Home Depot Research Paper

Download this Research Paper in word format (.doc)

Note: Sample below may appear distorted but all corresponding word document files contain proper formatting

Excerpt from Research Paper:

Home Depot is the largest home improvement retailer in the world and one of the biggest retailers. It has consistently grown over the past decades, since its start at the end of the 1970s, and has expanded into Canada, Mexico and China. It has diversified its network of suppliers and continues to offer a large array of products to its clients.

Competition remains significant, both with the presence of Lowe's on the market and with that of local hardware stores. Particularly Lowe's, which is in a different stage of its life cycle, has opened new stores and continues to remain an important competitor, benefiting from its no.2 position on the market.

This paper aims to look at Home Depot's history and to have two types of analysis that will show the company's position on the market. The first is a SWOT analysis, the second is an analysis of Porter's Five Forces. Based on these, the paper will conclude with several recommendations regarding potential venues for development into the future.

History

The first two Home Depot stores were opened in Atlanta, Georgia, in 1979. The concept was to create a huge hardware store that would provide all necessary things from the do-it-yourself sector. The concept was intentionally grand, to the degree to which not only the warehouse was enormous, but boxes were piled up high to maximize the impression of huge space occupied by products.

Home Depot was listed on NASDAQ as early as 1981 and then moved to the New York Stock Exchange in 1984. The 100th store was opened in 1989, marking a decade of continuous growth that went on into the 1990s. In 1994, the company expanded into Canada, and, in 2001, on the Mexican market. In both cases, this was done through the acquisition of local retail players, Aikenhead in Canada and Total HOME in Mexico. In 2006, Home Depot moved outside the American continent, entering the Chinese market. This was also done through the acquisition of a local chain, namely The Home Way

SWOT analysis diagram

Strengths (S)

Size. Home Depot is the largest home improvement retailer in the world. The company's size allows it to create economies of scale and to benefit from this on the market as well.

Global outreach. Not only has The Home Depot expanded to Canada, Mexico and China, but it also has procurement offices in Canada, China, Mexico and India. This gives it the opportunity of finding the best prices and of maximizing its profit margins.

National brands and proprietary products. Home Depot has several national brands and proprietary products, including Ryobi® tools, RIDGID® tools, BEHR® paint, LG® appliances, and Toro® and Cub Cadet® lawn equipment

Innovation. Home Depot's expansion was based on its continuous innovation, both of its business model and the products it sells.

Constant revenues. Even if the U.S. And the world went through the hardest economic recession since the Great Depression, Home Depot's revenues dropped with only 2.31% from 2008 to 2012, which is encouraging and shows sustainability.

Weaknesses (W)

Saturation of the U.S. market. The Home Depot has as many as 2,234 stores in the U.S. And one can analyze the potential saturation of the U.S. market.

Debt. Home Depot has as much as $10.8 billion debt on its balance sheet

. A financial analysis would probably reveal how much of a problem that is, but, in absolute terms, this appears as a weakness.

Opportunities (O)

Foreign markets. On one hand, the Chinese market, where Home Depot has entered in 2006, is still growing and is very promising. On the other hand, new markets such as those in Latin America (Chile and Argentina) or Europe show great potential.

The online market. Home Depot should be able to capitalize, in the future, from increased online purchasing, with more clients preferring to buy via the Internet rather than go to the local Home Depot.

Threats (T)

Local competitors. In the U.S., as well as in some of the foreign markets, some of the clients may prefer the local hardware store next door to a drive to the nearest Home Depot outside the town.

The downturn in the housing market/economy. The fact that fewer houses are built during the economic crisis may affect, overall, the demand for some Home Depot products, particularly more costly ones that are used during the construction process.

Porter's five force's model

Threat of new entrants. This threat is considerably low, because of several arguments. First, Home Depot, along with its primary competitor, Lowe's are too well established on the market for them to be in any way vulnerable to the threat of new entrants. Second, it is very difficult for a new company to enter the market because of (1) the presence of Home Depot and Lowe's on the market and (2) the high initial costs that setting up such a business involves, as well as the need to develop a huge network of suppliers.

Threat of substitute products or services. This threat is also low, mainly because there are not so many potential substitute products or services to the home improvement ones. On a larger scale, there are a couple of things that could be considered, even if this doesn't really change the evaluation regarding this threat. One related to potential technological substitutes, accepting the idea that some home improvement processes can be undertaken with different, more efficient technologies. Another is that people may prefer to use a specialized company rather than a do-it-yourself process, in which case Home Depot could lose customers.

Bargaining power of customers. The bargaining power of customers is low to medium. Customers have other alternatives, namely Lowe's or a local hardware store, but one would assume that Home Depot is able to dominate the bargaining power of customers with a large network of stores and a continuously improving customer service. Additionally, Home Depot seems to be managing every aspect of its relationship with the consumer, including the way the products are arranged on the shelves.

