FIRM OVERVIEW
Home depot is the largest home improvement store chain in the world, and has recently seen a drop in profits and stock price.[1] This could partly be blamed on external factors in the economy such as the recent sub-prime mortgage crisis. However, performance has been lagging far behind competitors such as Lowe’s for some years, demonstrating that Home Depot is not operating efficiently. In 2009, Company’s profit is down 49%. Full-year revenue for 2009 dipped 8% to $71.29 billion from $77.35 billion, while same-store sales slid 8.7%. From 2000 to 2006 research demonstrates Lowe’s growth in net income was 120% higher than its much larger competitor Home Depot. Furthermore, this period where Home depot was under CEO Nardelli, stock value dropped 8% while Lowe’s soared approximately 180%.[2]
These problems seem to have begun with Nardelli’s take over as CEO in 2000. Nardelli reversed Home depot’s strong attention to customer service. He implemented an autocratic, military like organizational culture that was completely different to the decentralized, high autonomy, and customer orientated culture formed by the founders Bernie Marcus and Arthur Blank.[3] These factors slowly saw the company’s performance slide, while Nardelli dropped the reigns in 2006 taking home over 245 million dollars in compensation. Frank Blake, a compatriot of Nardelli’s from GE took over as CEO. Blake has recognized several problems with Home Depot and remains hopeful for future growth, but has done little to reverse the problems. The firm’s issues must be addressed to revamp the performance of Home Depot to insure its continuing growth and efficiency.
This report acknowledg ...