Free Essay Home Depot History and Business Case Analysis

1762 words 8 pages
Home Depot Business Case Analysis Letter to CEO

To: Robert L. Nardelli, - President and CEO of Home Depot, Inc.
Date: March, 04, 2004

First of all, I would like to thank you for giving me the honor to analyze your well organized and developed company. In this memo, I am going to discuss the strategic factors facing Home Depot, the strategies that the company has been following for the past years, and the distinctive competency Home Depot attain. Also, I am going to give my recommendations and opinion.

Some of the strategic factors that Home Depot faces are related to product quality, price, advertising, store capacity, competitors, and customer's independency and satisfaction. Most of these strategic factors helped in the growth and
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Home Depot is one of the nation's largest retail advertisers and spends far more on advertising than comparable stores. Home Depot spent nearly eight times as much on advertising in 2002 than its nearest competitor, Lowe's Cos. Lowe's, which has just half the annual sales of Home Depot, spent about $114 million on advertising in year 2002. (Jim Lovel. Home Depot ad spending $895M. Retrieved April 25, 2003, from http://www.bizjournals.com/atlanta/stories/2003/04/28/story1.html). Therefore, extensive advertising is giving Home Depot a distinctive competency against other companies in the same industry.

These strategies are implying higher expenses in order to be achieved, especially the huge expenses on advertising. I would like to make a comparison between two most growing companies in the USA (Home Depot and Wal-Mart) .In 2002, Home Depot spent 32 percent more than Wal-Mart Stores Inc., the world's largest retailer. Wal-Mart with annual sales almost five times higher than Home Depot's spent $676 million on advertising last year. (Jim Lovel. Home Depot ad spending $895M. Retrieved April 25, 2003, from http://www.bizjournals.com/atlanta/stories/2003/04/28/story1.html). Therefore, the more money you spend on advertising, does not lead to increase in annual sales but it leads to increase in expenses. Even though,

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