Home Depot's Corporate Strategy

Improved Essays
Show More
Parnell (2014) defines corporate strategy as the approach that a firm’s executives use to guide the firm’s direction (p. 151). The text discusses three different strategies: growth, stability, and retrenchment. A firm that is focused on increase its market value or revenue is said to have a growth strategy (Parnell, 2014, p. 153). Home Depot’s corporate approach is the growth strategy, demonstrated by its increasing revenue. Home Depot’s 2015 Annual Report (2016) states that Home Depot’s revenue increased by 6.4% over the previous year (p. 1). This increase in revenue is a result of internal growth (Parnell, 2014, p. 153). According to Parnell (2014), when a firm’s growth is based on the development of the current business through increased …show more content…
183).
According to Parnell (2014), Porter’s strategy typology is a guide to develop business strategies, where managers decide if the business serves a portion or the entire market –focus or no focus, compete by differentiation or low-prices –differentiation or low-cost, or a combination of the approaches –low-cost/differentiation (p. 184). Firms seek to compete by targeting a particular group of consumers or the mass market (Parnell, 2014, p. 184). Another way firms compete are by offering low prices or specialized products and services (Parnell, 2014, p. 184). According to Parnell (2014), the resulting competitive strategies described by Porter are: low-cost (no focus), low-cost (focus), differentiation (no focus), differentiation (focus), low-cost/differentiation (no focus) and low-cost/differentiation (focus) (p. …show more content…
Parnell (2014) states that firms with a low-price-differentiation with focus produce specialized products and services at a low price for its targeted market (p. 195). Home Depot’s website (n.d.) states that Home Depot’s strategy is to invest in the business to boost productivity and efficiency, while delivering value to its customers through innovative products and an effortless customer experience (para. 2). According to Pederson (2009), Home Depot founders Bernie Marcus and Arthur Blank strategized to increase sales by offering low prices to encourage bigger purchases and hiring knowledgeable professionals who could advise and train do-it-yourselfer (DIY-ers), which would in turn increase sales and positive word-of-mouth (para. 4). As a large firm, Home Depot has the capability to take advantage of economies of scale, allowing Home Depot of benefit from declining per-unit costs due to increase of volume purchases and private-label merchandise (p. 38). In turn, Home Depot is still able to be profitable while promising its customers a low price. Home Depot differentiates itself from its competitors by offering expertise from their knowledgeable employees and value-added services such as delivery, installation, design, service agreements, tool and truck rental, special orders, do-it-yourself clinics, and online ordering with in-store pick-up. Home Depot’s focus is on DIY-ers, professional

Related Documents

  • Improved Essays

    What Is Lowe's Supplemental Strategy
    • 1439 Words
    • 6 Pages

    What Is Lowe's Supplemental Strategy

    Supplemental Strategies IMPROVE CUSTOMER EXPERIENCES As the second largest home improvement retailer, Lowe’s has been constantly improve and redesign its products, services and store environment for customers with the goal of accomplishing its vision of making Lowe’s the first choice for home improvement. In order to improve overall customer experiences, Lowe’s has taken several different supplemental strategies. These strategies include building customer design capabilities, improving both products and services for professional customers, redesigning the store environment to adapt to customer changing demands. Customer Design Capabilities Building customer design capabilities is a supplementary strategy of Lowe’s which has been continuously emphasized through the past two years (2012-2013).…

    • 1439 Words
    • 6 Pages
    Improved Essays
    Read More
  • Decent Essays

    What Are Home Depot's Categories
    • 251 Words
    • 2 Pages

    What Are Home Depot's Categories

    1. Categories of Service When The Home Depot was founded in 1978 by Bernie Marcus and Arthur Blank, it began changing consumers’ perspectives, which is about how they could improve and care for their homes. In the past, The Home Depot created the “do-it-yourself” concept, spawning an entire industry that now spans the globe. Their customers have traditionally been the "do-it-yourself" homeowners. Nowadays, their customers want The Home Depot to actually complete the work for them.…

    • 251 Words
    • 2 Pages
    Decent Essays
    Read More
  • Decent Essays

    Home Depot's Three Legged Stool Framework
    • 208 Words
    • 1 Pages

    Home Depot's Three Legged Stool Framework

    Home Depot displays a business strategy, which addresses who they serve (the Do It Yourselfers); the need for the company is to assist with the improvement or update of homes. The company can positioned itself to assist and help our customers, empower the frontline employees, the support system of field leadership, support from the support systems and strategic leadership from the CEO. Home Depot utilized the inverted pyramid. “We lived by a simple premise by our founders: Put customers and associates first and the rest will take care of itself (corporate.homedepot, 2016).” Home Depot has a strategy of a three legged stool framework.…

