Business Analysis: Home Depot

Business Analysis: Home Depot

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Business Analysis: Home Depot

When two upper level managers decided to relinquish their jobs with the small hardware store they were working at, “Handy Dandy” they had a vision and set out to develop a company that catered to the “do-it-yourselfer,” and with that idea, The Home Depot was born. As the company exploded from one store into hundreds, it soon became the largest supplier of building supplies and home improvement materials in the United States. However, this was a short-lived, other companies were closing in on the same idea and the market was shrinking. The planning managers, at that time, needed to develop a strategic plan for The Home Depot that would take advantage of the current business landscape, “globalization, technological change, the importance of knowledge and ideas, and collaboration across organizational “boundaries”” (Bateman & Snell, pg. 6). In today’s business culture, many more industries are going global. U.S. retailers are looking internationally not only for sourcing and outsourcing products and services but for new consumer markets and growth.
The author’s of this paper will describe how The Home Depot functions in globalized world and keeps pace with the world business community through innovation and diversity. Lastly, the authors will discuss hoe The Home Depot is going “green” with the help of today’s technology.
Globalization is a factor that is prevalent for companies wanting to succeed in gaining competitive advantage over their competition. Taking advantage of markets overseas can prove to be a process that can serve a company well. The Home Depot is no different. In 1998, the company saw the opportunity and went with it, opening stores in Santiago, Chile, and in San Juan, Puerto Rico. In order to avoid the obvious roadblocks of cultural and language barriers, as well as product barriers, the company shaped an alliance with a local retail chain. Prior to opening these stores, The Home Depot’s international portfolio consisted of stores located solely in Canada (Johnson, 1998). The company had the foresight to realize that certain barriers would likely come up with the location of these stores, and planned to team up with a local retail chain in order to ease some of the difficulties. This move allowed The Home Depot the ability to control the external factors involved in the openings.
While the company is taking the leap into international store chains, the percentage of their inventory made outside the United States remains low.

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In 1998, the company boasted that only three percent of their inventory was from outside of the United States, while in 2003, the level was only nine percent. Quite a record for a company that maintains sales of over 30 billion dollars annually worldwide (Johnson, 1998, p. 2).
As The Home Depot is expanding its brand into the global marketplace, The Home Depot is placing just as much emphasis on bettering its technology. The company is planning to spend $500 million dollars on technology, along with an additional $900 million on logistics, through the year 2010 (Dignan, 2007), with plans of creating a customer delivery tracking system to better monitor deliveries. The company is taking their technological advancements to a completely new level with the introduction of compact fluorescent light (CFL) bulb recycling in individual stores. The Home Depot is taking advantage of the new “green” lifestyle that consumers are adopting, and offering a one of a kind service. While CFL bulbs can save energy, they are known to contain small amount of mercury, which is toxic if released into water or air. Customers can bring in any expired CFL bulb, and The Home Depot will direct the proper removal of the bulbs to the appropriate recycling facility (Green Technolog, 2008, June 24). The company is being innovative in their efforts to make the most of all types of technology that are available to them.
The word best used to describe diversity would be “variety.” At The Home Depot, diversity has expanded in various ways. Within the company, The Home Depot has found was to be diverse for the employees as well as for the customers and the communities. For example, in early 2001, The Home Depot launched Diversity Through Culture, an initiative designed to educate, enlighten, and encourage associates to share culture experiences in our store support centers (The Home, 2009).
Diversity Through Culture is celebrated in its inaugural year at the Atlanta Store Support Center. Affinity groups are another diversity that The Home Depot offers. With the Affinity groups, associates are given the chance to support and network with varies groups. The groups of members in which the associates may assist have a common liking or natural attraction. Some may belong to the affinity for same sex orientation, national origin, affinity for disability, and the military affinity. Just to name a few, of the many diverse groups that are provided by The Home Depot.
The Home Depot takes pride in their company as well as the members and customers who support them. By being diverse The Home Depot strives to give back to their communities. With the diversity of The Home Depot, the company expands its business, the knowledge, and ability to different communities, countries, and ethnic groups with the sole purpose to satisfy everyone.

