Free Essay

Home Depot Story

In: Business and Management

Submitted By deepak18300
Words 4426
Pages 18
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 the doors open at 6. Although Ray's bookish round glasses and pressed khakis make him look more like a teacher than a onetime terrorist hunter, he exudes a steely confidence. Former soldiers on his staff call him ``sir.'' ``In the military, we win battles and conquer the enemy,'' says Ray. At Home Depot, ``we do that with customers.'' Military analogies are commonplace at Home Depot Inc. these days. Five years after his December, 2000, arrival, Chief Executive Robert L. Nardelli is putting his stamp on what was long a decentralized, entrepreneurial business under founders Bernie Marcus and Arthur Blank. And if his company starts to look and feel like an army, that's the point. Nardelli loves to hire soldiers. In fact, he seems to love almost everything about the armed services. The military, to a large extent, has become the management model for his entire enterprise. Of the 1,142 people hired into Home Depot's store leadership program, a two-year training regimen for future store managers launched in 2002, almost half -- 528 -- are junior military officers. More than 100 of them now run Home Depots. Recruits such as Ray ``understand the mission,'' says Nardelli. ``It's one thing to have faced a tough customer. It's another to face the enemy shooting at you. So they probably will be pretty calm under fire.'' Built like a bowling ball, Nardelli is a detail-obsessed, diamond-cut-precise manager who, in 2000, lost his shot at the top job at General Electric Co. to Jeffrey R. Immelt. He is fond of pointing out that if Home Depot were a country, it would be the fifth-largest contributor of troops in Iraq. Overall, some 13% of Home Depot's 345,000 employees have military experience, vs. 4% at Wal-Mart Stores Inc. And that doesn't even count James E. Izen, 38, a lieutenant colonel in the U.S. Marine Corps stationed outside Nardelli's door, is part of a Marine Corps Corporate Fellows program that Home Depot joined in 2002.

Importing ideas, people, and platitudes from the military is a key part of Nardelli's sweeping move to reshape Home Depot, the world's third-largest retailer, into a more centralized organization. That may be an untrendy idea in management circles, but Nardelli couldn't care less. It's a critical element of his strategy to rein in an unwieldy 2,048-store chain and prepare for its next leg of growth. ``The kind of discipline and maturity that you get out of the military is something that can be very, very useful in an organization where basically you have 2,100 colonels running things,'' explains Craig R. Johnson, president of Customer Growth Partners Inc., a retail consulting firm. Rivals such as Wal-Mart are plunging deeper into home improvement products, while archenemy No. 1, Lowe's Cos., is luring Home Depot customers to its 1,237 bright, airy stores. Even as other companies seek to stoke creativity and break down hierarchies, Nardelli is trying to build a disciplined corps, one predisposed to following orders, operating in high-pressure environments, and executing with high standards. Home Depot is one company that actually lives by the aggressive ideals laid out in Hardball: Are You Playing to Play or Playing to Win?, the much discussed 2004 book co-authored by Boston Consulting Group management expert George Stalk. The cultural overhaul is taking Home Depot in a markedly different direction from Lowe's, where managers describe the atmosphere as demanding -- but low-profile, collaborative, and collegial. Lowe's does not have formal military-hiring programs, says a company spokeswoman, nor does it track the number of military veterans in its ranks. Observes Goldman, Sachs & Co. analyst Matthew Fassler: ``Bob believes in a command-and-control organization.'' In Nardelli's eyes, it's a necessary step in Home Depot's corporate evolution. Even though founders Marcus and Blank were hardly a pair of teddy bears, they allowed store managers immense autonomy. ``Whether it was an aisle, department, or store, you were truly in charge of it,'' says former store operations manager and Navy mechanic Bryce G. Church, who now oversees 30 Ace Hardware stores. And the two relied more on instincts than analytics to build the youngest company ever to hit $40 billion in revenue, just 20 years after its 1979 founding. In the waning years of their leadership in the late 1990s, however, sales stagnated. The company ``grew so fast the wheels were starting to come off,'' says Edward E. Lawler III, a professor of business at the University of Southern California. These days every major decision and goal at Home Depot flows down from Nardelli's office. ``There's no question; Bob's the general,'' says Joe DeAngelo, 44, executive vice-president of Home Depot Supply and a GE veteran. Although he has yet to win all the hearts and minds of his employees, and probably never will, Nardelli's feisty spirit is rekindling stellar financial performance. Riding a housing and homeimprovement boom, Home Depot sales have soared, from $46 billion in 2000, the year Nardelli took over, to $81.5 billion in 2005, an average annual growth rate of 12%, according to results announced on Feb. 21. By squeezing more out of each orange box through centralized purchasing and a $1.1 billion investment in technology, such as self-checkout aisles and in-store Web kiosks, profits have more than doubled in Nardelli's tenure, to $5.8 billion. Home Depot's gross margins inched up from 30% in 2000 to 33.5% last year. But fast-growing Lowe's is still Wall Street's darling, in large part because analysts are only now getting comfortable with Nardelli's strategy. Based in Mooresville, N.C., Lowe's has seen sales grow an average of 19% a

