Home depot class presentation

The Home Depot Case Study 2010

PROBLEM STATEMENT-1 ,[object Object],[object Object],[object Object],[object Object],[object Object],By Azhar

PROBLEM STATEMENT-2 ,[object Object],[object Object],[object Object],[object Object],By Azhar

PROBLEM STATEMENT -3 ,[object Object],[object Object],[object Object],[object Object],[object Object],By Azhar

FINANCIAL ANALYSIS 2005-2006 INCOME statement By Azhar 2005 2006 (+/-) % Net Sales 81,511 90,837 10.4 Cost Of Sales 54,191 61,054 12.7 Gross Profit 27,320 29,783 9.0 Selling, Gen & Admin Exp 16,485 18,348 11.3 Dep& Amortization Expenses 1,472 1,762 19.7 Total Operating Exp 17,957 20,110 12.0 Operating Income 9,363 9,673 3.3 Interest (net) (81) (365) 350.0 Prov For tax 3,444 3,547 3.0 Net Earnings 5,838 5,761 (1.3)%

FINANCIAL ANALYSIS 2005-2006 INCOME statement ,[object Object],[object Object],[object Object],By Azhar

FINANCIAL ANALYSIS 2005-2006 Assets and capital structure By Azhar 2005 2006 Change +/- Assets 15,269 18,000 Cash & Equiv 807 614 Receivables Net 2,396 3,223 Inventory 11,401 12,822 Other Current Assets 665 1,341 Total Currnt Assets 15269 18,000 Property, Plant &Eq 24,901 26,605 Goodwill 3,286 6314 Other Assets 949 1,344 TOTAL ASSETS 44,405 52,263

FINANCIAL ANALYSIS 2005-2006 Capital structure By Azhar 2005 2006 Current Liabilities 12,706 12,931 Long Term Liabilities 4,790 14,302 Common Equity 26,909 25,030 TOTAL LIABILITIES & S/HOLDER EQUITY 44,405 52,263

FINANCIAL ANALYSIS 2005-2006 SALES GROWTH (%) ,[object Object],[object Object],By Azhar 2000 2001 2002 2003 2004 2005 Annual Growth Home Depot 17.09 8.77 11.28 12.77 11.52 11.44 12.12 Lowes 15.63 20.25 18.1 18.24 18.59 8.52 16.49 Industry 6.35 7.51 10.22 12.62 7.93 8.89 8.9

FINANCIAL ANALYSIS 2005-2006 NET INCOME GROWTH (%) ,[object Object],[object Object],[object Object],By Azhar 2000 2001 2002 2003 2004 2005 Annual Growth Home Depot 17.94 20.37 17.47 16.19 16.74 11.44 14.32 Lowes 24.71 46.44 22.18 19.92 27.6 12.3 25.1 Industry n/a 36.67 22.87 16.58 10.58 5.56 14.42

FINANCIAL ANALYSIS OPERATING PROFIT MARGIN ,[object Object],[object Object],[object Object],By Azhar 2000 2001 2002 2003 2004 2005 2006 2007 Home Depot 9.2 9.2 10.0 10.6 10.8 11.5 10.6 9.3 Lowes 7.5 8.2 9.8 10 10.1 10.8 11 10.3 Industry 8.8 7.7 8.6 9.1 9.2 8.8 8.8 8.6

FINANCIAL ANALYSIS NET PROFIT MARGIN(%) ,[object Object],[object Object],By Azhar 2000 2001 2002 2003 2004 2005 2006 2007 Home Depot 5.6 5.7 6.3 6.6 6.8 7.2 6.3 5.5 Lowes 4.3 4.7 5.7 5.9 5.9 6.4 6.6 6.2 Industry 8.8 7.7 8.6 9.1 9.2 8.8 8.8 5.5

FINANCIAL ANALYSIS RETURN ON EQUITY(%) ,[object Object],By Azhar 2000 2001 2002 2003 2004 2005 2006 2007 Home Depot 18.9 18.4 19.3 20.4 21.5 22.9 22.2 21.6 Lowes 15.9 16.6 19.8 19.5 20 21.4 20.7 19.4 Industry 20.3 16.7 21.1 23.6 27.8 27.4 24.7 27.4

FINANCIAL ANALYSIS RETURN ON ASSETS(%) ,[object Object],[object Object],By Azhar 2000 2001 2002 2003 2004 2005 2006 2007 Home Depot 13.4 12.7 13 13.4 13.6 14.0 11.9 9.9 Lowes 8.0 8.0 9.9 10.4 10.9 12.1 11.8 10.5 Industry 9.8 8.2 9.4 9.7 10.2 10.2 9.8 9.9

FINANCIAL ANALYSIS CURRENT RATIO ,[object Object],[object Object],[object Object],By Azhar 2000 2001 2002 2003 2004 2005 2006 2007 Home Depot 1.8 1.6 1.5 1.4 1.4 1.2 1.4 1.1 Lowes 1.4 1.6 1.6 1.6 1.2 1.3 1.3 1.2 Industry 1.6 1.7 1.8 1.8 1.8 1.7 1.7 1.7

