Home Depot SWOT Analysis

Strengths

Home Depot was founded by Bernie Marcus and Arthur Blank in 1979 and today it has become one of the largest home improvement specialty merchandiser in the world. The company has stores in more than fifty states.

In just a few years of its incorporation the income of the company reached $1 billion (in year 1986) while in 1997 it had reached twenty billion dollars an annum.

Home Depot has built its reputation as a national as well as international company. The company not only has a strong position in US with exclusive hit stores but also has developed a strong market position in Canada. The company is ranked as the largest merchandiser in United States after Wal-Mart.

Home Depot has well differentiated its products, with its bright logo and its binary departments serving both individuals and businesses.

Weaknesses

As compared to Home Depot its competitors have streamlined its various business processes including its human resources. Home Depot however has a weak IT infrastructure and needs to upgrade several of its services.

The company does not have a good reputation when it comes to customer service. The customer services are not good, the services are slow and the company is said to have very little or no knowledge of the products it stocks.

Not all stores of the company are performing equally well and the company needs to have a proper check and balance system.

Opportunities

Home Depot needs to make significant investments in technology that will help greatly in improving its services. The company should develop or acquire computers, software, networking tools, and other important communication tools components that will help them to stay current, provide fast communication, processes, better drive business and keep up their competitive stance.

The company can pay more attention towards giving value to the customers and develop a loyal customer base.

As companies are going green, it is also an opportunity for Home Depot to improve its social corporate image. They can achieve this by improving their operations that will lessen the effect on the environment. By using less water, electricity and non-renewable sources of energy, recycling etc, the company can cut down its costs as well as attract the environment conscious customers.

Home Depot can take several steps to get a competitive edge over its competitors. Besides the environment related steps, the company should also consider taking steps attractive to turn costs based on economic factors. The company should address the economic factors more, use different cost reduction, methods and study different economic trends in the segments that affect their industry.

The company should study closely, the underperforming stores. This will provide the company with cost savings and allow them to realize need for improvements to seize further opportunities.

Threats

Home Depot has several strong competitors in the industry including Ace Hardware, Lowe’s and True Value Hardware. Besides this Home Depot also competes and faces threats in other industries and market segments for building materials retail and distribution, appliances retail, consumer electronics, truck stops, gasoline retailers and convenience stores.

The customers can easily switch to other brands of other companies as the company does not have yet strong loyal customer development strategies.

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