After Mr Nardelli took over Home Depot, the sales, which were stagnating earlier, soared from $46 billion in 2000 to $81.5 billion in 2005. The average annual growth rate of company increased to 12%. The major reason for that was minimizing the cost through centralized purchasing and adoption of technology. He adopted technology to automate the stores, employed contemporary inventory management systems, automated of point of sale and customer check-out system etc. These systems also generated data automatically which allowed him to use ‘analytical techniques’ to improve the business rather than based on ‘gut feeling’. In preceding years, the company grew at frenzied pace and became unmanageable. Mr Nardelli slowed down the expansion plan to attain stability. Effective management of inventory and space allowed the company to compete with ‘airy’ stores of competitor Lowe’s. He introduced GE’s Six Sigma methodology to improve productivity and cut waste/ rework. All these measures increased the profitability of the company although performance on stock market did not see major improvement.
To kick-start the stocks, Mr Nardelli decided to venture from retail to service oriented business. Further, he was encouraged to move in this direction because of absence of major competitors and strong financial growth of the company. In isolation, this strategic move to catch the bigger competitors by surprise and attain the ‘first-mover’ advantage appears to be sound. However, the remaining Ss of 7s model are completely out of alignment with this business strategy.
Home Depot was founded on Entrepreneurial Model. Essentially, for 20 years the business success was centered on creativity, innovation, freedom to experiment, human touch and decentralized approach. Imposing centralized command and control (military-like) structure came as a shock to its employees. The company’s highly