year since 2000, and it has narrowed the gap in gross margins vs. Home Depot. Since the day before Nardelli's arrival on Dec. 14, 2000, Lowe's split-adjusted share price has soared 210%. Home Depot's is down 7%. One way Nardelli plans to kick-start the stock: move beyond the core U.S. big-box business and conquer new markets, from contractor supply to convenience stores to expansion into China. On Jan. 19, Home Depot announced plans to scale back the growth of new stores from more than 180 per year to about 100. The slowdown will let him plow extra resources into beefing up Home Depot Supply (HDS), a wholesale unit hawking pipes, custom kitchens, and building materials to contractors and repairmen. It's a fragmented market worth $410 billion per year, according to Home Depot, where Wal-Mart and Lowe's are AWOL and the only competitors are regional companies. Already, Nardelli has spent $4.1 billion buying 35 companies to bulk up HDS, and it plans to plunk down a further $3.5 billion to buy Orlando-based Hughes Supply Inc. By 2010, HDS sales are expected to reach $23 billion, accounting for 18% of Home Depot's total, up from 5% in 2005. The scope of the task is staggering. Nardelli, in essence, is building a whole new company -- in a market twice the size of do-it-yourself retail -- to service a prickly customer: professional contractors who want low prices, great quality, and instant service. Success in this field will require pinpoint execution, and Nardelli knows it. But his ambitions make some analysts nervous. ``He's moving out of retail into services,'' says Deborah Weinswig, an analyst at Citigroup. ``If it was just retail, a lot of us would be more comfortable.'' ``CULTURE OF FEAR'' The high stakes of Home Depot's services gambit is one of the main reasons Nardelli has pushed his cultural makeover so hard in the five years since he has been at the helm. But not all have embraced him, or his plans. BusinessWeek spoke with 11 former executives, a majority of whom requested anonymity lest the company sue them for violating nondisclosure agreements. Some describe a demoralized staff and say a ``culture of fear'' is causing customer service to wane. Nardelli's own big-time pay package, $28.5 million for the year ended Jan. 30, 2005, rubs many workers the wrong way. His guaranteed bonus, the only locked-in payout at the company, rose to $5.8 million in 2004, from $4.5 million in 2003, at a time when Home Depot's stock price finished below its yearend price in 2000, when Nardelli took over. Before he arrived, managers ran Home Depot's stores on ``tribal knowledge,'' based on years of experience about what sold and what didn't. Now they click nervously through BlackBerrys at the end of each week, hoping they ``made plan,'' a combination of sales and profit targets. The once-heavy ranks of full-time Home Depot store staff have been replaced with part-timers to drive down labor costs. Underperforming executives are routinely culled from the ranks. Since 2001, 98% of Home Depot's 170 top executives are new to their positions and, at headquarters in Atlanta, 56% of job changes involved bringing new managers in from outside the company. Says one former executive: ``Every single week you shuddered when you looked at e-mail because another officer was gone.''

