Home Depot's Corporate Strategy

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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

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