Kirklin_Hannah_org_strategy_and_analysis

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Strategy and Objectives As the largest competitor in the home improvement industry, The Home Depot uses multiple strategies to maintain its top spot, ensure customer and investor satisfaction, and offer the lowest prices. Business leadership and goal fulfillment for Home Depot’s corporate mission and corporate vision are linked to the successful implementation and combination of its generic strategy and intensive strategies for growth (Smithson, 2023). Generic Strategy Home Depot’s current generic strategy (based on Porter’s model) combines broad differentiation with cost leadership (Smithson, 2023). The Home Depot generic strategy is focused on cost leadership; this all began in 1979 when ‘everyday low prices’ were emphasized to attract potential customers. Today, Home Depot uses broad differentiation to compete with its competitors, such as Lowes, to offer various products and services at price-matched costs. Broad differentiation is the primary generic strategy, and cost leadership has fallen to the secondary position.

Strategy types and Competitive advantage After close evaluation, The Home Depot has a working strategy in the four levels of organizational strategy. From my perspective as an outside consultant, the four levels are being considered and revised as the market and consumer demands progress. Global Level Strategies With stores in Mexico and Canada, the Home Depot provides its services internationally. As of November 20, 2023, The Home Depot has also used a market development strategy to acquire International Design Group (IDG) to progress its international presence and expansion. However, after the attempt was made to enter the market in China, The Home Depot executives found their strategies for expansion on an international level needed to be more successful. This resulted in the closing of seven stores in that region in 2012 (China Store Closure, 2012). Market Development. Market development is used to acquire brands to establish a presence in new market segments; market development supports the generic strategy of broad differentiation by acquiring more firms to have a more substantial market presence. Corporate Level Strategy Internal growth is the name of the game regarding The Home Depot's corporate-level strategy, with an emphasis on growing its digital and physical footprints. The company focuses on expanding its products into multiple geographic locations at the same point in its value chain while increasing the range of products and services offered to current markets. Business Level Strategy The Home Depot uses market penetration to compete with rivals like Lowes, by running special offers or discount sales on products to customers in the current market to support the generic cost leadership strategy. This ties into the everyday low price (EDLP) strategy; in every

store, the store offers low prices daily instead of short seasonal markdowns and promotions. To further ensure customer satisfaction, store cashiers are afforded a $50 freedom to mark down products they deem fit. As the age of technology continues to grow, The Home Depot expands its platform by offering an app that helps customers locate items in the store and offers the option to purchase products online. Digital and e-commerce solutions provide a seamless shopping experience that affords the company new ways to attract customers. Additionally, new services like PRO, tool rental, in-home installations, and free delivery have boosted the store's level of customer support and satisfaction while opening new positions within the company. Functional Level Strategy Home Depot uses the three E’s to tie in with the business-level strategy. Extending business to international locations to take over the lacking market in the home improvement industry in other countries. Expand the market by adding services such as PRO and tool rental and enhancing the core. Strengthening the core focuses on the main component of Home Depot: the associates. Each Home Depot employee receives training in their position, and some are even certified in the department in which they work. Competitive Advantage The Home Depot's most significant competitive advantage is its brand recognition. Notes from the 2023 investor meeting highlight product authority, interconnected customer experience, customer-backed approach, and e-commerce business as additions to the competitive advantage. “We are also the product authority in home improvement with an exceptional merchandising organization and long-tenured strategic vendor partnerships. We relentlessly focus on delivering the best-interconnected customer experience in home improvement and look to remove friction

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using a customer-backed approach. Moreover, we have a world-class e-commerce business driving billions of customer engagements” (Decker, 2023).

