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Home depot industry analysis and strategy
Home depot business model strategy
Home depot and its operation strategy
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Home Depot is the largest retailer in the home improvement industry in the United States. Since its formation, Home Depot has undertaken intensive expansion and acquisition. Home Depot 's growth and success has been linked to its leadership, generic, and intensive growth strategies. The firm 's general strategy offers a variety of products at the lowest price in the market ("The Home Is Where Our Story Begins," 2016). The Home Depot initial strategy was to be the cost leader in the market. For instance, when Marcus and Blank opened their first store, their operational model was to offer low prices every day to their customers. The strategy was a hit among customers as the first store was very successful. Just as the founders had predicted, …show more content…
Home Depot intensive growth strategies include product development, market development, and market penetration. One of Home Depot intensive strategy is market development. The firm is focused on establishing its presence in new markets. The company method of penetrating new markets is buying out strategic companies. For instance, Home Depot bought Interline Brands to launch its entry into the non-industrial business. The strategy is to gain market presence by acquiring firms with a strong market presence. This approach lowers the barriers to entry of a new market. The company also launches the new product to ensure they gain a fair share of the market. Home Depot launches new products like Glacier Bay, Commercial Electric, and Husky. New product lines contribute to growth and competitiveness. Expanding the product mix allows the firm to appeal to both new and old customers sustaining the customers the substantial gains. Lastly, Home Depot uses market penetration as its tertiary strategy ("The Home Is Where Our Story Begins," 2016). Market penetration allows for gaining market share in both new and old markets. For instance, Home Depot implements special offers and discount sales to acquire more customers from the existing
Established as the older company of the two, Lowe’s ranks forty-second as a Fortune 500 company. Established in 1946 as a small hardware business, Lowe’s has grown into a 40,000 product, global market enterprise that consist of 1,710 stores nationwide expanding into the countries of Canada, Mexico and Australia (Lowe's Internal, 2010) Home Depot, founded in 1978, is the fastest growing retailer in the United States. Ranked twenty-ninth as a Fortune 500 company, Home Depot continues to remain the number one do-it-yourself retail store in America. These two companies may sell products of the same nature, but comparing their Code of Ethics is their way of setting themselves apart. (Home Depot Internal, 2009)
In the early 2000’s Lowe’s was rapidly intensifying its presence nationwide. The company carried a varied assortment of home improvement products and catered to the needs of retail as well as commercial business customers. Lowe’s expanded their reach by acquiring a 41-store chain, Eagle Hardware and Garden, and engaging in a strategic alliance with HGTV to obtain a more profound existence in their market (Rouse, 2005). By 2004, Lowe’s operated almost 1,000 stores with plans to continue expansion across the nation (Rouse, 2005). The company has a core competency in helping customers meet their home improvement needs at a low price. In order to use this core competency to gain a competitive advantage, the company has focused on key functional strategies. To continue their success, Lowe’s must specifically focus on marketing, logistics, and human resource management strategies.
Home Depot was started in 1978 as a one-stop shopping for do-it-yourselfers. As the fastest growing retailer in U.S. History, Home Depot went public on NASDAQ in 1981, and moved to the New York Stock Exchange in 1984. By 1989, Home Depot had opened its 100th store. In 1994, Home Depot moved into Canada with the acquisition of Aikenhead’s, in 2001, they moved into Mexico with the acquisition of Total Home. Home Depot acquired The Home Way in China in 2006.
