Analysis of corporate governance of Home Depot - Essay Example

?CEO Project THESIS MENT This paper intends to conduct the analysis of corporate governance of Home Depot, an American based retail store. II. CORPORATE GOVERNANCE Corporation represents the mechanism that has been established to enable different bodies for contribution of investment, labor and expertize with a motive of mutual benefit. It has been observed that shareholders participate in sharing of the profits that the organization earns but they do not frame a part of the responsibilities being undertaken within the organizational operations. Corresponding laws have been imposed in order to limit the shareholders’ liability for the organizational activities that ultimately results in their involvement within the operational processes. It can thus be ascertained that Board of Directors of any company endures certain obligations pertaining to the decision-making process that might affect the organization in the long run in the forms of Corporate Governance. Corporate governance basically relates to the relationship of shareholders, top management and Board of Directors for designing and planning the procedures and performances of the organization (Wheelen and Hunger 43-71). 2.1 – Board of Directors. The Founders of Home Depot included Arthur Blank, Kenneth Langone, and Bernard Marcus (Wheelen and Hunger 43-71). The current board of directors includes F. Duane Ackerman, Frank Blake, Ari Bousbib, Gregory D. Brenneman, J. Frank Brown, Albert (AI) Carey, Armando Codina, Helena B. Foulkes, Bonnie G. Hill, Karen L. Katen and Mark Vadon. Correspondingly, F. Duane Ackerm has been ascertained to be serving as a part of board of directors since 2007. Prior to his arrival in Home Depot, Mr. Ackerman had served as President and Chief Executive Officer of BellSouth Corporation for nine years tenure ranging from 1997 to 2006. Notably, he had occupied the position as Chairman of its board of directors from 1998 to 2006 and as Vice Chairman and Chief Operating Officer from 1995 to 1997. During his tenure, Mr. Ackerman has acquired wide-ranging experience overseeing finance, supply chain, marketing, sales international, information technology and real state function. Mr. Ackerman retried as Chairman Emeritus of BlueSouth in March 2007. Mr. Ackerman is required to express his experience in managing intricate activities within the organization. Ari Bousbib has been serving as the Director since 2007. Previously, he had served as the President of Otis Elevator Company from 2002 to 2008 and prior to this he had also occupied the position of Chief Operating Officer from 2000 to 2002. He is required to perform wide range of activities particularly concerning over-sighting information technology, supply chain and other activities dealing with developing strategies of the company. Furthermore, with his experiences in the field and dedicated expertize, Mr. Ackerman provides advance managing skills and competencies to Home Depot by handling the most complex situations efficiently (Wheelen and Hunger 43-71). Gregory D. Brenneman has been serving as the Director of Home Depot since 2000. He has showed his competencies as a business leader in many of the well-known established organizations. His involvement and expertize within the management decisions has changed the entire scenario of many organizations. Prior to this, he had served as President and member of the Board in Continental Airlines Inc from 1996 to 2001 and Chief Operating Officer from 1995-2001. He renders his valuable service in terms of general management of the company as well as delivers his expertise concerning corporate finance, marketing and international aspects of the company. He also endures expertize in the corporate finance, supply chain and international matters among others. Mr. Brenneman is currently working as the chairman of CCPM Capital Advisers. This company is a private equity firm. Furthermore, he has also been employed as a chairman and in the position of a CEO of the company TurnWorks incorporation. Moreover, in his working career, he has also carried the position of the Executive Chairman of the company Quiznos. This company is basically a national quick-services hotel chain. He had also incorporated a restructuring along with turn-around effort at the Berger King Corporation. This company represents an international restaurant of fast-food. He was also associated as the President of the renowned PwC Consulting Group that serves the problem of organizational activities worldwide. J. Frank Brown has been serving as the Director of Home Depot since 2011. Prior to serving at Home Depot, he had served as the affiliate of the American Institute of Certified Public Accountants, the European Executive Council and the European Academy of Business in Society. He currently serves in the Audit Committee within the company (Wheelen and Hunger 43-71). It has been noted that Mr. Brown is an exceptional academic and business leader who endures a strong technical competency in the field of financial along with accounting matters. In the year 2011, he has successfully completed his tenure as the DEAN of the international business