Home Depot Strategic Audit _ Final _ MMartinez

Running Head: STRATEGIC AUDIT: HOME DEPOT, INC. 1
Strategic Audit: Home Depot, Inc.
Monica VerStraten
National University
BUS480 – Integrated Business Policy
Professor Thomas Bernitt
March 26, 2015

STRATEGIC AUDIT: HOME DEPOT, INC. 2
Table of Contents
I. Executive Summary………………………………………………………………. 4
II. Company Background…………………………………………………………… 5
III. Current Performance……………………………………………………………. 5-6
IV. Strategic Posture……………………………………………………..….……… 6
A. Mission……………………………………………………..…….…….. 7
B. Objectives……………………………………………………..….…….. 7
C. Strategies……………………………………………………….….….... 7-8
V. Corporate Governance…………………………………………..……………… 8-9
VI. External Environment (EFAS Table; see Appendix 1)
A. Natural Environment………………………………………..…………. 9
B. Societal Environment………………………………………..………… 9-10
C. Task Environment………………………………………………….…. 11
D. Summary of External Factors………………………………………… 11-12
VII. Internal Environment (IFAS Table; see Appendix 2)
A. Corporate Structure…………………………………………...……… 12
B. Corporate Culture…………………………………………………..... 12-13
C. Corporate Resources…………………………………………………. 13-15
D. Summary of Internal Factors……………………………...…………. 15
VII. Analysis of Strategic Factors (SWOT)………………………………..…… 16
A. Strengths…………………………………………………………..… 16
B. Weaknesses……………………………………….………………… 16-17
C. Opportunities………………………………………….……………. 17-18
D. Threats…………………………………………………….………... 18

VIII. Strategic Alternatives………………………………………………..……. 18-19
IX. Recommendations Strategy……………………………………………..….. 19-20
X. Cost-Benefit Analysis……………………………………………………..… 20
XI. Implementation……………………………………………………………... 20-21
XII. Evaluation and Control…………………………………………………….. 21
XIII. Conclusion……………………………………………...…………………. 21-22
XIV. References…………………………………………..…………………….. 23-24
XV. Appendix………………………………………………..…………………. 25-26

Executive Summary
Home Depot is public traded company that specializes in Do-It-Yourself (DIY) products
for any household project. Home Depot operates in all 50 states, the US market accounts for
87% of the company’s store-base. Home Depot reportedly has 285 stores outside of the U.S.
which accounts for only 13% of its store population. The company offers wide variety
proprietary products, but also offers a strategically managed and marketed e-commerce business.
The company prides itself with customer friendly strategies that offer a variety of
purchasing alternatives. The company also focuses on a unique set of products like truck rental,
installation services, water treatment options, and free DIY classes for homeowners.
This strategic audit will first focus on Home Depot’s current position in the home
improvement industry. The audit will provide an analysis of the company’s strategic focus and
outline their strengths, weaknesses, opportunities and threats. In addition, this audit will provide
Home Depot, Inc. with strategic alternatives and a recommended strategy that will be
accompanied and supported by a cost-benefit analysis. The audit will conclude with an
implementation plan and steps for continuous evaluation and control.

Company Background
Home Depot was founded in 1978 by owners Bernard Marcus and Arthur Blank. Soon
after, Home Depot opened four stores in S. Florida, Louisiana and then Arizona – and the
company then went public. According to the company history reported by Hoovers (2015), in
1981 sales posted at $50 million and by 1983 they were more than $250 million. Soon after the
company’s stock was listed on the New York Stock Exchange and in 1985 the company
continued to expand into California by opening six new stores. Hoovers (2015) reported, “nearly
one year later, in 1986, sales exceeded $1 billion in the firm's 60 stores.” “Home Depot began
the current policy of ‘low day-in, day-out pricing’ the following year, achieving Marcus' dream
of eliminating sales events” (Company History, 2015). Then in 1994 the company reported a
“series of gender-bias lawsuits plagued the company in 1994 as female workers claimed they
were not treated on an equal basis with male employees. Home Depot reached a $65 million out-
of-court settlement in 1997, but not before the company was ordered to pay another female
employee $1.7 million in a case in California.”
As the world's largest home improvement chain and fourth-largest US retailer, the
company operates about 2,250 stores in the US, Canada, Mexico, and China, as well as an online
business (Company Overview, 2015). It targets the do-it-yourself (DIY) and professional
markets with its selection of some 40,000 items, including lumber, flooring, plumbing supplies,
garden products, tools, paint, and appliances (Company Overview, 2015).
Current Performance
For the 2014 fiscal year, Home Depot, Inc. reported sales worth $19.2 billion for only the
fourth quarter. According to GuruFocus (2015), “the 19.2 billion in sales was up 8.3% from the

