Environmental and Industrial Analysis of Home Depot

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Table of Contents

INTRODUCTION4
I.COMPETITIVE POSITIONING4
Operational History4
Competitors5
Global Operations6
Financial Strategy6
II.BUSINESS MODEL ANALYSIS7
Step 1: Value Proposition: (Advantage: Home Depot)7
Step 2: Target Segment: (Advantage: Lowe’s)8
Step 3: Determine Competitors9
Step 4: Evaluation of Value Chain and Cost Model: (Advantage: Lowe’s)9 Step 5: Evaluate the Value Network: (Advantage: None)11
Step 6: Determine the Revenue Model of the firm: (Advantage: Home Depot)12 Step 7: Critical Success Factors: (Table 3) (Advantage: Home Depot)12 Business Model Analysis Grid13
III.STRATEGIC RELATIONSHIP ANALYSIS13
Readiness/Willingness for Inter-Firm Relationships:13
Age/ Timing of Relationship:13
Location of Relationship (Geographical and Value Chain):14 Management’s Relationship Capacity and Expertise:15
Market Context of Relationships:15
Strengths and Positions of Parties:15
Rival Relationship Comparison:15
IV.McKINSEY 7S ANALYSIS16
Strategy:16
Structure:17
Systems:17
Shared Values:18
Style/Culture:18
Staff:18
Skills:19
VI.APPENDIX: TABLES AND FIGURES22
VII.REFERENCES28

INTRODUCTION

This strategic management field study will conceptually correlate lessons learned from our Environmental and Industry Analysis of the Specialty Retailing industry and directly apply them to an analytical assessment of The Home Depot Co. (NYSE: HD) Our analysis is predicated on implementation of specific diagnostic models: competitive positioning analysis, business model analysis, strategic relationship analysis and McKinsey 7S analysis. In the course of the presentation, it is our intention to highlight topical information, investigation data and summary conclusions that are essential for conceptualizing the internal and external dynamics of The Home Depot Co. Our research methodology is predicated on strict adherence to the criteria established for each analytical model with the objective of utilizing quantified and qualified data to yield practical conjecture and understanding. All information in this study was retrieved from public sources and the report contains no privileged information or trade secrets.

COMPETITIVE POSITIONING

The Home Depot Co. (NYSE HD) is the second largest US retailer with over 2,200 domestic and international retail outlets, 36 distribution centers and 30 lumber distribution centers[i]. Operating in all 50 states, 10 Canadian provinces, Puerto Rico, Mexico and China, Home Depot Co. ($51.1B) is the dominant competitor in the Do-It-Yourself (DIY) and Do-it-For-Me (DIFM) global home improvement industry. The fundamentals of competition in this industry include location, pricing, merchandise quality, in-stock consistency, product assortment, presentation, and level of customer service[ii]. The Home Depot Co. is ranked #29 among the (2010) Fortune 500 and in the top 10 of Fortune Magazine’s most admired companies.

Operational History

Averaging 22 million customers weekly, the firm draws on a competitive strategy characterized by low prices and high volume, low margins and high inventory turnover, massive product selection (50,000), superior customer service and aggressive marketing[iii]. To accomplish this, Home Depot Co. is highly innovative with respect to process. In 2007, the company began a massive reconfiguration of its North American supply chain[iv]. The cornerstone of progression from a (direct-to-store) to a (central) distribution model is a network of flow-through facilities designed to cross-dock and rapidly distribute high volumes of merchandise. The revamped supply chain, with upgraded technology and processes, has transformed the world's largest home improvement retailer into a supply chain leader. The strategic supply chain now directs goods to the proper store with superior timing and maximum sales efficiency.

The Home Depot...
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