school, i.e. INSEAD. The campus of the international school was situated in France and Abu Dhabi. On his credit, it has been further observed that he has served for around 26 years in the PwC. In this company he has imparted expert management decisions in the transaction services along with the corporate –developmental practices. Albert (AI) Carey has been acting as the Director of Home Depot since 2008. Previously, he had served as the member of Senior Executive Position at PepsiCo. He had also served as the President of PepsiCo sales from 2003 to 2006. He rendered his expertise in marketing matters, general management of the company along with assisting in developing strategic business skills for the members of the Board. Armando Codina has been serving as the Director of Home Depot since 2007. He is also recognized as the Founder of Codina Group, a commercial estate group located in South Florida. He renders his services in expertise to address the various factors related with real estate issue of the company (Wheelen and Hunger 43-71). Helena B. Foulkes has undertaken the responsibility of Director of Home Depot lately in 2013. Prior to this, she was acting as the Executive Vice President and Chief Marketing Officer for two years from 2009 to 2011, Senior Vice President of Health Services of CVS/Pharmacy, Inc. for the tenure ranging from 2007 to 2009. She endures exceptional skills pertaining to innovation in marketing strategies, merchandizing and the operational activities of the retail sector. This quality is embedded within her due to her major experience as an executive marketing. She also used to handle operations along with the strategic roles related to advance planning roles of the CVS Caremark Corporations. This company represents as the pharmacy provider in the healthcare sector. Bonnie G. Hill has been serving as Director since early 1999. Previously, she had served as the affiliate of the board of directors of NASD Regulation Inc. and various other corporate portfolios. She is responsible for integrating her expertise for the development of leadership skills in the various segments of the company. She endures exceptional leadership competencies in retail and finance sector. Arguably, leadership skill plays a vital role in the growth and development of any organization. According to her bio-data, she also has advanced competencies pertaining to the fields of corporate governance and public policy issues among others. She has also been a co-founder of the company, Icon Blue Incorporation, which represents as a brand marketing company. She has served The Times Mirror Foundation too, as the CEO and the President. Karen L. Katen has been serving as Director of Home Depot since 2007. She has worked in various healthcare organizations under different designations. She is also responsible for monitoring supply chain and marketing activities of the company. Mark Vadon has been acting as the Director of Home Depot since 2012. He is also recognized as the Founder of Blue Nile, Inc. which is regarded as one of the leading retailers of diamond and fine jewelry. He is required to assist the company in terms of online retail activities and retail strategy (Homer TLC, Inc, “Our Leadership”). The board members were selected based on their past expertise and achievement. He expertizes in the field of information technology along with online retail area. Responsibilities of the Board of Directors. Laws and regulations pertaining to the responsibilities of Board of Directors greatly vary within different countries. This can be explained in a better way by citing an example. The Board Members of Ontario, situated in Canada, endures the federal laws associated with their responsibilities. The basic responsibilities that the Board of Directors inherits have been described briefly hereunder. It is the core responsibility of the directors to frame the corporate strategy and the mission of the organization. Furthermore, they are also entitled to frame the vision and set objectives of the firm. On further analysis, the directors of any company are also found to be responsible for the hiring and firing of the CEO along with the personnel in top management level as per the requirement and their performances. Another basic function of the directors is to control, monitor and supervise the executive level of any company. Prior to all these functions, important decision making process also depends upon the top level management including the Board of Directors. It is therefore necessary for them to ensure effective handling of the internal and the external affairs that ensures sustainability and development of an organization on the whole. In correspondence to the responsibilities of the directors, reviewing the resources and the approval for appropriate usage of the resources also frames the part. Satisfying shareholder’s interests is another prior responsibility of the director. 