As a manager, Nardelli is relentless, demanding, and determined to prove wrong every critic of Home Depot. He treats Saturdays and Sundays as ordinary working days and often expects those around him to do the same. ``He's the hardest-working guy you'll ever see,'' says his former boss, Jack Welch. ``If I was working late at GE and wanted to feel good at 9 p.m., I would pick up the phone and call Bob. He would always be there.'' Privately, Nardelli admits that the move to Home Depot has sometimes been a tough slog. When he first took over -- having no retail experience and replacing the beloved Bernie and Arthur -- he often felt as though he were fighting a lonely, uphill battle to convert Home Depot's legions of workers to his new vision for the company. Nardelli's history of surrounding himself with military recruits goes back to his GE days. At GE Transportation in the 1980s, he pioneered a program of hiring junior military officers, in part because few people were willing to move to ``Dreary Erie, Pa.,'' where the unit is headquartered. Former grunts, used to sitting in mud holes, found the locale less of a problem. William J. Conaty, senior vice-president for corporate human resources at GE, says: ``Places like Erie or Fort Wayne, Ind., didn't look desolate to these guys.'' Welch soon expanded the program throughout GE. Welch characterizes Nardelli as ``an unusual patriot...a true flag-waving American.'' Nardelli's father, Raymond, served in Europe during World War II with the Pennsylvania Keystone unit of the National Guard. As a freshman at Rockford Auburn High School in Rockford, Ill., Nardelli joined the Reserve Officers' Training Corps (ROTC) and eventually became company commander and a member of the rifle team. He also played football. ``You could either take gym class or ROTC,'' recalls Nardelli. ``I took ROTC and enjoyed the hell out of it.'' When it came time for college, he applied to the U.S. Military Academy at West Point, N.Y. But the Army academy accepts applicants in part by congressional district, and the young Nardelli missed the cut by one person: He was the first alternate from his region of Illinois. Instead he attended Western Illinois University in Macomb. After graduating in 1971, his draft number was called, but, he says, he did not pass his physical. Later he went on to the University of Louisville for an MBA. As an adult, Nardelli's passion for the military persists. At Home Depot headquarters, 1,800 ``blue star banners'' hang in the main hallway in honor of employees serving in Afghanistan, Iraq, and elsewhere. He is frequently shadowed by Marine Fellow Izen. During one recent project to help Home Depot hone its motivational message to 317,000 store troops, Izen consulted the Marine Corps Doctrinal Publication 1 on ``War-Fighting.'' MCDP 1, as it's called in the Marines, includes a chapter on ``developing subordinate leaders,'' which Izen found a handy guide for Home Depot workers, too. ``It's about how to out-think your enemy,'' says Izen. The military, says Nardelli, trains its recruits to be leaders and think on their feet, skills he wants in Home Depot stores. ``Having personally been on the flight deck of an aircraft carrier where 18-year-olds are responsible for millions of dollars worth of aircraft,'' says Nardelli, ``I just think these are folks who understand the importance of training, understand the importance of 'you're only as good as the people around you.' In their case, their life depends on it many times. In our case, our business depends on it many times.''

Indeed, the Home Depot of Bob Nardelli is being run with military-style precision. These days everyone at Home Depot is ranked on the basis of four performance metrics: financial, operational, customer, and people skills. The company has placed human resources managers in every store, and all job applicants who make it through a first-round interview must then pass a role-playing exercise. Dennis M. Donovan, Home Depot's executive vice-president for human resources and a GE alumnus, measures the effectiveness of Home Depot workers by using an equation: VA = Q x A x E. Its meaning? According to Home Depot, the value-added (VA) of an employee equals the quality (Q) of what you do, multiplied by its acceptance (A) in the company, times how well you execute (E) the task. The goal is to replace the old, sometimes random management style with new rigor. ``Bob's creating a second culture [at Home Depot],'' says DeAngelo. While Nardelli is careful to say that the military is just one pipeline of talent into Home Depot -the company also recruits senior citizens through the AARP and Latinos through four Hispanic advocacy groups -- he is clearly imbuing the company with ``Semper Fi'' spirit. If Nardelli is the four-star general, then Carl C. Liebert III is his chief of staff. A graduate of the U.S. Naval Academy at Annapolis, Md., where he played college basketball with NBA star David Robinson, Liebert, 40, stands 6 ft., 7 in. and is every bit as intense as his boss. After running Six Sigma programs at GE's Consumer Products unit, followed by a stint at Circuit City Stores Inc., he took over Home Depot's stores in the U.S. and Mexico in 2004. Now, with Lowe's and Wal-Mart picking off Home Depot's customers, Liebert is moving quickly to whip the troops into shape. ``What worked 20 years ago may not work today,'' says Liebert. ``It's as simple as warfare. We don't fight wars the way we used to.'' SIMPLE SLOGANS To win the customer service war, Liebert has adjusted his tactics. At the annual store managers' meeting in Los Angeles on Mar. 8, Home Depot plans to roll out a 25-page booklet dubbed How To Be Orange Every Day. All store employees will be expected to keep it in their apron pocket. It contains aphorisms such as ``customers cannot buy what we do not have,'' ``we create an atmosphere of high-energy fun,'' and ``every person, penny and product counts.'' Liebert hopes such simple slogans will help shore up Home Depot's once-vaunted customer service. To Liebert's mind, they recall the four basic responses to an officer's question in the Navy: ``Yes, sir''; ``No, sir''; ``Aye, aye, sir''; and ``I'll find out, sir.'' He calls it an effort to ``align'' all Home Depot workers on the same page when it comes to serving customers. ``I think about that line from A Few Good Men when Jack Nicholson says: 'Are we clear?' and Tom Cruise says: 'Crystal,''' chuckles Liebert. ``I love that.'' But drilling workers in how to treat customers may not be enough. The University of Michigan's annual American Customer Satisfaction Index, released on Feb. 21, shows Home Depot slipped to dead last among major U.S. retailers. With a score of 67, down from 73 in 2004, Home Depot scored 11 points behind Lowe's and three points lower than much-maligned Kmart. ``This is not competitive and too low to be sustainable. It's very serious,'' says Claes Fornell, professor of business at the University of Michigan and author of the 12-year-old customer satisfaction survey, which uses a 250-person sample and an econometric model to rate companies on quality and service. Fornell believes that the drop in satisfaction is one reason why Home Depot's stock

