The Home Depot Case Study

2007

HISTORY
April 14, 1978 - Bernie Marcus and Arthur
Blank were fired from Handy Man Home
Improvement Centers.
June 22, 1979 - The first Home Depot Stores
opened on Memorial Drive and Buford Highway
in Atlanta, GA.

HISTORY
1979-1980 - The first Home Depot Stores
opened.
- The first regularly scheduled product
knowledge training seminars began.

HISTORY
1988-1990 - The Home Depot was included in
S&Ps 500 stock index and became the largest
home improvement retailer.
1994-1997 acquired Aikenhead to create
Canadian division.
- Arthur Blank become CEO.

HISTORY
2000-2002 - Robert L. Nardelli was hired as
President and CEO.
- was the first major home
improvement
retailer to install self
checkouts.
-expanded into Mexico with the
acquisition of Del Norte.

HISTORY
2005-2007 - acquired 21 companies for its Home
Depot Supply and Home Services businesses.
- Frank Blake was elected chairman and CEO.

Home depot today

MISSION STATEMENT
To provide the highest level of
service, the broadest selection of
products and the most competitive
prices.

VISION STATEMENT
To create a company that would keep
alive the values that were important to
us. Values like respect among all people,
excellent customer service and giving
back to communities and society.

STATEMENT OF THE
PROBLEM
How can Home Depot improve its
core competencies to restore its
performance in the current
marketplace?

STATEMENT OF OBJECTIVES
1. To increase its current market share by
15% by the following year.
2. To reduce executive Turnover rate back to
0%.
3. To increase net income by 15%.

PORTERS FIVE FORCES ANALYSIS

A. Analysis of Existing Competitors ( HIGH )
- The industry of Home Improvement is one of very
fierce competition. Competitors have to consistently
fight over the market through innovations and unique
strategies.

PORTERS FIVE FORCES ANALYSIS

B. Analysis of Potential of New Entrants (LOW)
- The possibility of another firm entering the industry
is extremely unlikely. Competitors already dominated
the market which becomes extremely difficult for
anyone to establish a name without introducing
something unique to appeal to the market.

PORTERS FIVE FORCES ANALYSIS

C. Analysis of Substitute Product ( LOW )
- Home improvement products have almost no
existing threatening substitute in the market. The only
threat of a substitute in the industry are for the
services offered along with the products, which Home
Depot does not directly offer.

PORTERS FIVE FORCES ANALYSIS

D. Bargaining Power of Consumers ( HIGH )
- The customers are the driving factor for the
continued existence in the industry. It is no surprise
that they hold power over the industries prices,
revenue and marketing strategies

PORTERS FIVE FORCES ANALYSIS

E. Analysis of Suppliers ( LOW )
- Supliers have seldom direct contact to end users
and require the aid of retailers to generate profit. This
allows Home Depot , Lowes and Menards to control
contract terms and conditions especially since they
hold a vast percentage of the Market shares.

pestel ANALYSIS
Political Factor
Government spending and legislature
Home Depot. Political agendas may come in the
the government trying to increase GNP
globalization
or
increasing
infrastructure
government projects.

affects
form of
through
through

Economic Factor
Depending on the health of the economy, Home
Depots revenue sales may improve. If individual
customers spending capacity increases, they can spend
money on Home Improvement

STEEPLE ANALYSIS
Social Factor
Trends and customer preference affects Home
Depots market share. More and more customers prefer
High-quality products instead of cheap ones. Branding has
been a deciding factor for sales. Customers often prefer
certain brands.
Technological Factor
The exponential growth of technology can affect
Home Depot greatly, automated check outs, and state-ofthe-art materials can affect how much market Home
Depot can accommodate. Advertising their market
through the internet is also a possibility

STEEPLE ANALYSIS
Environmental Factor
Customers now prefer ecofriendly products, as well
as the growing environmental concern will force Home
Depot to adapt to this new market preference.

Legal Factor
Legalities, laws and regulations will affect how
Home Depot will approach the market, as those that
restrict their growth through acquisitions will make Home
Depot look for other strategies.

CPM
Home Depot
Competitive

Weigh

Profile matrix

Lowe's

Weight
Rating

ed

Weight
Rating

Score
Market Share

Menards

ed

Weight
Rating

Score

ed
Score

0.25

0.75

0.5

0.25

0.75

0.75

0.25

0.75

0.15

0.6

0.45

0.45

Loyalty

0.1

0.3

0.4

0.2

Total

3.65

3.6

2.65

Customer
Service
Price
Competitiven
ess
Supplier
Relations
Consumer

Financial Analysis

Financial analysis

Financial Analysis

Financial Analysis

Financial Analysis

Industry analysis

What is the product or service?

What function does it serve?
What are the channels of
distribution?

manufacturer

distributor

manufacturer

retailer

retailer

consumers

consumers

Industry analysis

What is the industry size in units

and in dollars? How fast is it
growing? Are products
differentiated? Are there high
exit barriers? Are there high fixed
costs?

Industry analysis

Who are the major competitors?

What are their market shares? Is
the industry consolidated or
fragmented?

Industry analysis

Who are the major customers to

the industry? Are they powerful?
What gives them power?

33

Industry analysis

Who are the major supplier? Are

they powerful? What gives them
power?

Industry analysis

Industry analysis

Do significant entry barriers exist? What

are they? Are they effective in protecting
existing competitors thus enhancing profit?

Industry analysis

Industry analysis

Are there any close substitutes for

industry products and services? Do they
provide pressure on prices charged in the
industry?

Industry analysis

What are the basic strategies of competitors?

Industry analysis

To what extent is the industry global?

Are there any apparent advantages to
being involved in more than one nation?

Industry analysis

Is the industry regulated? What

influence do regulations have on
industry competitiveness?

Alternative courses of action

SPACE Matrix
FINANCIAL POSITION ( Y )
STABILITY POSITION ( -Y )
Y-Axis coordinate

4
-2.33
1.67

INDUSTRY POSITION ( X )

4.5

COMPETITIVE POSITION ( -X )

-2.33

Y-Axis coordinate

2.17

Alternative courses of action

Alternative courses of action

Alternative courses of action

DECISION MATRIX

ACA # 3
Horizontal
Integration

ACA # 1 Market
Penetration

ACA # 2 Market
Development

Weighted
Score

Ratin
g

Weighted
Score

Ratin
g

Weighted
Score

Factor

Weight

Ratin
g

Ease of Implementation

25%

0.75

0.5

0.25

Impact to Company
Performance

25%

0.75

0.75

0.75

Market Share Increase

25%

0.5

0.75

0.75

Cost Effectiveness

15%

0.45

0.15

0.15

Globalization

10%

0.2

0.3

0.3

TOTAL

100%

2.65

2.45

2.2

Alternative courses of action

We recommend ACA #1 due to how easy we

can implement the strategy and how less
costs we can incur. There are very minimal
drawbacks for the strategy

Detailed action plan

TIME FRAME

DEPARTMENT

1ST week to 8th week

Board of Directors

7th week to 15th week

Top Management

14th week to 15th week

Finance Department

15th week to 23rd week

Marketing Department

24th week

Logistics Department

24th week to 32nd week

Human Resource
Department

32nd week to 40th week

Top Management

Thank you !