Home Depot Swot Analysis
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The Home Depot Case Analysis
“The Home Depot NYSE: HD, headquartered in Vinings, Georgia, is a home improvement retailer that aims for both the do-it-yourself consumer and the professional in home improvement and construction. It is the second largest retailer in the United States, behind Wal-Mart; and the third largest retailer in the world, behind Wal-Mart and French company Carrefour. The Home Depot operates about 1,900 stores across North America. The company operates stores in the United States (including the 50 states, Puerto Rico, the United States Virgin Islands), Canada, and Mexico. The Home Depot also operates EXPO Design Center stores in select U.S. markets, providing high-end home design products and services. Its 2004 sales totaled US $73.1 billion. It was ranked #13 on FORTUNE magazines FORTUNE 500 The Home Depot also owns a chain of higher-end home decorating and appliance stores. The Home Depot employs over 325,000 people.”
The company was founded in 1978 in Atlanta, Georgia by Bernie Marcus and Arthur Blank, and grew rapidly, with sales topping $1 billion annually by 1986. From the moment of its foundation, HD has continued to grow constantly by targeting strong markets with many new homeowners and young people such as New Orleans.Home Depot managed to grow fast by quickly adapting to change and continued to be successful by holding fast to the culture and values of the organization.
The constant renewal and the work to sustain culture that produces good products, employees, and customers has helped Home Depot maintain its competitive advantage and lead the retail building industry.
The companys management put a lot of emphasis on taking care of its employees, encouraging an entrepreneurial spirit, treating each other with respect, and being committed
to the highest standards.
The stores and their merchandise were set up that all the stores were very similar. Operational efficiency has been a crucial part of achieving low prices while still ofering high level of customer service. The company was assesing and upgrading its information to support its growth and control cost, and enable better decision making. The company continued to see greater efficiency as a result of its Electronic Data Interchange program.
Merchandising included all activities involved in the buyig and selling of goods for profit, and the merchandising strategy for Home Depot followed a 3-prolonged approach: (1) excellent customer service, (2) everyday low pricing, and (3) wide breadth of products.
To maintain its competitive advantage Home Depot employed the clustering strategy, and it was also the the only one to offer quality products such as Prego laminate flooring, Ralph Lauren paints, etc. Home Depots customer service also differentiated it form its comeptitors.
SWOT Analysis
Strengths:
To my opinion Home Depot has manged to succeed and lead the home improvement industry only through its numerous and unique strengths. Some of the most important ones are:
Company culture-The orange-blooded culture emphasized individuality, informality, nonconformity, growth, and pride.
Taking care of its people-Providing excellent wages and benefits, superior training, and advancement opportunities.
Excellent customer service-This is the key to the company success.
Operational efficiency-Home Depot was achieving operational efficiency by upgrading its computerized systems and implementing the satellite communication. All of these investments would help in reducing cost, support growth, and enable better decision-making. Operational efficiency is very crucial in achieving low prices while still offering the same customer service.
Television Network(HDTV)-Money saving device that allowed HDs top executives to get instant feedback form local managers, and allowed training and communication programs to be viewed in the stores.
Advanced inventory management system-It allowed and increases in the inventory turnover.
Electronic Article Surveillance-Preventing theft.
Continuous experimenting and testing in technology and business strategies-A company can grow and be successful only if it invests money and time on its future development.
Advertising-Home Depot maintained an aggressive campaign using various media for both price and institutional policy. Also sponsored the Summer Olympic Games in Atlanta, which can have a great impact on the generation-X, and Y who are going to be future customers of HD.
Reacting with speed and catch trends early- This can assure a firms success.
Merchandising Strategy-It provided excellent customer service, low prices, and wide variety of products.
Workshops-Can attract more do-it-yourself customers.
No unions-The company has never suffered a work stoppage.
Foresee future problems-The year 2000 problem.
Strategic Planing-Planing in advance how many stores would be opening in the next four years and how many employees they would be needing to keep the business going.
Weaknesses:
The strong management team of Home Depot has left very less space for weaknesses but has not eliminated all of them. The greatest weakness that I noticed was the rapid expansion into unknown territories. For example, when Home Depot moved to Houston and Detroit. Both these terrain were less hospitable and the company lost money. I can say that this was not a well-studied move. Home Depot repeated the same mistake when it bought the 9-store Bowater Warehouse chain, and also when it implemented the Cross Road Strategy which didnt turn as profitable as HD expected. So all these moves were the result of not well-planed strategies and could lead to a disaster if not prevented.
Another weakness is the fact that HD is not doing a great job in targeting the women customers. The rack-type displays and the non-elegant stores definitely dont attract females like myself, Lowes is even better at that.
Opportunities:
Being the only big-box retailer to offer a number of other exclusive, high quality products such as Prego laminate flooring,