Home Depot 2005

1、danielle boucher, takefumi kawahara, matthew bouchard, darius parker1a strategic management case studydanielle boucher, takefumi kawahara, matthew bouchard, darius parker2overviewa brief history of the home depoteoy 2004mission, vision, objectives, strategies2005 new vision and missionexternal analy

2、sisopportunities & threats cpmefeinternal analysisfinancial datastrengths and weaknesses ifefinancial ratiosstrategic analysis swot matrixspace bcgie matrixgrand strategy matrixmatrix analysisqspm possible alternative strategiesour recommendationstrategies long range objectiveseps/ebit implement

3、ation issuesproposed annual objectives (goal) and policesproposed procedures for evaluationepiloguecurrent performanceresources utilizedquestions danielle boucher, takefumi kawahara, matthew bouchard, darius parker3history of the home depot 1978 founded by bernie marcus and arthur blank; zero locati

4、ons; 20 associates 1979 3 store location; 200 associates; $7 million in sales 1980 4 stores; 300 associates; $22 million in sales 1981 stock goes public on nasdaq, raising $4.1 million; 8 stores; 700 associates; $51 million in sales 1984 moved to the new york stock exchange (nyse) in 1986 sales exce

5、ed $1 billion; 60 stores 1987 day-in/day-out pricing policy; upc scanning system; health program for associates introduced; 75 stores; $1.45 billion sales 1988 named retailer of the year by building supply home centers for second time; named high performance retailer for 7th consecutive year by mana

6、gement horizons; 96 stores; $2 billion in salesdanielle boucher, takefumi kawahara, matthew bouchard, darius parker4history of the home depot 1994 the company arrived in canada with the acquisition of aikenheads home improvement centers 1997 624 stores; 124,000 associates; $24.2 billion sales 1999 t

7、he legend opened in the atlanta store support center; chronicles the history of the home depot and illustrates the values that set us apart 2001 began flying its flag proudly in mexico in 2001 through the acquisition of total home 2002 1,532 stores; 300,000 associates; $58.3 billion in sales 2003 $6

8、4.8 billion in sales 2004 sales reach 73.1 billion; over 1,818 stores and 54 expo centers making home depot the worlds largest home improvement retailer, 2nd largest retailer in the united states, 3rd largest retailer in the worlddanielle boucher, takefumi kawahara, matthew bouchard, darius parker52

9、004 missionthe home depot is in the home improvement business and our goal is to provide the highest level of service, the broadest selection of products and the most competitive prices. we are a values-driven company and our eight core values include the following: excellent customer service taking

10、 care of our people giving back doing the right thing creating shareholder value respect for all people entrepreneurial spirit building strong relationships giving backdanielle boucher, takefumi kawahara, matthew bouchard, darius parker6in 2004 home depot committed to its first ever week of service.

11、 260,000 volunteers hours were donated by 34,500 associates. completing 1,600 service projects. due to its success we have decided to make it an annual event.danielle boucher, takefumi kawahara, matthew bouchard, darius parker72004 strategies and objectives approximately $1 billion is being invested

12、 in infrastructure self check out computers product scanning devices 175 new stores in north america modernize current storesdanielle boucher, takefumi kawahara, matthew bouchard, darius parker82004 issues strong competition with lowes is driving down prices contractor shortages causing a backlog in

13、 home remodeling a class-action lawsuit alleges that home depot and rival lowes misled customers with interest-deferred credit card promotions in 2003danielle boucher, takefumi kawahara, matthew bouchard, darius parker9exclusive brandsthe home depot carries several exclusive brands, including:behr p

14、aintchem-dry (carpet cleaning, upholstery cleaning, tile and grout services) distinctions cabinetry eco options (store brand) feather river doors g.e. (water heaters) glacier bay (faucets and bath) hampton bay (lighting, ceiling fans & patio furniture) husky (tools) millstead pegasus (kitchen an

15、d bath items) ralph lauren paint ryobi (power tools) thomasville cabinetry vigoro (fertilizer) workforcedanielle boucher, takefumi kawahara, matthew bouchard, darius parker10creating a worldwide presenceadd the end of 2004 we had 44 stores in mexico and 117 in canadadanielle boucher, takefumi kawaha

16、ra, matthew bouchard, darius parker11a new visionto be the first choice for affordable, diverse, innovative, and modern products in the home improvement industry.danielle boucher, takefumi kawahara, matthew bouchard, darius parker12a new missionthe home depots mission is to be a superior retailer in

17、 the home improvement business by providing an extensive range of products worldwide. (2,3,7) we offer first-rate customer service to all home owners and businesses, from housewives to contractors. (1) the home depot values its relationship with its employees, shareholders, customers, and the commun