price has declined at the same time Lowe's has soared. A former executive who spoke on condition of anonymity says that Nardelli's effort to measure good customer service, instead of inspiring it, is to blame: ``My perception is that the mechanics are there. The soul isn't.'' Nardelli angrily disputes the survey. ``It's a sham,'' he says, jabbing his finger in the air for emphasis. Nardelli notes that, in 2003, Fornell shorted Home Depot stock in his personal portfolio, before his survey results came out. Fornell says the trades were part of his research into a correlation between companies' customer-satisfaction scores and stock price performance. The University of Michigan banned the practice the next year. Home Depot executives add that internal polling shows customer satisfaction is improving, but they won't release complete results. They point to Harris Interactive's 2005 Reputation Quotient, an annual 600-person survey that combines a range of reputation-related categories, from customer service to social responsibility. The survey ranked Home Depot No. 12 among major companies and reported that customers appreciated Home Depot's ``quality service.'' Still, Home Depot appears to know it has serious customer-service problems. Store chief Liebert's back-to-basics plan includes a push to improve even the ``genuineness'' of the greeting that customers receive at the door. Some of the same former managers who blame Nardelli's hardball approach for corroding the service ethic at Home Depot describe a culture so paralyzed with fear that they didn't worry about whether they would be terminated, but when. One night last year, an unnamed executive in the lighting department at Home Depot headquarters left fliers on desks and in elevators containing a litany of complaints about Home Depot, including Nardelli's giant pay package and the high level of executive turnover. The rebel, say other former executives, was tracked down by security cameras and immediately fired. Citing concerns about the employee's privacy, Home Depot declined to comment on the incident. In break rooms, the company pipes in HD-TV, short for Home Depot television. But employees have mocked it as ``Bobaganda,'' referring to Nardelli, for its constant drone of tips, warnings, and executive messages. Every Monday night, for example, store chief Liebert and Tom Taylor, executive vice-president for marketing and merchandising, host a 25-minute live broadcast for senior store staff on the week's most important priorities called The Same Page. ``These are [their] marching orders for the week,'' says Liebert. COMMAND OF DETAILS Still, it's hard even for Nardelli critics, including ones he has fired, not to admire his unstinting determination to follow his makeover plan in the face of scores of naysayers. They describe being ``in awe'' of his command of minute details. But some of them question whether the manufacturing business model that worked for him at GE Transportation and GE Power Systems -- squeezing efficiencies out of the core business while buying up new businesses -- can work in a retail environment where taking care of customers is paramount. ``Bob has brought a lot of operational efficiencies that Home Depot needed,'' says Steve Mahurin, chief merchandising officer at True Value Co. and a former senior vice-president for merchandising at Home Depot. ``But he failed to keep the orange-blooded, entrepreneurial spirit alive. Home Depot is now a factory.''

