...Arthur Blank founded the Home Depot in 1978. Along with investment banker Ken Langone and merchandising guru Pat Farrah, the founder’s vision of one-stop shopping for the do-it-yourselfer came to existence when they opened the first two Home Depot stores on June 22, 1979, in Atlanta, Georgia. The first stores, at around 60,000 square feet each, were cavernous warehouses that dwarfed the competition and stocked 25,000 SKUs, much more than the average hardware store at that time. Empty boxes piled high on the shelves gave the illusion of even more product. in only one year they opened a 4th store in Atlanta and the company had annual sales of $22.3 million dollars. In only 10 years on its 10th anniversary Home Depot opened its 100th store in Atlanta. I. Current Situation The Home Depot is the fastest growing retailer in U.S. history. Home Depot is the largest home improvement retailer and the second largest retailer behind Wal-Mart in the United States based on net sales for the 2005 fiscal year. In 1981, the company went public on NASDAQ and moved to the New York Stock Exchange in 1984. The 1980s and 1990s spawned tremendous growth for the company, with 1989 marking the celebration of its 100th store opening. The company arrived in Canada with the acquisition of Aikenhead’s home improvement centers in 1994. In 2003 Home Depot opened its 100th Canadian store. Home Depot began flying its flag proudly in Mexico in 2001 through the acquisition of Total HOME. In 2006, the company extended...
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...Cover Story Renovating Home Depot; Skip the touchy-feely stuff. The big-box store is thriving under CEO Bob Nardelli's military-style rule By Brian Grow, with Diane Brady in New York and Michael Arndt in Chicago 6 March 2006 BusinessWeek 50 Volume 3974. Don D. Ray is one tough hombre. The 39-year-old Kentucky native spent three years with the 82nd Airborne Div., one of the U.S. Army's elite units, serving at the head of a maintenance crew during the first Gulf War and an additional seven years on active duty. Then, after the September 11 terrorist attacks, Ray suited up for service again, this time as the commander of a special forces A-team that followed the U.S.-led invasion into Afghanistan. His 12-man squad of snipers, demolition experts, and communications specialists hunted renegade al-Qaeda and Taliban. Combing mountain villages, he grew a thick beard, wore traditional Afghan garb, and rode on horseback to blend in with local Muslims. Ray and his men never killed anyone, he says, but they arrested dozens of suspected militants. Nowadays, Ray commands a different kind of operation. He has replaced crack-of-dawn physical training and green Army fatigues with sunrise store openings and an orange Home Depot apron. A store manager in Clarksville, Tenn., Ray runs a 110,000-square-foot box with 35,000 products and a 100-member staff, 30 of them former military. Many days start at 4 a.m. That's when he wakes, eats breakfast, catches some CNBC news, then heads to the store, where...
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...HRM 532-Talent Management Discuss how the leadership at Home Depot intended to use its organizational talent to gain a competitive advantage in the Do It Yourself industry. The Home Depot is the second largest retailer in the world. With that title there is a need to employ a lot of employees. According to the case there are approximately 17,000 leaders into positions each year on average. This is a range from the front line supervisors to executive line supervisors. Unlike most company the Home Depot has more than 80 percent of leadership placements are internal promotions. With that high rate of internal promotion there has to be a seamless pipeline to develop that talent and still have the competitive advantage. That comes from their talent which they take very seriously. The key competitive differentiator in a company that built its reputation and case on knowledgeable associates, problem solving, and superior customer service (Silzer p 657) . The case also goes into detail and explains that the Home Depot was able to keep this focus was by doing the following: • Embedding the enduring importance of human capital to corporate success. • Internalizing the importance of engaged associates in creating a superior customer experience. • Acknowledging significant changes in workforce and consumers demographics. All of these factors help maintain the spot as the second largest retailer in the world. They put enfaces on the people and the service that they...
