Company Logistic Analysis, Drawbacks, and Recommendation - Case Study Example

Company Logistic Analysis, Drawbacks, and Recommendation 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 (Burritt). 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. For the last financial year home depot registered profits of over $4.5 billion. This made the share price to rise from $2.47 to $3.00 per share. In the financial report for the year 2012, it did not include the $145 million tax charge. This was related to the closing of the china store, which affected the share price negatively with a decline of 0.10 earnings per share. The net sale for the year 2012 increased by 62% to $78 billion. This was an increase from the previous year where the earnings were $70 billion. The store sales increased to 4.6% attributed by a 2.9% rise in comparable store average ticket. In addition, the rise in customers in our stores attributed to this increase. The financial year of 2012 had an extra week that increased the net sales by $1.2 billion. This led to an increase of the share earnings by $0.07. The growth in the 2012 financial year is credited to continued focus on the following initiatives. 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 in. This is because the value of the shares continues to increase with each financial year that passes. 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. Home depot pay dividends on time, considering that the shareholders need to see their money at work. For this same reason, the company has been always called for an annual shareholders meeting to discuss the ongoing at the company. This way always, makes the shareholder fell appreciated and involved in the decision making of the company. The home depot stocks come with many benefits. It is easier to use them as collateral when applying for a loan. You can pay your insurance with the dividends that are paid for the stocks One of the major drawbacks of the stock is that they are mostly overvalued. Most media put home depot in the same category as housing stocks. The company does not fit in the retail sector stock. The last major improvement in housing stock pick in 2005 did not concur with the building products pick in 2006. In recent times the homebuilders stock suffered a skid for several months while the stocks at home depot improved. This means that the investors the focus should be on the value and volume movements of the stock at home depot. Home depot earnings are 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). 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 in the period before September 11. Other more grave issues are also at fault. Home Depot stock value has tumbled from a per share stock value of close to $70 to beneath $25 in the last years. It is a necessity that Home Depot rapidly needs to change its approach in order to continue being the world’s top home enhancement vender. Owing to Home Depot’s sole retail formation, it has had a precise benefit over other vendors that were in thru rivalry with it. This benefit permitted Home Depot to develop to an influential, if not leading, company in the home upgrading the trading industry. 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