Home Depots' Involvement in International Term Paper

Tapping into consumer needs, wants, and purchasing tendencies could present a challenge due to the country's size and diverse population in terms of taste, preferences, and purchasing power. The need for more interior home products is going to be critical to the company's growth

Driving up square footage growth globally. According to DataMonitor (2006) Home Depot's weaknesses include a declining sales per square foot, which is forcing the company to look at smaller-store footprints during acquisition strategies. The focus on driving up same-store sales internationally is critical for Home Depot, and this is another major motivation for the company to pursue a more joint-venture based approach to acquisition than a pure buyout.

Accentuating global strength in supply chain and logistics. Third party logistics service suppliers are still relatively underdeveloped in China, and as a result, Home Depot will need to focus on bringing their significant expertise in supply chain management, planning and execution within China. To its credit, the Home Depot has put major effort behind rationalizing and improving its logistics model as well as developing its Centralized Automated Replenishment (CAR) strategy which is paying dividends globally. The company's growth globally will be directly influenced by their performance with CAR-based expansion into China. Home Depot has an unparalleled logistics system that continues to deliver outstanding performance. Home Depot was the first retailer to develop drop shipping processes for moving products directly form manufacturers to distribution center, a practice that saved millions of dollars in distribution center charges. In addition, the company has invested in over 3,500 company-owned trucks to get goods from its over 100 distribution centers in the United States alone to nearly 5,000 stores. The focus on safety and reliability in logistics is also reflected in the high standards for drivers Home Depot has, which requires any driver to have 300,000 accident-free miles with no major traffic violations to get hired.

Summary

Home Depot's international growth has followed a consistent model of first acquiring nationally-based DIY/BIY retailers in the countries of interest, then working to increase organic growth. Implicit in this strategy is a high level of integration with the specific systems, processes, and people at Home Depot's Corporate facilities. This growth-by-acquisition strategy significantly minimizes the company's total risk, as it often treats these acquisitions more as joint ventures than buyouts. The role of Home Depot's supply chain and its ability to manage its own logistics requirements is also a major competitive advantage when expanding into China, and other potential nations in the future.

References

Blake, 2007-2007 Investor & Analyst Conference. Business Overview. From the Hone Depot Investor Relations Website. Accessed on March 20, 2007 from location: http://ir.homedepot.com/downloads/24085hd_blake.pdf

DataMonitor (2006) - Home Depot Company Profile. June, 2006. Accessed from EBSCO on March 20, 2007. Referenced document is provided below:

PR Newswire, 2006 - the Home Depot Announces Acquisition of Home Way. Press release from Home Depot Investor…