18、ity as well as the environment and maintains a high level of respect for all. (6,8,9) these relationships are maintained through vast community involvement and a dedication to increasing our presence internationally, thereby providing to those in need and increasing profits to our shareholders. (4,

19、6,5) we utilize technological advancements to assist in our growth and further develop our innovated stores. (4)danielle boucher, takefumi kawahara, matthew bouchard, darius parker13the home depots missionthe new mission answers the following questions 1.customers: who are the firms customers?2.prod

20、ucts or services: what are the firms major products?3.markets: geographically, where does the firm compete?4.technology: is the firm technologically current?5.concern for survival, growth, and profitability: is the firm committed to growth and financial soundness?6.philosophy: what are the basic bel

21、iefs, values, aspirations, and ethical priorities of the firm?7.self-concept: what is the firms distinctive competence or major competitive advantage?8.concern for public image: is the firm responsive to social, community, and environmental concerns?9.concern for employees: are employees a valuable

22、asset of the firm?danielle boucher, takefumi kawahara, matthew bouchard, darius parker14external audit: opportunitiesexternal audit: opportunitiesinternational expansionconsumer interest in one-stop shopping to save time and gas moneygrowth in global sourcinghardware stores, home centers, and retail

23、-oriented lumberyards, industry expected to grow (from $236.3 billion in 2004 to $281.7 billion by 2008)slow housing sales (people are likely to stay home and spend money on remodeling and on improvements to make a home more attractive to purchase)the growing number of woman who are making home impr

24、ovement decisions and spending an increasing amount of time on diy (do-it-yourself) projectsdanielle boucher, takefumi kawahara, matthew bouchard, darius parker15external audit: threats competitors (lowes, sears, wal-mart) reaching market saturation within north america contractor shortage causing b

25、acklog in home remodeling overlap between home depot and lowes a class-action lawsuit alleges that home depot and rival lowes misled customers with interest-deferred credit card promotions in 2003danielle boucher, takefumi kawahara, matthew bouchard, darius parker16the home depot cpmthe home depot c

26、pmhome depotloweswal-martcritical success factorsweightsratingweighted scoreratingweighted scoreratingweighted score0.0 to 1.01 to 41 to 41 to 4market share0.1030.320.240.40inventory system 0.0740.2830.2130.21financial position0.0720.1440.2840.28product quality0.0930.2730.2720.18consumer loyalty0.05

27、40.2040.2030.15sales distribution0.0740.2820.1440.28global expansion0.1130.3330.3340.44organization structure0.0830.2430.2430.24production capacity0.0530.1530.1540.20e-commerce0.0830.2420.1640.32customer service0.0640.2430.1820.12price competitive0.0730.2130.2140.28management experience0.1040.430.30

28、30.30totals13.282.873.4danielle boucher, takefumi kawahara, matthew bouchard, darius parker17the home depot efethe home depot efekeyexternalfactorsweightsratingweightedscore0.0to1.01to4opportunitiesinternationalexpansion0.140.4consumerinterestinone-stopshoppingtosavetimeandgasmoney0.140.4growthinglo

29、balsourcing0.0840.32paybackfromitinvestment0.0530.15hardwarestore,homecenters,andretail-oriented,lumberyards,industryexpectedtogrow(from236.3billionin2004to281.7billionin2008)0.0840.32slowhousingsales(peoplearemostlikelytostayhomeandspendmoneyonremodelingandonimprovementstomakeahomemoreattractivetop

30、urchase0.0720.14growingnumberofwomenwhoaremakinghomeimprovementdecisionsandspendinganincreaseamountoftimeondiy(do-it-yourself)projects0.0940.36threats0competitors(lowess,sears,wal-mart)0.130.3reachingmarketsaturationwithinnorthamerica0.0740.28contractorshortagecausingbackloginhomeremodeling0.0720.14

31、overlapbetweenhomedepotandlowes0.0730.21aclass-actionlawsuitallegesthathomedepotandrivallowesmisledcustomerswithinterest-deferredcreditcardpromotionsin20030.0620.12industryslowdown0.0630.18totals13.32danielle boucher, takefumi kawahara, matthew bouchard, darius parker18consolidated balance sheetdani

32、elle boucher, takefumi kawahara, matthew bouchard, darius parker19consolidated balance sheetdanielle boucher, takefumi kawahara, matthew bouchard, darius parker20consolidated statement of cash flowsdanielle boucher, takefumi kawahara, matthew bouchard, darius parker21internal audit: strengths #1 hom

