Home Depot Structure Analysis

Home Depot Structure Analysis

Length: 1713 words (4.9 double-spaced pages)

Rating: Excellent

Open Document

Essay Preview

More ↓
Home Depot was founded in 1978 by Bernie Marcus and Arthur Blank in Atlanta, Georgia. With their store, Marcus and Blank revolutionized the do-it-yourself home improvement market in the United States. Home Depot began as a very basic store, operated in a large, no-frills warehouse. Home Depot carries over 35,000 products, with national brand names along with the Home Depot brand. At the start, Home Depot was able to offer exceptional customer service with knowledgeable employees who could guide customers through home renovation projects. Since its opening, Home Depot has experienced incredible growth, and today is North America's second largest retailer, and the largest home improvement retailer. Internationally, Home Depot has expanded into Canada, Mexico, and is beginning to operate stores in China. Home Depot's competition includes Sears, Ace Hardware and Lowes (the main competitor).

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).

The article centers on the leadership of Home Depot's Chief Executive Officer Robert L. Nardelli. He was born May 17, 1948, in Old Forge, Pennsylvania. He received his Bachelor of Science in business from Western Illinois University, and also earned an MBA from the University of Louisville.
Mr. Nardelli joined GE in 1971 as an entry-level manufacturing engineer. By 1995, he had risen to president and CEO of GE Power Systems, also having the title of GE senior vice president. In 2000 he left GE, and about 10 minutes after leaving he received a job offer from a member of the board of Home Depot.
Nardelli became CEO of Home Depot in December 2000 despite having no retail experience. Using the "Six Sigma" management strategy from GE, he dramatically overhauled the company and replaced its freewheeling business process. He changed the decentralized management structure, by eliminating and consolidating division executives. He also installed processes and streamlined operations, which implemented a computerized automated inventory system and centralizing supply orders at the Atlanta headquarters.

How to Cite this Page

MLA Citation:
"Home Depot Structure Analysis." 123HelpMe.com. 17 Feb 2020

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

The Home Depot: Stock or No Stock Essay

- The company I have chosen to research for my final paper is Home Depot. Home Depot’s principal assets, debt and stock information as of January 30, 2001 are as follows: (amounts in millions, except stock) Principal assets Merchandise Inventory – 10,625 Property and Equipment - 25,060 Debt Long-term debt – 8,707 Other long-term liabilities – 2,135 Stock – Common Stock, par value $0.05, authorized: 10 billion shared Issued – 1.722 billion shares Outstanding – 1.623 billion shares Home Depot was started in 1978 as a one-stop shopping for do-it-yourselfers....   [tags: Economics]

Research Papers
975 words (2.8 pages)

Swot Of Home Depot Essay

- Introduction Home Depot is a nationally and somewhat internationally recognized company. They not only have stores throughout the US but they have broken into Canada, District of Columbia, Puerto Rico and Mexico. They are the United States’ largest retailer behind Wal-Mart. Home Depot is known for its bright orange logo and its multiple departments available to individuals and businesses. They have primary operations in the home center and hardware store industry. Their strongest competition in that industry comes from Lowe’s, True Value Hardware, and Ace Hardware....   [tags: Business Analysis Management Strategy]

Free Essays
952 words (2.7 pages)

Essay on Business Analysis: Home Depot

- Business Analysis: Home Depot Introduction 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....   [tags: Business Home Depot Hardware Home Improvement]

Free Essays
1590 words (4.5 pages)

Home Depot & Capital Structure Essay

- Home Depot & Capital Structure Finding the perfect capital structure in terms of risk and reward can ensure a company meets shareholder expectations and protects a firm in times of recession. Capital structure refers to how a business puts its money to “work”. The two forms of capital structure are equity capital and debt capital. Both have their benefits and limitations. Striking that perfect balance between the two can mean the difference between thriving versus trying to survive. Equity capital represents money put up and owned by shareholders....   [tags: wacc, equity, debt]

Research Papers
987 words (2.8 pages)

Essay on The Home Depot 's Governance Structure

- Due to my interest in the company I am currently employed with I will be discussing The Home Depot’s governance structure as well as their strategic planning. The Home Depot is a public company and all information about them as well as their governance documents are public information and can be found on their website. The website opens up with the following statement: "The Home Depot strives to be employer, retailer, investment, and neighbor of choice in the home improvement industry. Corporate governance is part of our culture and is founded on our daily commitment to living values and principles that recognize our ethical obligations to our shareholders, associates(employees), customers,...   [tags: Corporate governance, Board of directors]