prior year period, and the operating income came to $2.2 billion compared to previous year's
$1.8 billion, translating into an improvement of 24.4% year on year.” Home depot financial
records indicate that during the same quarter the amount of transactions increased by 5.1%.
Reports showed that, “this trickled down to the bottom-line as the company posted net earnings
of $1.4 billion, up 36.1% from last year fourth quarter's $1.0 billion. Diluted earnings per share
came to $1.05, up from prior year period's $0.73, improving 43.8%” (GuruFocus, 2015).
For the entire year of 2014 Home Depot posted an astonishing $83.2 billion in sales.
Reported by Home Depot (as cited in GuruFocus, 2015) the company’s, “annual operating
income improved 14.2% year on year and came to $10.5 billion and reported net earnings of $6.3
billion, up 17.8% from previous year's $5.4 billion. Overall in 2014 sales were up by 5.5%,
shares improved by 25.3% at $4.71, and customer transactions increased 3.7%.”
Store locations within the U.S. market is Home Depot’s main playing field. Home Depot
(2015) reported that 85% of its 2,269 stores are located within the United States. According to
the company's Merchandising EVP Ted Decker, areas that showed strength were, "tools, lumber,
millwork, lighting, décor, building materials, kitchen, bath, and hardware."
Online sales were another facet that saw booming development in 2014. Home Depot
(2015) reported that, “online sales grew over $1 billion, resulting in a growth of more than 36%.”
Additionally, “during the year almost 40% of all online orders were picked up from the physical
stores, suggesting retailer's initiatives are working and consumers are finding the option viable”
(GuruFocus, 2015).
Strategic Posture

Mission/Values
Home Depot’s mission, “is to provide the highest level of service, the broadest selection
of products and the most competitive prices” (Home Depot, 2015). Home Depot’s values are
based on eight principles that are the foundation and guide for the company’s beliefs. According
to Home Depot (2015) their values are their “competitive advantage in the marketplace.”
According to the Company Overview (2015) Home Depot’s “competitive advantage” is its
values, which are: “Taking care of our people; Giving back to our communities; Doing the right
thing; Excellent customer service; Creating shareholder value; Building strong relationships;
Entrepreneurial spirit; and Respect for all people.”
Objectives
Home Depot will continue to increase revenue through long-term growth ventures and
steady sales. The company’s growth initiatives will be centered on their core competencies and
must generate synergies with their existing business. The company will continue to test all new
ideas before implementing them companywide. According to Home Depot (2015) “This
approach is not only prudent for our stockholders, but it allows us to refine new programs as we
learn more about them.” The company will continue to deliver a wide variety of high quality
products that will be delivered by excellent customer service.
Strategies
The company’s strategic priorities are focused around four areas: customer service;
product authority; disciplined capital allocation, productivity and efficiency; and interconnected
retail. Now that Home Depot’s E-Commerce accounts for more than 4.2% of the company’s
sales, Home Depot is refocusing their strategic priorities to incorporate a business strategy that