33、e improvement retailer in the world #2 retailer in the u.s. profits climbed 16% and revenues climbed 13% in for the fiscal year 2004 innovative methods of differentiating dominant in the lumber and building materials industry distinctive product range efficient business modeldanielle boucher, takefu

34、mi kawahara, matthew bouchard, darius parker22internal audit: weaknesses rising expenses store layout and appearance new store productivity remains weak revenue growth is slower than industry average and lowes 18% decrease in cash and cash equivalents fy from 2002 and 2003 to 2004danielle boucher, t

35、akefumi kawahara, matthew bouchard, darius parker23the home depot ifethe home depot ifekeyinternalfactorsweightsratingweightedscore0.0to1.01,2,3or4internal strengths3 or 4#1 home improvement retailer in the world0.1240.48#2retailerintheu.s.0.0940.4profitsclimbed16%andrevenuesclimbed13%inforthefiscal

36、year20040.0740.32innovativemethodsofdifferentiating0.0840.32dominantinthelumberandbuildingmaterialsindustry0.0830.24distinctiveproductrange0.0430.12efficientbusinessmodel0.140.4internalweaknesses1or2risingexpenses0.120.2storelayoutandappearance0.0620.12newstoreproductivityremainsweak0.1110.12revenue

37、growthisslowerthanindustryaverageandlowes0.0720.1618%decreaseincashandcashequivalentsfyfrom2002and2003to20040.0820.16totals13.04danielle boucher, takefumi kawahara, matthew bouchard, darius parker24financial ratio analysisliquidityratios current ratio 1.3 times 1.4 times quick ratio 0.4 times 0.4 ti

38、mes leverageratios debt to total assets 37.9% 34.9% times interest earned 114.0 times 111.4 times activityratios inventory turnover 7.3 times 14.3 times ave. collection period 7.5 days 3.1 days fixed assets turnover 3.0 times 6.1 times total assets turnover 1.9 times 3.8 times profitabilityratios pr

39、ofit margin on sales 6.8% 6.6% return on total assets 12.9% 25.0% return on net worth 20.7% 38.4% danielle boucher, takefumi kawahara, matthew bouchard, darius parker25financial ratio analysisliquidityratios current ratio 1.3 times 1.2 times 0.9 times quick ratio 0.4 times 0.2 times 0.2 times levera

40、geratios debt to total assets 37.9% 45.6% 58.4% times interest earned 114.0 times 21.1 times 17.6 times activityratios inventory turnover 7.3 times 12.2 times 9.6 times ave. collection period 7.5 days 0.0 days 1.8 days fixed assets turnover 3.0 times 5.1 times 3.6 times total assets turnover 1.9 tim

41、es 3.4 times 2.4 times profitabilityratios profit ma rgin on sales 6.8% 6.0% 3.5% return on total assets 12.9% 20.5% 8.6% return on net worth 20.7% 37.7% 20.8% danielle boucher, takefumi kawahara, matthew bouchard, darius parker26financial ratio analysisdanielle boucher, takefumi kawahara, matthew b

42、ouchard, darius parker27financial trends(january 1999-january 2005) avg p/e price/ sales price/ book net profit margin (%) 01/05 16.70 1.23 3.65 6.8 02/04 16.70 1.25 3.57 6.6 02/03 22.40 0.84 2.42 6.3 02/02 35.50 2.17 6.41 5.7 01/01 46.20 2.30 6.93 5.6 01/00 46.60 3.39 10.39 6.0 01/99 40.20 3.09 10.

43、19 5.3 book value/ share debt/ equity return on equity (% ) return on assets (% ) interest coverage 01/05 $11.06 0.09 20.7 12.8 113.2 02/04 $9.93 0.06 19.2 12.5 110.4 02/03 $8.64 0.07 18.5 12.2 157.6 02/02 $7.71 0.07 16.8 11.5 176.1 01/01 $6.46 0.10 17.2 12.1 199.6 01/00 $5.36 0.06 18.8 13.6 92.9 01

44、/99 $3.95 0.18 18.5 12.0 58.0 financial data in u.s. dollarsindustry: home improvement storesdanielle boucher, takefumi kawahara, matthew bouchard, darius parker28the home depot stock performancesource: dividends ( ) splits ( )danielle boucher, takefumi kawahara, matthew bouchard, darius parker29the

45、 home depot net worth (january 2005, in millions of u.s. dollars except per share items)1. stockholders equity + goodwill = $24,158 + $1,394$ 25,5522. net income x 5 = $5,001 x 5=$ 25,0053. share price = *$40.41/eps(2.26) = 17.88 x net income $5,001 =$ 89,4184. number of shares outstanding x share p