Can his plan work? ``Ab-so-lute-ly,'' says Nardelli. ``This is the third time this business model has been successful.'' He rejects the idea that he has created a culture of fear. ``The only reason you should be fearful is if you personally don't want to make the commitment,'' says Nardelli. ``Or there's a bolt of reality that you're in a position, based on the growth of the company, that you can't deliver on those commitments.'' He says Home Depot is dealing with the challenges of being a more centralized company just fine. And he makes no apologies for laying off the ranks of underperforming store workers and executives to achieve aggressive financial objectives. ``We couldn't have done this by saying, 'Run slower, jump lower, and just kind of get by,''' insists Nardelli, hardening his gaze. ``So I will never apologize for setting the bar high.'' John N. Pistone, 35, is on the elite team. A graduate of West Point and former company commander in the Army's First Cavalry Div., he served in Kuwait in 2000 and was an ROTC instructor at Boston College. Now a district manager running eight Home Depot stores on the east side of Atlanta, with 1,200 staffers, he's on the fast track, in part because of his cool demeanor and always-on smile that endears him to employees. ``A private in the Army is a lot like an $8-an-hour cashier,'' he says. But there's another reason Pistone is on the rise: As he clicks through his BlackBerry on a Monday morning, he remarks, with a sigh of relief, that his eight stores ``made plan'' the previous week. ``This is a quarterly business that we worry about hourly,'' he says. As Bob Nardelli builds his new army at Home Depot, that's a sentiment he loves to hear. Full Metal Apron Nardelli is building an army at Home Depot. Here are the new marching orders for America's biggest home improvement store: Hire Warriors Home Depot is on a military hiring spree. The number of former troops hired by Nardelli, who loves their discipline, has risen steadily from 10,000 in 2003 to 17,000 in 2005. Quantify It Home Depot now measures everything from gross margin per labor-hour for store workers to the number of ``greets'' at its front doors. Nardelli's predecessors, Marcus and Blank, relied more on instinct. Issue Clear Commands On Monday afternoons, Home Depot's in-house television station broadcasts The Same Page, a 25-minute live show emphasizing the week's top priorities. Expel Underachievers There's little room for error at the new Home Depot. Weak managers are routinely booted. Of the top 170 executives, 98% of Nardelli's team are new to their positions since 2001.

Centralize Control Before Nardelli arrived, managers ran stores as individual fiefdoms. Now he is centralizing the operation, spending $1.1 billion on technology that helps to give Atlanta greater control over most tasks. Borrow Military Ideas What other company looks to Marine Corps literature for management wisdom? That's what Home Depot Marine Fellow James Izen did in helping to craft motivational messages for more than 300,000 store workers. Buzz Words Nardelli's cultural transformation has prompted some new lingo among Home Depot workers, some of it unflattering: ``Home Despot'' For the most disenchanted workers, the moniker bestowed on the mighty home-improvement chain The ``Aprons'' Like ``troops,'' a term used by some senior executives to refer to Home Depot store workers (who wear aprons) ``Bob's Army'' Slang for the ``store leadership program,'' wherein almost 50% of the 1,142 trainees hired are exmilitary personnel ``Bobaganda'' The always-on Home Depot television channel, a.k.a. HD-TV, shown in rooms where employees take their breaks ``Home GEpot'' A snarky reference to the swelling ranks of General Electric alumni Nardelli has wooed ``Orange Belt'' The entry level for employees studying Six Sigma, the quality management system Nardelli imported from GE

Take No Prisoners Home Depot's cultural makeover echoes some of the guiding principles of Hardball: Are You Playing to Play or Playing to Win?, co-authored by George Stalk. Raise the costs of your competitors Maneuver them into pursuing customers they believe are more profitable but aren't. Your competitors' costs increase, and profits decrease. Devastate your rivals' profit sanctuaries Influence the behavior of competitors by knowing where their most lucrative business niches are; then, when needed, use that knowledge to constrict their cash flow. Take it and make it your own Recognize the value of an existing idea, practice, or business model from another industry and deploy the insight to create an unassailable advantage. Break the compromises your industry accepts Customers rarely see past standard operating procedures. Instead, they accept them as ``the way the industry works.'' Breaking those compromises can release huge competitive advantages. Unleash massive, overwhelming force Establish a resource advantage over competitors, then engage them in wars of attrition. Warning: Can be costly to carry out. illustration | Illustration: Chart: Work in Progress: Nardelli's discipline is getting financial results, but the stock remains stagnant | photograph | Photograph: ORANGE CRUSH: Nardelli's 2,048 outlets rake in $81.5 billion a year PHOTOGRAPH BY BRIAN SMITH

Similar Documents

Free Essay

Home Depot

...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......

Words: 1495 - Pages: 6

Premium Essay

Competitive Adavantage

...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......

Words: 7629 - Pages: 31

Premium Essay

The Home Depot

...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...