can readily support the online sales growth. As stated by emarketer (2014) “Home Depot is now
putting its attention on building out warehouses and the necessary infrastructure to support a
booming digital business.”
Corporate Governance
Home Depot’s board of directors consists of 11 members. Of those 11 board members
one member is internal; Chairman, Craig Menear, President and CEO since 2014. The
remaining 10 board members consist of external individuals with a wide range of expertise
ranging from seasoned international business and academic leaders, expert experience in
optimizing supply chain and enhancing international markets, commercial real estate
management experts, crafted individual experience in publicly traded companies, and the
country’s leading internet retailing entrepreneurs.
Figure 1. Home Depot Officers. (Hoovers, 2015).
However, in 2000 Home Depot brought in Robert Nardelli, one of the most “vilified”
CEOs in history. He managed to drive up profits while stock prices were down. Investors
wanted nothing to do with the company. He accomplished this by letting go all the journeyman
employees and hired mostly part time. According to CNN money reporter Kavilanz (2007),
“Nardelli had faced growing criticism from shareholders for what some of them called a very

"generous" compensation package relative to the stock's weak performance, slowing profits and
a regulatory probe about its options practices, but to his credit, Nardelli's tenure also coincided
with one of the most profitable periods for the company.” In 2007 Nardelli stepped down, and in
total he received a severance of $210 million dollars for essentially being a failed CEO.
External Environment (See EFAS Table; Appendix 1)
Natural Environment
• Home Depot has implemented a sustainability integration system that will quantify the
company’s sustainable goals, achievements, and improvements. (O)
• Strategic sustainability allows for improved business operations, merchandising, supply
chain management, and information technology. (O)
• Worsening US climate conditions could disrupt supply chain manufacturing and product
delivery. (T)
Societal Environment
Economic
• U.S. economic improvement will increase in customer traffic. (O)
• Increased state and federal sales tax rates. (T)
• Increasing labor wages. (T)
• Improving U.S. employment can result in increased customer traffic and spending. (O)
• Rebate incentives offered for electric, water, and lawn related products. (O)
• Unstable and unpredictable world economy and trade regulations. (T)

Technological
• Advancing technology allows for more efficient systems. (O)
• New technologies can offer businesses the option for new innovative products and
services. (O)
• Media sources such as, YouTube allows millions of people easy access to tutorials on
how to complete home improvement projects. (O)
• Increasing cyber-crimes and information security hacking. (T)
Political-Legal
• Data breach potentially impacting some 56 million customers who used a payment card
at Home Depot stores in the US and Canada from April through September 2014. (T)
• The company is facing at least 21 additional lawsuits stemming from the data breach,
which led to fraudulent transactions across the U.S. (T)
Sociocultural
• Mass customization trends are booming due to new DIY television shows and DIY cable
network channels. (O)
• Women are becoming more inclined to do home improvement projects. (O)
• Competitors such as Lowe’s dominate almost all social media outlets. (Emarketer, 2014).
(O/T)
• Society has an increased comfort level when it comes to doing projects that would have
typically required a contractor. (O)

Task Environment
• Home depot has everything a customer would need to complete the job by offering a
large span of products and services they are able to minimize (O)
• Rivalry for Home Depot is low. Home Depot has been able to overcome their rivals due
their massive bargaining power against suppliers. (O)
• Home Depot is ranked number 33 on the 2014 Fortune 500 list and has out-ranked all of
its competitors. (O)
• Home Depot continues to cannibalize sales of existing stores by opening two other stores
in a single area. While this may lower same store sales it is also able to drive existing
stores out of business and keep competition from entering. Home Depot has managed to
raise entry barriers themselves (Industrial Education, 2015). (O)
• International market. (T) Home Depot’s presence in the international market is not one of
their main focal areas. (T) The company has taken a cautious approach. (O)
Summary of External Environment
Home Depot’s has many opportunities that can be taken advantage of. Primarily, the US
economic improvement and increased employment rate. These two external factors can almost
guarantee that Home Depot can expect to see an increase in online and store traffic, which in
return results in sales. Many American’s are now financially capable to make home
improvements and long awaited repairs. But, the company is threatened with increasing federal
and state sales tax rates; hopefully, they can counter this with their proprietary products.
Historically, the company has been known for taking their time when it comes to
international growth. The company prefers to gain familiarity with the market before expanding

