At that time, store managers had the complete freedom to determine their stores’ operations, merchandising practices and vendor management. According to Ton and Ross (2009), the management believed that local autonomy would encourage innovations that best suit the preferences and specifications of the local market. The firm adopted a decentralized purchasing approach so that each nine regional purchasing office separately negotiated with suppliers. It has been identified that the Home Depot gives first priority to full time personnel who are knowledgeable about home improvement. Although the company has adopted all necessary approaches that would add to customer satisfaction, its strategic failure in other organizational management sectors caused ineffective future planning. We also described that the Lowe’s had got a favorable market environment to grow and it became a growing threat to the Home Depot. Anyhow, increased application of customer satisfaction tactics aided the Home Depot to keep its profitability rate stable. Analysis of the issues We saw that the Home Depot’s share prices have been gradually falling for the last four to five years even though the company maintains improved sales revenues and profit. So, to explore the hidden reasons behind this issue, it is necessary to understand various factors that affect share prices. According to Reddy and Saraswathi (2007, p.235), an investor always looks on possible economic growth rate that a company would achieve in future in addition to the current profitability rate of the firm. It is obvious that the future economic growth rate of a firm would clearly depend on the effectiveness of its current business strategies. It seems that the implemented… It is recommendable for the Home Depot to establish effective communication channels that connect all the stores of the company. This practice would be beneficial for the company to pass merchandise and other information instantaneously between the stores. Likewise, the Home Depot must formulate fruitful employee welfare programs that would contribute to increased productivity and employee retention. It is also advisable for the company management to trim down the part time workers ratio in order to improve operational efficiency. Moreover, the Home Depot management must offer potential investment packages to shareholders, and these techniques must best fit the wealth maximization objectives of the shareholders. We have seen that shareholders always look on business future since they are paid at the end of the financial year. Therefore, it is strongly recommendable for the Home Depot to design some innovative strategies that bear potential to produce fruitful economic outcomes in the future.
Home Depot Case Analysis