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Evaluate the Home Depot

In: Business and Management

Submitted By jeanrivera
Words 1074
Pages 5
Jean C. Rivera-Nazario
DR. Gonzalez Cerrud

THE HOME DEPOT, INC. 1. Evaluate The Home Depot's growth strategy.
The Home Depot innovated in the home center industry by bringing a new retailing concept. One of the most important decision was to cut out completely the warehouse costs by designing retailing stores in a warehouse format in which all the inventory was already at store. This format helped The Home Depot to keep Overhead costs low and as a consequence, past these savings to their customers. This practice also led The Home Depot to work with a higher volume, lower margin and higher inventory turnover, a good indicator for retail companies which in turn helped to reduce costs even more. Having the warehouse format also helped them minimize out-of-stock occurrences, which helped them to have a stronger relationship with the customer, to whom they offered guaranteed products, by either the manufacturer or themselves. Customer service was so important for The Home Depot that 90% of their employees were fulltime works with special trainings of technical knowledge to help their customers with home improvement projects, and their advertising program included in-store demonstration of do-it-yourself which helped the Home Depot grow successfully in its early years.

2. How well did the company implement its strategy? Analyze The HomeDepot's financial performance and cash flow during the fiscal year 1985. How well did the company perform in 1985 relative to the previous years? How does The Home Depot's performance compare to that of Hechinger? You may use the analysis in Exhibit 3 in the case as a guide to begin your analysis. Also, make sure that you use data on store productivity in your analysis.
The Home Depot implemented its strategy so well that in five years, from 1981 to 1985 its assets grew up by 2149.7% from $16.9 to...

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