Office Depot Essay

7352 Words 30 Pages
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[Comprehensive business Analysis: Office Depot] |

Background
Office Depot was founded in 1986 by F. Patrick Sher, Stephen Dougherty and Jack Kopkin in Boca Raton, Florida. The three envisioned a warehouse style store that could offer office supplies at discounted prices. The first store was opened in October in Fort Lauderdale. It was immediately successful and before the year was over, two more stores were opened in Florida. While Office Depot was one of the first companies to tap into this new market, they were not the only ones. Rivals, Staples and Office Club, both opened their first stores within three months of Office Depot. All had the same basic strategy: Buy products directly from manufacturers rather than wholesalers
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Through licensing agreements stores were opened in Poland, Hungary and Thailand and through joint ventures also opened in France, Japan and Mexico. They also acquired Viking Office Products Inc. This was the world’s largest direct-mail office products marketer. It was based in California, yet it had 11 delivery centers in Europe and Australia. During the same year, 1998, Office Depot launched its first website and in 1999 entered a contract with United Parcel Service Inc. (UPS), which allowed them to offer UPS packaging and shipping services in Office Depot stores. By the end of the decade sales were topping $10 billion and the company boasted 825 stores in the U.S. and Canada and 32 overseas.
The early 2000’s did not start out quite as well as the 90’s had finished. After the fallout with the Staples deal, the company scrambled to make up for lost time and seemed to open many stores with reckless abandon. Often store location was chosen poorly and many were placed in areas were competitors had already established themselves. Competition from other warehouse retailers such as Costco and Sam’s Club were also causing Office Depot to cut prices on paper and ink. In mid 2000, after earnings had dropped 22 percent, David Fuente was removed from his position as CEO and was replaced by Bruce Nelson, a former executive at Viking Office Products. Nelson immediately began making changes. He planned to close 70 of its North American stores, reduce the size of

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