The Home Depot, Inc.

Topics: Robert Nardelli, The Home Depot, Frank Blake Pages: 9 (2399 words) Published: May 28, 2013
The Home Depot, Inc.|
An internal analysis|

Table of contents

Table of contents2
Introduction & Problem Definition3
IFAS Table4
Agency Problem5
Earning Metrics5
Corporate Governance5
Corporate Culture6
Store Location6
Human Resource Management7
Agency Problem7
Corporate Culture8
Store Location8
Human Resource Management8

Introduction & Problem Definition

The Home Depot, Inc. was the world’s largest home improvement retailer and the second largest retailer in the United States based on net sales in 2005. The Home Depot sells a wide assortment of building materials and home-improvement and lawn and garden products, and they provide a number of services such as design and installation. The stores serve three different types of customers: (1) Do-It-Yourself(D-I-Y) customer, (2) Do-It-For-Me (D-I-F-M) customer and (3) the professional customer, such as home improvement contractors, building maintenance professionals, interior designers, and other professionals.The Home Depot has expanded its business by acquisitions in the same and other markets. Legally, the company consists of a set of companies: Home Depot, EXPO Design Center, Home Depot Floor Store, Home Depot Landscape Supply, Home Depot Supply, Home Depot Mexico, and Home Depot Canada.

In December 2000 Bob Nardelli was appointed to be CEO of the Home Depot. The founders were hoping that with the new CEO the company could continue to grow. However he succeeded in doing so, there were also some negative changes within the company.

Among the negative changes, since the appointment of Nardelli, was the change of the corporate culture. The orange-blooded culture made room for a culture of fear. The orange-blooded cultureemphasized individuality, informality, nonconformity, growth, and pride. The new culture under the management of CEO Nardelli emphasized on building a disciplined manager corps, one predisposed to following orders, operating in high-pressure environments, and executing with high standards. This resulted in a decrease in moral among the employees and thus a lower customer service index.

Other negative changes were the Human Resource management, the Agency Problem and the store location. The work staff changed from 90% full-time employees to only 68% and employee turnover was extremely high. Nardelli’s new format at the annual shareholder’s meeting was strongly criticized as well as the drop in the stock price tied with the change in his earnings metrics. The many new stores that were opened sometimes cannibalized sales of other stores owned by the Home Depot.

In this report we will create a thorough internal analysis by looking at the strengths and weaknesses of the Home Depot and with this information we will create an IFAS Table.

IFAS Table

We as a team discussed our findings in the case on the Home Depot and listed the strengths and weaknesses. Furthermore, we made an IFAS Table to measure its performance. We do this through weighting, rating and scoring each factor. The last column states a description of why this is a strength or weakness. Internal Factors| Weight| Rating| Score| Description|

Strengths| | | | |
Price & Supply| 0,25| 5| 1,25| Low price, no middle man cost, great sale results| Acquisitions| 0,15| 5| 0,75| Improve supply chain|
CSR| 0,10| 4| 0,40| Environmentally aware and contribute to society| | | | | |
Weaknesses| | | | |
Agency Problem| 0,10| 2| 0,20| Changed earning metrics, new format meeting| Corporate Culture| 0,20| 2| 0,40| Orange-blooded culture turned into culture of fear| HRM| 0,10| 3| 0,30| Less full-time employees less experience employee turnover much too high|

Store location| 0,10| 3| 0,30| Too suburban, 3 stores in 1 market area, cannibalization| | | | | |
Total| 1,00| | 3,60| |

As we can...
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