Strategic Management Analysis: The Home Depot

1348 words - 6 pages

Strategic Management Analysis: The Home Depot

History, Development, and Growth

The Home Depot, founded in Atlanta, Georgia in 1978 by Bernie Marcus and Arthur Blank, experienced growth rather quickly. The Home Depot is “the fastest growing retailer in U.S. history.” In 1981, the company went public on NASDAQ, moving to the New York Stock Exchange (NYSE) merely four years later in 1984. The 1980s and 1990s saw tremendous growth for the company, with 1989 marking the celebration of its 100th store opening. From the time of its foundation, The Home Depot has been able to continue growth by implementing and reinforcing its distinct core competencies. Additionally, The Home Depot ...view middle of the document...

A simple example includes why the company chose orange as its main color early on. Scientifically, the color orange has been shown to be correlated to productivity stimulation. Additionally, “The Home Depot” logo slants upward, indicative of a productive increase. When coupled with clean, customer-friendly store formats, these two things enhance buyer awareness, and thus, secure final sales.

Weaknesses

Customer Retention

Often times, do-it-yourselfers are not loyal to one particular store. These customers seek out the following attributes and are willing to travel to other stores to satisfy these preferences. The most common preferences amongst do-it-yourselfers are: convenience of store location, low prices, and product quality (value).

Pricing Effectiveness

Simply put, The Home Depot cannot fully guarantee lower prices than the competition, and thus, customers may fail realize that they are not always getting the best deal. More times than not, this realization tends to motivate customers to make purchases at a competitor’s store as opposed to The Home Depot.

External Analysis - Opportunities and Threats

All four of the following, whether opportunities or threats, carry a high priority for The Home Depot.

Opportunities

Market to Women (Demographic)

With women consumers making over half of household purchasing decisions, The Home Depot must more specifically attempt to appeal to them. With the recent advances made by competitor Lowe’s to specifically target women, The Home Depot must begin to consider a strategy to maintain and/or increase this market share in this sector.

Expand E-Commerce (Technological)

E-Commerce is becoming ever prominent in a modern world. With such means of purchasing goods (e.g. buying online), it seems highly plausible for retailers to address this seriously as a means to increase sales and overall brand image.

Threats

Competition

Although The Home Depot has had and will continue to have profound success within the home-improvement industry, it should never recede into a state of complacency. With competitors such as Lowes and Menards, The Home Depot cannot afford to continuously forfeit market share. Thus, consistent reinforcement and reinvention of core competencies to maintain its competitive advantage must be employed.

Lack of Product Differentiation

Simply put, The Home Depot lacks overall product differentiation from its main competitors. This is a threat, since it may impede the corporation long-term. Things such as superior customer service must remain paramount to The Home Depot in order to keep this lack of differentiated product appeal at bay.

SWOT Evaluation

Overall, the factors within The Home Depot’s SWOT Analysis are balanced. The corporation’s weaknesses transcend functional departments, and thus, make them easier to reinforce and correct across the board. The Home Depot is in a strong competitive position, being the...

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