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Case study of employee engagement
Research paper on importance of employee engagement
Case study of employee engagement
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The Home Depot is one company, of many, in the home improvement industry. This market is relatively easy to enter, in fact many materials, previously only at home improvement facilities are now available at e-commerce sites, such as “Amazon.com”. There are multiple suppliers, but those in the industry attempt to negotiate contracts with suppliers, limiting them to whom they may supply. Buyers have a great deal of power as the products sold are easily able to be substituted by products at other organizations in the industry. However, the Home Depot has built its organization so that replication of their processes and systems would be extremely difficult to replicate. They value their employees, their customers, the environment, and finance …show more content…
multiple, “give back” programs, making a difference in the lives of many. These strategic decisions have enabled them to grow and maintain, even in difficult economic times. In order to ensure continued success I believe they need to implement succession planning; improve international markets, going beyond Canada and Mexico; and implement contractual agreements between the Home Depot and those it uses to provide installation and service to its customers. Their value statements are a clear and constant reminder of what is important. These are core values are rare and would be very difficult for any competitor to replicate. The Home Depot has reviewed its industry and taken strategic steps, providing it with the largest share of the market in the home improvement industry. They have developed an effective e-commerce tool in anticipation of the need to expand access to products. I believe that the Home Depot will continue to have a competitive advantage in the home improvement industry. HISTORY The Home Depot was founded in 1978 by Bernie Marcus and Arthur Blank.
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, …show more content…
2014) The Home Depot is the world’s largest home improvement specialty retailer, with more than 2,200 retail stores in the US, Canada and Mexico. Their stock is traded on the New York Stock Exchange (NYSE:HD) and is included in the Dow Jones industrial average and Standard & Poor’s 500 index. Robert Nardelli, (Wikipedia.org) became CEO of Home Depot in December 2000. Wikipedia indicates that Nardelli replaced Home Depot’s”… entrepreneurial culture of innovative product design with one focused on relentless cost-cutting.”(Flaherty, (2013) Nardelli implemented an automated inventory system and centralized supply orders. He automated processes, streamlined operations and focused on cost cutting. Under his leadership revenue increased from $45.74B in 2000 to $81.51B in 2005. Home Depot’s stock value remained steady while, at the same time, Lowe’s stock doubled in value. (Colvin, 2007) According to Colvin, Nardelli “…increased Home Deposit’s return on capital…. ten full percentage points above the firm’s cost of capital …something investors love to see. …… Investors need to believe that the company can invest increasing sums of capital on which it will earn that spread. The market clearly didn’t believe …..” this could happen. (Colvin, 2007) Nardelli cut back on knowledgeable full-time employees, with trade experience and replaced them with part-time employees with little relevant experience. (Lubline, 2007) Nardelli left the Home Depot in January, 2007. When Nardelli left the Home Depot Frank Blake was named as his replacement. Blake had been the Vice Chairman and Executive Vice President during Nardelli‘s tenure. According to a Fortune article, “How Home Depot CEO Frank Blake kept his legacy from being hacked” by Jennifer Reingold, dated October 29, 2014; Frank Blake often called himself “the accidental CEO”.
(Reingold, 2014) Nardelli had a hard edge and was driven by the numbers, whereas Blake preferred a management style of a service culture. He wanted engaged employees who excited customers with their knowledge of the latest tools and products available for purchase. He wanted to dominate the professional contracting business. He realized that employee morale is an important factor in the retail business. “He slowed store growth to focus on quality over quantity.”(Reingold, 2014) He spent money to train associates. He was determined to build a sense of pride among the associates. He felt that the training would provide for better customer service.5 Blake believed that customer service was the key to Home Depots ability to succeed. (Aluise,
2012) INDUSTRY ANALYSIS The Home Depot, when founded, revolutionized the American home improvement industry. Their stock prices grew over 270% in the five year period from 2000 through 2015. (Appendix B & C) The Home Depot has a market share of 27%, the largest share in the industry. Home Depot offers services to those interested in Do-It-Yourself, Do-It-For-Me, and Professional customers. (Trevis Team, 2016) There are five basic forces impacting the state of competition in an industry. (Porter, 1976) It is the collective strenght of these five forces that define the profit potential in an industry. (Porter, 1976) (Appendix D) Using Porter’s five forces analysis Home Depot, as any firm, has several factors that could have an impact on its future success and/or failure. Home Depot has a great deal of competition. There is a chance that “new entrants” may enter the home improvement industry. They have strong relationships with their suppliers, but the suppliers might be persuaded to terminate the relationship and provide merchandise to competitors. There are great opportunities for substitutions. Buyers have a great deal of power, as there are multiple firms selling home improvement products. There are many competitors in the home improvement industry. There is very low or no cost associated with consumers switching to another firm. There are moderate exit barriers associated with leaving this industry. Home Depot’s main competitor is Lowe’s. Home Depot must strategically develop and maintain a competitive advantage if they plan to keep and/or gain market share. (Meyer, 2017) Customers have many choices, when selecting a home improvement supplier, as companies in the industry sell similar/substitutable products. There are many buyers in the industry, providing opportunities to gain market share, given the correct strategies are implemented.