Words: 1567 - Pages: 7

Free Essay

Home Depot

...THE HOME DEPOT’S ORGANIZATIONAL COMMUNICATION Organization Communications Mgmt 305 Potomac College  Abstract This paper will analyze the culture of The Home Depot and its communication practices. This will be accomplished by examining the dimensions of the organization’s structure. The Home Depot’s sociability, power distribution and job autonomy, degree of structure, achievement rewards, opportunities for growth, tolerance for risk and change, conflict tolerance, and emotional support will be used to determine if the organization has a Theory Y culture.  Introduction Home Depot is considered to be one of the top ranking home improvement organizations. The mission statement of this organization was formulated around being “committed to maximizing long term shareholder value while supporting management in the business and operations of the company, observing the highest ethical standards and adhering to the laws of the jurisdictions within which the company operates” (Homer TLC INC, 2010). The Home Depot transformed the “home improvement industry” by providing a well round reputation for products, corporate governance and strong values within the community. The purpose of The Home Depot remains to build relationships, have social responsibility, and concrete ethics as an organization. Employees are respected, offered growth and reputable incentive plans. Public policy makers and Home Depot collaborates on ideas to assure prosperity in our society. Home Depot......

Words: 2579 - Pages: 11

Free Essay

Playing Hardball at Home Depot

...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......

Words: 1295 - Pages: 6

Free Essay

Lowe's Paper

...Lowe’s Home Improvement Stores Sheila Thomas Webster University Abstract Lowe’s exists to help customers improve and maintain their biggest asset- their home. We do this by meeting the changing needs of our customers by providing inspiration and support whenever and wherever they shop. Whether our customers shop in store, online, by phone, or if we’re meeting them at their home or place of business, Lowe’s is ready to help. In our more than 1,830 stores, we have implemented multiple systems to improve the customer experience, including an upgraded store information technology infrastructure that allows customers and employees to access richer product information, enjoy an endless aisle of product choices and manage their projects from inspiration to enjoyment (Lowe’ Online, we are rapidly expanding our assortments to offer customers a broader range of products that can be researched and purchased online, in store or via our mobile app.  MyLowe’s makes it easy for our customers to automatically track and store all purchases on their online customer profile. We’ve vowed to “Never Stop Improving” so we can satisfy the ever-changing needs of our customers (Lowe’ Lowe’s operates more than 1,830 stores in the United States, Canada and Mexico. We serve approximately 15 million customers each week and employ more than 260,000 people (Lowe’ Our stores stock 12 product categories ranging from appliances and tools, to paint, lumber and......

Words: 3755 - Pages: 16

Free Essay

Home Depot Business Proposal

...Home Depot Business Proposal Easter B. Fulton ECO 561 June 22, 2015 J. Carl Bowman Home Depot Service The Home Depot was founded in 1978 in Atlanta, Georgia as the first home retail store by Bernie Marcus and Arthur Blank (Home Depot, 2014). To give an extent of mixes to customers the Home Depot affiliation made key item examination. This helped clients who request to complete structure extends on different business ranges the affiliation's innovative stock revolved around internal and outside customers of the relationship for master foremen, free how to focus, do it without any other individual's help assignments, free how to office and childrens' workshops. Home Depot progressed overall and saw as a claim to fame retailer that business segments 40,000 different sorts of building materials, home change supplies, apparatuses and yard and patio nursery supplies, and additionally stock nook things' and stock restricted to match the customer's specific market needs (Home Depot, 2014). The Home Depot has more than 2,200 supportive regions all through the United States (numbering the spaces of Puerto Rico and the Virgin Islands), Canada, China and Mexico. Stores typical 105,000 square feet with give or take 23,000 additional square feet of outside greenery walled in area zone (Home Depot, 2014). One clarification to survey and satisfy the business' possibilities is to look at the strategies and system for a supplementary client administration. Home Depot offers......

Words: 2903 - Pages: 12

Free Essay

Case Study’s social systems. The leadership team of Home Depot employed a remarkable set of tools to do that. Home Depot’s Blueprint for Culture Change by Ram Charan Reprint R0604C Deep, lasting culture change requires an integrated approach that remodels a company’s social systems. The leadership team of Home Depot employed a remarkable set of tools to do that. Home Depot’s Blueprint for Culture Change by Ram Charan COPYRIGHT © 2006 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. When Robert Nardelli arrived at Home Depot in December 2000, the deck seemed stacked against the new CEO. He had no retailing experience and, in fact, had spent an entire career in industrial, not consumer, businesses. His previous job was running General Electric’s power systems division, whose multimilliondollar generating plants for industry and governments were a far cry from $10 light switches for do-it-yourselfers. Nardelli also was taking over what seemed to be a wildly successful company, with a 20year record of growth that had outpaced even Wal-Mart’s—but with latent financial and operational problems that threatened its continued growth, and even its future, if they weren’t quickly addressed. To top it off, Nardelli’s exacting and toughminded approach, which he learned at General Electric, set him on a collision course with the freewheeling yet famously close-knit culture fostered by his predecessors, Home Depot’s legendary cofounders, Bernie Marcus......

