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. The planning managers, at that time, needed to develop a strategic plan for The Home Depot that would take advantage of the current business landscape, “globalization, technological change, the importance of knowledge and ideas, and collaboration across organizational “boundaries”” (Bateman & Snell, pg. 6). In today’s business culture, many more industries are going global. U.S. retailers are looking internationally not only for sourcing and outsourcing products and services but for new consumer markets and growth.

The author’s of this paper will describe how The Home Depot functions in globalized world and keeps pace with the world business community through innovation and diversity. Lastly, the authors will discuss hoe The Home Depot is going “green” with the help of today’s technology.

Globalization

Globalization is a factor that is prevalent for companies wanting to succeed in gaining competitive advantage over their competition. Taking advantage of markets overseas can prove to be a process that can serve a company well. The Home Depot is no different. In 1998, the company saw the opportunity and went with it, opening stores in Santiago, Chile, and in San Juan, Puerto Rico. In order to avoid the obvious roadblocks of cultural and language barriers, as well as product barriers, the company shaped an alliance with a local retail chain. Prior to opening these stores, The Home Depot’s international portfolio consisted of stores located solely in Canada (Johnson, 1998). The company had the foresight to realize that certain barriers would likely come up with the location of these stores, and planned to team up with a local retail chain in order to ease some of the difficulties. This move allowed The Home Depot the ability to control the external factors involved in the openings.

While the company is taking the leap into international store chains, the percentage of their inventory made outside the United States remains low.