Centralizing Home Depot

Centralizing Home Depot

Home Depot’s reason for decentralization was a strategic decision when the company was new and needed to understand the demands for their products. The company encouraged the store managers to be entrepreneurial, and be able to manage their stores on an individual basis, ordering merchandise that best fitted the needs of the consumers locally. This decentralized approach offered the new company to meet its mission statement of being able to offer a low-cost product beating whatever competitors where out there. This approach gave them the freedom, and on the spot decision making process to be able to evaluate new products, keeping up with the ever changing market. These processes of offering different products and trying to better understand the customer needs enabled the company to grow quickly through the late 20th century. This accelerated growth posed an appetite for other companies, like Lowers to be started, as they found a lucrative market in providing cheaper home supplies.

The decentralized approached worked for Home Depot was that they did not have multiple stores, as the housing infrastructure back then was not as larger as it is today. The demands on these stores where high, as the consumers found that they could get many of the products they needed for home improvement at a fair price, in one location. Decentralization allows businesses to take full advantage of their division of labor by sharing decision-making across the organization. This will empower the employees at the local stores, and let them improve their performance by being able to operate efficiently to demands without senior management approval. Another advantage of decentralization is allowing for the managers of business ar...

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.... The foresight of Bernie Marcus and Arthur Blank enable the company not only to deal with an aggressive competitor. “Lowes” but also take the company into the 21st century. The new company also leveraged technology to streamline efficiencies, also created new incentive programs to promote innovation. Throughout the start of this new business back in the early 80‘s, Home Depot had set up alliances with many manufactures to sell their products like; Ryobi® tools, RIDGID® tools, BEHR® paint, LG® appliances, and Toro® and Cub Cadet® to continue to meet the demands of its customers (Homer TLC, Inc, 2003 - 2010).

Reference

Homer TLC, Inc. (2003 - 2010). Our History. Retrieved from Home Depot: http://corporate.homedepot.com/wps/portal/History

Jones, G. R. (2010). Organizational Theory, Design and Change (Vol. 6th). Upper Saddle River, New Jersey, USA: Prentice Hall.