into it. This might sound like a smart decision, but in the meantime they remain overly reliant on
the US market. Not every country has a large need for the products and services Home Depot
offers, but the company can still fill the international demand by growing their E-commerce site.
As the global economy begins to improve Home Depot can expect to see a greater demand in the
home improvement industry and will want to be ready for their continued international growth.
Internal Environment (See IFAS Table; Appendix 1)
Corporate Structure
• According to Hoovers (2015) Home Depot operates about 2,265 stores in the US, Canada
and Mexico. (S/W)
• The company is focused on creating an emotional connection with customers, putting
customers first and simplifying the business. (S)
• Continued operational improvement, incremental supply chain benefits and
shareholder value built through higher returns on invested capital. (S)
Corporate Culture
• Wheelen and Hunger (2010) reported that, “in 2007 a record 1,169 shareholder
resolutions were proposed in the U.S. due to concerns with questionable top managers
and weak board of directors.” (W)
• Craig Menear holds a dual role of Chairman and CEO, which means the board of
directors cannot fire the CEO if needed. (W)

• Research revealed that top managers in over 29% of U.S. market stores had manipulated
stock options which resulted in increased executive pay (Wheelen and Hunger, 2010).
(W)
• Home Depot has formed Associate Resource Groups to help strengthen diversity and
inclusion in the workplace. (S)
• According to Home Depot’s military commitment, “in 2004 they joined forces with the
U.S. Departments of Defense, Labor and Veterans Affairs to provide rewarding and
challenging career opportunities.” (S)
Corporate Resources
Marketing
• Low social media marketing involvement. (W)
• Home Depot strives at customer commitment through brand loyalty and image. (S)
• Targets the do-it-yourselfer, laborers and contractors. (S)
• Strategic marketing initiatives for customer options resulted in cyber week producing
record online sales and traffic. (S)
• Promote customer value and loyalty through marketing efforts. (S)
Finance
• Earnings per share are $3.76 which is a 25.3% increase from 2012. (S)
• Online sales increased by 36% in 2014 (excellent for investors). (S)
Research & Development

• Prioritize and develop portfolio strategies, including innovation, assortment and
value. (W)
• Proven eco-friendly products are now offered in stores for a wide range of environmental
safe products. (S)
Operations
• The company opened eight new stores in fiscal 2014 (ended January), including six in
Mexico and two new stores in the US (Hoovers, 2015). (S)
• According to Home Depot’s RSS News Feed (2015), the company is focused on
building a competitive platform across all commerce channels. (S)
• According to Hoovers (2015) Home Depot operates about 285 stores outside the US,
accounting for 13% of its store base. (W)
• The chain has stores in all 50 US states, the District of Columbia, Puerto Rico, Guam,
and the Virgin Islands. (S)
• The sheer size of the company positions them with strong bargaining and trade
power. (S)
• As a part of their supply chain network is company has added direct fulfillment
centers (DFC), designed to support omni-channel capabilities like direct-to-consumer
fulfillment and store pickup for online orders (Bond, 2015). (S)
Human Resources
• The company is planning to hire an additional 80,000 employees. (S)
• As of May 2014 the company employed 365,000 employees. (S)

• Home Depot is non-unionized. (S)
Information Technology
• The company has been working very hard to popularize its e-commerce offering and
making shopping easier as deliveries are available from its physical stores (GuruFocus,
2015). (S)
• In 2015 the company is set to install an in-store mobile technology called the
“FIRST” phone, which is designed to help associates conduct faster checkouts. (S)
Summary of Internal Factors
The company has significant bargaining rights and power within the industry due to their
size. Home Depot is focused on creating an emotional connection with customers, putting
customers first and simplifying the business. The company has a strong E-commerce system, but
lack at offering certain amenities that their competitors provide. Home Depot is the “largest
home improvement retailer in the world” and has had impressive financial improvement since
2012. Home Depot has successfully established itself in multiple markets, but primarily in the
US market. Currently, the company is overly reliant on its 87% US store base.
Financially the company is thriving. In 2014 the company’s annual operating income
improved by 14.2% and totaled to $10.5 billion with reported net earnings of $6.3 billion, up
17.8% from previous year's $5.4 billion, which led to an overall increase in sales by 5.5%
(GuruFocus, 2015). The company currently employs over 365,000 non-unionized employees
and is expected to hire an estimated 80,000 more in 2015.

