Free Essay

Home Depot

In: Business and Management

Submitted By pageml
Words 1174
Pages 5
Introduction
The purpose of the paper is demonstrate all that has business models that have been learned by me in the course BUSU 630. To demonstrate the lessons learned, through different models taught, will look at Home Depot in how they are the leader of their industry. Than it will delve into how they can maintain their leadership over their major competitor Lowes; this paper will include a brief background on each company, and how they stack against each other in history’s timeline.
Analysis
Brief History
The Home Depot was founded in 1978 by Bernie Marcus and Arthur Blank; the first stores that opened were approximately 60,000 square feet having in stock over 25,000 SKUs which made look competition look small. To the consumer they also appeared to have more product than they actually did, as they placed boxes on shelves super high give the illusion of even more product (homedepot.com). Currently Home Depot operates just over 2, 200 stores across all 50 states, Puerto Rico, Mexico, Virgin Islands, and Canada. Compared to their top competitor Lowe’s, Home Depot is relatively young company. Carl Buchan originally founded Lowe’s in 1946, where the first store was in North Carolina originally named the North Wilkesboro Hardware Company. The name Lowes stemmed from that fact they had the lowest prices originally as they eliminated wholesalers and dealt directly with manufacturers (lowes.com). Currently Lowes has just over 1,825 stores throughout the United States, Canada, and Mexico (lowes.com). Somewhere along the lines, Lowes slipped up and Home Depot passed them up, making Home Depot the number one worldwide in their industry.
There are several things that Home Depot has started doing that has separated them, and put them ahead of the rest of those in the hardware/ lumber industry; they have created value through their strategic choices, sustainability efforts, and inventory.
Value through Strategic Choices
At the heart of operations strategy are choices made in three primary areas (Swink, M. 2013 pg. 28). These three area are the critical customer, value proposition, and capabilities. Critical customers are the customer or customer segment receiving the firms focus because it is critical to the firm’s current or future success (Swink, M 2013 pg. 28). To Home Depot that is predominatly the contractos that buy their supplies from them, then the homeowner. They make this very clear in their mission statement.
“The Home Depot is in the home improvement business and our goal is to provide the highest level of service, the broadest selection of products and the most competitive prices. We are a values-driven company and our eight core values include the following:
• Excellent customer service
• Taking care of our people
• Giving back
• Doing the "right" thing
• Creating shareholder value
• Respect for all people
• Entrepreneurial spirit
• Building strong relationships” (Homedepot.com).
The value proposition is all of the tangible and intangible “benefits” that customers can get by obtaining the use of products offered by a firm (Swink, M 2013, pg. 28).It would seem that Home Depot is succeeding in this area based upon their rising gross profit. January 30, 2011 they reported gross profit of 23,304,000 million dollars than Febuary 30, 2013 they reported gross profit of 25,842,00 million dollars (finance.yahoo.com). Clearly, in the minds of the consumer they have value. As far as their capabilities, which concern their operational activities that the firm can perform well; these can define the types of problems and solutions that operations can address proficiently (Swink, M 2013, pg. 28) it does not seem capabilities are an issue as their profit keeps rising, so these problems if any are not standing in the way. Below in the follow chart is depiction of the value chain, for home depot their ultimate would be to make the center where each overlaps together and grow it. Sustainability
Sustainability is being able to meet the needs of the present without compromising the ability of future generations (Swink, M. 2013 pg 534). Home Depot is not just just worried about pollution but addressing the three Ps: People, Planet, and Profit. Home Depot goal is to achieve their profit goal and grow but not damaging the planet, or harming future generations. Home Depot has a branch called Home Depot Foundation that does things for veterans, through this programs they have teamed up with many non-profit organizations and build or customize homes for veterans, wounded warriors and their families so that they are not without (homedepot.com). They are going back to their mission statement and taking care of people. in saving the environment they currently have more that 3,900 products that are Eco Friendly.
Inventory and Forecasting Inventory is the supply of items held by a firm to meet demand (Swink, M. 2013 pg. 212). At Home Depot they have variety of inventory from finished goods to raw materials for customers to transform. Home Depot general keeps large warehouses where there stock is kept than they also have large warehouse for buffer items. Buffer items are extra inventory held to guard against uncertainty in demand or supply (Swink, M. 2012, pg. 213). This can set some hardware stores apart as many hardware store do not have the room to keep a buffer stock for that supposed rainy day like Home Depot. It seems that by keeping a buffer stock, they prevent stockout cost. In personal experience, my aunt and uncle prefer to shop at Lowes due to their son works their but Lowes has a way of constantly being out of the product they need so they go to Home Depot and they always have it or can have it ready in a day, this is due to Home Depot buffer stock. Home Depot is also always doing cycle counts to keep ther inventory current, which is something that Lowes struggles with. Home Depot has done excellent job in developing a forecasting program that predict the needs upon the season so they know items to keep in stock at each store and which items to switch out.
Conclusion
Home Depot, a much younger company than their older top competition Lowes, making Lowes number two in the world for that industry, which make Home Depot number one. Home Depot has excelled at putting the critical customer first, creating value in their strategy plans. They have a strong sustainability plan in action that continues to grow. Lastly, they keep their inventory top notch.

