Home Depot's Strategy under Bob Nardelli

Home Depot's Strategy under Bob Nardelli
Case Code: BSTR141
Case Length: 13 Pages
Period: 1978-2004
Pub Date: 2004
Teaching Note: Available
Price: Rs.400
Organization: Home Depot
Industry: Retail
Countries: USA
Themes: Growth Strategies
Home Depot's Strategy under Bob Nardelli
Abstract Case Intro 1 Case Intro 2 Excerpts

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

The case is structured to achieve the following teaching objectives:

  • 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

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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