FINANCIAL ANALYSIS QUICK RATIO By Azhar 2000 2001 2002 2003 2004 2005 2006 2007 Home Depot 0.3 0.6 0.4 0.4 0.4 0.4 0.3 0.2 Lowes 0.3 0.4 0.4 0.5 0.2 0.2 0.2 0.1 Industry 0.5 0.7 0.8 0.9 0.8 0.7 0.7 0.7

FINANCIAL ANALYSIS 2005-2006 DEBT TO EQUITY RATIO ,[object Object],By Azhar 2000 2001 2002 2003 2004 2005 2006 2007 Home Depot 9.3 6.5 6.3 3.7 8.2 9.0 31.7 39.4 Lowes 32.9 35.9 31 26.5 21 19.7 21.6 25.8 Industry 24.1 23.4 26.5 25 24.6 23.4 23.1 25

FINANCIAL LEVERAGE ,[object Object],By Azhar 2000 2001 2002 2003 2004 2005 2006 2007 Home Depot 1.4 1.5 1.5 1.5 1.6 1.7 2.1 2.6 Lowes 2.1 2.1 1.9 1.8 1.8 1.7 1.8 1.9 Industry 2.3 2.3 2.4 2.5 2.8 2.6 2.6 2.9

FINANCIAL ANALYSIS MARKET SHARE ($) By Azhar 2000 2001 2002 2003 2004 2005 2006 2007 Home Depot 45,738 53,553 58,247 64,816 73,094 81,511 90,837 59,690 Lowes 18,779 21,714 26,112 30,838 36,464 43,243 46,927 37,904 Industry Total 71,501 82,276 93,415 105,625 121,560 139,263 153,428 108,881

FINANCIAL ANALYSIS MARKET SHARE (%) By Azhar 2000 2001 2002 2003 2004 2005 2006 2007 Home Depot 63.97 65.09 62.35 61.36 60.13 58.53 59.2 54.82 Lowes 26.26 26.39 27.95 29.2 30.00 31.05 30.59 34.81 Others 9.77 8.52 9.7 9.44 9.87 10.42 10.21 10.37

General / External Environment ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],By Sunita

Economic Environment ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],By Sunita

Social Environment ,[object Object],[object Object],[object Object],[object Object],By Sunita

Social Environment (Cont’d) ,[object Object],[object Object],[object Object],By Sunita

Technological Forces ,[object Object],[object Object],[object Object],By Sunita

Political / Legal Environment ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],By Sunita

Global Environment ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],By Sunita

Industry Analysis ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],By Sunita

Bargaining Power of Supplier ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],By Sunita

Bargaining Power of Supplier (Cont) ,[object Object],[object Object],By Sunita

Bargaining Power of Customer ,[object Object],[object Object],[object Object],[object Object],By Sunita

Threats of New Entrants ,[object Object],[object Object],[object Object],By Sunita

Threats of Substitutes ,[object Object],[object Object],[object Object],[object Object],By Sunita

Rivalry Between Existing Competitors ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],By Sunita

Threats of Substitutes ,[object Object],By Sunita

Competitive Strategy ,[object Object],[object Object],[object Object],[object Object],By Bimel

Environment Trends ,[object Object],[object Object],[object Object],[object Object],By Bimel

Key Success Factors ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],By Hon

Business Level Strategy ,[object Object],[object Object],[object Object],[object Object],By Hon

Corporate Level Strategy ,[object Object],[object Object],By Bimel

Core Competencies Tangile ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],By Hon

Core Competencies Intangible ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],By Hon

Value Chain Primary Activities ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],By Hon

Value Chain Supporting Activities ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],By Hon

Sustainable Competitive Advantages ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],By Hon

Strategy Recommendation Business Level Cost Leadership Differentiation Focused Cost Leadership Focused Differentiation Integrated! Broad target Narrow target Uniqueness Cost Competitive Advantage Competitive Scope ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Integrated strategy is recommended By Mooi

Strategy Recommendation Business Level Market Dominance Competitive Advantage De-layering Something which gives the organization some advantages over its rivals. Could be achieved through internal growth or acquisitions. Flattening the management structure, removing bureaucracy to speed up decision making. Getting back customers ’ trust? YES! ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],By Hon

Strategy Recommendation Competitive Strategy Plans on how a firm compete, formulated after evaluating SWOT compare to its competitors. By Mooi ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Strategy Recommendation International Strategy Geographical expansion to seek for new opportunities for sustainability. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Multi-domestic strategy : - Canada, Mexico, China, South America  Europe, UK, Vietnam, Australia. - Customized products to meet local customers ’ specific needs and preferences. Target for those developing countries where constructions are mushrooming . Target for those developed countries where home improvement DIY concept is very strong. By Mooi

Strategy Recommendation Corporate Level Home Depot is not fit for diversification yet. Need to focus more on business, competitive and international strategies By Mooi

Home depot class presentation

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