Home Depot's Competitive Advantage

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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

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