References
Swink, M., Melynk, S., Cooper, M., & Hartley, J. (2013) Managing Operations Across The
Supply Chain. McGraw Hill Irwin. New York
Home Depot (2013) Retrieved on 10/26/13 from http://www.homedepot.com/b/webapp/catalog/servlet/HomePageView?storeId=10051&catalogId=10053&langId=-1&cm_mmc=SEM|THD|G|BT1|HighVolumeExact&gclid=CJuL-47-t7oCFQVBQgodmDgA6w Lowes (2013). Retrieved on 10/26/13 from http://www.lowes.com/cd_About+Lowes+Landing+page_567636953_?storeId=10151&langId=-1&catalogId=10051 Home Depot at Yahoo Finance (2013) http://finance.yahoo.com/q/is?s=HD+Income+Statement&annual

Similar Documents

Free Essay

Home Depot

...Home Depot Background: The Home Depot’s got started in the year 1978, Bernard Marcus, Arthur Blank, Ron Brill, and Pat Farrah were the founders. The owners Marcus and Blank got the $2000,000 that was required from a group of investors; also they were given 2 years to get their business up and running. They did lease three unoccupied buildings from J.C. Penney in Atlanta, Georgia, determining that city was the best place to start up their first store. They successfully gathered another $3.5 million in the form of loans, which was used to procure inventory. Furthermore they hired 20 employees to help run the management end of the business. On June 22, 1979, the very first three Home Depot stores, staffed by 200 workers, opened up in Atlanta. The organization began with Marcus as the chairman of the board of directors and CEO, and Blank as the president. Home Depot’s Profile: * Employees: 256,300 * CEO: Robert L Nardelli * Subsidiaries: EXPO Design Center; Maintenance Warehouse; Georgia Lighting; Apex Supply Company; Your "other" Warehouse; Home Depot Commercial Direct Division; Total HOME * Notable Stores: Home Depot; EXPO Design Center; Villager's Hardware; Del Norte * Major Competitors: Lowe's; Menard; TruServ. Lowe’s at a Glance: Lowe’s and Home Depot are the two largest retailers in the home improvement industry. Lowe’s being the 2nd largest in the industry, however, It was originally incorporated as “North Wilkesboro Hardware” in...

Words: 358 - Pages: 2

Free Essay

The Home Depot

...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.......

Words: 2091 - Pages: 9

Premium Essay

Home Depot

...THE HOME DEPOT, INC. Introduction 1. Identify the company’s mission, vision, and primary stake holders. 2. Identify the five forces of competition and how it impacts the company. 3. Create a SWOT analysis for the company identifying the major strengths, weakness, opportunities and threats. 4. Based on the SWOT analysis, recommend how the company may capitalize on its strengths and opportunities, and minimize its weaknesses and threats. 5. Discuss the various levels and types of strategies the firm may use to maximize its competitiveness and profitability. 6. Determine the recent corporate governance issues that are currently affecting the company’s decisions and report how the company is or should be handling the issues. 7. Use 4-5 external sources as part of your assignment. Introduction Home Depot, Inc. is the world’s largest home improvement retailer with 2,246 retail stores in all 50 states in United States, the District of Columbia, Puerto Rico, Virgin Islands, Guam, 10 Canadian provinces, Mexico, and lastly China. HD (Home Depot) provides employment to approximately 321,000 full time employees. HD stock is traded on the New York Stock Exchange (NYSE:HD), is included in the Dow Jones industrial average and Standard & Poor’s 500 index. This company sales a range of building materials, home improvement and lawn and garden. (Poor's, 2011) Home Depot was found by Bernie Marcus and Arthur Blank, on June 29, 1978. Their vision was to create......