46、rice = 2,159 x $40.41=$ 87,245method average$ 56,805*stock price is based on a closing price at 1/28/2005 from danielle boucher, takefumi kawahara, matthew bouchard, darius parker30strategic analysis: swot strategic analysis: swot matrixmatrixwt strategies1.open stores in every large u.s. market (w3

47、, w4, t6)2.open stores in europe or asia-pacific markets (w3, w4, t2, t6)3.supply contractors working in middle east reconstruction efforts (w4, t1, t2, t3, t6)st strategies1.increase market share by buying out menard inc., true value, or ace hardware (s2, s5, t1)2.open stores in europe or asia paci

48、fic markets (s2, s5, t2, t6)threats t1.competitors (wal-mart, sears, lowes)2.north american market saturation3.contractor shortage / backlog in home remodeling4.2003 lawsuit5.overlap between h.d. and loweswo strategies1.expand product line to other areas (w3, w4, o2, o6)2.sell wider variety of produ

49、cts online (w1, w2, w4, o1, o3, o7)3.open stores in europe or asia-pacific markets (w4, o1, o5, o6)so strategies1.open stores in europe or asia-pacific markets (s2, s5, o1, o5)2.buy out kingfisher or obi to expand into those markets (s2, s5, t1, o5)3.experiment with different check-out methods (s3,

50、s5, o2, o7)4.add more options such as fuel centers or convenience stores (s2, s3, s5, o2, o5)opportunities o1.international expansion2.consumer interest in one-stop shopping3.growth in global sourcing4.payback from it investment5.select industries expected to grow6.slow housing sales (more remodelin

51、g)7.more “do it yourself” womenweaknesses w1.rising expenses2.store layout and appearance3.new store productivity remains weak4.revenue growth is slower than industry average and lowes5.18% decrease in cash and cash equivalents from 2002 to 2004strengths s1.#1 home improvement retailer in the world

52、/ #2 retailer in u.s.2.profits climbed 16% / revenues 13% in 20043.innovative methods of differentiating4.dominant in lumber/building materials industry5.efficient business modelhome depotswot matrixwt strategies1.open stores in every large u.s. market (w3, w4, t6)2.open stores in europe or asia-pac

53、ific markets (w3, w4, t2, t6)3.supply contractors working in middle east reconstruction efforts (w4, t1, t2, t3, t6)st strategies1.increase market share by buying out menard inc., true value, or ace hardware (s2, s5, t1)2.open stores in europe or asia pacific markets (s2, s5, t2, t6)threats t1.compe

54、titors (wal-mart, sears, lowes)2.north american market saturation3.contractor shortage / backlog in home remodeling4.2003 lawsuit5.overlap between h.d. and loweswo strategies1.expand product line to other areas (w3, w4, o2, o6)2.sell wider variety of products online (w1, w2, w4, o1, o3, o7)3.open st

55、ores in europe or asia-pacific markets (w4, o1, o5, o6)so strategies1.open stores in europe or asia-pacific markets (s2, s5, o1, o5)2.buy out kingfisher or obi to expand into those markets (s2, s5, t1, o5)3.experiment with different check-out methods (s3, s5, o2, o7)4.add more options such as fuel c

56、enters or convenience stores (s2, s3, s5, o2, o5)opportunities o1.international expansion2.consumer interest in one-stop shopping3.growth in global sourcing4.payback from it investment5.select industries expected to grow6.slow housing sales (more remodeling)7.more “do it yourself” womenweaknesses w1

57、.rising expenses2.store layout and appearance3.new store productivity remains weak4.revenue growth is slower than industry average and lowes5.18% decrease in cash and cash equivalents from 2002 to 2004strengths s1.#1 home improvement retailer in the world / #2 retailer in u.s.2.profits climbed 16% /

58、 revenues 13% in 20043.innovative methods of differentiating4.dominant in lumber/building materials industry5.efficient business modelhome depotswot matrixdanielle boucher, takefumi kawahara, matthew bouchard, darius parker31strategic analysis: space strategic analysis: space matrixmatrixdanielle bo

59、ucher, takefumi kawahara, matthew bouchard, darius parker32strategic analysis: space matrixhome depot has achieved moderate competitive advantages and financial strength in a growing and stable industry.danielle boucher, takefumi kawahara, matthew bouchard, darius parker33strategic analysis: grand s

60、trategy matrixdanielle boucher, takefumi kawahara, matthew bouchard, darius parker34strategic analysis: ie matrixdanielle boucher, takefumi kawahara, matthew bouchard, darius parker35strategic analysis: bcg matrixdanielle boucher, takefumi kawahara, matthew bouchard, darius parker36matrix analysismatrix ana