    • 208 Words
    • 1 Pages
    Decent Essays
    Read More
  • Decent Essays

    What Is Home Depot's Operating Leverage
    • 309 Words
    • 2 Pages

    What Is Home Depot's Operating Leverage

    Home Depot’s operating leverage significantly affects the profitability of the company. Since the company lost 21% of earnings in 2007 compared to 2006, it implies that the company’s sales are lower and they cannot pay for all the fixed costs and still earn a profit. Operating leverage changes depending on the economy and how many sales the company is generating. With the decline in the housing market, it directly affected the operating leverage of Home Depot since the store supplies building and renovating supplies. The fixed costs of Home Depot must be paid, but these bills will be difficult to pay in the company keeps losing money.…

    • 309 Words
    • 2 Pages
    Decent Essays
    Read More
  • Improved Essays

    Best Buy's Five Competitive Strategies
    • 316 Words
    • 2 Pages

    Best Buy's Five Competitive Strategies

    The competitive strategy describes the long-term action goals or plans a company has to gain competitive edge over its competitors in the market. Best Buy’s competitive strategy helps them set apart from the rest of their competitors and help them build a strong action plan to increase their chances of success. They are exceptionally knowledge about products including exact location and the latest devices that in store use. Base on the text there are five generic competitive strategies. A low cost provider strategy, a broad differentiation strategy, a focused low-cost strategy, a focused differentiation strategy and a best-cost provider strategy.…

    • 316 Words
    • 2 Pages
    Improved Essays
    Read More
  • Decent Essays

    Competitive Analysis Of Home Depot And Lowe's
    • 110 Words
    • 1 Pages

    Competitive Analysis Of Home Depot And Lowe's

    Our major competitors are construction service companies operating in the area and home improvement retailers. Although companies such as The Home Depot and Lowe’s are leaders in home improvement chain with an exceptional reputation and customer satisfaction, they offer traditional shower ideas. We will offer unique SD Freestanding Shower System at the affordable prices to the market, which will allow us to gain the market share in the targeted segment.…

    • 110 Words
    • 1 Pages
    Decent Essays
    Read More
  • Decent Essays

    Home Depot Scientific Strategic Analysis
    • 284 Words
    • 2 Pages

    Home Depot Scientific Strategic Analysis

    Home Depot is a home improvement specialty store that has been around since 1978 (Home Depot, 2016). The Home Depot has more than 2,200+ retail stores in the United States (including Puerto Rico and the U.S. Virgin Islands and the territory of Guam), Canada and Mexico and reported retail sales of $94 Billion and earnings of $8 billion in 2016 (Home Depot, 2016). In order to have this type of success, Home Depot had to be well aware of the economy, housing market, and home improvement industry which lead me to believe that the company subscribe to a scientific strategic perspective. Scientific strategic perspective states that a firm uses data from the industry environment to determine the firm’s next move that would give them a strategic advantage…

    • 284 Words
    • 2 Pages
    Decent Essays
    Read More
  • Improved Essays

    Analysis Of Home Depot Culture
    • 866 Words
    • 4 Pages

    Analysis Of Home Depot Culture

    Bob Nardelli joined the Home Depot team in 2000, when it was already successful. However, he also joined during a time when the company had grown so rapidly so quickly that changes needed to be made. While he created his own change model, had he known about Kotter and Cohen’s 8-step change model, he may have met fewer challenges (Kotter & Cohen, 2002). When Nardelli first arrived at Home Depot, he was deemed an outsider of a close-knit organization. Nonetheless, the board had made the decision that he was the best person for the task at hand.…

    • 866 Words
    • 4 Pages
    Improved Essays
    Read More
  • Decent Essays

    Dollar Tree Domestic Growth: Case Summary
    • 470 Words
    • 2 Pages

    Dollar Tree Domestic Growth: Case Summary

    1.From the article in our reading this week there is no doubt that Dollar Tree domestic growth has taken on the strategies of the “Prospector” and “Analyzers” approach from the Miles’ and Snow strategy typology model. That said, evidence show that Dollar Tree used the prospector approach aggressively by buying out the competition. From 1995 to 2006 Dollar Tree acquired stores in the same industry throughout North America from New York to California (Parnell, 2014). Each acquisition caused the firm to reevaluate and add new operational and organizational systems redefining the $1.00 retail industry. Also, as an analyzer dealing in retail the firm used the Miles and Snow approach collectively together since both the analyzer and defending approach work well parallel with each other.…