Words: 6921 - Pages: 28

Free Essay

Mckinsey 7 S Framework

...TAVIS COBURN Deep, lasting culture change requires an integrated approach that remodels a company’s social systems. The leadership team of Home Depot employed a remarkable set of tools to do that. by Ram Charan W hen Robert Nardelli arrived at Home Depot in December 2000, the deck seemed stacked against the new CEO. He had no retailing experience and, in fact, had spent an entire career in industrial, not consumer, businesses. His previous job was running General Electric’s power systems division, whose multimilliondollar generating plants for industry and governments were a far cry from $10 light switches for do-it-yourselfers. re tu ul C Change HOME DEPOT’S BLUEPRINT FOR april 2006 61 H o m e D e p o t’s B l u e p r i n t f o r C u l t u re C h a n g e Nardelli also was taking over what seemed to be a wildly successful company, with a 20-year record of growth that had outpaced even Wal-Mart’s – but with latent financial and operational problems that threatened its continued growth, and even its future, if they weren’t quickly addressed. To top it off, Nardelli’s exacting and tough-minded approach, which he learned at General Electric, set him on a collision course with the freewheeling yet famously close-knit culture fostered by his predecessors, Home Depot’s legendary cofounders, Bernie Marcus and Arthur Blank. It was this culture that Nardelli had to reshape if he hoped to bring some big-company muscle to the cooled from the breakneck pace of......

Words: 7019 - Pages: 29

Free Essay

Darfur Genocide

...Nuwaila September 26, 2012 Swot analysis Home Depot is a nationally and somewhat internationally recognized company. They not only have stores throughout the US but they have broken into Canada, District of Columbia, Puerto Rico and Mexico. They are the United States’ largest retailer behind Wal-Mart. Home Depot is known for its bright orange logo and its multiple departments available to individuals and businesses. They have primary operations in the home center and hardware store industry. Their strongest competition in that industry comes from Lowe’s, True Value Hardware, and Ace Hardware. Some other industry’s in which you can find Home Depot competing include building materials retail and distribution, consumer electronics and appliances retail, convenience stores and truck stops, and gasoline retailers. Areas that drive demand for Home Depot’s primary industry are home remodeling and new homebuilding. Products included in this industry include lumber and building supplies (50%), hardware, tools, and plumbing and electrical supplies (25%), and paint and lawn and garden products (5%), (Hoovers, 2008). The home center and hardware store industry is made up of national and regional chains and independent retailers. Home Depot, as an established corporation, has much strength behind its name. One of the largest strengths would be that of its brand recognition. Home Depot is known by all across the United States as a home improvement/supply store. Smaller......

Words: 867 - Pages: 4

Free Essay

Home Depot Book Review

...From Scratch: How a Couple of Regular Guys Grew the Home Depot from Nothing to $30 Billion, tells the story of Bernie Marcus and Arthur Blank, and how they are responsible for one of the biggest entrepreneur successes in recent history. This novel shows, first hand, how they became leaders within the home improvement industry. This was no easy task, but these two had experience. Bernie’s parents immigrated to America, and he grew up in a poor neighborhood, Newark, New Jersey. He dreamed of working in medicine, but could not afford the kickback he needed to pay Harvard Medical School to circumnavigate the quota they had at the time for people of Jewish ancestry. Bernie soon graduated from Rutgers, Newark, and worked as an intern in a pharmaceutical company. One day a customer came in that forever changed his life. Bernie was introduced to the world of discount stores when he met a man named Danny Kessler. A few years later Bernie worked alongside Arthur blank within one of the most successful home improvement chains at the time, Handy Dan’s Home improvement center. Bernie became the President and CEO, and Arthur was the vice president of finance. They were eventually fired, and faced legal trouble due to a false accusation. It was at this time that they decided to open up their own home improvement store, one that captured their own core values. They had high hopes of a store that far surpassed Handy Dan’s Home improvement center. The idea was to build a......

