Organizational Structure and Internal Environment of of Home Depot - Case Study Example

? An Organizational Analysis and Case Study of the Home Depot Section/# Introduction: For purposes of this brief analysis, the author will consider organizational structure, internal environment, external environment, organizational culture, organizational competitive advantage, and any recommended changes with regards to the Home Depot. The unit of analysis for this particular paper has been chosen due to the fact that Home Depot represents one of the fastest-growing and most profitable consumer chains within the United States. From virtual obscurity, the Home Depot was able to carve out one of the most profitable home-improvement market offerings within the United States. It is the hope of this author that by analyzing the aforementioned determinants, the reader can come to a more informed and effective level of understanding with regards to how these determinants impact upon the overall level of profitability that the Home Depot has been able to enjoy within the past several years. Although it cannot be considered a step-by-step color by the numbers approach to success, mirroring the strategy and organizational approaches that the Home Depot has engendered will necessarily lead a given entity and/or organization to experience a higher level of success than they may otherwise have enjoyed. However, it must be cautioned that the Home Depot’s success story is ultimately one that is defined by current market conditions and pass eventualities. As such, the level and extent to which success can be defined for a given institution or business entity merely by following such an approach is necessarily limited. It is the hope of this author that such a level of analysis will enable the reader to come to a more appreciable level of understanding with regards to the direction to which the Home Depot should move within the coming months and years as a way of solidifying its place within the current market. Organizational Structure As with many retail giants that exist within corporate America, the Home Depot is organized under a chairman, Board of Directors, regions, and individual store managers. Such an organizational structure has not always existed for the Home Depot; rather, it was born out of a measure of success that the initial Home Depot offering was able to engender within the market. For growth and experience a rapid level of integration of success with regards to consumer needs and overall levels of profitability, such an organizational structure, mirroring many other existing corporate chain, was affected. This technique is an effective means of providing a degree of sequential management oversight and key strategy implementation with regards to the way in which the firm continues to grow and expand within the near future. Naturally, the key issue comes down to what degree of leverage and decision-making the board of directors leave up to the regional directors and the individual store managers; too great a degree of freedom necessarily decreases the effective level of oversight and strategy implementation that can be effected whereas too close a level of constraint can stifle any best practices that are region or geographic/demographic specific. Internal Environment: The internal environment is oftentimes defined as the events, entities, factors, conditions, and particularly the behavior of the stakeholders involved (the employees). Within such an understanding, the mission statement of the organization, the leadership styles employed, and the organizational culture are all core facets of what defines the internal environment with a Home Depot. Whereas the leadership style has briefly been referenced above, the culture will be discussed at some link below, the court level of importance that must be understood with regards to the internal culture and environment that exists within the Home Depot is most certainly contingent upon the mission statement. As such, the mission statement for the Home Depot is as follows: “The Home Depot is in the home improvement business and our goal is to provide the highest level of service, the broadest selection of products and the most competitive prices. We are a values-driven company and our eight core values include the following: Excellent customer service Taking care of our people Giving back Doing the "right" thing Creating shareholder value Respect for all people Entrepreneurial spirit Building strong relationships” (Benner, 2012). Naturally, it is oftentimes difficult to find a clear level of differentiation between the mission statements of many corporate entities. This is due to the fact that each of these corporate entities ultimately attempt to affect the same goals; increasing the number of consumers and widening profit margins. As such, mission statements in and of themselves are oftentimes very similar. In this way, the mission statement of the Home Depot does not surprise this particular author due to the fact that it places customer service, taking care of consumer needs, doing the right thing, respecting other individuals, and furthering an entrepreneurial spirit as well as building strong relationships as the core fundamentals of its mission statement. External Environment: The external environment, oftentimes referenced as the operating environment, is ultimately the conditions, factors, events, organizations, activities, and choices that help to define the way in which a given entity operates and/or integrates with the given market. In this way, the external environment that the Home Depot operates within is typified by a level of oligarchic competition. Whereas there are many other offerings with regards to home improvement and hardware stores within the United States, Lowes and Home Depot occupy the most prominent position. In this way, both of these firms are locked in something of a continual form of oligarchic competition within the market; with each decision that is made by the other heavily impacting upon the decision making structure and outcomes that the other engages in. Culture: The culture that the Home Depot represents can be understood as one that ultimately deviates from the norm of how a traditional board of directors integrates with the component parts of the entity it oversees. Whereas a Board of Directors, regional managers, and store managers oftentimes feel themselves constrain to an unrealistic and detached strategy, the culture of the Home Depot has experienced