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Product quality importance
Competitive advantage and its building blocks
Competitive advantage and its building blocks
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Abstract Pick any organization you are familiar with and analyze its competitive advantages. Being specific, how did you determine the type of advantage? Has this advantage changed over time? If so, how? If not, what keeps the environment static? Prepare a two page (double-spaced) essay. The paper should be 12-point font, Times New Roman, be at least 500 words, and include a final source list. Keywords: Home Depot, competitive advantage, cost leadership, differentiation Home Depot’s Competitive Advantage There are no definite answers about what competitive advantage means to an organization. An organization could consider as a competitive advantage to a brand reputation, low-cost production, …show more content…
Home Depot offers from home-building and construction materials to kitchen appliances such as stoves, refrigerators, and microwaves. It is clear that, when I talk about Home Depot’s competitive advantage, I will be addressing the benefits of the products they provide to its customers. And, in order to determine the types of advantage, I have used the generic strategy approach. The generic strategy approach guides the company to capture the biggest market share (Smithson, 2017). The company's generic strategy is broad differentiation combined with cost leadership (Smithson, 2017). Home Depot offers quality products at a lower price; the lower price is achieved by lowering operational costs and improving processes. Moreover, the cost minimization is achieved by developing exclusive relationships with suppliers. The broad differentiation is achieved by offering unique products such as high-quality DIY building materials and providing expert advice to customers during and after purchase (Smithson, 2017). In other words, in order for Home Depot to have a competitive advantage over its rivals, it has “product authority”. Product authority refers to having the best mix of exclusive brands and innovative products such as cordless outdoor power tools, digital projectors that displaces animated images on screens and windows, and SMART LED light bulbs (Kalogeropoulos, …show more content…
Even though Home Depot still emphasizes on offering high-quality products at a lower price than its rival Lowe’s, currently the company uses broad differentiation as a primary strategy and cost leadership as a secondary strategy. In order to keep sustainable advantages using broad differentiation, Home Depot focuses on product development. The product development contributes to create new products and attract more customers. Through the product development strategy, the company has created several house brands like Husky, Glacier Bay, and Commercial Electric. These brands are Home Depot’s advantages and provide the company to generate higher revenues and give leverage to expand its product mix. Another competitive advantage that Home Depot has created is the “interconnected retailing”. The interconnected retailing provides the customer to shop in-store while at the same time order online (Denman, 2016). This will give the customer a unique experience and boost sales because the design is to improve efficiency and minimize costs. In 2016, the online sales increased 21.5% and many customers prefer this option because the product can be picked up in-store or sent home. The uniqueness of the design is that the customer can purchase the product while in the store and pick up immediately. The other advantage is that if a product is not in stock, you can order online and they will send it to you
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.
If we refer to products, people often take them as the things we get from suppliers with a price. Apparently, this is a definition from the perspective of exchanges and does not quite catch the essence of the meaning of product in the marketing discipline. In this regard, Rothschild (2009) offered a probably better definition for products as a bundle of benefits for customers. This definition also offers an important perspective for JB Hi-Fi to understand its products. Because after all, JB Hi-Fi is only a retailer and all its home theatre products are sourced from their manufacturers. If JB Hi-Fi only sees its products as the tangible parts, it may miss out the very important parts of the competition. However, if JB Hi-Fi sees the product as a bundle of benefits it can offer to its customers, the tangible part is only part of this bundle. There is much more for JB Hi-Fi to offer to improve the benefits to customers, and at the same time differentiate itself from its competitors.
Home Depot’s slogan, “More saving. More Doing.”, promotes Home Depot’s marketing strategy with more appeal for customers with less money to spend. Home Depot carries major brands but also carries Home Depot exclusives and proprietary brands which save customers money. Home Depot carries major brands like Dewalt, Hampton Bay, Homelite, and Martha Stewart Living. They also carry proprietary brands such as Ryobi, Rigid, Behr, LG and Toro.
Home Depot operates in the home improvement retail industry that comprises of retailer that sell appliances, lumber, building material, kitten fittings and other home improvement products aimed at improving existing structures. Companies functioning in the home improvement industry buy products from retailer and manufacturer based all over the world, and then put those products for sale on the market to three types of buyers, generally characterized as: do-it-for-me, do-it-yourself, and professional customers. The home improvement retail industry is well established industry and is highly attractive and there is high level of price competition among the key players of the industry as the products lines are all the same.
“The Miles and Snow’s typology is based on the idea that managers seek to formulate strategies that will be congruent with the external environment” (64). There are four types of strategies that can be established under this typology that is, the prospector, the defender, the analyzer and the reactor. While prospector is innovative and risky, the defender is conservative and concerned with stability. I have mentioned above that HBC is now able to compete with premium brands retailer due to an acquisition of Saks Fifth Avenue, and yet they are not utilizing low-cost leadership as their main competitive strategy. Nonetheless, Daft and Armstrong showcases a perfect example of the defender positioning using HBC’s case. “HBC has carefully monitored its margins and spending, maintained its discount brand (Zellers) in order to successfully compete with Walmart, and survived as one of Canada’s only two national department store” (65). Then they further describe how HBC refurbish its brand, “HBC hired Bonnie Brooks in 2008 to revamp its brand”, “She dropped many underperforming product lines and brought in trendy product lines such as Coach and Top Shop” (65). This explanation also supports my
Home Depot is built on the principle of creating value for our stockholders while never forgetting our values. We seek to be profitable, responsible, and balance the needs of our communities. Throughout our company, our associates are challenged with finding ways in which we can provide the best products for our customers, provide the best possible work environment for our associates, have a positive impact on the communities in which we operate, and provide excellent returns for our stockholders. Working in a Store Support Center, rather than a corporate headquarters, their leadership team knows that the most important people in the fabric of the company are the store associates and store leadership teams. Frank Blake was appointed as the Chief Executive Officer of Home Depot in January 2007 (Sellers, P.).
Since the home improvement market is highly competitive, Lowe’s needs to apply the best strategies to deal with Home Depot’s rivalry. This rivalry is as a result of the identical nature of the products handles by the two companies. The company should structure its distribution framework to pull down costs as the firm adjusts to changes in demand. The company should set a 6-month budget for research and development projects. To outperform Home Depot, Lowe’s should seek to expand its in-store services as well as the international operations.
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 began changing consumer’s perspectives about how they could care for and improve their homes, by creating a “do-it-yourself’ concept. According to the founders, the customer has a bill of rights at the Home Depot. The bill of rights entitles the customer to the right assortment, quantities and price (of tools and home improvement supplies) along with trained associates on the sales floor. Home Depot describes their business strategy as a three legged stool, which stands for customer service, product knowledge and availability and disciplined capital allocation. (Moskowitz,
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).
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...
of a firm to attain new forms of competitive advantage (Müller, 2011). It is due to these
Hendersern and Stern 2000, ‘Untangling the origins of competitive advantage’,Strategic Management Journal, Vol. 21, pp. 1123-1145.
...M. E. (2008). Competitive advantage: Creating and sustaining superior performance. New York: Simon and Schuster.