Lowe's Inc. Strategic Initiative

Businesses such as Lowe’s Inc. rely on the “capital budget process” or that which is referred to as “strategic planning” (Keown, et al. 2005). The Chief Executive Officer is the corporate officer who is usually responsible for administering corporate strategic planning, financial planning or the company’s cash flow (Keown, et al., 2005). Part of the strategy of Lowe’s Inc. being a successful business, considering the current economic downturn is the company’s belief that the “key to success in difficult economic times is a focus on what you can control” (Lowe’s 2008). The company’s pledge includes the ideology that “regardless of the expansion or contraction of the industry, Lowe’s will continue to work diligently to drive sales and capture profitable market share (Lowe’s Inc., 2008.)” The company further acknowledges that the economic recovery is contingent unknown factors therefore the plans that the company will implement to build the business will be conservative. Lowe’s capital budgeting process includes review of (1) Merchandising Strategy (2) Merchandise Selection (3) Marketing and Advertising (4) Real Estate Approach (5) New Stores and (6) New Formants.
Reviewing how the company would approach 2009 Lowe’s analyzed the internal factors that impacted the success of the company (Lowe’s, Inc, 2008.) Lowe’s had to develop a profitable project (Keown, et al.), to create new business and attract sales and new business. The company reviewed the financial statements and inventory. After a review of the product demand for certain merchandise by Lowe’s customers, management developed a method of disposing of the merchandise that was not selling as well as others. The aggressive merchandise markdowns pressured gross margin in the fourth quarter of 2008 (Lowe’s Inc., 2008), but improved the company’s inventory position heading into 2009 (Lowe’s Inc.). The “results were positive and the first quarter 2009 gross margin” indicated a slight recovery (Lowe’s, Inc.)