Research Papers
811 words (2.3 pages)

Sears Holdings Corp. (SHLD) SWOT Analysis, Porter’s Five Forces Analysis and Recommendations

- Our recommendation is to take Sears Holdings Corp. (SHLD) private through a private equity buyout. After doing so, we recommend implementing a centralized management structure and recruiting retail-savvy executives for the upper management team. We then recommend focusing on increasing value by capitalizing on SHLD’s real estate holdings through leasing agreements and increasing partnerships with complementary enterprises. Also, we recommend improving employee retention rates and retaining exclusive rights to private brands....   [tags: Porter’s Five Forces Analysis]

Research Papers
3014 words (8.6 pages)

Lowe's Case Analysis Essay

- External Analysis Macroenviorment Analysis: · Economic- The home improvement industry is below their normal state with the present economic status. Consumers are putting their wants such as adding new appliances or redoing their bathroom on hold. Construction companies are also in a slump; with the building of new homes on a downward slope the large orders of construction companies are not being made · Technological- Technological advances have played a huge role in the home improvement industry with advancements in appliances and power tools....   [tags: Business Analysis ]

Free Essays
1257 words (3.6 pages)

Home Depot vs. Lowes Essay

- Home Depot vs. Lowes The Home Depot Company Introduction Home Depot company offer a wide range of merchandise and services, and serve three primary customer groups: do-it-yourself customers, do-it-for-me customers and professional customers. A classic Home Depot store stocks approximately 40,000 to 50,000 product items, including variations in color and size. Major product groups include building materials, lumber plumbing, electrical and kitchen; hardware and seasonal, and paint, flooring and wall coverings....   [tags: Compare Contrast Home Improvement Essays]

Research Papers
3027 words (8.6 pages)

Essay about Home Depot Swot Analysis

- The Home Depot Case Analysis "The Home Depot NYSE: HD, headquartered in Vinings, Georgia, is a home improvement retailer that aims for both the do-it-yourself consumer and the professional in home improvement and construction. It is the second largest retailer in the United States, behind Wal-Mart; and the third largest retailer in the world, behind Wal-Mart and French company Carrefour. The Home Depot operates about 1,900 stores across North America. The company operates stores in the United States (including the 50 states, Puerto Rico, the United States Virgin Islands), Canada, and Mexico....   [tags: Strategic Management]

Free Essays
1765 words (5 pages)

Case Study of The Home Depot Essay

- Case Study of The Home Depot Preface This Essentials of Strategic Management assignment has been made by three persons which have been working together and individually to finish the assignment properly and in time. Secondly, we would like to thank the company whose websites we were able to visit and use, to get additional information that we could use for leading the assignment of Home Depot to a successful ending. We can say, that it was a pleasure to work on this assignment and would, in the third place, like to thank each other....   [tags: Papers]

Research Papers
16544 words (47.3 pages)

Nardelli started making the company look and feel like an army. He loved to hire soldiers, because they were already trained with the discipline that he felt necessary to run a successful business. Implementing military ideas was a key factor in Nardelli's plan to reshape Home Depot and make it a more centralized organization.
Revenue increased from $45.7 billion in 2000 to $81.5 billion in 2005, while profits rose from $2.6 billion to $5.8 billion. While this was a slower growth rate than Home Depot had experienced in the past, it was because past growth was due to the company's rapid expansion. Some board members criticized him for not maintaining the growth that the company had previously experienced, but Nardelli never wavered from his strategy. He always believed in running a business with a command-and-control type of structure. He used a functional structure in which he made all major decisions and monitored all activities while the staff just served as an extension of the management. This is not how the company was run in the past, and it made some of the Home Depot board members nervous. His ambition also drove him to expand the service component of the organization. This was stretching the company strategy into a whole new area in which Home Depot was not familiar.
In 2005 the company experienced stagnating share prices, which accompanied with the critical and autocratic management style, turned off employees and angered the investors. In 2006 questions about his leadership mounted criticism about his behavior caused the board to get rid of him in January of 2007. Home Depot replaced him with Vice Chairman and Executive Vice President Frank Blake. Blake had served as Nardelli's deputy at both GE Power Systems and Home Depot.

There are three main structures used within businesses; simple structure, functional structure, and multidivisional structure. Simple structure is mainly used in smaller businesses, and is categorized by the head of the company making all of the decisions and with all employees taking direction from the company head. In the functional structure the company maintains a CEO with a small corporate staff along with managers in organizational areas such as production, accounting, marketing, R&D, engineering and human resources. Separating the organizational areas of a company allows for specialization in each functional area. However, this separation can have a negative effect as it makes communication between these areas more difficult. The multidivisional structure consists of different divisions which represent separate businesses which corporate officers dictate responsibilities to. This allows officers to monitor each businesses performance more effectively. Officers can easily compare divisions and help improve the performance of a poorly performing division.

