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In assessing the competitive position of a home improvement retailer, we would use the five forces analysis of Michael E. Porter. The assessment would compare Home Depot as home improvement retail against its retail competitors.

Extracts from this document...

Introduction

Strategic Analysis External Analysis Industry Analysis: 5 Forces Model In assessing the competitive position of a home improvement retailer, we would use the five forces analysis of Michael E. Porter. The assessment would compare Home Depot as home improvement retail against its retail competitors. Potential Entrants The retail building supply served two distinct clients which are the professional building contractor and the Do-It-Yourself homeowner. The industry did not have barriers to entry in the form of patents or special technology. But the BIY segment was moving rapidly one characterized by small, independently run establishments to one dominated by regional and national chains of vast superstores. So there are a few regional or national chains in this industry but they operated a lot of stores in their chain. This can make its chains have more competitive advantage comparing to the independent one. The examples of competitive advantage are brand image, lower cost, a lot of stores, a wide range of products and service, and have more skill. If the newcomer enters into this industry, it has to invest much money to compete with the existing retail chains in every aspect. So the beginner should not enter into BIY segment. Not only focused on the BIY segment, but the superstore warehouses also tried to serve all market segments, but they had become increasingly consumer-oriented. Because of this, smaller competitors were focusing their strategies on the professional constructor segment of the market. So the newcomer can enter into this segment easier than entering to the BIY segment. But the new entrant has to build its brand image which is the important factor to persuade the customer to buy its product. Building brand image is difficult. Moreover, it has to find a lot of vendors to supply product and service. Most vendors have already signed contract with the existing retailer, so it is difficult to seek for the qualified vendors. ...read more.

Middle

It has DIY customers the support and confidence that no home project was beyond their capabilities with Home Depot personnel close at hand. Home Depot, Inc's employees went beyond simply recommending appropriate products, tools, and materials. Sales personnel cultivated the customers by demonstrating methods and techniques of performing a job safely and efficiently. As per 10-year compound growth rate, Home Depot's weighted average sales per square foot increased from $1.00 to $4.40. So we can infer that there are a lot of customers visits Home Depot. The company faced a lot of problem about services, therefore management tried to solve the problem starting with introduction of full-service, in-store interior decorating centers staffed by designers and an expanded assortment in its lighting department in 1991. In fiscal year 1993, the company introduced Depot diners which were an extension of the company's commitment to total customer satisfaction and was designed to provide customers and employees with a convenience place to eat. Next, it introduced phone centers to serve its customers who called to inquire about pricing and availability of merchandise. Home Depot also responded to the demographics of certain markets by expanding its service hours to 24 hours a day in 15 stores location. Moreover, the company authorized approximately 3,500 installed sales vendors who, as independent licensed contractors, provide services to customers. This program targeted the BIY customer, who would purchase a product but did not have the desire or ability to install it. Support Activities � Procurement Merchandising included all activities involved in the buying and selling of goods for a profit. It involved long-range planning to ensure that the right merchandise was available at the right place, at the right time, in the right quantity, and at the right price. As per a wide variety of Home Depot's product, the company conducted business with approximately 5,700 vendors, the majority of which were manufacturers. There is no single vendor accounted for more than 5% of total purchases. ...read more.

Conclusion

When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise. The balanced scorecard suggests that the company should view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives; Finance, Customer, Internal Process, and Learning & Growth. Key Performance Indicators (KPIs) Objectives KPI 1. Maximize Profit � Profit Growth � Return on Investment (ROI) 2. Increase Sales Revenue � Sales Growth � Sales Revenue 3. Increase Service Revenue � Service Sales Growth � Service Sales Revenue 4. Reduce Costs � Profit Margin � Costs per cup 5. Maintain existing customers � Numbers of Existing Customers 6. Increase new customers � Number of New Customers 7. Increase customers' satisfaction � Customers Satisfaction Index (Survey) 8. Faster Services � Service Time � Waiting Time 9. Increase lines of products and service � Number of product and service lines 10. Good Image � Customers Satisfaction Index (Survey) 11. Increase Market Coverage � Number of New Countries 12. Fast, Accurate, and User Friendly operating process � Service Time � Number of Failure in each process � Number of Complaints about Website Appearance and Using the Web 13. Open New Markets (DC + Websites) � Number of New Markets � Number of New DC and Websites 14. Improve Research and Development � Number of New Product and Service � Number of Process Improvement 15. Supplier Relationship Management � Supplier Performance � Total Material Costs � Number of new suppliers making contract with the company 16. Proficient and Service-Minded Employees � Performance Evaluation � Competency Testing Objectives KPI 17. Expand Product Lines � Number of new products 18. Technology Improvement � Number of technology course employee take � Amount of money invest in technology 19. Employee Training � Number of training hours per employee � Number of training courses 20. Employee Recruitment and Selection � Turnover rate 21. High morale and satisfaction from employee � Turnover rate � Employee Satisfaction ?? ?? ?? ?? Strategic Management 1 ...read more.

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