Business Analysis of Home Depot Essay
April 18 2012
Business Analysis of Home Depot Inc.
The Home Depot was founded in 1978 by Bernie Marcus and Arthur Blank. Along with investment banker Ken Langone and merchandising guru Pat Farrah, the founders’ vision of one-stop shopping for the do-it-yourselfer came to fruition when they opened the first two Home Depot stores on June 22, 1979, in Atlanta, Georgia (“The Home Depot”, 2011). From the start, associates were able to offer the best customer service in the industry, guiding customers through projects such as laying tile, changing a fill valve or handling a power tool. Not only did store associates undergo rigorous product knowledge training, but …show more content…
The size of the company is significant to the bargaining power the company holds over its vendors. The largest home improvement retailer operates 2,248 across the U.S., Canada, Mexico, and China. Home Depot’s size creates a low-cost position that puts the company in a dominant competitive position. “The companies scale generates significant bargaining power with vendor when it comes to products, advertising and rent among other things” (“Datamonitor” 2011). The company provides value and instills customer loyalty by passing the saving along to the customer. Home Depot stores are visited by 22 million people a day. Diversified Stores, Products and Service Portfolio Diversification of products and services and the wide network of stores improve sales and increase profitability. 40,000 different products falling into four categories mainly plumbing, electrical and kitchens; hardware and seasonal; building materials, lumber and millwork; and paint and flooring. In addition the company offers installation services. Installations are performed by pre-screened independent contractors. With the large number of stores if an item is out of stock at one location it can be shipped in from another many located in the same geographic area. Supply chain transformation. Home Depot has committed itself to a supply chain transformation. In distribution the company has moved to the Rapid Deployment