Home Depot, Inc. is one of the largest retail stores that deal with home improvement. The home Depot retail store was first launched in Atlanta, Georgia in 1978, and since then, it has grown and opened branches in various locations. The retail store aims at being the largest retailer of home improvement (Bianchi, 2009). The retailer shop has therefore employed various strategies to obtain the largest market share.
It has worked tirelessly to meet the demands of its customers across all the regions in which it operates. The home Depot retail store employs a corporate strategy that provides it with the right direction towards its success. This paper gives a stringent analysis of the core competencies, corporate structure, corporate culture, and various strategies employed by Home Depot, Inc.
Core competencies of Home Depot, Inc
Home Depot, Inc. is a one-stop shop that provides excellent products and customer services (Bianchi, 2009). The customers’ bargaining power is reduced because of the variety of products and services offered by the retail store.
Products exist in different prices and quantities and customers can choose the products according to their purchasing power. In addition to the high quality products, Home Depot, Inc. has unique strategies that value what customers purchase. It offers discounts for bulk purchases and workshop demonstrations of how to use its products.
For many years, Home Depot, Inc. had been the pacesetter of the required customer care standards for the home improvement industry. Home Depot expresses a lot of professionalism in the Do-It-Yourself (DIY) market.
Home Depot, Inc. has incorporated the latest technologies to upgrade its internal and external environment, and gain a competitive advantage by attracting professional buyers. To outdo the rest of its competitors, Home Depot employs the product differentiation strategy that enables it to supply a wide range of products and services.
Due to its massive size, Home Depot, Inc. enjoys the privileges associated with a large economy of scale. It obtains bulk discounts from the suppliers, and thus, the retail store has been in a position to share the associated advantages to its customers.
Home Depot, Inc. sells its products at considerably low prices. It is also noteworthy that Home Depot, Inc. deals with highly essential products, whether there is a recession or not, because people must buy their products to upgrade and fix their households.
Therefore, while other markets are greatly affected during tough economic conditions, Home Depot, Inc. will always enjoy massive profits because of the immense range of products it sells.
In carrying out a VRIO analysis for Home Depot, Inc., there is a need to speculate about the products and services offered at the Home Depot, and identify if they really have a competitive advantage. The VRIO analysis considers the Value, Rarity, Imitation, and Organization.
Value: Home Depot is one of the largest sellers of products and services in home improvement. Its products are highly valued and demanded even in times of difficult economic conditions.
Rarity: Home Depot is one of the many retail stores that deal with home improvement products and services. Its products are not rare as they are available in other home improvement stores. However, its rarity occurs in its price differentiation strategy as well as the esteemed customer care services.
Imitation: Home Depot obtains its products from entrusted suppliers, and its products are always original. While there could be cases of fraud due to imitated products, it is a rare occurrence. Fraudsters can imitate the products, but they cannot fake the seals. Moreover, potential customers will always purchase their products from entrusted retail stores like the Home Depot.
Organization: Home Depot, Inc. has a staunch organization and corporate culture that insists on value, rarity, and originality. It would be very difficult and very expensive for an organization to imitate the products, services, and standard of the Home Depot, Inc.
Home Depot, Inc. has employed the Environment-Strategy-Structure-Operations (ESSO) business model as shown below.
Environment: Home Depot, Inc.’s management team takes a stringent analysis of the external environment of business to identify the possible threats, as well as business opportunities. Since the competitors present the threats, the retail store has developed various differentiation strategies to have a competitive advantage over its competitors.
Business developers of Home Depot, Inc. have always worked towards ensuring that they identify new business opportunities. Moreover, the marketers have always worked tirelessly to ensure that they obtain new customers, as well as maintain the old ones.
Strategy: After accessing the external environment, Home Depot, Inc.’s managers respond by employing different strategies to respond to the identified loopholes. In case there is a market opportunity, the managers would consider making the necessary arrangements to open up new stores. If there is a customer satisfaction issue, a strategy is employed to address it accordingly.
The Home Depot retailers continuously employ the product and price differentiation strategies to maintain its customers and gain new ones. The home improvement retailer always works towards ensuring that it maintains the government standard requirements to safeguard its reputation.
Structure: Home Depot retail store has a hierarchical organizational structure, where employees have an immediate boss to address their queries. Each of the retail stores has a manager in charge that takes care of all the business activities within the store. Daily reports are sent to the central management team that monitors the progress of the various stores.
Operations: The operations department of Home Depot, Inc. takes care of all the key activities, resources, competitors, suppliers, and most importantly, the customers. The department keeps a record of all activities, identifies areas of weakness, and provides the way forward to address the issues that may arise.
Knowledge of management: The ESSO business model in Home Depot, Inc. works collectively to bring out the required knowledge of management.
As discussed, Home Depot, Inc. is a retail store that deals with a wide range of products. The retail store experiences stiff competition from its competitors. However, the supporting quality customer-care service is what adds value to Home Depot products and services. The skilled and knowledgeable employees who are willing to serve customers to their satisfaction add value to the products of Home Depot, Inc.
In addition, Home Depot, Inc. employs the most innovative technologies that enhance the customer care services. The technology helps in reducing the common queues in the purchasing process.
An enhanced self-checkout system further hastens the purchasing process, especially when a customer purchases some enormous shopping. The discounts for bulk purchases and after-sales services are other factors that add value to customers who purchase products at Home Depot, Inc.