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...the Customer Experience at Home Depot Rev. 12-2012 During 1990’s, the Home Depot was well renowned for its orange-blooded entrepreneurial culture and outstanding customer service. From the beginning, the retailer took a long-term approach by training its associates to form enduring customer relationships rather than push for incremental sales gains. As a result, the company grew very quickly becoming the fastest retailer in history to reach sales milestones of $30 billion, $40 billion, $50 billion, $60 billion and $70 billion in revenuesi. Despite this remarkable success, Marcus and Blank, the founders of the Home Depot, stepped down as leaders stating that continued growth required new leadership with fresh and innovative business approaches. Thus, in 2001, Robert Nardelli was named Chief Executive Office of the Home Depot. Nardelli introduced many new initiatives to the company such as, centralized buying, company-wide analytics and improved information systems, which were essential for the company to remain competitive. Many of his other changes, however, led to significant dissatisfaction, low morale, high turnover, reduced productivity, and general discontent among the associates that seriously derailed the company from the customer-centric approach that made the Home Depot such a success story during the Marcus and Blank era. The result was the most dramatic decrease in customer satisfaction in retailing history. In 2001, the Home Depot and Lowe’s both had customer...
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...of companies like Home Depot, Lowes and any local hardware store. Each of these businesses aims to satisfy their customers by providing a wide range of products that can assist on home improvement projects or general contracting and construction. While all three businesses may have similar business models or target the same type of clientele, they each have a different Operations and Materials Management (OMM) cost. Home Depot is one of the largest hardware retail stores located in the United States. Home Depot employees run various tasks from assisting a customer with suggestions on items, to actually running heavy machinery to cut wood or metal for a customer. The employees seemed to be geared to help customers with their needs as fast as possible. The store stocks a wide variety of items for multiple different projects or repair. They also have a lower cost alternative under the Home Depot brand for many different items available in the store. By having a Home Depot brand on the shelves for a variety of items helps the OMM of the business by increasing revenue thru a low cost alternative item that the customer my purchase instead of the name brand. Lowes is a competitor to the Home Depot. Lowes is also one of the largest hardware retail stores in the United States. Lowes employees also perform many of the same tasks as a Home Depot employee. The difference that can be observed between Lowes and Home Depot is that by the types of items being carried. Home...
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...his case follows the performance-review and financial-statement-forecasting decisions of a Value Line analyst for the retail-building-supply industry in October 2002. The case contrasts the strong operating performance of Home Depot with the strong stock-market performance of Lowe's. Students examine a financial-ratio analysis for Home Depot that acts as a template for generating a comparable ratio analysis for Lowe's. The student ratio analysis is designed to build intuition with respect to interpreting individual ratios as well as ratio interrelationships (e.g., the DuPont framework). The historical-performance comparison suggests that investors are skeptical of the ability of Home Depot to maintain its performance trajectory, yet they project sustained improvements for Lowe's. Students are invited to scrutinize the analyst's five-year income-statement and asset-side balance-sheet forecast for Home Depot. The case expressly focuses on the asset side of the balance sheet as a preview for other cases using free-cash-flow forecasting. The Home Depot forecast exercise exposes students to the mechanics of financial-statement modeling and sensitivity analysis, which they can use in building their own forecast for Lowe's. Finally, the strong-growth assumptions for Home Depot relative to the modest-growth forecast for the industry suggest that the company can be expected to capture massive and perhaps unreasonable market share in the near term. The exercise provides a striking example...
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...line manager is able to analyze the effect of decisions in specific situations and make necessary adjustments in terms of productivity of the team members. Assumptions Taking something for granted is an assumption. An assumption can be a statement this presumed to be true, but does not have concrete evidence to support it. Assumptions can be very dangerous with research to support critical thinking. Assumptions enable companies to plan and make decisions in uncertain situations. Basically assumptions are wishful thinking. Traditional business forecasting is based on the belief leaders are able to generalize potential outcomes from previous occurrence, in other words “cause and effect” or “what if.” However, this may not be the case for a new business to plan and make decisions. Making Assumptions in specific areas of decision making Work ethics is closely related to good decision making which are reflected in the outcomes of decisions. Good work ethics...
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...Home Depot A. Executive Summary * Introduction * The Home Depot Story - First Stage (1979-2000) * The Home Depot Story – Second Stage (2000 – 2006) * Problem Identification * Case Questions Introduction * Home Depot was founded in 1978 in Atlanta, Georgia by Bernie Marcus and Arthur Blank. * Both of them worked at Home Improvement Company in California and were fire by this company. * So instead of looking for a new job they decide to start up their own business based on a vision they had. * This vision was about creating home improvement stores similar to warehouses where customers would be able to find different types of tools and products with the help of experts in home improvement and customer service. * Home Depot created the concept “Do it yourself” (DIY) where homeowners were encouraged to buy products and tools and to use them to build, repair and improve their own homes. * This concept of “Do it yourself” was Home Depot’s main strategy to become successful in the Home Improvement industry. The “Do it yourself concept consisted on: * Prioritizing customer service (special attention to their customers problems) * Providing customers with training workshops and clinics to teach them how to repair their own homes. * Vendors and sale associates went through a rigorous training in product use before servicing customers. * Sales associates develop relationships with customers rather than just merely seeing...