Established as the older company of the two, Lowe’s ranks forty-second as a Fortune 500 company. Established in 1946 as a small hardware business, Lowe’s has grown into a 40,000 product, global market enterprise that consist of 1,710 stores nationwide expanding into the countries of Canada, Mexico and Australia (Lowe's Internal, 2010) Home Depot, founded in 1978, is the fastest growing retailer in the United States. Ranked twenty-ninth as a Fortune 500 company, Home Depot continues to remain the number one do-it-yourself retail store in America. These two companies may sell products of the same nature, but comparing their Code of Ethics is their way of setting themselves apart. (Home Depot Internal, 2009)
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
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.
Any time the company is looking into software project, there are areas associated with risk such as cost, time and relationship with suppliers. However, for Harley-Davidson, “collocation of suppliers with production facilities and their integration into company’s development process was the essential part of long-term relationship development”. Through a continued focus on collaboration and strong supplier relationships, the company could position itself to achieve strategic objectives and deliver cost and quality improvement over the long-term. Since, at that time company had no centralized system in place to handle relationship with suppliers and consequently, most of company’s time was spent on supplier management activities. For example, reviewing inventory, expediting and data entry. Furthermore, each supplier had different information systems for “Maintenance, Repair, and Operations (MRO), Original Equipment (OE), Parts and Accessories (P&A), and General Merchandising (GM) purchasing activities”. The systems, already provided by supplier, had to be further modified to meet individual need at each location, such as “the OE system at Harley-Davidson’s York, Pennsylvania site was different from the OE system in Kansas City”. However, due to long-standing tradition of gradual change implementation and focus on quality, quick transitions were unwelcome and did not come easy for the company. The size of the project determined how much risk was involved in terms of cost, time, and supplier relationships. The idea of switching to global purchasing system was seen as a threat not only in supplies and production flow interruption, but also in damaged dealer/customer relationships and lost sales. Furthermore, failure of the sy...
Lowe’s employs more than 260,000 people in more than 1830 stores; these employees are trained to provide exceptional customer service as well as receiving up-to-date product knowledge to assist customers with their improvement needs. In addition, Lowe’s has upgraded store information technology infrastructure to assist employees in accessing product data faster and easier. This is accomplished by providing the sales team with computers that have Internet access, and Ipad’s and Iphone’s loaded with specialized apps (Lowes, 2014).
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 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.
Lowe’s is leading the way by example. Lowe’s believes that creating long-term partnerships is a win-win situation for both sides of the deal. Lowe’s is the second largest home appliance retailer in the country, by working hand in hand for twenty-six years with Whirlpool, the largest marketer and manufacturer of home appliances. Whirlpool and Lowe’s have worked together to become unmatched in bringing their customers a high quality product and a very low competitive price. Through a tremendous logistical effort Whirlpool and Lowe’s have created a one of a kind Innovation Tour. A semi-trailer transforms itself into a functioning kitchen to show customers cutting edge appliances that will be available at Lowe’s in the future from Whirlpool and Kitchen Aid. As Lowe’s motto states, Lowe’s truly is “Improving Home Improvement”. (http://www.businesswire.com/)
Target Corporation's strategic structure plans are continuing staffing the organization and assemble a well-talented management team. Also, continue recruiting and retaining employees with the needed experience. Another option is to acquire, develop and strengthen resources and capabilities in performing critical value chain activities to match changing market conditions and customer expectations. Target Corporation needs to explore multidivisional or matrix organization structure to facilitate strategy execution, delegate authority, and managing external relationships (Thompson, Peteraf, Gamble and Strickland, 2016).
| |stores serve three primary customer groups: do-it-yourself customers who are completing projects themselves, |
Second, the rapid development of the Home centers such as The Home Depot, with prices 30% less than the traditional hardware store made Black & Decker to lose market share to Makita. As per Exhibit 2 we could notice that in the home center channel that represent 25%of the trades...
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.).
Once Home Depot’s marketing plan contains a thorough description of the scissor lift, it will then focus on the branding, pricing, and distribution of the lift. The plan will also need to include a product branding and pricing strategy, as well as examine how the pricing strategy supports the branding strategy. In addition, Home Depot will prepare a distribution channel analysis from which it will create a distribution strategy, determine whether the company is going to use a push or a pull strategy, and how the distribution strategy fits the product.
Bianchi, C. (2006). Home Depot in Chile: Case study. Retrieved January 10, 2011, from http://www.carlospitta.com/Courses/Gestion%20Financiera%20Internacional/Cases/Home%20Depot%20Case.pdf