Analysis of Strategic Factors (SWOT)
Strengths
Home Depot is considered the “world’s largest home improvement retail store.” Home
Depot is filled with strengths that start with their value system. The company’s values are what
they consider to be their competitive advantage. Home Depot has positioned themselves as the
most dominate industry leader by offering low-cost quality products. Their massive size has
given them the bargaining power and contributes significantly towards the top line growth (The
Home Depot, Inc. SWOT, 2015). Because of this bargaining power, the company can offer
exclusive brands, which has directly let to revenue growth and profit.
The company has also been committed to environmental sustainability and in 2007,
launched a robust variety of eco-friendly products. As stated by the (2015) Home Depot, Inc.
SWOT performed by Market-Line, “the company's Eco Options Program has certified more than
7,700 products, and, the products sold through this program include; ENERGY STAR certified
appliances, compact fluorescent light bulbs and LED light bulbs, wifi-programmable
thermostats, tankless water heaters and other products.” The company continues to be involved
in numerous initiatives designed at lowering their carbon footprint.
Weaknesses
One of Home Depot’s greatest weaknesses is their dependency on the US market.
Roughly 87% of their store base is domestically located. If the US should encounter another
devastating economic recession then the company will be at risk of losing huge amounts of sales.
Additionally, the company is only hurting itself by not taking advantage of international growth
opportunities.

Secondly, the company’s recent legal involvement resulting from the 2014 data breach
has made the company financially unpredictable and vulnerable. The company is facing
numerous lawsuits that will strain the company’s operation resources by resulting in civil
penalties and settlement payouts.
Opportunities
The recent US economic improvement has allowed the home improvement industry to
flourish, resulting in increased customer traffic and sales for Home Depot. Spending on
household renovation projects is also on the rise due to new trending factors like the DIY
network, new smartphone applications, and YouTube channels that stream DIY tutorials for
almost any type of project.
Home Depot is taking advantage of the popularity online shopping that today’s society
prefers. They are focused on improving and expanding their E-Commerce website. Through
proper marketing an online purchase promotions the company can expect to see a substantial
increase in online sales, both domestically and internationally.
Lastly, the company is immediately benefiting from government and state offered
incentive programs that are designed to give customers cash rebates when they replace certain
household and lawn items. For example, the Department of Energy offers a variety of tax credits
and rebates for customers who purchase ENERGY STAR appliances, install solar systems,
and/or replace existing lighting with energy efficient bulbs. Similarly, California has numerous
water conservation rebate programs for customers who purchase high efficiency flushing toilets,
and/or install turf and drought tolerant plants. Luckily for Home Depot, they carry all types of

these products and the company utilizing this to help market themselves, which in return
increases sales and customer traffic.
Threats
Currently the company’s most concerning threat is the growing number of lawsuits, legal
fees, and civil actions resulting from a 2014 third quarter data breach. In addition they are also
faced with increasing labor wages. US labor costs have significantly increased and the increased
minimum wage rate impacts the company’s overall operating costs and will greatly affect profit
margins.
Climate changes are another major threat to Home Depot. Since the company has
decided to operate 87% of the business in the US they have put themselves at risk when certain
states continue to get hit with worsening weather conditions. Climate conditions could result in;
decreased demand for seasonal products, disruption of supply chain and delivery, facility
damage, and utility disruptions. All these factors will dramatically impact the company’s bottom
line.
Strategic Alternatives
There are many areas of the business that are thriving, but there are also areas where new
strategic alternatives can be implemented to improve overall functionality. Strategic alternative
#1 would be continued growth through E-Commerce. This strategy is designed to focus on new
products and services through E-Commerce. Home Depot is already successful with online
sales, but continued focus will give a competitive advantage and help improve sales both
domestically and internationally. For every region, the website needs cater to specific
demographics based on their location, allowing optimal use for all market types.