Home Depot, Inc. is one of the largest home improvement retailers, which has many stores. To enable the effective management of the stores, Home Depot CEO has employed three main structures, the simple, multidivisional, and functional structures (Bianchi, 2009). The simple structure operates in the small business units, which has a company head and various employees.
The various employees take orders from the company manager who makes most of the decisions. The small businesses are located across several divisions and their heads report to the multidivisional structure managers. The multidivisional corporate officers monitor and compare the performance of the small business units.
Based on reports from the simple structure managers, the multidivisional corporate officers advise the functional managers accordingly. The functional structure of Home Depot, Inc. is located in the head office. The functional structure comprises of a central CEO, small corporate staff and various organizational managers as shown in the chart below.
The culture that guides Home Depot, Inc. encourages its employees to have the passion to serve customers with the utmost respect (Bianchi, 2009). Home Depot culture insists on the following aspects.
- Excellent customer care services: The employees are obliged to offer their customers with excellent value and knowledge of the products and services offered at the Home Depot.
- Social Corporate Responsibility (CSR): Home Depot, Inc. strives to take care of the environment and the people in it. Home Depot contributes to social projects that help in the growth and development of the community.
- Building strong relationships with customers, suppliers, and all stakeholders based on honesty, respect, and integrity.
- Doing the right thing and accepting responsibility of all their actions.
- Appreciating the time, talent, and energy invested by employees. Home Depot, Inc. does this by giving incentives and diversified employee benefits.
Home Depot, Inc. has seen its resources transform into capabilities. The various efforts in marketing, incorporation of technology, research, and development are some of the factors that have resulted in the growing capital of Home Depot, Inc. over the years. The various corporate resource strategies are discussed below.
Marketing: Home Depot, Inc. has invested heavily in marketing. The heavy investments in advertisements have enabled the retail shop to gain a lot of popularity. This has enabled the company to obtain new customers as well as maintain the loyalty of the old customers.
Finance: Home Depot, Inc. has maintained a good relationship with all its shareholders who help in financing the whole project. Over the years, Home Depot, Inc. has maintained growing profit inventories, and this factor has encouraged the shareholders to freely buy shares and provide funds whenever the business needs to expand.
Research and development: Research plays a very great role in enabling a business to know exactly where it heads. Home Depot, Inc. has been able to identify its main competitors through research and identified the way forward to deal with the competition (Bianchi, 2009). Through research, Home Depot, Inc. identified its strengths and weakness, and employed various strategies to improve on its weak areas.
Operations and logistics: Home Depot employs logistics to ensure that there is a strong internal network structure among the employees. Moreover, the employees are entitled to considerably high wages and benefits. The satisfied employees deliver the best services that add value to Home Depot, Inc. products and services.
Human resource: The human resource department ensures that employees are satisfied with the positions they hold in the organization. Recruitment is done whenever a new store opens, and the existing employees are promoted depending on their experience level. Everything in the human resource department is done openly to everybody’s satisfaction.
Employees who qualify to be on the management team are highly skilled and experienced because they are chosen on merit. The board of directors comprises of very competent individuals who guide the company towards the right direction. The human resource department works exclusively to bring utmost value to its employees by giving them decent wages, investing in their training, and helping their families.
Information system: One of the greatest features that place Home Depot, Inc. at its high standards is the highly upgraded information system. Home Depot, Inc. has an Electronic Data Interchange (EDI) technology that enables the employees to serve thousands of customers within the shortest time possible. The highly esteemed technologies in Home Depot, Inc. enable the retail store to track inventory records, keep accuracy, and prevent fraud cases.
Home Depot, Inc. keeps a stringent analysis of its internal factors as shown in the table below.
|Internal factors||Weight||Rating||Weight score||Comments|
|Technological advances |
Improved logistics operations
Process oriented R&D
Declined stock prices
|Implement a new IT structure |
Improve service & performance
Double from last year’s results
Improve employee satisfaction
More exploration neededDissatisfaction of shareholders
Declined trainings and recruitments
Decreased earnings due to clustering
From the IFAS table, it is noteworthy that Home Depot Inc. responds to its internal factors accordingly. The human resource department has done a great job in ensuring there is employee satisfaction. However, more approaches are needed to enhance further employee satisfaction.
Since Home Depot, Inc. is one of the leading retailers of home improvements, it ought to invest heavily in Research and Development (R&D). The IFAS table indicates that Home Depot Inc. doubled the amount spent on R&D, and therefore, the amount should triple in the subsequent year.
Training has the least score as indicated in the IFAS table. Home Depot, Inc. needs to recruit new staff and train the existing staff to ensure that the staff offers high quality services to the customers.
From the discussions, it is evident that Home Depot is one of the best one-stop shops. The retail store not only provides shoppers with quality products, but also value added customer care services. Moreover, Home Depot Inc. is one of the best dream employers that one can ever dream of, as it takes utmost care of the needs and the welfare of its employees.
The management and all the stakeholders have done such a recommendable job, which has seen Home Depot Inc. grow up from a small retail shop in the 1978 to one of the biggest retailers of home improvement. The future of Home Depot is bright, and all businesspersons who are thinking of establishing retail stores should borrow ideas from Home Depot, Inc.’s management team.
Bianchi, C. (2009). Home Depot in Chile: Case study. Journal of Business Research, 59(1), 391-393.