Home Depot Case Study

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  • Topic: Robert Nardelli, The Home Depot, Financial ratio
  • Pages : 34 (11460 words )
  • Download(s) : 585
  • Published : November 6, 2011
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The Home Depot, Inc.|
Suggested Growth Strategy|
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Table of Contents
Executive Summary……………………………………………………………………………….2 Strategic Audit Case Analysis………….........................................................................................4 Introduction4
Past Corporate Performance5
Financial Analysis - Ratios5
Financial Analysis – Financial Statements6
Financial Analysis – Industry/Competitor Comparison7
Strategic Posture8
Current Mission8
Current Objectives9
Current Strategies9
Current Policies10
Corporate Governance12
Board of Directors12
Leadership Team….14
External Environment15
Societal Environment15
Task Environment – Industry Analysis19
Internal Environment22
Corporate Structure22
Corporate Culture22
Corporate Resources23
Analysis of Strategic Factors26
Key Internal and External Factors26
Review of Mission and Objectives28
Alternatives and Recommendations29
Strategic Alternatives29
Recommended Strategy30
Implementation31
Evaluation and Control32
Appendix………………………………………………………………………………………34 Figure 1: Balance Sheet34
Figure 2: Income Statement36
Figure 3: Financial Ratios37
Figure 4: Corporate Governance38
Figure 5: Internal Strategic Factor Analysis39
Figure 6: External Strategic Factor Analysis40
Figure 7: Strategic Factor Analysis Summary…………………………………....……...40 Bibliography…………………………………………………………………………………42

Executive Summary
It is our recommendation that The Home Depot implement the pause/proceed with caution strategy, in order for The Home Depot to continue to grow and accomplish its Mission Statement’s objectives. This strategy will allow The Home Depot to rest before continuing to grow and expand. The short-term duration of the strategy will allow the company to emerge as once again the largest home improvement retailer, with an increasing shareholder’s value.

The primary reason for The Home Depot to use a pause/proceed with caution strategy is due to the recent increase in interest rates and the recent decline in the sales within the housing market. Analysis of recent economic data suggests that there is a threat of inflation which will result in lower disposable income for its customers.

Coupled with the significant growth in the industry and by its major competitor Lowe’s, The Home Depot should use a pause/proceed with caution strategy for its short-term strategy. This will help The Home Depot to focus on providing better customer service, competitive pricing, and higher quality of products and services at its current locations. The growth over the past several years has given The Home Depot a competitive advantage and a large market lead. With this, it would be sensible for them to focus on its current stores, increasing sales at those locations before expanding into new areas.

A decline in home sales and home improvement markets will have a major impact on the services that The Home Depot can provide and the prices that it can offer. The demand for installation and other services may suffer if there is a major decline in the housing market or if interest rates increase. It is recommended that The Home Depot implement the pause/proceed with caution strategy for a short-term duration period, to help protect against potential economic problems, which could decrease shareholders value. Strategic Audit Case Analysis

Introduction
The Home Depot was founded in Atlanta, Georgia in 1978. The company was started by three men who were fired from the same company. The same weekend that they were fired, they formed what would eventually become The Home Depot. Bernard Marcus, Arthur Blank, and Kenneth G. Langone were the three men that started The Home Depot. The company began in Atlanta and started with just three stores. Industry experts gave Home Depot 10-to-1 odds that it would fail (Wheelen and Hunger, 20-4). However, by 1982, it was voted the “retailer of the year” (Wheelen and Hunger, 20-4). By 1990, its stock price...
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