Innovation is a key factor in the success of the survival of The Home Depot. Executive vice president Tom Taylor states, "Innovation continues to be a key driver in the success of our business. We must be innovative in everything we do, and we count on our suppliers to develop products that will respond to changes in the marketplace, advances in technology and the changing needs of our customers," said Tom Taylor, executive vice president, Merchandising and Marketing for The Home Depot.
"Each year our innovation awards honor our top suppliers for their forward thinking, responsiveness and product development that best serve our customers (Taylor T., 2005, August 30 ¶ 1).” Innovations of The Home Depot affect the company, an affect the customer. As consumers look at new, faster, and better products it is important that the company offer and deliver updated products and merchandise that is suitable for today’s constant changes. With the introduction of newly introduced products, society looks for the advantages in advance technology and with the help of the suppliers; The Home Depot is there to serve the customer with their needs and wants.
Merriam-Webster’s dictionary (2009) defines ethics as, “the discipline dealing with what is good and bad and with moral duty and obligation, a set of moral principles, a theory or system of moral values, the principles of conduct governing an individual or a group, a consciousness of moral importance.” Ethics at The Home Depot are clearly defined in the Business Code of Conduct and Ethics. The Business Code of Conduct and Ethics states “The Home Depot requires its Directors, Officers and Associates to conduct themselves and the Company's business in the most ethical manner possible. We share the responsibility for protecting and advancing the Company's reputation, and ethics and values must drive our business strategies and activities. This Business Code of Conduct and Ethics provides you with the guidelines for meeting your ethical and legal obligations at The Home Depot (The Home, 2008, October, ¶ 5).”
The Home Depot’s upper management, during the planning stage, clearly planned that ethics and ethical behavior of everyone working for the company, play a big role in conducting any and all business. In a memo to all directors, officers and associates: Chairman and CEO Frank Blake said, “Acting with integrity and doing the right thing are the driving forces behind The Home Depot's extraordinary success (The Home, 2008, October ¶ 4).”
The external environment of today’s economy may have played a role in an incident involving four, now former employees, of The Home Depot, when in 2007 a tipster informed The Home Depot upper management that four employees had allegedly received kickbacks totaling roughly 1 million dollars, from un-named vendors in Asia. The employees were fired citing “not following company ethics and business conduct (Los Angeles, 2007, August 1).”
The Home Depot is a highly diverse organization that is highly committed and dedicated to its customers. Organizational leadership at The Home Depot starts with the customer and store associates at the top and senior management at the bottom. Their philosophy is “whatever-it-takes” and delegates the frontline managers to lead “It is your business, your division, your market, your store, your aisle and your customer (Home Depot, 2009).” The Home Depot continues to remain flexible with the changing global markets and continues to develop strategic and tactical strategies to tap international markets.

Bateman and Snell (2009). Management: Leading and Collaborating in a Competitive World, Eighth Edition. [University of Phoenix Custom Edition e-text]. McGraw-Hill Companies. Retrieved on February 11, 2009, from University of Phoenix rEsource, MGT 330-Management, Theory, and Application
Dignan, L. (2007). “Home Depot plots IT, supply chain improvements”. Retrieved February 11,
2009, from
Green Technolog. (2008, July 28). “Home Depot offers CFL Recycling in Stores”). Retrieved February 11, 2009, from http://greentechnolog/com/2008/06.html.
Johnson, R. S. (1998). “Home Depot Renovates”. Retrieved February 11, 2009, from
Los Angeles Times. (2007, August 1). “Home Depot fires four in alleged kickback scheme”. Retrieved February, 11, 2009, from
Merriam-Webster’s Dictionary. (2009). Retrieved on February 11, 2009, from
Taylor, Tom. (2005, August 30). Retrieved on February 12, 2009, from
The Home Depot. (2007, October 5). “Business Code of Conduct and Ethics.” Retrieved on February 13, 2009, from
The Home Depot. (2009). “Home Depot Values”. Retrieved on February, 12, 2009, from
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