Organizational Size and Structure Since its start in 1978, The Home Depot has surpassed the expectations of many, becoming the world's largest home improvement retailer and finding its way to number twenty on the Fortune 500 list. Organizational Size There are 2,300 stores across North America, with stores in Canada and Mexico. There are two thousand three stores in the United States. California has the most Home Depot locations in the US, with 233 stores as of January 11, 2024. This is about 12% of all Home Depot stores in the US. Texas has 179 locations, and Florida has 155 locations (Home Depot USA Locations, 2024). Only two stores were located in Georgia when the store first opened in 1979. With the massive growth and expansion of the store and the success of locations thus far, it is safe to conclude that store leadership is competent in growth strategy. As the store continues to discuss expansion to an international level, the need for employees grows too. There are 475,000 Home Depot employees across the United States, Mexico, and Canada. California and New Jersey are home to the two biggest stores with the most employees. The Home Depot supported 2.2 million jobs last year, more than 400,000 of which were directly created by the company, and supported billions of dollars in wages, salaries, and benefits. In 2022, the company promoted 65,000 associates in the U.S. (Home Depot Jobs, 2023). Using The Home Depot app, customers have access to the location of 35,00 items in store. An even more impressive number of 1 million products are available online. According to the 2023 Responsible Sourcing Report, The Home Depot has roughly 12,000 suppliers in over 30 countries.

Organizational Structure The Home Depot follows a divisional organizational structure. In organizations using divisional structures, departments represent the unique products, services, customers, or geographic locations the company serves (Organizational Structure, n.d.). There are three structural characteristics: geographical divisions, global functional groups, and a global hierarchy. Geographic Divisions The Home Depot is divided into divisions, each led by a president or vice president. The three divisions of the United States are northern, southern, and western. These divisions play a part in Home Depot's marketing mix, which determines geographic and regional variations throughout the market based on economic factors. The geographic divisions are the U.S., Canada, and Mexico. These divisions provide feedback on purchasing and customer preferences. Global Functional Groups Within the organizational structure, functional groups have subcategories below them. For example, the company has a global Human Resource Management group and a global Merchandising group, among others. The Merchandising group comprises the Hardlines Merchandising group, the Décor Merchandising group, and the Building Materials Merchandising group (Greenspan, 2023). These groups help to assess the needs of the business and highlight the pros and cons of each department within the company. Global Hierarchy The Home Depot operates under centralized corporate control, which provides a clear chain of command for employees and investors. This hierarchy exists at the global and store levels. Globally, Home Depot’s organizational structure’s hierarchy is observable in the lines of

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command and authority (Greenspan, 2023). Each Home Depot store also has a chain of command to assist in the reporting procedures. Associates are trained to know their in-store and out-of-store chain of command, which also helps with the flow of information from lower level to higher level and vice versa.

References Number of the Home Depot locations in the USA in 2024. ScrapeHero. (2024, January 11). https://www.scrapehero.com/location-reports/Homedepot-USA/#:~:text=Number%20of %20Homedepot%20stores%20in%20the%20United%20States%20in %202024&text=There%20are%202%2C003%20Homedepot%20stores,Homedepot %20stores%20in%20the%20US. Smithson, N. (2023, June 14). Home Depot’s generic strategy, Intensive Growth Strategies. Panmore Institute. https://panmore.com/home-depot-generic-strategy-intensive-growth- strategies The Home Depot closes Seven big box stores in China. The Home Depot. (2012, September 13). https://ir.homedepot.com/news-releases/2012/09-13-2012 The Home Depot supported 2.2 million jobs nationwide in 2022, creating four additional jobs for every associate it employed. The Home Depot. (2023, December 6). https://corporate.homedepot.com/news/company/home-depot-supported-22-million-jobs- nationwide-2022-creating-four-additional-jobs 2023 responsible sourcing report. (n.d.). https://corporate.homedepot.com/sites/default/files/2023- 07/2023_Responsible_Sourcing_Report_Final.pdf Learning resource. Organizational Structure. (n.d.). https://leocontent.umgc.edu/content/scor/uncurated/mba/2218-mba610/learning- resourcelist/organizational-structure.html?ou=916133 Greenspan, R. (2023, June 15). Home Depot’s organizational structure (an analysis). Panmore Institute. https://panmore.com/home-depot-organizational-structure-analysis#:~:text=The

%20main%20advantage%20of%20Home,under%20former%20CEO%20Nardelli’s %20leadership. Decker, E. P. (2023, June 13). The Home Depot, Inc. (HD) - investor relations. The Home Depot . https://ir.homedepot.com/~/media/Files/H/HomeDepot-IR/reports-and-presentations/ 2023-iac-transcript-vf.pdf

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