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...Background The Home Depot was founded in 1978 by Bernie Marcus and Arthur Blank in Atlanta, Georgia after they were fired from their executive post at the Handy Dan Home Improvement Centers in California. The founders began the home improvement company around their vision of “one-stop shopping for the do it yourselfer” opening their first two stores in 1979 in Atlanta, Georgia in a cavernous warehouses that dwarfed the competition stocking 25,000 stock keeping units (SKUs), much more than the average hardware store at that time, and staffing the stores with knowledgeable experts in home improvement and customer service. From the beginning, Home Depot was able to offer not only the best customer service in the industry by hiring employees knowledgeable and experienced in the business and by motivating the sales associates to develop relationships with the customers instead of seeing sales as a transaction, but by popularizing the concept of “do it yourself” (DIY) offering to homeowners and other individuals trainings workshops and clinics so customers could learn how to do it themselves. The Home Depot revolutionized the home improvement industry by bringing the know-how and the tools to the consumer and by saving them money. In 1980, Home Depot opened two more stores achieving annual sales of $22 million from all its four stores. By 1990, the company had opened 145 stores, employing 21,500 people, generating annual sales of $3.8 billion, and becoming the number one U.S. retailer...
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...Kyle Fortin Case 12: VALUE LINE PUBLISHING, OCTOBER 2002 From a profitability standpoint, Home Depot created value, according to their 12.3% WACC found in exhibit 3. They are consistently creating value in all years (97’-01’) beings their ROC is higher than their WACC. Considering the Industry ROE average was 17.1% in 1997 according to Wikinvest.com, Home Depot was a little behind the game as far as creating value for their investors. Home Depot’s Gross Margin increased steadily each year, indicating higher profits, as well as their operating margin increasing to a high in 99’ and leveling out around 2001 due to the economic factors erupting after 9/11. Their NOPAT margin is higher than their biggest competitor lowe’s so they were consistently producing more returns, in conjunction with greater sales figures. Home Depot is operating on relatively wide margins compared to its competitors; its substantial growth rate is quite high compared to Lowe’s which is easily explained by their innovative business strategy. The Home Depot at the end of 2000 stands on good financial footing. Their net revenues have grown 208% between FY 1995 and FY 2000. Home Depot continues its market saturation strategy which consistently grows their net revenues. Home Depot’s growth in net earnings over the same period has been 284%. The money that the firm is retaining as profits is larger than the total amount being brought into the company, indicative of a company that is realizing economies of...
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...THE HOME DEPOT OVERVIEW Bernie Marcus, Ken Langone and Pat Ferrah created the Home Depot in 1978. Their main vision was “One – Stop shopping for do it your self”. The Home Depot opens its door with two large stores located in Atlanta Georgia in 1979. With operations focus on customer services, The Home Depot provide their clients with highly trained personnel, leading those customers with quality services through different kinds of constructions projects. Their philosophy of customer services “whatever it takes” means purpose on develop customer relationship instead a simple sales transaction. Since its foundation in 1978, The Home Depot has been known as a story of growth; recognized as the fastest growing retailer in United State. In 1981 the company went public and by 1984 moves to the New York Exchange Commission. This kind of financial movement allows the opening of international operations. By 1984 Home Depot was opening operation in Canada by the acquisition of the company called Aiken Heads. After Canada, Home Depot expansion took place with Mexico in 2001 and China in 2006. Through the combination of national brands and products The Home Depot sets the standard for innovate merchandise for do it yourself customers and professional contractors. MARKET SYSTEMS AND LEGAL SYSTEMS With operations in different countries around the world, Home Depot needs to be aware about the different market and legal system that...