Strategic alternative #2 is growth through sociocultural alliances and services. Currently,
Home Depot is not taking full advantage of today’s culture and social factors. Implementing
stronger social media marketing campaigns allows the company to take presence over their
competitors and will be designed around new technological services and programs.
Strategic alternative #3 is growth of service through differentiation strategy. Home
Depot offers an exclusive line of products. They offer a unique line of tools and paint, but what
they fail to offer is a satisfactory service that will give them superior value over their
competitors. At a minimum, the company needs to design and offer a service that would help
customers stay on budget, track all purchases, and self-design their projects.
Recommendation Strategy
My recommended strategy for Home Depot would be strategic alternative #3. This
strategy is designed with the intent to separate Home Depot from its competitors and give them
unique satisfactory value. Similarly to the, ‘MyLowes’ program offered by Lowe’s Home
Improvement, Home Depot will implement a service that allows customers to track purchase(s),
track and monitor their specified budget(s), but what will differentiate this service above all
others will be the ability for preferred customers to utilize exclusive design software to plan their
next DIY project.
This recommendation is designed to function at two levels. The first level will be offered
to all customers and will include user registration that will tracking of all purchases, budget and
financial planning control features, integrated shopping cart, and home improvement project
planning tips and tools. The second level will be for preferred customers. This level will offer
an advanced feature such as, Auto CAD Design software. This customizable design software

can give customers the opportunity to design their renovation project. However, this software
will be limited and is only intended provide customers with a visualization tool where they can
explore inspirational ideas.
Cost-Benefit Analysis
Positives Negatives
• Customer retention • Not an immediate ROI
• Added value to customer
experience • Specialized software
• New employment opportunities
• Additional servers and
maintenance costs
• Remain cost effective and
increase sustainability
• Potential delay in phase
implementation
• Increased customer traffic
(online & in-store)
• Not as many new customer
credit lines as anticipated
• Benefit to Stockholders and
Investors
• Opportunity to increase
bargaining power
• Unique differentiation above
competitors
• New sales and growth
opportunities
• Growth through E-Commerce
Implementation
This strategy will be implemented in phases and have the ability sustain continued short-
term and long-term success. Home Depot will need to leverage their enormous bargaining
power in order to purchase access rights of software that can be specifically catered to meet the
company’s specifications. These specifications will be derived around the company’s core
competencies. This strategy will be supported by Home Depot’s E-Commerce and customer
service business unit(s).

Home Depot will also reduce O&M costs and become more sustainable by offering
paperless receipt options. Customers who enroll in the member service will be given a key chain
card or can utilize their phone number at the time of purchase to track purchases made either
online or in-store. This recommendation will be rolled out company-wide and will enhance the
customer experience both domestically and internationally.
Evaluation and Control
Home Depot will be able to leverage some functionality of their existing E-Commerce
website, but will need to incorporate the new specifications. Once successful implementation has
been completed, ongoing evaluation and control is a must. Evaluation and control will primarily
be done by a series of success metrics. The company will need to perform continuous website
performance analysis that will be based on internal and external benchmarks.
Initially, the total number of subscribed users will measure the marketing success of this
recommendation. Customer surveys will then help measure satisfaction of the service and data
reports that show the ranges of the websites functional will help in forecasting likes and dislikes.
The evaluation and control process is a huge factor in identifying improvement opportunities,
best practices, and tactical execution of future enhancements.
Conclusion
In summary, Home Depot is a well-established company with many strengths and
potential opportunities, but aside from the company’s brand exclusivity they do not offer any
service that really sets them above their competitors. The goal here is to make Home Depot the
one stop shop that can offer its customers the all the tools necessary for the next project. With
the recent US economic improvement and trending DIY social platforms the company can

implement this recommended strategy and see short-term and long-term growth and through
measurable evaluation and control.

