Critical Factors to the Success of Home Depot - Case Study Example

Critical Factors to the Success of Home Depot Project definition The purpose of this paper is to analyze home depot shelf stock rate. The paper will also state critical factors to the success of the company. In addition, it will state the company’s drawbacks when it comes to shelf stock rate. Recommendation to improve this will be stated and explained. Company overview Home Depot is one of the largest retailers of home improvement products and services. The company has over 2255 retail stores across 50 states in the U.S. The company employs more than 300,000 employees. The company is listed on the New York stock exchange and in the doe Jones. The company enjoys good revenue. In the finical year of 2011, the company made a profit of 3.9 billion and their gross sales were up to 70.4 billion. The company’s stocks enjoy good ratings and trading in the stock exchange. The dividends paid for the stocks are good and shareholders enjoy many benefits that come with the strength of the stocks (Burritt). In the year 2010, home depot bought a portable device technology. This technology is aimed at easing the process of stocking shelves. It also allows them to keep an eye on customers no matter which part of the store they are in. this has helped a lot in improving customer service. The company is an all rounded company. This is because when customers have money, it allows them to do home improvements more often. This stocking technology has allowed home depot to make huge profits. This technology helps them in knowing which products have been lifted from the shelves and need replacement. Because of the positive feedback that they are receiving because of this technology, it is safe to assume that they will invest more in these types of technology. The company is also searching for new technology that will help them stock their shelves better. Factors Leading to its Success Home Depot is aiming at serving customers better. They want to improve customer’s satisfaction so that they can get more revenue in sales. Some of the measures that home depot has undertaken so as to improve their services are, Customer service – continued focus on customer service is driven by philosophies of making an emotive link with the customer. These philosophies are putting the customer first and making the business simple. Home depot has opened new call centers in Utah and Georgia simply to have a more personalized connection with the customers. All these centers have been opened in the last financial year. This has played a major role in increasing the earnings and profit margins for the company. In additions, new wits such as the new arrangement system for secondary and centralized return to seller process has more than 57% of all labor hours dedicated to customer services and by the end of the financial year of 2013 the labor hours will have reached 60%. In addition, other measures will be put in place to ensure complete customer satisfaction. This will lead to increased sales bringing the stock price to a higher price. This will put the stocks in a better position than the previous year. Product authority – focus on product expertise is enabled by selling transformation and a collection of strategies, which are aimed at delivering product novelty, variety and worth. In extension of this approach, new merchandise and importance for both our expertise and D-I-Y client in a variety of divisions are the focus of the approach. In addition, expansion of showrooms to accommodate more products especially the Electrolux, whirlpool and Frigidaire will help in helping these brands to move and reach more consumers. This is because of the exposure that these brands will have on the open market. Controlled capital distribution, efficiency and competence – the tactic to driving productivity and effectiveness is advanced through nonstop operational upgrading, incremental supply chain welfares, disciplined money distributions and expenditure control. Also building shareholder worth through complex return on devoting money and total worth reimbursed to shareholder in the system of bonuses and share repurchase. In the last financial year, the company completed the automation of the RDCs, which is likely to further progress the cost efficiency of this platform. The inventory ratio turnover rose from 4.3 to 4.5. 74 million shares were acquired through ASR contracts and the open market during the last financial year. All the shares purchased amounted to $4.0 million. At the last board meeting, the board of directors approved a new $17.0 billion shares repurchase package that substituted the previous endorsement and declared a 34% growth in the trimestral cash bonus to $0.39 per share (Home Depot). Intersected retail – focus on intersected trade is based on structuring an inexpensive platform across business channels. During the last financial year, the company launched enhancements to the website. This included My Install, which was intended to improve clarity and communication in installation scheme and to abridge the customer experience. This makes the company a good place to invest. This is because the value of the shares continues to increase with each financial year that passes. Home depot drawbacks to shelf stock rate The home depot stock rate is in an upward drive. This makes the company a good place to invest your money. The company is consistently looking for new ways to improve business this makes their stock value go here with each end of the financial year. Being a big company, there are several drawbacks when it comes to the shelf stock rate. Stocking all shelves to full capacity is challenging. This is because the company has many branches across the country. There are still opening new stores shifting their focus from older stores to new stores. This makes it even harder to note some of the products that are missing in some stores. The system that is currently been used has not been fully integrated to all Home Depot stores. This makes it hard for the suppliers