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...CHAPTER CLOSING CASE FROM CHAPTER ONE: PLAYING HARDBALL AT HOME DEPOT BRIEF SUMMARY: This case was mainly about Home Depot’s turning point on its sales increases after the new CEO Robert Nardelli had taken charge of the corporation. The way which Nardelli applied to change the old fashion of running the business was highlighted in the text. Described as command-and-control, the method he used which can be traced back to 1950s was simple and straight and it can be characterized as emphasis on a military-like discipline and obedience. Being centralized again, Home Depot became a more standardized-machine like place where effectiveness and efficiency were laid utmost stress on. Then, Nardelli’s principles are illustrated as follows: First, centralize control over functions. Second, follow slow growth. Third, control by measuring every input and output instead of relying on instinct. Fourth, ruthlessly eliminate underperforming managers. Besides cost cutting, he also made radical progress on wholesale supply to contractors, service offerings and potential new hirings. However, “soft” topics such as corporate culture and employee empowerment are largely neglected, which diminished the better development of this management skill. CASE QUESTIONS: 1. The four principles Nardelli has adopted to improve the performance of the business can be served as examples of his planning phase. When he conducted his plan into practise by assigning tasks for his employees, as in transmitting...
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...External Environment Analysis Kristy Sanchez MGT/488 September-Sunday 11, 2011 Jeannette Guignard External Environment Analysis Introduction This essay is written in regards to the Home Depot and the evaluation of their external environment. The Home Depot is a highly successful retail industry that has expanded globally. The Home Depot has a wide variety of supplies and materials for all home improvement projects. They even have tools, equipment, and trucks that can be rented out to assist with any larger home improvement needs. The Home Depot has made a continuity plan to assist with protection of the customers, associates, and the industry if a crisis or disaster occurs. A continuity plan is basically the instructional list or procedures for the company in the event that a crisis or natural disaster occurs and how they will handle that event. This essay will look at how the external environment affects that plan. This essay will also look at the affects of the environment in three other areas as well, including general, industry, and competitor. Finally, it will look into the business ethics and see how they play a role when gathering information for competitor intelligence. The Home Depot has a continuity plan that they follow that can be found in their code of conduct and ethics manual. That continuity plan is as follows: “We are committed to taking all reasonable steps to minimize risks to our associates, customers, facilities, information assets and supply chains...
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...Home depot has been doing well over the past couple years throughout their existence, ranked #1 in the local companies on the 2013 fortune 500 rankings. The strategy for home depot is making room for improvement, by focusing on employee turnover, which is costing them million of dollars dealing with high cost of employee trading. The home depot, has a mission and vision statement of eight corporate values which are designed to guide employees by Taking care of customers, Giving back to the community, Excellent customer service, Creative shareholder values, Building strong relationships, Having a entrepreneurial sprit and Having respect for all people. It is a do it yourself kind of market that represents a 100 billion dollar market sales. Home depot has a foundation of key competitors that attracts many professional buyers. These competences our considered as up to date technology, which is the internal and external environment, that allows competition between other competitors like Lowes, Menards, and Ace hardware. Home Depot has also been able to establish and successfully execute a market saturation strategy coupled with low prices and high services. Being able to execute on these three pillars has been the hallmark of Home Depot's strategy and will carry the company into the future. As Home Depot continues to expand, the cost of prime real estate will rise as they compete head to head with their main competitor, Lowes. Also tied to the market saturation strategy...
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...SWOT Analysis Home Depot Strengths • Brand Awareness - Home Depot is the world’s largest company in the home improvement retail industry with revenues exceeding $70 billion. Specifically, while Home Depot is the fourth largest retailer in the United States, it is the largest in both Canada and Mexico. In addition, it ranks 127th in Forbes Global list of the 2000 largest companies. Such dominance boosts brand awareness for such private brands as Pegasus Faucets, Husky Hand Tools, and Vigoro Lawn Care Products. Such brand awareness is fortunate for Home Depot since recent studies show that 80% shoppers have a positive attitude about private brand labels and some even perceive their quality as being superior. • Rapid Deployment Centers -Home Depot plans on increasing its utilization of Rapid Deployment Centers (RDC). RDCs allow the use of a single purchase order to consolidate product needs and more rapidly replenish inventories to individual stores from the center locations. Home Depot currently employs five Rapid Deployment Centers and plans to open additional centers in 2010. The result of this implementation will be improved transportation, and reduced lead time from notification of needs to inventory replacement. It is anticipated that this method will increase efficiently substantially. Weaknesses • Negative Comparable Store Sales Figures - Home Depot suffered a decrease in same store sales, down 8.7% is 2009 as compared to a smaller decrease of 6.7% in 2008. The decline...
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