Business Operations in Home Depot: Strategies for Achieving Competitive Advantage

Business Operations in Home Depot: Strategies for Achieving Competitive Advantage

Introduction

Home Depot, Inc. (HD) is a home improvement retailer which imparts lawn care and home improvement products, installation, equipment rental, and building materials services, to the customers. The Home Depot, Inc. was founded in the year 1978, and it has its business functioning out of Atlanta, Georgia. The instigation of the economic downturn and the collapse of the housing bubble in the year 2008 had an undesirable impact on the entire industry of home improvement retailing and so, on the sales of Home Depot. Nevertheless, the retailing company has been successful in making a strong upturn and is the greatest home improvement retailer in the world.

Global supply chain management

Strategy

Home Depot, in the 1990s, followed a differentiation business model. It emphasized on differentiating itself from the contenders with helpful and knowledgeable personnel, a distinctive customer experience, and brand name products. With the maturation and reduction in fragmentation in the home improvement retailing industry, Home Depot realized that they required a new approach for maintaining a competitive advantage and increasing profitability. Hence, the management team of Home Depot settled on implementing a cost leadership approach. Also, Home Depot made use of a chaining approach for achieving cost advantages and consolidating the retailing industry. It set out networks of the synchronized retail stores that assisted them in controlling the costs of supply (Wilson & Barry, 2008).

The cost leadership approach

The Home Depot permitted it to trim down its cost structure and enhance its functioning performance. This has facilitated Home Depot in being increasingly profitable compared to its contenders and competitors, like Menards and Lowes. One more advantage of the cost leadership approach is that Home Depot is capable of charging a reduced price that appeals increased number of customers and enhances its competitive advantage. The Home Depot has been successful in destroying the brands and transforming all the products into markets having a low margin commodity.

The Home Depot, within its cost leadership model, set out a three pronged approach for boosting its business for the current year and the coming years. It is particularly emphasizing on the customer service, and the transformation of merchandize and supply chain. The three pronged approach, in accordance with the EVP US stores, Marvin Ellison, produces great value for Home Depot whilst introducing product authority (Wallace & Mark, 2001). Home Depot, apart from this, is budging its model for catering to the customers that are like “do-it-yourself”, by means of altering its product mix in stores for focusing on the minor projects for the reason that the money is in minor projects which can be accomplished by the homeowners themselves over a couple of weekends without smashing their bank accounts. Home Depot wishes to enhance the customer service and make the operations at store simpler.

Actions

The transformation of supply chain is related to the leveling out of the novel swift deployment centers of Home Depot. The RDCs have noticeably enhanced the environments ...