References
24/7 Wall St. (2015). The bullish and bearish case for home depot in 2015. Chatham: Newstex.
Retrieved from,
http://ezproxy.nu.edu/login?url=http://search.proquest.com/docview/1643249016?accountid
=25320
Bond, J. (2015). The Home Depot builds an omni-channel supply chain. (cover story). Modern
Materials Handling, 70(2), 18-22.
Emarketer (2014). The Home Depot Remodels Strategy, Doubles Down on Ecommerce.
Retrieved from, http://www.emarketer.com/Article/Home-Depot-Remodels-Strategy-
Doubles-Down-on-Ecommerce/1011439
GuruFocus.com: Home improvement retailer home depot's Q4 2014 earnings: What you need to
know. (2015). Chatham: Newstex. Retrieved from,
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Home Depot (2015). Corporate Company Values; Corporate Governance; RSS News Feed.
Retrieved from, https://corporate.homedepot.com/OurCompany/Values/Pages/default.aspx
The Home Depot, Inc. SWOT Analysis. (2015). Home Depot SWOT Analysis, 1-9. Business
Source Premier, EBSCOhost.
Trefis: Home depot: Four factors to watch out for in 2015. (2015). Chatham: Newstex. Retrieved
from,

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Industrial Educations (2015). HBS CASE : Home Depot. Home Depot - Strategic Internal
Organization & Financial Analysis. Retrieved from,
http://industrialeducation.blogspot.com/2009/10/hbs-case-home-depot.html
Wheelen, T. L., & Hunger, J. D. (2012), Strategic Management and Business Policy, (13th Ed.),
Prentice Hall.

Appendix 1: EFAS and IFAS Table
INTERNAL FACTORS WEIGHT RATING
WEIGHTED
SCORE COMMENTS
STRENGHTS
S1-Bargaining Power 0.20 4.5 0.90
Huge bargaining power with
vendors due to the company
size.
S2-Customer commitment through
brand loyalty 0.15 4.0 0.60
Offering a wide variety of home
and garden product brands
ensure long-term success.
S3-Strong Customer Service Focus 0.10 4.5 0.45
S4-Earnings Per Share is up by
25.3% since '12 0.05 3.5 0.175
S5-Free DIY Workshops 0.05 2.0 0.10
Free workshops are offered to
help teach customers how to
complete a variety of home
improvement projects. Increase
future revenue.
WEAKNESSESS
W1-Lack of Social Media
Presence/Marketing 0.10 1.5 0.15
Competitors such as, Lowe's is
ruling the social media platform.
W2-Manipulated Stock Options 0.05 1.0 0.50
Shareholder risk. Top executives
in 29% of US stores manipulated
stocks to increase executive pay.
W3-Weak Board of Directors 0.10 1.0 0.10
Dual designation of Chairman &
CEO.
W4-US Territory has 87% of Stores 0.20 1.5 0.30 Overly reliant on US stores
TOTAL SCORES 1.00 3.28
EXTERNAL FACTORS WEIGHT RATING
WEIGHTED
SCORE COMMENTS
OPPORTUNITIES
O1-Improved US Economy 0.20 3.0 0.60
An improving economy
increases store traffic and sales.
O2-Increasing sociocultural DIY
Trends 0.10 2.0 0.20
Utilize new smartphone apps
such as, Pinterest & Houzz to
promote DIY projects and
services.
O3-New US Stores 0.10 3.5 0.35
In 2014 the company opened 8
US stores. Future and economic
investment.
O4-Sustainability Advancement 0.20 4.0 0.80
Advanced sustainability has led
to an improved supply chain and
environmental initiatives
throughout the business.
O5-Rebate Incentives 0.10 2.5 0.25
Many product lines are sold with
rebate incentives offered by
local electric or water
companies.
THREATS

T1-Unstable International Economy 0.05 3.5 0.175
An unstable world economy
makes international growth
risky.
T2-Competitors/Rivals 0.05 1.5 0.075
Competitors offer services that
track customer purchases,
projects & budgets.
T3-Increasing Labor Wages 0.05 1.0 0.5
Higher and potentially uncertain
risk to overhead.
T4- Climate Changes 0.05 2.5 0.125
Harsh weather conditions can
prevent hinder inventory
delivery and prevent timely
delivery to customers.
T5-Lawsuits 0.10 4.5 0.45
Uncertain legal fees & pending
lawsuit from a 2014 data breach
TOTAL SCORES 1.00 3.525

Home Depot Strategic Audit _ Final _ MMartinez

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