Q3: Using the material in Chapter 4, describe Home Depot's external environment.
For home depot, the external factors can be identified by understanding the political, social, economic and technological factors. A major strategy of the company is expanding the market geographically. In order to do this, Home Depot needs to analyze the situation of the host country. For going international, the company needs to identify the rules, regulations, economic structure, cultural values and other things before starting a business there. The company has proved its success in Canada and Mexico. As far as the economy of a particular country is concerned, the economy of America, China, and Mexico has been the most favorable factor for the company. Furthermore, Home Depot is considered as one of the most important assets and a symbol of protection and financial stability. The company has made its entrance in countries after studying its economy and thus, has been successful every time. With the help of social factors, companies can identify the social and demographical trends of a particular country. The housing market in the US is facing a downturn and the market is deteriorating which is then negatively impacting the home improvement retail market. Aging of baby boomers might negatively impact the social factor because the aged people are moved to assisted living centers. From a technological perspective, the overall condition is in the favor of the company because Nardelli has made a huge investment in the IT sector of the company, and the company will get a return from it soon.
External analysis can also be done through porter’s five forces analysis. The threat of new entrants for Home Depot is low in the home improvement industry because of the market as it is already filled with big retail giants and for the new entrants it is extremely important for them to have a strong competitive advantage. The internal rivalry of the company is high because of one major competitor of Home Depot that is Lowe’s. The performance of Lowe’s was outstanding in the past few years especially the stock price. The company is competing neck to neck with HD and thus, giving a tough competition. Threat of substitutes is quite low because the need for making improvements in home can never be eliminated. The bargaining power of buyers for Home Depot is extremely high as the company’s main focus is always on providing greater customer service with minimum complaints. Bargaining power of suppliers for home depot is low because the vendors are more dependent on them.
Q4: Using the material in Chapter 5, discuss how the different stakeholder groups of Home Depot are, in fact, different "organizations" requiring different relationships between each.
A time came when the organization found their selfseparated from the rest of the companies and thus, gave a try to outdo the rest of the organizations. However, most of the organizations today accept themselves as a major part of the ecosystem. The main component of this ecosystem is based on collaboration that can be seen as important as the competition in the industry. In addition to this, many organizations are now competing and collaborating as well depending on the issue and scenario. As far as the ecosystem in business is concerned, it has changed the overall role of management and thus, added the development of more relationships with many other organizations.
The most traditional is the resource dependence perspective that is based on the fact that organizations are making some arrangements to reduce its dependence on others in terms of resources. Through this approach, the main motive of an organization is to control the environment to achieve greater autonomy.
The Home Depot is using collaborative Network approach that is they are aiming to maintain a relationship with every stakeholder. Out of all, the main focus of the company is on maintaining strong relationships with their customers, and this was the element that was lacking in Nardelli’s leadership style. The company was following high decentralization before Nardelli that means there was little communication among managers, and limited ability to negotiate national deals. Furthermore, there was less or no collaboration between the managers and top level management at Home Depot..........................
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