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Economic and Finance Institute

Strategic ManagementYin ChhengSorn

The Loewen Group INCGroup 01: Preap Veasna Kao Ly HourSun Sokunthea Sao Sokha

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STRATEGIC MANAGEMENT

The Loewen Group INC

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Content Literature Review Introduction Histories The ways to run Business Division Organization Business Process

Business Obstacles Solutions Conclusion Suggestions

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LITERATURE REVIEW

Strategy is a plan of action designed to

achieve the vision.

Strategic planning is an

organization's process of defining its

strategy, or direction, and making

decisions on allocating its resources to

pursue this strategy.

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What is Management ?

Management is the act of getting

people together to accomplish

desired goals and objectives using

available resources efficiently and

effectively.

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Strategic Management

The Art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.

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Introduction Funeral industry has been one of

tradition, representing a mixture of religion and business.

Most people a funeral has a religious dimension. The body is placed into its eternal resting-place and the soul is released into the hereafter as defined by the religious beliefs of the deceased.

Traditional religious ceremonies have helped add stability to the industry by faith’s final rite can be administered .

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Histories 1985 Loewen Group was found in Vancouver, Canada by Raymond Loewen.

1987 Loewen was purchase first funeral home in the

United State. Dec 2, 1999 Paul Houston was named president and

CEO Currently the Loewen Group own or operate more

than 1,100 funeral home and more than 400 cemeteries, employing approximately 13,000 people across the U.S, Canada, and United Kingdom.

90% of total revenue is from U.S operation . While the company’s operations had grown

substantially, its profitability and stock price.

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The ways to run Business

Organization Divisions

President and CEO

Funeral Service Division

Cemetery Division

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The ways to run Business Cont’

President and CEO: Control all of the business process and make sure all of the stock price of Loewen Group INC is higher.

Funeral Service Division: Direct the operation of the company are many funeral homes across the U.S and Canada. A typical home contains a funeral chapel, reposing room, rest rooms, and a show room for casket and other items.

Cemetery Division: Assist the family in making a burial arrangements and offers a complete lines of cemetery products, the opening and closing of graves, and cremation services.

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Funeral homes in U.S.

Cemeteries

The ways to run Business Cont’

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The ways to run Business

Business Process:

“ Gentlemen's Agreement” within the industry to

not compete on the basis of price or to even shop

for lower prices.

XROADS, a website critical of the funeral

industry, has conducted research into the funeral

industry, especially its pricing strategy.

XROADS argues that there are five to ten times

as many funeral home nationally as are needed.

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The ways to run Business cont’

In 1997, there were over 2 million deaths in the United States with 22,000 funeral home are handle the service.

This means that the average funeral home handled less than two funerals per week. While some funeral home may do 1,000 or more funerals per year, others will have fewer than 30 funerals annually.

XROADS argues that high volume homes could charge half to one-third of the going rate and still make a reasonable profit

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Business Obstacles

Competition:

There are 2 potential Competitors in

Funeral Industry with Loewen INC Group.

1. Service Corporation International

( Service Corp Int’l or SCI )

2. Stewart Enterprises

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Business Obstacles

1. Service Corp. Int’l:

SCI is the largest funeral service provider in the

world. SCI is considered the original consolidator in

the funeral industry.

It operated 3,442 funeral homes, 433 cemeteries,

and 191 cremation in 20 countries and on five

continents in 1998.

Funeral as counted for 63% of revenues in 1998

with a gross profit margin of 21%. The cemetery

division had a 36%gross profit margin for the same

year.

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During the mid-90s, SCI spent $1 billion

buying foreign funeral homes. It was able

to gain the number one or number two

position in France, the U.K and Australia.

The company hopes to expand product and

service offerings to increase the operating

margins in many of its foreign markets.

Business Obstacles

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Business Obstacles

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Business Obstacles

2. Stewart Enterprises (NASDAQ-STEI)

Stewart Enterprises is based in New Orleans. It

is the third large provider of death care planning

and delivery services.

It has 575 funeral homes and 143 cemeteries

operating in 29 states, Puerto Rico, Mexico,

Australia, New Zealand, Canada, Portugal, the

Netherlands, France, Belgium, and Argentina.

The firm operates largely in the Mid west and West

Coast although international activity is expected

to increase.

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Business Obstacles

The company believes the prearranged

funerals represent a backlog of future

business for its products and services,

building current and future market share.

Funeral operations accounted for 58% of

1998 revenues with most of the remainder

coming from cemetery operations.

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Business Obstacles

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Business Obstacles

The Loewen Group The Loewen Group (NYSE-LWN) is the second largest

funeral home and cemetery operator in North America.

The British Columbia-based firm receives about 90% of its

revenue from its U.S operations.

It is the least active of the Big Three funeral services

companies in operation outside of the U.S and Canada.

The company is active in the provision of funeral services,

products, and cemetery operations, as are its major

competitors.

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Business Obstacles

Funeral services and products have

accounted for 56, 54, and 60% of revenues

in 1998, 1997, and 1996, respectively.

Cemetery operations as a percent of revenue have counted for 36, 38, and 31% of revenues for the same time period. The balance of revenues is from the company’s insurance operations.

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Business Obstacles

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Solutions Acquisition strategy:

Loewen acquired $1.4 billion of 351 funeral homes

and 300 cemeteries of other companies during 1996.

In 1997 had spent $546 million to acquire 138

funeral homes and 171 cemeteries.

and $500 million in 1998.

Centralize administrative function: by closing

some offices and moving those operations to

Burnaby headquarters.

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Conclusion

In early of 1999, the Loewen’s stock price went from

$35.75 to $5.125 per share.

On June 1, 1999, the company filed for Chapter 11

bankruptcy protection in the U.S. and creditor protection

in Canada.

On August 10, 1999, the company was notified by New

York Stock Exchange that its stock had failed to attain a

minimum share price of $1 over a 30-day trading period.

Finally to save the company, Paul Houston was selected

by BOD to replace Lungren as President and CEO.

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Suggestion Preplanning: Preplanning allows survivors to

avoid the stress and uncertainty of fulfilling the

wishes of the deceased after their death. It was

allows families to discuss their many options and

expectations of the potential customer.

Clustering the funeral homes and cemeteries

service together for increasing demands

Acquisition strategy is not suggested.

THANKS FOR YOUR ATTENTIONS!

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