Words: 1570 - Pages: 7

Premium Essay

Analyzing Disclosures

...Disclosures The footnote describing cash, cash equivalents, receivables and inventories for Home Depot for the year ending on January 31, 2010, are all included in the Summary of Significant Accounting Policies. The Summary of Significant Accounting Policies is always the first footnote in financial statements prepared. This footnote is prepared in accordance with generally accepted accounting principles (GAAP) and contains the general policies for recording assets, liabilities, revenues and expenses. When firms wish to include more extensive remarks about these elements of the financial statement, they often add footnotes dedicated specifically to an area, such as inventories, investments, receivables and long term assets. For the year ended January 31, 2010, Home Depot decided to make all their remarks about cash, cash equivalents, receivables and inventory in the first footnotes, making this a many page footnote! There are no disclosures about cash since this is usually assumed to be bank balances and does not required additional comments. The disclosures about cash equivalents, however, is very brief, this indicates that the liquidity of Home Depots investments are highly liquid. Home Depots maturities will mature within three months or less and is reported with cash ("cash equivalent"). The footnote disclosure about receivables is rather interesting. First, Home Depot is mostly a cash or credit card retailer. They have some contractor house accounts where......

Words: 687 - Pages: 3

Premium Essay


...Leadership Case Study Jenee Tugwell Shawna Wentlandt, PhD Behavior in Organizations September 12, 2013 Abstract A leader shares their vision with their employees and convinces them that their vision must come to reality. In other words, a leader sells their dream to the employees and convinces them to accomplish it. The ability of the leader to influence others is the key to the success of every organization. Every member, of the organization, should have the same vision of the leader and be compelled to make the vision reality. The leader should make everyone feel like they are an integral part of the organization and are empowered to achieve excellence. This paper discusses Steve Jobs and Robert Nardelli’s leadership styles and their impact on their organizations and if they would be considered as ethical leaders. Leadership Steve Jobs was an unconventional leader. He demanded excellence from his staff and was known for his blunt delivery of criticism. But it was his sheer genius combined with his ability to articulate his vision and bring staff, investors and customers along on the journey. Steve jobs was a charismatic leader. He had the ability to influence people without logic. He built, arguably, the most creative company in the world. He was also exceptionally good at selecting talent within employees to work for him. Steve Jobs’s leadership style was complex. He was intensely focused when committed, confident enough to take risky leaps, and......

Words: 1678 - Pages: 7

Premium Essay

Global Business

...Global Business What is global business? It is not difficult to define this word. By definition, global business basically stands for a business which operates across the globe, rather than just in a country. However, global business is not something new or strange in today’s society, yet the exchange of goods over a great distance has already existed since very long time ago. Back in the Stone Age, anthropologists have already established trading in Europe over a long distance; According to the history, the Silk Road, a historical network of interlinking trade routes for the lucrative Chinese silk trade, is also a type of “global business” back in the old time. Although these two examples cannot perfectly represent what global business is, still, they had the same characteristics. In the 21st century, today’s society, global business has a much bigger and broader meaning, it could include creation and transfer of goods, skills, information, resources, and even services. Resources may include raw materials, capital, and energy, etc.; whereas goods include tangible goods and intangible goods, such as manufactured parts, sub-assemblies, and assemblies. Intangible goods, like service, may include financial, accounting, import and export. It is no longer defined only by the distance or number of offices companies have in countries around the world or how many products they sell internationally, yet, according to an article published on Business Inquirer, by James G.......

Words: 993 - Pages: 4

Premium Essay

Business Ethics

...Business Ethics Tajah Yesher El BUS 610 Week # 4 Instructor: Barbara-Leigh Tonelli November 3, 2013 Introduction Robert Nardelli was heavily criticized for his leadership style and methods he used during his tenure as CEO of Home Depot. The purpose of this paper is to describe Robert Nardelli’s style of leadership and take a position on whether or not his actions rose to the levels of unethical. This paper will attempt to incorporate the trait theory, behavioral theory, and situational and contingency theories then determine whether Roberts’ Nardelli’s actions were ethical or unethical. History Robert Nardelli was born in Old Forge Pennsylvania on May 17, 1948. Nardelli served in the Reserve Officers Training Corp. While serving in the reserves in 1971he earned a B.S. in business. Upon graduation Nardelli joined General Electric (GE). His father had also been employed there as an engineer and middle manager. In 1975 Nardelli went on to earn an M.B.A. from the University of Louisville, in Kentucky while working at GE. BY the year of 1988 Nardelli had climbed the corporate ladder and had become a company vice president. During his time at GE , they passed him over for a general management position so he left to take a position as a division leader with Case Equipment Co. Later, Nardelli returned to GE as the head of its appliance-manufacturing subsidiary in Canada from 1991-1992 and then held the top jobs at GE......

Words: 1184 - Pages: 5