Supervalu, Inc. Strategic Management

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free offerings and taste testing will help them determine if it’s the right or wrong product to produce.

Threat – Increasing Price of Operating a Business

With this bad economy, prices on everything have increased. Fuel has increase for transportation, wages for employees has increase, and supplies for maintenance have increase and so much more. Supervalu is lowering its expenditures to save and pay off some debt. But the debt only seems to increase. They have to learn to adapt to the economic price change and come up with new and more aggressive strategy to stop on top.

Company Change Analysis

In accordance with the Donahue Graduate Business School’s Code of Ethical Behavior, I attest that I have not engaged in any acts of plagiarism or other unethical behavior in completing this assignment.

Table of Contents

Company Overview | | 2 |

| Summary | 2 |

| Mission and Values | 2 |

| Store Locations and Size | 3 |

| Financial Snapshot | 4 |

| Global Socrates KLD Report Highlights | 5 |

Analysis | | 6 |

| Defining Change | 6 |

| Top 5 Change Indicators | 8 |

| Analysis of Initiatives | 9 |

Strategic Recommendations | | 12 |

Company Overview

Summary

Supervalu has been a participant in the grocery retail and supply chain industry for more than 140 years. Through the establishment of 1,114 traditional retail stores, 1,280 hard-discount stores, and 2,700 independent locations serviced by its Independent Business Segment, Supervalu has been able to target millions of customers who are looking to shop in traditional, premium, or hard-discounted stores. In addition, of the 1,114 traditional stores and 1,280 hard-discount stores, 805 in-store pharmacies and 899 stores operated by licensed owners, respectively, also exist within the traditional and discounted stores. Supervalu offers all types of products including, but not limited to, farm-fresh fruits and vegetables, USDA-inspected beef, pork and poultry, and an assortment of general merchandise. In addition, Supervalu is a primary supplier to approximately 1,900 stores within its 2,700 independent locations serviced by its Independent Business Segment (Supervalu 2011 Fact Book).

Mission and Values

The mission statement of Supervalu is as followed: “We will provide America’s Neighborhoods with a superior grocery shopping experience enhanced by local expertise, national strength and a passion for our customers” (Mission Statement).

The values of Supervalu include:

* Standards – “We must understand, share and practice our business standards.”

* Integrity – “We must make decisions and act with integrity every day.”

* Passion – “We must have passion for our work.”

* Urgency – “We must react with urgency to our opportunities and problems.”

* Focus – “We must focus on well-defined objectives for success.”

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Store Locations and Size

Traditional retail stores owned by Supervalu are located throughout the United States and are mainly dispersed in the Northwest, West, and Midwest regions. Below is a map of where all of the traditional retail stores are located (Supervalu 2011 Fact Book).

As shown by the map, the traditional retail stores are titled under specific store names which include Jewel-Osco, Albertson’s, Shaw’s/Star Market, Acme, Farm Fresh, Shoppers Food & Pharmacy, Cub Foods, and Shop & Save (Supervalu 2011 Fact Book).

The hard-discount stores fall under the “Save-a-Lot” name and are located throughout the United States. Below is a map of where all discount stores are located.

As stated above, there are approximately 1,280 hard-discounted stores(Supervalu 2011 Fact Book).

As a supplier to all corporate owned retail stores and independently owned operations distributor centers are located throughout the Unites States. The distributor centers in total comprise of 20,846,000 square feet (Supervalu 2011 Fact Book).

In order to sustain quality and operate all traditional, hard-discounted, and independent stores, Supervalu employs approximately 140,000 employees.

Financial Snapshot

Below is a 5-year snap shot of the Supervalu’s financial performance (Supervalu 2011 Fact Book 24).

As shown above, Supervalu’s net sales have continually decreased since 2009. In addition, operating income was reported at a loss in 2011. As stated in the notes of the financials, the impairment costs, store closure costs, and retail market exits were some of the main cost drivers in 2011. The company must work to improve its financial performance by establishing a competitive advantage and taking corrective actions to increase sales and reduce costs.

Just as revenue and operating income has decreased over the past five years, the stock

price has also continually decreased. The chart to the left is a snapshot of the closing stock price from 2008 to 2012 (SUPERVALU INC.: NYSE:SVU Quotes & News - Google Finance). As noted, the stock price has continually decreased. | |

Global Socrates KLD Report Highlights

As rated by MSCI Inc., Supervalu has performed poorly in the following areas: employee management, employee safety, employee diversity, environmental impact, and product stewardship. “Although the majority of Supervalu’s employees are unionized, the company has a history of allowing union contracts to expire, and then employing union busting-tactics to reduce the number of unionized employees at its retailers” (Supervalu Inc. 1). In addition, the company has been involved with many lawsuits dealing with late or insufficient compensation and misclassification of its employees. Furthermore, the company has accrued significant penalties