Home Depot's largest competitors are Lowe's, Ace Hardware and more locally, Menard's. Although these stores all carry similar items, they each differ in their strategy of attracting customers. Ace Hardware differs the most from the three as they are much smaller in size and therefore focus most on being customer friendly. Menard's is a privately held company which does not release its finances publicly, but is believed to be the third largest home improvement retailer in the United States, despite having locations in only eleven states. Menard's is similar in size and structure to both Lowe's and Home Depot. One of our group members happens to work at Lowe's, Home Depot's largest competitor and second largest home improvement retailer. This has given us some insight as to how they try to set themselves apart from Home Depot. Like Home Depot, Lowe's has a functional structure following a cost leadership strategy. Lowe's shows cost leadership by their low price guarantee, where they will beat any competitors price by 10% on any in stock product. Lowe's also uses a differentiation strategy to separate themselves from Home Depot by trying to appeal more to women, with the thought that women make most home design decisions. It is believed within the company that Lowe's stores are cleaner and that their blue and red colors are more welcoming than Home Depot's bold orange and black. They are also very customer focused by having "expert" employees who can give customers the knowledge needed to do projects themselves, shown by their "let's build something together" advertisements.

When Home Depot CEO Robert Nardelli resigned they named Frank Blake as his successor. Currently, Home Depot maintains a functional structure similar to the one implemented by Nardelli. However, as the new CEO Frank Blake has made several changes within the corporation. First, he replaced many top managers and discontinued daily catered meals for top management--instead sending them to cafeteria and buy their own lunch. The Board of Directors also approved the sale of Home Depot's supply division to increase shareholders value. HD supply was eventually sold on Aug. 28, 2007, for $8.5 billion.
After refreshing his top management team, Frank Blake hired many new employees and trained them to provide the best service to customers. Blake believed this would return some loyal customers back to Home Depot. He also decreased his base salary to $975,000 and limited possible bonuses and add-ons to $8 million, which depend on performance. Blake is also tried to improve top manager's morale, which was low after the strict store quotas from Nardelli. Blake said that he would not fire the remaining managers if they did not meet certain financial goals.
Blake tried to make peace with the enemies of his predecessor by inviting David Batchelder of Relational Investors to join company's board and hiring the Lehman Brothers for advice over HD supply. Blake has reintroduced the "Inverted Pyramid, which lays out the retailer's hierarchy, with customers and employees above the chief executive on the bottom". He is trying to distance himself from Nardelli and bring back the Home Depot that customers used to know.
The new Home Depot is trying to distance itself from a cost leadership business strategy and move closer to differentiation strategy. When Frank Blake became the new CEO of home depot, during his presentation to Merrill Lynch, he said "the key to Home |Depot's strategy is quality customer service delivered by knowledgeable professionals". To reinforce this quality of customer service, he is trying to launch a new program to hire some skilled professionals or "master trade specialists". He is also trying to renew the emphasis on training which he blames for eroded retailers reputation among customers.
Blake has given all staff members radios to respond to customer pages. If an associate has not responded to the customer request within a minute a notice is sent to the district manager and the incident is recorded. Blake is using this tool to ensure that every employee is reinforcing the quality customer service people expect. Another way that Home Depot is trying to differentiate itself is through the use of family programs such as Kid's Corner. Children can visit a Home Depot on the first Saturday of every month and participate in a project supervised by employees. The kids have their own orange aprons and are made to feel a part of the Home Depot team. Along with the family friendly theme is Home Depot's eco label program. Home Depot label's over 3,000 products to inform customers about products that will help conserve energy, conserve the forests and keep our waters clean (Barbaro). Blake envisions Home Depot in the future as "clean, uncluttered, well stocked stores with friendly, knowledgeable clerks to help you through your home improvement project". He also plans to have a greater presence in the international market.

Works Cited

Barbaro, Michael. "Home Depot to Display an Environmental Label ." New York Times 17Apr2007 08Mar2008 .

Grow, Brian, Diane Brady, Michael Ardnt. "Renovating Home Depot." Business Week 3974(2005): 50.

Howell, Debbie. "Home Depot strategy marked by rampant acquisition." DSN Retailing Today 12June2006 16FEB2008 .

Return to 123HelpMe.com