
negatively affect the consumers.
2. Dependent on which part of the world Lowe’s decides to expand; significant weather
could play different roles on a particular store. In the Asian-pacific arena, tsunami may be the
largest threat to the area. Not only could it threaten the consumers and there homes, but the retail
store itself could take extensive damage from theses storms, if a store is opened near India, than
earthquakes may be the most significant danger associated with these forces.
B. Societal Environment
1. The economic downturn is probably the largest, and most important environmental
factor affecting Lowe’s for the current time.
a) With the crash of the housing market Lowe’s may be struggling to sell to contractors
due to the slow home sales in the nation. This associated with unemployment could cause the
retail outlet to possibly loose revenue if the market doesn’t make a turn for the better. (T)
b) The advancement of green technology will lead Lowe’s to offer products for the
average home owner to make green home improvements to save money. The advancement in
technology, such as high-efficiency appliances or low consumption products could lead the way
for the future of the technological environment. (O)
c) With new regulations requiring “cleaner” products and the taxation of numerous
environmental products, Lowe’s must regulate which products they choose to sell and evaluate to
what cost they will incur to sell these items. (T)
d) Since Lowe’s has elected to advance in the metropolitan areas the sociocultural aspect
will be a factor that Lowe’s could benefit from. With development in the area comes buying
surges for home improvements and home building. Even with home building in a recession, they
could still benefit from booming populations. (O)
External Factors
2. The only force that may have a drastic change would be the sociocultural change. Every
region will have its own needs, wants, and values that need to be addressed by local
management.
C. Task Environment
1. The largest force driving industry competition would be market performance and how it
affects the housing market. Stakeholders will also affect how Lowe’s handles business in the task
environment. Unemployment, recession, seasonal changes, and the stock market are just a few
factors that may affect competition. These forces should remain the same globally since each
retailer has one main goal, profit w/ customer satisfaction.
a) Threat of new entrants – Medium
b) Bargaining power of buyers – Medium
c) Threat of substitute products or services – Low
d) Bargaining power of suppliers - High
e) Rivalry among competing firms – Medium
f) Relative power of unions, governments, special interest groups, etc. - Medium
2. Home Depot remains the most competitive retailer for Lowe’s. With these two retail giants
marketing to the same customer demographic, if could become a threat to Lowe’s since Home
Depot stocks are lower. (T) Additionally, smaller hardware stores will also vie for the local
customers, this could be both a threat or opportunity, dependent on how uppermanagement
handles the local business owners. (T,O)
D. Summary of External Factors
External Factors
Weight
Rating
Weighted Score
Comments
Opportunities:
Green Technology
.20
4
0.8
Population Growth
.10
4.4
0.44
Upturn of Housing
Market
.20
3.5
0.7
.20
4.0
0.8
Green technology
still being
advanced
Stores can handle
these booms
Has already
proved itself w/
housing growth
Threats:
Home Depot
Must ensure
stakeholders are
won over
External Factors
Local Business
Owners
Economic
Downturn
“Green”
rules/regulations
Total Scores
.15
3.4
0.51
.10
4
0.4
.05
3.1
0.16
1.0
3.81
Keep in good faith,
no bullying
Must prepare for
the worse
Not many rules
established yet