Words: 2359 - Pages: 10

Premium Essay

Home Depot

...The Home Depot Home Depot’s Plan Home Depot had several intentions in regarding the use of its organizational talent to gain a competitive advantage in the Do It Yourself Industry. The first of these is to ingrain the importance of corporate success through human capital. In the current economic environment, corporate success and growth; even survival, is dependent on the firm's ability to create employees that are motivated, skilled, and committed. The concept of how important human capital is to corporate success can be summed up with a quote from Nobel Prize-winning economist Gary S. Becker says that “The basic resource in any company is the people. The most successful companies and the most successful countries will be those that manage human capital in the most effective and efficient manner” (Brocaglia, n.d.). The Home Depot embraced this idea when the company considered its organizational talent as a competitive edge. The second of these intentions is first-class customer service through engaged employees. Employees are the first line of defense and influence when it comes to a firm's level of achievement in customer service. Customer service and satisfaction become the competitive advantage that allows for retaining customers longer even through severe price competition; and that satisfaction should be paramount through all stages of customer interaction (IBM, 2007). By placing such an emphasis on a satisfying customer experience, The Home Depot......

Words: 1407 - Pages: 6

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

Premium Essay

Home Depot

...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......

Words: 863 - Pages: 4

Free Essay

Home Depot Story

...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,......

Words: 4426 - Pages: 18

Premium Essay

Evaluate the Home Depot

...10-mar-2015 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......

Words: 1074 - Pages: 5

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

Premium Essay

Home Depot Competitor Analysis

...Primary Competitor Analysis Competitor Name: The Home Depot, Inc Headquarters: Atlanta (Cobb County), Georgia Locations: 2,200 Retail Stores in U.S., Canada, and Mexico Annual Revenue: 2013-$74,754,000,000 2014-$78,812,000,000 2015-$83,176,000,000 Slogan/Motto: “More saving. More doing.” Primary Products: -Building Materials (40,000 different kinds) -Tools/Hardware -Appliances (kitchen/bath/décor) -Lawn and Garden Products -Electrical, Plumbing, Flooring, & Heating/Cooling Supplies Primary Services: -Home Depot Home Services (national installation service with pre-screened independent contractors) -Free How-To Clinics -Kids Workshops Primary Target Market: The Home Depot’s primary target markets are the do-it-yourself customer, the do-it-for-me customer, and professionals. This mainly includes Generation Y white, Hispanic, and black males, across the United States with pretty much any education level. Distribution Strategy: Network of distribution centers for store replenishment and ...

Words: 1055 - Pages: 5

Free Essay

Home Depot Case Study

...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......

Words: 2464 - Pages: 10

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

Premium Essay

Home Depot Fortunate 500

...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...

Words: 765 - Pages: 4

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

Free Essay

Forging Your Path the Home Depot

...Forging Your Path with The Home Depot Shannon Burten CGD 218 Visiual Literacy in Business David Hannum June 13, 2016 Forging Your Path with The Home Depot What is career advancement? In the article, Career advancement: What it is and how to achieve it, Louie (2013) defines it as, “…one of the most important elements for employee satisfaction and retention at a company” (para. 1). Home Depot’s main goal is employee satisfaction which correlates directly to Louie’s definition of career advancement. Career advancement is a huge opportunity at the Home Depot that many people tend to pass off after becoming complacent in different field positions. There are eight career areas within Home Depot and each area is interchangeable. The areas include: retail, merchandising, supply chain, services, contact centers, civilian, corporate, and technology. If an employee begans a career with the Home Depot in any of these areas and decides to advance, they can move vertically within that area or horizontally to a different career area. Victor Lipman (2013), contributor of Forbes Magazine, explains that, “clear opportunities for career advancement are an "especially powerful" employee motivator” (p. 1). Lipman (2013) also notes, "At times when career paths were clear, individuals tended to be more motivated, with tangible goals to work towards. At times when career paths were dim or nonexistent, individuals......

Words: 806 - Pages: 4