Internal and External Factors

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Home Depot
MGT 330 Management, Theory, and Application
University of Phoenix
Harry Clore
February 16, 2009
Home Depot
When two upper level managers decided to relinquish their jobs with the small hardware store they were working at, “Handy Dandy” they had a vision and set out to develop a company that catered to the “do-it-yourselfer,” and with that idea, The Home Depot was born. As the company exploded from one store into hundreds, it soon became the largest supplier of building supplies and home improvement materials in the United States. However, this was a short-lived, other companies were closing in on the same idea and the market was shrinking. The planning managers, at that time, needed to develop a strategic plan for The Home Depot that would take advantage of the current business landscape, “globalization, technological change, the importance of knowledge and ideas, and collaboration across organizational “boundaries”” (Bateman & Snell, pg. 6). In today’s business culture, many more industries are going global. U.S. retailers are looking internationally not only for sourcing and outsourcing products and services but for new consumer markets and growth. The author’s of this paper will describe how The Home Depot functions in globalized world and keeps pace with the world business community through innovation and diversity. Lastly, the authors will discuss hoe The Home Depot is going “green” with the help of today’s technology. Globalization

Globalization is a factor that is prevalent for companies wanting to succeed in gaining competitive advantage over their competition. Taking advantage of markets overseas can prove to be a process that can serve a company well. The Home Depot is no different. In 1998, the company saw the opportunity and went with it, opening stores in Santiago, Chile, and in San Juan, Puerto Rico. In order to avoid the obvious roadblocks of cultural and language barriers, as well as product barriers, the company shaped an alliance with a local retail chain. Prior to opening these stores, The Home Depot’s international portfolio consisted of stores located solely in Canada (Johnson, 1998). The company had the foresight to realize that certain barriers would likely come up with the location of these stores, and planned to team up with a local retail chain in order to ease some of the difficulties. This move allowed The Home Depot the ability to control the external factors involved in the openings. While the company is taking the leap into international store chains, the percentage of their inventory made outside the United States remains low. In 1998, the company boasted that only three percent of their inventory was from outside of the United States, while in 2003, the level was only nine percent. Quite a record for a company that maintains sales of over 30 billion dollars annually worldwide (Johnson, 1998, p. 2). Technology

As The Home Depot is expanding its brand into the global marketplace, The Home Depot is placing just as much emphasis on bettering its technology. The company is planning to spend $500 million dollars on technology, along with an additional $900 million on logistics, through the year 2010 (Dignan, 2007), with plans of creating a customer delivery tracking system to better monitor deliveries. The company is taking their technological advancements to a completely new level with the introduction of compact fluorescent light (CFL) bulb recycling in individual stores. The Home Depot is taking advantage of the new “green” lifestyle that consumers are adopting, and offering a one of a kind service. While CFL bulbs can save energy, they are known to contain small amount of mercury, which is toxic if released into water or air. Customers can bring in any expired CFL bulb, and The Home Depot will direct the proper removal of the bulbs to the appropriate recycling facility (Green Technolog, 2008, June 24). The company is being...
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