to know which products to take to which stores. This makes it very hard to satisfy customer’s demands with the stocks on the shelf. Each branch of the company receives more than 1000 customers in a single day. This makes demand very high for home depot products. With the current systems that the company uses to restock, the company is unable to meet the demand and supply of the products. Home Depot has survived many storms. When there was an economic crisis Home depot earnings were very strong. Trimestral EPS progressed 23%, 34%, 28% and most lately 23%. The returns grew from 5% to 9% in the last financial year. An analyst’s project that in the financial year, ending in 2014, there will have a 20% growth in earnings and 5% growth in revenue. This will automatically give a rise in the value of stocks meaning more dividends for stockholders (Whitfield). This will be possible if the company improves its shelf stock rate policy. This will help in attracting more customers and help in curbing demand. Recommendations and implementation Investing in new and existing technology that eases the process of restocking and product watch, would be a positive step in improving service in home depot. A few years back the company acquired services of a portable device that helped in restocking shelves and improving customer service. Full integration of this device to the operations would be the key in tilting the market to the company’s favor. In addition, it would help in meting demand and getting more products to the shelf. Getting new technology that will assist in keeping track of supply orders will also be a good way to help improve the shelf stock rate. A customer will not come back to the same store twice when he or she does not get the products that they are looking for. This will help the company become a powerful force as it was before. The previous two years have been witness to a progressively poor company recital by Home Depot. However, some of this monetary slump can be credited to an overall financial go-slow. Home depot has managed to survive economic challenges. Nevertheless, new entities are becoming a gradual risk in threatening Home Depot. Lowe’s company specifically has been the most fruitful of Home Depot’s rivals and has improved its stock price by 83%, even in bad economic times. Whereas both companies offer fair rates because of their price saving thrifts of rule, Lowe’s has accomplished to shape a very optimistic facility and excellent status. Home Depot vends its bulk products at rates similar to those of Lowe’s. However, home depot has been giving market value to rivals because of its inferior service and client care compared with other companies. Although clients would be uninterested to the comparable prices of two supplies, the hurried good of value with provision would cause home upgrading clients to go to other suppliers rather than Home Depot. Therefore, that home depot can retort to the condition, Home Depot has introduced a package to expand excellence and the facility. They started a new countrywide advertisement drive to notify the public of these (Aispuro, Martin, and Chong). Home Depot’s advertisement drive talks the challenging subject of shops outlook. A lot of Lowe’s’ achievements can be credited to its optimistic repute with clients. The company’s new drive is an effort to guarantee clients of the company’s obligation to better value and service dedicated focus. Advertisements and announcements display common people getting gratification by completing home development responsibilities with the aid from Home Depot. Principal Advertising Officer specified that the company would conquer the market by doing what it does best. Presuming that, the company can progress its outlook through advertising and actual vicissitudes to grow store value and in customer provision. The company would have additional than the bulk needed to get back to the competitive status and achieve an increased corporate growth rate. In order to prove all the talk and assurances in the new countrywide advertisement drive, the company has amplified retained salaries in order to progress and restore older company stores. In the year 2003, the company increased expenditure on fresh and existing stores from a previous $3 billion to $4 billion. This is a part of the $250 million allocate to stores remodeling. The average age of all stores is 5 years but the oldest store is seven years old. The company’s earlier stories, that have feebler service, have unlocked the door for its key rival to excite customers with its up-to-date stores, which are normally labeled as shiner and having wider corridors. Besides staffs and teaching changes the company needs to emphasize more on client services, a Consulting thinks that staff teaching should also emphasize more on skilled employees. Though client service is vital, it is imperative to teach staffs especially for a client base with no home development knowledge. With the new advertisement drive to persuade average proprietors to take the opportunity and try home development plans, only knowledgeable staff can offer proficient client service. If the staff is new in the company and does not possess the required skill to persuade the customers, it might lead to discontented customers. Employees that are more skilled will require more salaries than the new employees will. This increase in the overall cost because of higher salaries cannot be compared with the revenue generated from satisfied customers. Satisfied customers will keep coming back for the product and service from the same company. Works Cited Aispuro, Eric, Martin, Stuart and Chong, Ji. Home Depot: Corporate Expansion and Image Improvement. Web. 2013. . Burritt, Chris. Home Depot’s Red beacon Expands ‘Do-It-for-Me’ Services. Web. 27 September 2013. . Home Depot. Annual financial report 2012. Web. 8 December 2013. http://phx.corporate- ir.net/phoenix.zhtml?c=63646&p=irol-reportscurrent Whitfield, Paul. Don't Let Housing Trend Dictate Stance on Home Depot. Web. September 25 2013. . Appendices Read More