    • 470 Words
    • 2 Pages
    Decent Essays
    Read More
  • Improved Essays

    Porter Compare And Contrast Bowman S And Ambrosini's
    • 1418 Words
    • 6 Pages

    Porter Compare And Contrast Bowman S And Ambrosini's

    In this essay the views of Porter that companies who engage in every generic strategy but fails to achieve any of them will be stuck in the middle and thereby possesses no competitive advantage (Porter. 1985) and Bowman’s and Ambrosini’s that despite Porters risks some firms have been successful by combining both strategies (1997) will be critically evaluated. Before the critical analysis can begin, the main concept of Porter’s business-level strategy will be outlined briefly. According to Porter a firm can only be successful if it specializes in one out of two different options, which he considers to be opposites. The first is cost leadership where a company tries to be the lowest cost producer in its industry and the second is differentiation,…

    • 1418 Words
    • 6 Pages
    Improved Essays
    Read More
  • Improved Essays

    Adaptive, Market Entry, And Competitive Strategies In The Health Care Industry
    • 1019 Words
    • 5 Pages

    Adaptive, Market Entry, And Competitive Strategies In The Health Care Industry

    Competitive strategies are used to by organizations to gain a competitive advantage over their rivals. They differ from the rest of the strategies for they are applied in a combination of two or more strategies, which are, focus, differentiation, and cost leadership strategies. An organization may apply a competitive strategy by lowering the cost of its health care services to patients to gain a competitive edge over its…

    • 1019 Words
    • 5 Pages
    Improved Essays
    Read More
  • Great Essays

    The Importance Of Primark's Business Strategy
    • 1040 Words
    • 5 Pages

    The Importance Of Primark's Business Strategy

    Name: Jack Sheehan Student Number: 114564277 Lecturer: Bernadette Power Module Code: EC2017 Date Due: 30th of July 2015 Word Count: 1,040 A business strategy is hugely important in determining the strategic position of a firm.…

    • 1040 Words
    • 5 Pages
    Great Essays
    Read More
  • Improved Essays

    Product Differentiation In The Case Of Domino's Pizza
    • 832 Words
    • 4 Pages

    Product Differentiation In The Case Of Domino's Pizza

    A perfect generic strategy is one which can provide a company with a competitive advantage over other companies in the market and has the potential to help the company to sustain its level of growth in the market. A company or a business organisation should always select a strategy after identifying its requirements and needs and analysing the existing trends in the market. Based on its needs and requirements, a company can choose from three major strategic options––cost leadership, differentiation and focus––in order to achieve a sustainable competitive advantage.…

    • 832 Words
    • 4 Pages
    Improved Essays
    Read More
  • Improved Essays

    Compare And Contrast Ansoff And Porter's Generic Strategy
    • 888 Words
    • 4 Pages

    Compare And Contrast Ansoff And Porter's Generic Strategy

    Porter's Generic Strategies: According to Gurau (2007), three general kinds of strategies have described by Porter which are usually used through the businesses to preserve and achieve competitive advantages. Porter was calling these generic strategies as: Cost Leadership (Lower cost for better profit), Focus (to offer a dedicated facility in a niche market) and Differentiation (creating required services or goods). Porter then decided to divide the Focus strategy into the two parts which are 'Differentiation Focus and Cost Focus' (Figure…

    • 888 Words
    • 4 Pages
    Improved Essays
    Read More
  • Great Essays

    Whittington Case Study
    • 2935 Words
    • 12 Pages

    Whittington Case Study

    But Michael Porter defines different from how to get a competitive advantage by acting different and unique value delivered to customers. In addition to the strategy Baker-defined as the framework that provides guidelines for actions to be taken, and all that is formed by the action taken, but others continued an argument and say that the strategy has nothing to do with the planning, but is the analysis of prudent understanding and influencing the position of a company on the market. Whittington strategic approach is more sociological than the management approach for the study of business strategy. Given approach Whittington, who has four strategic objectives about different perspective? It identifies four "theories of action" in business strategies as follows: classical approach to planning, evolutionary approach, approach prosecusial and systematic approach.…

    • 2935 Words
    • 12 Pages
    Great Essays
    Read More

Related Topics

Ready To Get Started?
Discover
Company
Follow
©2024 Cram.com
Privacy Policy |  Cookie Policy |  About Ads |  Site Map |  Advertise  | 
  • Cookie Settings