A stock price this low had some investors concerned that a hostile takeover of the retailer might become a possibility. The new CEO, Frank Blake, recognizing that the corporate culture would not sustain a profitable company, started to make changes within the organization after his hire in January of 2007. Nardelli had taken The Home Depot from 1,134 stores in 2000 to 2,000 stores in 2005, with a plan on opening another 400-500 additional stores from 2005 to 2010 (The Home Depot, 2005). Frank Blake recognized The Home Depot had become too stretched and needed to focus on rebuilding the customer service that once had made The Home Depot a strong contender among retail stores and the number one home improvement retailer. This caused Blake to stop the expansive store growth, close 15 underperforming stores, sell the newly acquired supply, and close the EXPO design centers.
There was also a 33 percent increase in the DIY market which leads to a 38 percent sales increase. Home Depot stock did not grow in 1993 due to the increase in large warehouse mega stores that sold similar home improvement items. So they went back and reviewed ways the organization could stand out from the competition. They developed a three-tiered strategy plan that included; price, assortment, and service. Along with this plan, they tested several non-traditional store designs they thought would help increase sales.
What has each competitor done in the past year to change the playing field? Lowes as one of the biggest Home Depot competitors has introduced smart home shopping which improves the shopping experience for their customers. The company has developed a smart home application and installation service that carters for the shopping process of their customers. The application and installation kit is an improvement of their flagship smart home application in 2012 (Hamblen, 2014).
Home Depot faced a wide range of competitors, both direct and indirect, in its pursuit of its market dominance. Among its direct competitors were well-established companies such as Lowe’s Companies Inc., Ace Hardware Company, Sherwin-Williams Company etc. Home Depot’s indirect competitors are local electrical and plumbing supply stores, independent hardware stores etc. Furthermore, the rise of e-commerce brought a new class of indirect competitors, including online retailers such as Amazon. Despite the intense competition, Home Depot maintained an edge over its closest rival, Lowe's, in the online space.
The strategic management tools I chose to assist Sun City Boards are Porter’s Competitive Strategies. The purpose of Porter’s Competitive Strategies is to help a business set up a strategy that incorporates a competitive advantage with the market scope. The conclusions that Sun City Boards will be able to draw from this tool are how it should focus its efforts in terms of product cost or product differentiation, as well as how much of the market the company should try to compete with. Given the market Sun City Boards is in, I would suggest using a focused differentiation. According to Porter’s Competitive Strategies chart, focused differentiation falls under the “differentiation” competitive advantage column and the “narrow” market scope row.
Suggests strategies & Evaluates strategies Go Back to the Basics While it’s tempting to follow every newly-released marketing trend, Lowes insists to stop chasing trends, but Instead, look at the big picture and design their own marketing strategies which simple is merging traditional tactics - like direct mail - with Facebook ads, content marketing, Invest in Training and
Introduction to Home Depot Home Depot stands out as the market leader in the home improvement industry. With the concept envisioned by two coworkers, Bernie Marcus and Arthur Blank, involving creating a chain of home-improvement warehouses selling a variety of products with a customer-oriented expert staff under one roof, Home Depot opened its first stores in 1978 in Atlanta. It concentrated heavily on offering a huge selection of home improvement merchandise at the lowest price, with customer service associates dedicated to providing expert guidance to consumers (primarily home owners and contractors). The stores were an instant success following which Marcus and Blank initiated an aggressive well-planned expansion program. (Bailey, 2014)
Home Depot’s strategic goal is to expand into new markets, further develop existing markets, and explore opportunities around the world. Over the past four decades Home Depot has grown a great deal and currently has a market share of 27.2%, and is the leading home improvement market with net sales of $83.2 billion for fiscal 2014.
Home Depot was founded in 1978. The cofounders are Arthur Blank, Bernard Marcus, Kenneth Langone, Pat Farrah and Ron Brill (Farfan, 2017). The corporate head quarter is in Atlanta, Ga (Farfan, 2017). “The first Home Depot store opened, it was the largest home improvement specialty store, with about 25,000 different home improvement products available in each store” (Farfan, 2017). Today, an average Home Depot store will have up to 40,000 different products, and Home Depot customers have the ability to special order 250,000 additional products not stocked in the brick-and-mortar Home Depot stores (Farfan, 2017).
Their cost leadership strategy is regularly stated in their 10k's: To
Home Depot was founded in 1978 by Bernie Marcus and Arthur Blank, headquartered in Atlanta, Georgia. As of 2023, Home Depot operates as a large-scale retail chain with over 2,000 stores across North America(United States, Canada & Mexico). The company currently has over 400,000 “associates” and service the home improvement industry targeting do-it-yourself (DIY) customers and professional contractors. Their product categories include building materials, tools, hardware, appliances, paint, flooring, plumbing, electrical, outdoor, and garden products. They also offer other products such as seasonal products (holiday decorations) and home goods (furniture and home décor)
Competitive strategy is a theory describing how a company pursues competitive advantage over other firms across their market scope. According to Porter’s Generic Strategies, a firm’s market scope will either be ‘Broad’ (Mass Market) or ‘Narrow’ (Niche market) and their competitive advantage will be either due to their ‘Cost’ advantage or because they are ‘Differentiated’. These descriptions create four main strategies a firm could be ‘Cost Leadership’, ‘Cost Focus’ ‘Differentiated Focus’ or ‘Differentiated Leadership’. Greggs, a well established high street bakery shop specialising in the production of sausage rolls, cakes, pastries and sandwiches, are known for their low selling price but relatively high quality (compared to other high street
Through culture change, Home Depot was able to execute some required training. When senior executives Nardelli and Donavon took over he knew there was a lot of opposition in the organization towards the proposed changes he wanted to implement. The company was being hammered by the media/market because of low shares. They went from $70 in the late 1990s to $20 in the early 2000s, plus failing to increase same-store sales. Even though the company did an effective job explaining what change is necessary, they were not as successful explaining why.
• Acquisition: Newell knew that to remain in the market and keep growing on year on year basis, it has to keep expanding and add new product lines to its business. Keeping this in mind Newell acquired different businesses having products in the hardware home products but different from those of Newell. This is clear from the case as Newell made 30 acquisitions in 20 years. • Service Quality:
In 1985, Harvard Business School Professor Michael Porter published his new book “The Competitive Advantage” which focuses the organisation internal environment. In this book, along with an in depth analysis of the competitive strategies which are Cost leadership, differentiation and Focus, he also concentrates on the firm’s value chain. 1. Cost Leadership: In cost leadership, an organisation aims to become the low cost provider in its industry. Examples are Aldi, Lidl, Ryan Air etc 2.