2.2 – Top Management. The top management of the company includes the name of Matt Carey, Cara Kinzey, Tim Crow, Bill Lennie, Craig Menear, Bill Lennie, Craig Menear, Giles Bowman, John Deaton, Gordon Erickson, Kevin Hofmann, Mark Holifield, Hal Lawton, Trish Mueller, Kevin Scott, Marvin Ellison, Ann-Marie Campbell, Lyne Castonguay, Aaron Flowe, Joe McFarland, Marc Powers, Teresa Wynn Roseborough, Ricardo Saldivar, Brad Shaw, Carol Tome Ted Decker and Richard McPhail. The team of senior leadership is designated under different portfolios and is required to reliever wide variety of tasks within the company such as over-sighting information technology and developing strategies required for performing various tasks within the organization. It is worth mentioning that all the senior leaders are required to report to CEO of the company. Correspondingly, Frank Blake has been acting as the Chairman and Chief Executive Officer since January 2007. Prior to this, he had served as the Vice Chairman for one year tenure ranging from 2006 to 2007. He had also occupied a position of Executive Vice President from 2002 to 2007. While performing his roles in the later position, he was required to deal with the company’s real estate credit services, store construction, strategic business development, call centers, international and home services business. He has also occupied a variety of positions while serving at General Electricals such as Senior Vice President in Corporate Business Development wherein he was in charge of all worldwide acquisitions, mergers and identification of strategic growth opportunities. Mr. Blake is generally considered as self-efficient and candid. Furthermore, he is more inclined towards adopting participative style leadership (Homer TLC, Inc, “Our Leadership”). Correspondingly, it is determined that he does not own a large share of stock. The compensation in the company is firmly based upon the duties and responsibilities rendered by the senior leaders in the organization. Furthermore, the compensation plan within the company is designed as equity-based and incentive-based. III. EXTERNAL ENVIRONMENT: OPPORTUNITIES AND THREATS (SWOT) 3.1 – Natural Physical Environment: Sustainability Issues. Home Depot since its foundation has achieved numerous milestones and recognitions. The company is committed towards rendering its efforts for performing Corporate Social Responsibility (CSR). It has been ascertained that as the company expanded its structure for the board of directors decided to change the management structure from ‘ad-hoc’ to a formal style to gain a lasting impact. In correspondence to the CSR activities of the Home Depot, the company basically focuses on the four areas. The four areas are affordable housing, disaster preparedness, environment and young generation at risk. Home Depot also endures certain values pertaining to the CSR activities. The prior value that the company ensures is ‘excellent customer services’. The company always tries to provide the customers’ with quality services and products. Furthermore, the company also provides the customers’ advices with regard to the usage of the product to derive maximum satisfaction. Another vital value that the company inherits is building up of strong relationship. The company builds up the concurrent relationship on the basis of trust, integrity and honesty. It has been widely involved in supporting habitat for humanity since its incorporation time. The company is determined towards addressing the sustainability and environment responsibilities through its performances and operations. Home Depot has launched numerous environmental programs in order to reveal its commitment towards sustaining its operations by becoming a responsible corporate citizen. The company has replaced all the wooden shipping pallets with “slip sheet”. It has also been working with Business for Social Responsibility in order to reduce environmental impact. It has also been involved in promoting a wide variety of environmental friendly products (Community Development Society, “CSR Case Study: The Home Depot”). 3.2 – Societal Environment 3.2.1 – Economic The sustainability of Home Depot in the recent times has been influenced by certain important economic factors such as low consumer confidence followed by increasing unemployment. However, its excellent management practices, superior consumer services and competitive prices have offered the company an increasing opportunity to boost its business performance (Tolunay, Wang, Ma and Zhang, “Home Depot vs. Lowe’s”). It has been further ascertained that Home Depot’s vital success factor remains to be its excellent management competencies and the competitive prices of the products. Moreover, the company also invested in the e-commerce strategy and became committed towards the benefit of the web-based trade. This further added to its success potentials (Tolunay, Wang, Ma and Zhang, “Home Depot vs. Lowe’s”). 3.2.2 – Technological The continuous advancements in the technological aspects have offered radical challenges for Home Depot to implement the designated changes. Correspondingly, Home Depot in order to eliminate the challenges of rapid obsolescence and promote innovation has been constantly involved in the implementation of creative technological changes. 