- Executive summary
- Issues and outlook profile
- External environment and competitors
- Applying Porter's five forces model
- Analysis of the organization
- Value chain analysis
- Core competencies
- Strengths and weaknesses
- Development of strategic alternatives and options
- Organization's current strategy
- Strategy recommendations
- Evaluation of recommendations and strategic choices
- Strategic implementation and control mechanism
Home Depot is the largest retailer in the home improvement industry with more than 2,100 stores. The company was started in 1979 by Bernie Marcus and Arthur Blank. Within these stores, they offer a large array of home improvement products. By selling at continually low prices, they are able to gain a competitive advantage over many companies in their industry. In 2006, Home Depot recorded $81.5 billion of revenue, which makes them the second largest retailer in the United States.In the past and the present Home Depot has had a number of issues that have affected the company’s performance. The first problem is how the home buying market controls the need for building supplies. Another key issue is that the company has experienced troubles with their tough competitive environment in the past five years. Not only has the company been experiencing added pressure from external sources, but there have also been a number of issues that have plagued their internal environment, such as their past CEO, Bob Nardelli.Home Depot’s external environment has affected them both positively and negatively. Some opportunities Home Depot has been given would be the growth of their e-commerce sector, global expansion and add new product lines to the stores. However, they have also encountered some treats from their external environment such as home improvement products being sold online directly to consumers and the increase of strong competition. New entrants to the home improvement industry does not pose a big threat on Home Depot; yet, rivalry is strong amongst existing competition.Home Depot’s internal environment has also affected them. They have all but perfected their primary and support functions in their value chain. Nevertheless, they are consistently rated above their competition in sales and logistics. However, Home depot needs to improvement in their sales force and human resources.
The company core competencies have been strong. Since home depot was first in the market they have held a sustainable market share through the industry over the years. They have done this by keeping cost manageable while adding value to their products. Some internal strengths seen in Home Depot are their superior competitive advantage, their differentiation and focus strategy and their knowledgeable workforce. Their weaknesses would include: having all of there investments in one industry, lack of senior management and by not using their highly trained employees as much as they should.
Home Depot’s current strategy is a combination strategy, which has proven to be successful thus far. We believe that Home Depot may benefit from researching into other strategies. Some suggestions we made were to implement an unrelated in-store diversification, strategic alliance or by leverage their core competencies.
[...] The entity is comprised of six different companies; Home Depot Stores, EXPO Design Centers, HD Supply, Home Depot Landscape Supply, Home Depot Mexico, and Home Depot Canada. Home Depot has begun globalization and differentiation through the many companies that it operates. In addition to the separate companies, Home Depot operates a successful online storefront that offers many product lines that are not even available in their stores. Home Depot has many advantages over its competition. First and foremost, they have the largest portion of market share in the industry. [...]
[...] As we said again we feel that Home Depot should not wait for the competition to make a move, because it might be too late to capture some of the market share if they were a laggard Strategic Implementation and Control Mechanism An efficient and strong action plan is needed to implement the recommended strategy into Home Depot’s business plan. Major steps to implement the strategy can be summarized as follows: A careful development of plans and priorities is needed to implement and make the process successful. [...]
[...] As you can see, forming this type of relationship would be very beneficial to the Home Depot and would be a great way to alleviate some of the company’s reliance on the housing industry. Not only would this be a positive for Home Depot as a company, but it would be a fairly easy sell to the other party involved. Basically, every larger retailer has a proven blue print that works best and is used for building all of their new stores. [...]