Home Depot Situational Analysis

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HomeDepot Situational Analysis

CompanyIntroduction

HomeDepot provides tools, construction materials, and services needed toimprove houses. Its headquarters is in Atlanta, Canada. So far, ithas over 150 branches in strategic places in every country where itis operating (The Home Depot, 2015). It has expanded to countriessuch as the United States and Mexico. These stores entail a varietyof products which people can use to improve their houses. Theorganization’s supply chain is organized in such a way that makesit possible for the management to order approximately 250,000 moreproducts that they do not stock within a small duration upon therequest of customers (The Home Depot). These products are stocked ina way that meets the needs of the communities they serve. Currently,it is the largest company in Canada and the United States.

PESTELAnalysis on Home Depot

Political

Theorganization’s processes are likely to be influenced by the tradepolicies which control the housing market (Gao, 2013). For instance,the American government has been trying to make shelter affordable toeveryone by reducing taxes on building items. Under suchcircumstances, Home Depot is forced to review and cut its operationalcosts to facilitate the reduction of the prices of products andservices. It is in the best interest of the company to take part inthe political activities in every country where they operate tocompete efficiently and create a positive image in the market.

Economic

Thecompany`s profitability depends on the financial status of Canada andother countries where it operates. A recession would reduce people`sability to spend on its products and services. Similarly, animprovement in such economies would enhance consumer`s expenditure,consequently impacting the firm`s revenue collection positively. Forinstance, the latest economic downturn in the United States hasaffected most countries. As a result, the company is likely toexperience reduced economic activities, which translates into reducedprofitability.

Social

Likemany organizations, Home Depot is subjected to social influenceswhich require it to enhance its corporate social responsibility (Gao,2013). For instance, the company established a foundation which seeksto improve the living standards of people across the regions where itoperates by providing tips on cost-saving building approaches. Italso focuses on improving the working conditions of constructors byteaching them how to arrange their tools and protect themselves inthe process. Home Depot has spent millions of shillings in theproject far. The firm has also renovated public gathering places,playground for children, and other social amenities for free as partof its CSR strategy.

Technology

Technologyis influential to organizations in the contemporary businessenvironment (Gao, 2013). For instance, Home Depot made substantialinvestment in its supply and value chain to outperform itscompetitors such as Lowe. Like most organizations, Home Depotestablished a website where consumers can window shop, place orders,negotiate with customer service representatives, and transactpayment. Technology enhances the efficiency of the firm’sprocesses. The company has also embraced information technology as astrategy for coordinating its multiple outlets within Canada andoutside the country.

Environment

HomeDepot has made a commitment to preserve the environment. For example,the company uses machinery whose carbon dioxide emissions arerelatively minimal compared to others. This initiative may have beenfacilitated by the influence emanating from the green movement.People have become environmentally conscious. Thus, they scrutinizethe activities of every corporation and how they impact thesurrounding. They also stock environmental friendly products toprevent the destruction of the natural habitat of animals throughdeforestation and mining among others. In 2011, Home Depot organizedprograms in America to promote the installation of solar panels andencourage the use of renewable energy.

Legal

Theorganizational processes are susceptible to the interferencesemanating from rules, laws, and regulations imposed by local andinternational governments. These restrictions are based onproduction, safety, and manufacturing. Therefore, Home Depot has theobligation of ensuring that their products and services meet therequired standards to avoid lawsuits. Moreover, the firm must make acommitment to conserving the environment. Likewise, nations such asAmerica have strict anti-discriminatory laws. Therefore, theworkforce of the business must reflect the diversity in the market toavoid criticism and penalties from the government. Its practicesshould provide an opportunity for individual growth.

ThePrimary and Secondary Markets for Home Depot

4Ps

Products:HomeDepot, being a home improvement company, offers retail services asits major services. They include advice from its field operators suchas plumbers (Williams, 2010). Likewise, they include home upgradingservices from contractors. The company also offers items such asequipment and building materials from manufacturers. Lastly, it hashouse brands such as tools, HDX, and paints among others. Some ofthis merchandise can be rented.