a great deal of growth within the past decade. Much of this can be attributed directly to the CEO change that saw Bob Nardelli take over Home Depot as the Director of the Board. What Nardelli ultimately saw when he came on as the head of the Home Depot was a situation in which the regional and store managers had ultimately had their authority stripped from them in favor of a heavy-handed corporate approach to the way in which decision-making should be carried out. As such, what Nardelli proposed was ultimate strategy for market penetration should be concentric upon the upper echelons of management; however the individual manner by which a regional director and/or store manager sought to ameliorate and address key and salient issues that they were faced must necessarily be placed within their hands. In this way, Nardelli sought to strike a balance between a formally heavy-handed approach to store a region management and the extent to which the local stakeholders can ultimately defined and manage their own destiny. Although a risky strategy, this approach allowed Home Depot to change the culture by which they had formerly operated. To the current time, Home Depot continues to operate on the model that the incoming CEO/director of the board Bob Nardelli proposed. Competitive Advantage: As with many retail giants, Home Depot sees that there ultimate competitive package life within their employees. Not surprisingly, the Home Depot says of this competitive advantage, “The Home Depot® believes that our associates are our greatest competitive advantage. As a company, we strive to attract, motivate and retain a high-performing, diverse workforce” (Benner, 2012). Naturally, as a means of retaining this competitive advantage, the strategy and culture that Home Depot reflects must necessarily be contingent upon attempting to foster the training, development, remuneration, and quality of life that these respective stakeholders enjoy while being employed at the firm. This is a tentative balance to strike due to the fact that the Home Depot, as well as any other large corporate it, realizes that one of its most costly engagements is with respect to the money that is spent on human resources development and payment. In this way, the Home Depot seeks to strike the delicate balance of treating stakeholders in a fair and equitable manner, all the while providing adequate and above industry-standard payment for their services, while at the same time seeking to cut costs so that the profit margins can be higher. Whereas a student’s perception of the weaknesses of a multibillion-dollar corporate entity might necessarily be taken with a grain of salt, it is the firm belief of this author that the Home Depot could benefit from seeking to differentiate itself in a positive way from the oligarchic competition that currently defines the market. For the consumer, the differential between the Home Depot and Lowe’s is ultimately nonexistent. The choice then comes to whether or not proximity and/or price can be the determining factor with regards to swaying the individual consumer in one direction or another. Although such considerations cannot be ignored, the fact of the matter is that a more effective differentiation between these two monolithic entities would place the Home Depot at a competitive advantage that it cannot currently experience. This of course ties back in to the previous discussion of the competitive advantage that the Home Depot enjoys as compared to the competition. Merely speaking to the quality of life and respect that the employees might be treated with is an inefficient means of providing a full and nuanced competitive advantage to the Home Depot. Further, with regards to a key change that could be engaged, it is noted by this author that the home improvements market within the United States is ultimately static and has not changed with technology. Whereas it is true that both Lowe’s and the Home Depot have their own respective websites and allow for a certain degree of online site to store pickup, a more effective integration of supply delivery could allow the Home Depot to avoid many of the pitfalls of stock availability and loss of revenue that are very much an eventuality of the construction and home improvement business (Corral, 2013). Moreover, this would allow the Home Depot to have a competitive advantage over Lowe’s, and smaller home-improvement outfits within the region, due to the fact that no such service is currently in existence to an effective degree. Naturally, such an approach would be risky and would require a significant amount of marketing and website redesign in order for it to be integrated within the market. Nonetheless, a successful integration of the aforementioned strategy would likely bring far more profits to the firm that whatever money might be invested in the first place. Rather than continuing a strategy of continuing to build warehouse style stores within a saturated market, providing regional deliveries from stockpiles non-consumer delivery stations could most certainly benefit the way in which the firm continues to enjoy a level of profitability and success within the current web enabled era. Conclusion: From the information that is been presented, it is clear that the Home Depot has an effective organizational structure, a firm and salient grasp on both the internal and external environment, a defined and reactive culture (with regards to the realities of the business world), a delineated competitive advantage, and a certain level of potential improvements and/or suggestions that can ultimately make it even more successful than it currently is. Through such a unit of analysis, it is the understanding of this author that the Home Depot, although a mature firm that is unlikely to experience a rapid level of growth as it has within the past several decades, can nonetheless continue to be a relevant force and derive a higher degree of profitability merely by engaging with the success factors that is thus far enabled it to become a market leader. However, that being said, it also must be understood that without continual evolution and change, the degree and extent to which the Home Depot can continue to exhibit a successful and profitable business model will be all but annulled. References Benner, K. (2012). The other star of home improvement. Fortune, 166(7), 25-1. Corral, C. B. (2013). Face to face: Home Depot Vs. Lowe's - Area rugs. (cover story). Home Textiles Today, 33(16), 1-11. Read More