3.2.3 – Political-Legal Home Depot observes that increase in the frequency of the actions pertaining to the policymaker at the federal along with state levels has laid a greater impact on the regular organizational operations. The corporate activity concerning with the political aspect is basically regulated by the federal and the state governmental bodies. The political activities and the government relation policy engraved certain policies pertaining to Home Depot. These policies have been briefly discussed here under. The company entails the regulatory requirements within the political activities along with interactions Home Depot mainly encourages the employees to participate in the political aspects It has been observed that complexity associated with the present global political and legal policies have widespread impacts on the performance of Home Depot as well as its ability to devise strategies. In order to deal with political aspects, Home Depot has established political action committee. Furthermore, the company ensures that all it operational activities are performed as per the rules and regulations established by the concerned authority (The Home Depot, Inc., “Political Activity and Government Relations Policy”) 3.2.4 – Socio-Culture Home Depot has been involved in various societal campaigns to promote education, job assurance to people along with sage working practices. It has invested millions of dollars for promoting healthy environment (The Home Depot Foundation, “Doing More for Veterans.”). 8.1.3 – INTERNAL BUSINESS PROCESS 8.1.3.1 – Objectives. The objective of Home Depot is to establish itself as a leading home improvement company and offer superior quality services to its customers. Superior quality of services can enable it to attain greater volume of customers in the long run who would also contribute to its brand value and market share competitiveness (Crystal, Brink , Allphin and Zanatta, “Home Depot Media Plan”). 8.1.3.2 – Measures. In order to achieve its broad objectives, Home Depot has established measures and strategies that aim at reaching the maximum target audiences with least possible cost. The company also intends to increase the fidelity of existing customers along with attracting new customers from the market for realizing its broad objectives. In the present dynamic world, there is a requirement to increase customer base as switching cost of customers is quite low. This often enables the prevailing customers to look for new avenues to maximize their profit (Crystal, Brink, Allphin and Zanatta, “Home Depot Media Plan”). 8.1.3.3 – Targets. Home Depot particularly deals with retail store and hence it targets a wide range of consumers. It is worth mentioning that the company predominately deals with women consumers while it does not mean that the company ignores the other consumer segments. Correspondingly, the target audience for the company also comprises contractors. This assortment of targets shall enable the company to generate greater sales from different avenues along with enabling it to ascertain a greater section of loyal customer base (Michal Zbijewski, “Marketing Communication Strategy Home Depot Paper”). 8.1.3.4 – Initiatives. Home Depot has undertaken several initiatives primarily oriented to customers and environment. As an initiative concerning customers, the company is determined to make the customer experience unique through building more convenient stores (Webb, “Home Depot Exec Reveals New Initiatives to Serve Pros”). Furthermore, the company has commenced recycling initiative in order to contribute towards its environmental obligation. In this present business environment, showing concern towards environmental aspects has become norm for business houses to establish themselves amid the customers. Depicting environmental concerns facilitates the customers bestow trust upon the company as they often believe the organization is not only focused towards earning greater profits but it is showing significant social element as well. Home Depot, in this regard, has taken this decisive measure, which can in turn enable the company to ensure maximum consumer trust and superior customer retention rate as well. Additionally, Home Depot has also been able to showcase its societal and humane side through this approach (Homer TLC, Inc, “The Home Depot Launches National CFL Bulb Recycling Initiative”). Works Cited Crystal, Natalie, Megan Brink, Taylor Allphin, and Julia Zanatta. Home Depot Media Plan. n.d. Web. 19 Nov. 2013. “CSR Case Study: The Home Depot.” Community Development Society. n.d. Web. 19 Nov. 2013. “The Home Depot Launches National CFL Bulb Recycling Initiative.” Homer TLC, Inc. 2013. Web. 19 Nov. 2013. “Our Leadership.” Homer TLC, Inc. 2012. Web. 19 Nov. 2013. “Marketing Communication Strategy Home Depot Paper.” Michal Zbijewski. n.d. Web. 19 Nov. 2013. “Doing More for Veterans.” The Home Depot Foundation. 2013. Web. 19 Nov. 2013. “Political Activity and Government Relations Policy.” The Home Depot, Inc. 2012. Web. 19 Nov. 2013. Tolunay, Cenk, Yan Wang, Hong Ma, and Yuhong Zhang. Home Depot vs. Lowe’s. 2008. Web. 19 Nov. 2013. Wheelen, Thomas and J. David Hunger. Strategic Management and Business Policy 43-71. United States: Pearson. Print. Webb, Craig. Home Depot Exec Reveals New Initiatives To Serve Pros. 2012. Web. 19 Nov. 2013. Read More