Bargaining power of suppliers. The bargaining power of suppliers is low, mainly because Home Depot has a large and diversified network of suppliers. As previously mentioned, this network is spread around the world, including countries such as India or China, where the costs are likely significantly lower. By properly managing this large network of suppliers, Home Depot is able to reduce the bargaining power of suppliers, including by threatening to shift to a different supplier.

Intensity of competitive rivalry. This is a real threat, particularly given the competitive rivalry coming from Lowe's. There are several aspects worth pointing out. Home Depot is in a different phase of development: with a large number of stores, it has virtually saturated its share of the U.S. market and aims, in the present, to expand its business through international expansion, while, at the same time, maximize its profits per store. Lowe's continues to open new stores, building its market share and further expanding on the U.S. market. At the same time, Lowe's seems to appeal to a different category of consumers, particularly to the women segment, capitalizing on its differences from Home Depot. Another category of rivalry may also come from the traditional, local hardware stores. While these cannot compete with Home Depot when it comes to home improvement, they can do so on a smaller scale, offering more personalized services.

Recommendations

Following the SWOT analysis and the Five Forces analysis, one of the conclusions is that the U.S. market is becoming saturated for Home Depot. With this in mind, one of the recommendations is to continue the international expansion that has been started with Canada, Mexico and China. The Chinese market, for example, offers enormous opportunities. Certainly, the company needs to take into account a large range of issues, from cultural differences to the political…[continue]

Cite This Research Paper:

"Home Depot" (2013, September 30) Retrieved December 6, 2016, from http://www.paperdue.com/essay/home-depot-123449

"Home Depot" 30 September 2013. Web.6 December. 2016. <http://www.paperdue.com/essay/home-depot-123449>

"Home Depot", 30 September 2013, Accessed.6 December. 2016, http://www.paperdue.com/essay/home-depot-123449

Other Documents Pertaining To This Topic

  • Home Depot

    Home Depot Mission statement / goal of company/vision The Home Depot, Inc. has established itself above and beyond its competitors by employing a development approach of building up its core capabilities by providing each consumer a distinctive encounter via shop modernization, having a number of exclusive products, offering top quality service representatives, and specialized information technologies. Subsidiaries associated with Home Depot, Inc. offer specialized solutions to equally the individual property owner along

  • Home Depot

    Home Depot Industry overview about home depot and its position in the Market in comparison to its closest competitor Lowe's Home Depot Inc. became a corporation in 1978 and currently has over 1500 stores. The stores are full service warehouse style, stores that sell more than 40,000 products related to home improvement. (HD Full Description) Multex Investor also reports that, Home Depot operates four wholly owned subsidiaries: Georgia Lighting, Inc., Apex Supply Company,

  • Home Depot

    Home Depot In order to answer the main question of the price to be paid within one year time for 100 shares of the company, it is important to know the price of one share at that point of time based upon the past performance of the shares and its' expected movements. If compared the price and performance of the Home Depot shares since 1984, which is the time since when

  • Home Depot Is the Second Largest Retailer

    Home Depot is the second largest retailer in the world, but like every other company there are issues that can make even this business more productive. The home products market is very competitive around the world and The Home Depot has taken advantage of much of the American market while leaving the international market largely untouched. This analysis will diagnose the company's situation, determine what issues need to be addressed

  • Home Depot in New York City

    Home Depot in New York City Comparison between Downtown and suburban locations There are notable differences in trading area size and characteristics between a downtown and a suburban location for a Home Depot as depicted in the case study; The Home Depots located in the suburban are smaller in size and deprived f any space for expansion as compared to those located in town. This is noticeable from the Home Depot located in

  • Home Depot s Blueprint for Culture Change Start

    HOME DEPOT'S BLUEPRINT FOR CULTURE CHANGE Start reading Harvard Business Review (HBR) article: Charan, R. (2006). Home Depot's Blueprint Culture Change. Harvard Business Review, April, Vol 84 Issue 4 p. 60-70. Assignment Expectations (Content) Based HBR article Charan (2006),pages paper Home depot's blueprint for culture change Steps the team took to make the change The Home depot team undertook four main steps to ensure that the company changed its mechanisms are metrics, processes, programs,

  • Home Depot You Can Do

    Furthermore, the Home Depot employs many community members providing them with a livelihood enabling them to earn a living. Additionally, the special activities of the Home Depot in the community in which they are located results in benefits realized by community members in various areas such as housing, workshops, clinics, and other specialized services of the Home Depot. The slogan used by the Home Depot of "you can do


Read Full Research Paper
Copyright 2016 . All Rights Reserved