Home Depot's Strategy under Bob Nardelli

            
 
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Case Details:

Price:

Case Code : BSTR141 Electronic Format: Rs. 400;
Courier (within India):Rs. 25 Extra
Business Strategy | Case Study in Management, Operations, Strategies, Business Strategy, Case Studies

Themes

Growth Strategies
Case Length : 13 Pages
Period : 1978-2004
Organization : Home Depot
Pub Date : 2004
Teaching Note : Available
Countries : U.S.A
Industry : Retail

Abstract:

Home Depot was the biggest home improvement retailer in the world in 2004. Set up in the late 1970s, to provide low price, warehouse-like products, Home Depot grew rapidly over the 1980s and early 1990s, adding stores at the average annual rate of 20 percent. However, in the late 1990s, the company's comparable store growth rate began declining. It was also experiencing operational difficulties due to its tardiness in developing systems to manage its rapid growth. In this situation, the board brought in Bob Nardelli as the CEO of the company in 2000. Nardelli was responsible for implementing new initiatives that changed Home Depot's culture and strategic direction. The case discusses the changes implemented by Nardelli at Home Depot in the early 2000s.


It discusses the measures he took to eliminate inefficiencies from the company and to streamline its processes. The case also talks about the difficulties that Nardelli, who was the first outside CEO of Home Depot, faced in implementing these changes. The case concludes with an analysis of how Home Depot compared with Lowe, its nearest competitor, in the early 2000s and an analysis of the reasons why the company's share price had fallen.

Issues:

To analyze the growth strategy followed by a large home improvement retailer in the US

To study the retailer's attempt to revive growth in the face of market saturation and the steps it took to offset saturation

To understand the impact on a company's strategy of the passing on of leadership from founders to an outsider and first timer in the industry

To examine the difficulties faced by an outsider in bringing about changes in a company

To understand the competitive position between the two top companies in the home improvement market in the US

To examine the reasons for a company's comparatively low share price despite its improved financial performance

Contents:

  Page No.
First Manhattan Store 1
Background Note 2
Changes Under Nardelli 3
The Challenges 7
Home Depot vs. Lowe in the Early 2000s 8
Exhibits 10

Keywords:

Home Depot, Bob Nardelli, Bernie Marcus, Arthur Blank, New York Stock Exchange, Supply chain, Store layout, In-store improvements, Lowe, US retail industry, The Home Depot Supply, Georgia Lighting, Expo Design Centers, The Home Depot Landscape Supply and Discovery Channel.

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