Place:HomeDepot’s sale transactions take place in its stores which resemblewarehouses. Additionally, the organization also generates revenuesfrom its online sales. It has applications which can help consumersto locate stores and place orders for home delivery. This aspect ofthe marketing mix portrays the firm’s focus on maximizing itscustomer reach.

Promotion:HomeDepot uses a combination of media platforms such as television,prints, radio, and social media to promote its products and services.It has extensively engaged in CSR initiatives such as the foundationfor safety and environment conservation to enhance its image in themarket.

Prices:TheCompany uses Everyday Low Pricing strategy to attract as manycustomers as possible. The approach is used in all the stores acrossthe world. Furthermore, the EDLP is aligned with the firm’s genericstrategy.

5Cs

Customer:The products meet the needs of consumers due to the Everyday LowPricing strategy used by the company. Moreover, the different brandsgive customers the opportunity to make choices which suit theirpreferences

Consistency:The Company maintains its pricing strategy and commitment toenhancing its image in the society through effective brand managementapproaches such as solar panel programs and the usage of machineswhich emit insignificant carbon dioxide to the atmosphere.

Creativity:The Company has integrated information technology in its value andsupply chain in a way that facilitates efficiency in the relatedprocesses.

Culture:Home Depot’s culture focuses on enhancing the motivation ofemployees. As a result, they remain committed to improving theexperiences of customers.

Communication:One of Home Depot’s strategic objectives is to improve its customerengagement with the aim of facilitating value co-creation. The mainpurpose of the process is to provide products and services which meetthe specific objectives consumers.

Shortand Long Term Goals

Long-termGoals

HomeDepot’s Long term goals include boosting sales, operationalcapital, and shareholder value. The company outlined strategies suchas customer service, product authority, productivity and efficiency,and appropriate capital allocation to achieve its objectives (Kurtz,2010). The effectiveness of this goal will be measured regarding thenumber of people who visit the firm`s website to get informationregarding the products offered.

Short-termGoals

Theshort term ambitions focus is fulfilling the ongoing programs such asenhancement of the company`s image in the market through effectivebrand management strategies (Kurtz, 2010). The company will continueto sustain its foundation with the aim of attracting more customersand continue to be the leading provider of construction materials andservices. The successes of this goal will also be assessed using therate of growth of the company`s market share.

SWOTAnalysis on Home Depot

Strengths

Oneof the company’s greatest strengths is its capacity to use theexcellent services to differentiate itself from others (Dunne, Lusch&amp Carver, 2013). Secondly, it attracts the most significantmarket share compared to its competitors because it has a strongbrand image. Lastly, the firm has established a close relationshipwith suppliers, consequently making it easy to cut the cost ofoperation.

Weaknesses

Competitionssuch as Lowe have a close relationship with some suppliers, thuslimiting Home Depot`s supply chain. Secondly, other companies caneasily imitate the Home Depot’s business idea, thus enhancingcompetition in the market. Lastly, the organization is at risk offinancial instability during economic crises because it is overdependence on the American market.

Opportunities

HomeDepot can expand its operations to other countries (Dune et al.,2013). Secondly, it can acquire or partner with other firms tofacilitate its business diversification as well as growth andexpansion. It can also expand its supply chain by establishing morerelationships with other suppliers.

Threats

HomeDepot faces stiff completion from aggressive companies such as Lowe(Williams, 2010). Likewise, it faces challenges from the threat ofsubstitutes, especially from the general merchandise retailers suchas Wal-Mart and COSTCO. An economic recession in the United States islikely to compromise the firm`s profitability since it is largelybased in the country.

References

Dunne,P. M., Lusch, R. F., &amp Carver, J. R. (2013). Retailing.Cengage Learning.

Gao,M. H. (2013). Culture determines business models: Analyzing homedepot`s failure case in China for international retailers from acommunication perspective. ThunderbirdInternational Business Review,55(2),173-191.

Kurtz,D. L. (2010). Contemporarybusiness.Hoboken, NJ: Wiley.

TheHome Depot (2015). Professionaland Contractor Services.

Williams,C. (2010). Management.Mason, OH: South-Western Cengage Learning.

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