Lowe’s Companies, Inc. is averaging the opening of about two stores per week. This is part of an unprecedented two billion dollar store expansion, which is the most aggressive expansion in the company’s fifty-five year history; thus, magnifying Lowe’s locality and customer convenience in the United Sates home improvement marketplace. Lowe’s new superstores are currently the largest in the home improvement marketplace, averaging a retail space of about 150,000 square feet. (http://www.lowes.com)
Home Depot is the brainchild of Bernard Marcus and Arthur Blank and came about after both men lost their job in the home improvement industry in 1978 (Parnell, 2014). Home Depot has acquired several smaller home improvement stores in both the U.S. and abroad through the years which enabled it to position itself as the world’s largest home improvement chain (Parnell, 2014). Home Depot focuses on the do-it-yourself segment of the market and sells sells tools, construction products and services. Marketing is a strong point for the company. They are able to maintain a competitive advantage by keeping themselves available to their customers at all times. Home Depot has been using both online and offline marketing efforts. The internet has become a very useful tool for the company and part of the reason that they are leading the market in DIY stores. Home Depot currently provides DIY videos on YouTube and Vine that cover current topics that consumers are likely to be interested in. They also have social media pages on Facebook and Twitter, where they have a huge following. They provide online communities where actual employees answer consumer’s questions and provide assistance on
Opening its doors for the first time in 1946, Lowe’s is now the second largest home improvement chain in the world, operating over 1,800 stores in the United States, generating $56.2 billion in sales and $2.6 billion in net income for 2014 (Lowes Newsroom, 2015). Employing around 265,000 personal making them one of the top employers in the nation, there is no question that Lowe’s must be doing something right. According to Lowes Newsroom, “Lowe’s professional customers represent approximately 30 percent of total sales, approximately 16 million retail and professional customers are served each week. (2015, para 3) “Never Stop Improving”, is Lowe’s slogan; encouraging employees and customers to work together to maximize their in store
The Home Depot is one company, of many, in the home improvement industry. This market is relatively easy to enter, in fact many materials, previously only at home improvement facilities are now available at e-commerce sites, such as “Amazon.com”. There are multiple suppliers, but those in the industry attempt to negotiate contracts with suppliers, limiting them to whom they may supply. Buyers have a great deal of power as the products sold are easily able to be substituted by products at other organizations in the industry. However, the Home Depot has built its organization so that replication of their processes and systems would be extremely difficult to replicate. They value their employees, their customers, the environment, and finance
Conclusion: Given the current economic status the home improvement industry is in a low spot with sales. With the decrease in building new homes we have to focus mainly on home improvements. The three strong points we have against existing rivalries are our great locations, quantity of quality products, and convenient customer service. With these great qualities we can move ahead and stay ahead of our competitors during these times.
The Article, "Renovating Home Depot," describes how, since the arrival of the new Chief Executive, Robert Nardelli, the business strategy has shifted to a more militaristic style. In the beginning, Home Depot was a "decentralized, entrepreneurial" business, and now is switching to a different management style. Nardelli loves to hire ex-soldiers, and is perhaps using the armed services as a role model for the new business structure. Under Nardelli's leadership, Home Depot is becoming more centralized and the good financial reports following this are signs that it a good strategy (Grow 50).
|Business |The Home Depot, Inc. is the world's largest home improvement retailer. The company incorporated in 1978 in |
Primark is a subsidiary company of the Associated British Foods (ABF). It was first opened in Dublin in June 1969, which under the name Penneys. Four more stores were launched within a year in Ireland afterward. Currently, Primark operates in over 270 stores in 9 different countries in Europe such as United Kingdom, Germany, Spain, etc. Primark capitalised on the fast-fashion tendency that began in the 1990s as well as the capability to produce garments cheaply in Asia where clothing values fell dramatically (Shawcross, 2014). It offers a diverse range of products which includes kids clothing, menswear, womenswear, accessories, home ware, beauty products and confectionary. According to TNS market research ranking, Primark ranks the second
The 3 percent decline in sales causing a 21 percent decline in profits can be attributed to the identification of the accounting concept of operating leverage. Operating leverage is what business managers apply to boost small changes in revenue into sizable changes in profitability. Fixed cost is the force managers use to attain disproportionate changes between revenue and profitability. Therefore, when all costs are fixed every sales dollar contributes one dollar toward the potential profitability of a project. Once sales dollars cover fixed costs, each additional sales dollar represents pure profit. A small change in sales volume can significantly affect profitability (Edmonds, Tsay, & Olds, 2011). So, therefore, if sales volume increases,
Second, the rapid development of the Home centers such as The Home Depot, with prices 30% less than the traditional hardware store made Black & Decker to lose market share to Makita. As per Exhibit 2 we could notice that in the home center channel that represent 25%of the trades...
Home Depot, well-known by its big, bright orange box logo, is a retailor of numerous popular brands of construction and home improvement products. Reach the Top® manufactures a popular brand of ladders and scaffolding already sold by Home Depot, and...
Household and personal care product companies are making efforts to stimulate sales in a variety of ways, such as entering new markets, creating new product categories, adding new distribution channels, and acquiring (and divesting) businesses to be able to compete in this highly competitive industry.