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Home Depot - Essay Example

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3.3 – Task Environment 3.3.1 – Threat Of New Entrants Threat of new entrants in the industry is low. Home Depot has an advantage over new entrants in this industry as it has maintained its brand name, a wide range of products and has established customer’s loyalty in the industry (Harrison and John)…
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Home Depot
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Download file to see previous pages Home Depot operates with contracts, establishes credits with the bank, which provides it opportunities to work effectively in the long run (Magretta). In home improvement industry, it is prior for companies to anticipate with the changing market trends and knowledge (Harrison and John). Home Depot is effective to anticipate with the changing trends in the market and retains their customer. For the new entrant lack of knowledge and experience in the field makes it difficult to maintain its supply chains and customer retention. In addition; Home Depot has maintained an absolute cost advantage in the industry (Harrison and John). The pricing offered by the company is low cost pricing which makes the competition tough in the in the industry. Home Depot has maintained an exclusive control on the costing by developing strong relations with its exclusive sellers and suppliers. One of the major advantages Home Depot experience is the brand image, as customers are more inclined to approach companies having strong brand names (Harrison and John). Home Depot has served over years, it is known as for the best quality and service provider in the industry. This eventually declines the dilemma for the existing companies like Home Depot and Lowies from the new entrants. Constantly, it can be concluded that Home Depot has an edge in the market and has restrained others from entering as new threats. 3.3.2 – Bargaining Power of Suppliers The bargaining power of suppliers in the home improvement industry is a low force. Home Depot’s expense controls and cost initiatives are its core competencies. Prominent companies in the industry like Home Depot and Lowe’s are dependent on well recognized brand name suppliers (Harrison and John). These firms maintain strategic alliances and exclusive relationship with certain suppliers; they maintain their market image in the industry, which eventually secures the bargaining power of suppliers. Home Depot maintains exclusive relationship with its suppliers, as it is depend upon products that are well recognized and brand suppliers. This is because of the reason that if these firms are unable to maintain strong relationship with its suppliers the may lose their product variety and quality (Harrison and John). Furthermore Home Depot eliminates the reliance upon third parties and middle man; this is because of the reason that if these third parties run into financial or regulatory difficulties it may caste negative impacts on the company in the industry (Harrison and John). Therefore, home depot has centralized its purchases operations through making direct purchases (Harrison and John). The online centers of the company aid company to minimize the control of suppliers. Home Depot also maintains websites to maintain and to strengthening the relationship with its suppliers, these measures limits supplier’s bargaining power to a low force. 3.3.3 – Threat Of Substitute Products or Services The threat of substitution in the home retailing industry is relatively low, because the substitution for the home product like hammers, nails, and paint etc. can be the similar products bought within the industry which are also sold by the same vendors (Harrison and John). It is true that the demand of products, their supplies and prices are interrelated in a market, which ...Download file to see next pagesRead More
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