Home Depot's Retreat from China

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Case Details:

Case Code : BSTR429
Case Length : 15 Pages
Period : 2006-2012
Pub Date : 2013
Teaching Note :Not Available
Organization : The Home Depot.
Industry : Retail
Countries : USA, China

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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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Background Note

Home Depot was established in 1978 by Bernie Marcus and Arthur Blank in Atlanta, Georgia. They opened the first store in 1979, a home improvement store that catered to the Do-it-Yourself market. The store stocked building, plumbing, electrical supplies, tools, lawn and garden equipment, landscaping materials, etc. Later on, the company went on to add home appliances to its range. In 1981, the company went public and was listed on the NASDAQ exchange

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In 1984, the company acquired Bowater's Home Center unit, and expanded to Texas. In 1986, Home Depot opened its first big-box store. In 1989, the company opened its 100th store. In 1994, Home Depot entered Canada by acquiring Aikenhead, a hardware store in Toronto and Ontario. It entered South America in 1998 by opening a store in Santiago, Chile. In the same year it ventured into Puerto Rico. It entered Mexico in 2001 by acquiring Home improvement retailer, Total Home.

Home Depot entered South America in 1998 by opening stores in Chile in strategic alliance with Flabella. It entered Argentina in 1999. The company launched its online store in 2000. In 2001, it exited Chile by selling the stores to its joint venture partner. The following year it exited Argentina, due to mounting losses.

In 2006, Home Depot's sales (net of HD Supply which was sold off in 2007) were at US$ 79 billion. During the year it created ‘Orange Works', an innovation and design venture, in association with brand strategy, marketing communications and design firm Arnell Group. The main task of ‘Orange Works' was to create distinctive products at a competitive price. In 2007, Home Depot entered into a marketing partnership with National Football League (NFL), which made Home Depot the official home improvement sponsor of NFL. The company launched a program to identify eco-friendly products ‘Eco Options' in the same year. There were over 2500 products in this category ranging from natural insect repellants to organic plants, biodegradable pots and washing machines.

By 2009, sales fell to US$ 66.2 billion due to the recession in the US. In the same year, it entered into a partnership with Martha Stewart Brand Strategy, the marketing communications and design firm to develop exclusive furniture under the Martha Stewart Living brand. They also developed an exclusive interior and exterior paint under the same brand....

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