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Home depot industry analysis and strategy
Strength and competitive advantages of home depot
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More handpicked essays just for you.
Home depot industry analysis and strategy
Strength and competitive advantages of home depot
Don’t take our word for it - see why 10 million students trust us with their essay needs.
Based on this intensive growth strategy, a strategic objective is to offer products at affordable prices. Home Depot’s cost leadership generic strategy supports this intensive growth strategy. To enhance its product selection, the company has developed strategic alliances and exclusive relationships with suppliers to market a variety of well-known brand names (Home Depot Product Authority, LLC, 2016). Lowe’s competitive business level strategy is a low-cost provider. Lowe’s is able to keep costs low through by purchasing in large quantities from suppliers, buying directly from manufacturers, using technology to control costs, and setting up distribution centers to service area stores.
Lowe’s has two different design layouts for their stores. One of their layouts that cater more to the larger metropolitan markets while the other layout is smaller an intended more remote location areas. The sizing of the store depends on which area and group that they are trying to reach. Stores that are owned by Home Depot stock product quantity amounts from 35,000 to 45,000 in a year for their stores (encyclopedia.com, 2017.)These products include power tools, painting materials, plumbing materials, electrical materials, appliances, gardening materials, landscaping items, and more. On the contrary, Lowes has a large number additional products in their store that include home décor items, home repair materials, home maintenance, and more that can be specially ordered (encyclopedia.com,
However with few exceptions, The Home Depot outperforms Lowe’s considerably. Lowe’s did outperform The Home Depot in revenue growth this most recent quarter, but this is just a snapshot when in reality both The Home Depot and Lowe’s have been experiencing very similar growth for years. Next is Earnings/Share, The Home Depot is earns over two times more than Lowe’s for one dollar of share price. Key differences can be found in profit margins, debt vs equity, and return on equity. The Home Depot has a considerably higher profit margin when compared to the margin of Lowe’s, and is much better at turning invested capital into equity.
If cuts are made or political actions shift, it can directly affect Home Depot. Incalculable spending by the government can affect Home Depot because they are one segment of their targeted consumer. Economic Factors: Millennials have been deemed as Home Depot's saving grace. Millennials make up the largest percentage of the population. And if they couldn’t buy houses, it’s a risk to Home Depot’s stability.
Annual Reports and Press releases The annual reports and press releases of both companies slightly differ though with a portion of similarity. Although, Home Depot’s annual report is composed at the headquarters of giving an inclusive report on all of the retail stores in the world, through the company’s website these reports posted can be found. Therefore, this being impartial and all-inclusive to an extent of analysis it would have to be done on the contrasts, similarities, profitability, and performance of different retail stores in different regions or countries. However, the shareholders and customers analyze the summary provided to know the general performance.
Home Depot is expanding rapidly within the USA but not internationally. Even though it has opened some stores in Canada and Mexico, 90% of the market is located in the USA (Dalavagas, 2015). The other weakness for Home Depot is the legal issues. Over the years HD has had many class action lawsuits. For example, in 2015, the company paid 1.8 million settlements for violating the Credit Reporting Act (LaFreniere, 2016).
Companies all over the globe will experience some sales and profit decrease. Home Depot in the growing housing industry benefited greatly from the houses being built. The accounting concept portrayed in this situation for home depot is called operating leverage. Operation leverage is when managers view a small change in revenue and magnify it to dramatic changes in revenue (Edmonds, Tsay, & Olds, 2011). With a decrease in the market for construction materials, Home Depot is experiencing a 3% decrease revenue and a 21% decrease in profitability.
Home Depot is a multi-million dollar industry, with over 2,000 stores around the world. They supply contractors with tools and products to build a house or supply Do-It-Yourselfers with home and business improvements. But with all the good Home Depot has done, they have their faults too. Home Depot has faced job cuts, ethical violations and the mistreatment of their customers. When a person hears job cuts, they assume that the reason for the job cuts is downsizing.
So the threat of new entry is LOW. 2-Threat of Rivalry: Beside Home Depot; the biggest rival to Lowe’s, there are some other small competitors such as Menards, Ace, and local small businesses trying to maintain their sales, but Lowe’s is in the growth stage which add an advantage to Lowe’s that any new Lowe’s outlet will appropriates
This report also includes various questions that me and my partner directed at home depot employees, to get a better understanding of the safety regulations of the home improvement giant. Company Information Home Depot is the world’s largest home improvement retailer with more than 2200 stores in the U.S, Canada and Mexico. They typically sell tools, construction products, and services like lumber cutting. Home Depot was founded
In the early 21st century, the economy was soaring causing people to use their money to have bigger and better homes, cars, and spending more money on discretionary items. Ideally, the job market was flourishing with people making more money than they have in years. Logically, this caused stores like Lowe’s, and Home Depot to sell more home building products than in previous years.
Home Depot’s corporate-level strategy is one that is external growth based on the number of acquisitions that occurred. However, as of late, the company has conducted internal growth that has resulted in the store count of 2,250 stores in the Americas. The growth of the company started with several horizontal-related integrations. For example, Home Depot acquired National Blind & Wallpaper Factory, Maintenance Warehouse, Total Home, and Del Norte. These acquisitions increased profits almost immediately.
Records show due to Walmart is all around the place, gross domestic prices have gone up in an amount. Even though Walmart set up bad labor and gives bad opportunities to their employees, customers still thinks it is very convenient due to the low price. Since it is all around the corner, it is easy for people to walk in and walk out in any minute. The shopping carts are also a useful tool for customers to pick up their products, they also have small drive shopping carts for disables so they can even come to the store without any help. Nothing is better than Walmart in my opinion.
Therefore, we have positioned and balanced our tenants in such a way that it’s hard for online firms to replace them. For instance, we have a shopping center that has Starbucks and restaurant that are surrounding the bigger retailers such as Ross and Office Max. Therefore, we draw customers to our shopping centers where all their needs can be met which is an advantage we have over online
• 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: