There are numerous environmental changes contributing to strategic issues in Home Depot. First, this company is experiencing challenges emanating from the limited space, hence, being unable to carry out its daily operations in an efficient and effective manner (Howard, 2012). To illustrate, the shortage of operational area is hindering organizational obsolescence as well as making it hard for the management in this firm to promote innovation (Parnell, 2017). In connection with the above information, this company is unable to invest largely inventive knowledge irrespective of the existence of encountering diverse technological changes that affect its production (Gao, 2013). In the illustration, Home Depot is not able to effectively and efficiently buy new products and the management is also incapable of coming up with advanced manufacturing and marketing tactics.
On the other hand, this company is also experiencing great competition from other companies dealing with similar products and services. In this case, Home Depot appears to lack suitable methods that facilitate the process of introducing innovative and distinctive new goods in order to align with the emerging customer needs (Gao, 2013). Essentially, the above tactic is required to enhance the course of differentiating organizational products from that of that of the rivals in the marketplace. In a like manner, Home Depot is unable to balance development and research along with low price or cost strategy because it does not have competent planners who can bring about constant attention concerning the existing challenges (Parnell, 2017). Additionally, Home Depot is also encountering challenges from the companies substituting its products in the market including the Lowe (Howard, 2012). Conversely, Home Depot needs to come up effectual methods for monitoring its operations in order to outweigh its opponents. According to real time information, Home Depot is confirmed to have established circular economy ideals in 2018. The above design entails a conservative big-box store as well as circular economic frameworks for reducing emissions, eliminating waste, regenerating natural systems, and keeping organizational materials at play. On the other hand, this company has come up with effectual means of manufacturing, extracting resources, and making varied supplies to its clients. Generally, Home Depot tries all the way possible to avoid negative environmental impacts as well as promoting client’s satisfaction (Secon, 2018). In consideration with the above information, it occurs that both market changes and climate change aspects have influence new priorities and sustainability efforts for Home Depot.
In the view of retail marketing, the Home Depot is currently at the top position, a thing that has been attained through application of numerous pricing policies that aids it to attain competitiveness, although at cost of revenues. To illustrate, this firm utilizes a pricing tactic recognized as a guaranteed low price (Howard, 2012). Indeed, this strategy is the same as the method applied by other companies competing against Home Depot. Generally, Home Depot has been using the above technique as penetration pricing since this method it is capable of contending with its rivals such as Walmart (Parnell, 2017). However, the pricing strategy is matched with a generic tactic that helps in attracting clients, a thing that enables Home Depot to attract clients as well as providing the lowest prices for qualitative goods.
Actually, the marketing strategy utilized by Home Depot seems to align with its strategies used at the business and corporate levels. Genuinely, the tactics used by Home Depot seems to offer this company with the capability of selling its products at reasonable prices, hence, managing to gain a stable consumer base. As a result, this company is capable of generating huge revenues via its online stores where if gives new schemes and periodic discounts among various activities meant at maintaining its competitive powers (Gao, 2013). On the other hand, Home Depot also offers a cut of twenty percent for goods like playsets, kitchen faucets, and professional saws (Howard, 2012). Nevertheless, this company still offer Special Buys project on different appliances and it provides discounts ranging from 20% to 25% on various products including washers and refrigerators.
Unlike Lowe, Home Depot utilizes effectual functional strategies on production, marketing, and managing human resources. To illustrate, this company serves all its clients equitably without differentiating them on gender bases. Moreover, this company is focused on serving customers of all ages but it seems to concentrate largely on young individuals as well as ladies since they have a higher tendency of buying compared to other groups (Howard, 2012). Furthermore, Home Depot’s management also seems to lay more emphasis on improving the feel and look of their home by coming up with quality products such as kitchen tables, TV screens, and bed sheets (Parnell, 2017). Nevertheless, this company is concerned with do-it-yourself determination through a lumber yard environment and possessing powerful tools (Gao, 2013). Furthermore, the store design for Home Depot makes this company have the capability of offering goods and services in large warehouses that measure about 105,000 square feet.
In addition, this company depends on two models stores established in metropolitan markets located in an area measuring 117,000 square feet as well as operating in a small to middle-sized markets situated in place measuring 94,000 square feet. On the other hand, Lowe has stocked 40,000 products regarding maintenance, decoration, remodeling, construction, and repair as well as having more than a hundred products present via special ordering (Gao, 2013). Otherwise, Home Depot is supposed to come up with long-term objectives that will facilitate the process of advancing its IT-based infrastructure, a thing that will, in turn, contribute to continuous growth and development (Howard, 2012). Indeed, the technological advancement will aid this company to cut cost as well as enhancing Home Depot’s long-run efficiency.
In strategic view, AutoZone is presently affected by numerous environmental factors that contribute to strategic issues. To illustrate, the changes concerning macro-environment factors are confirmed to bring about direct implication on AutoZone operations. For instance, this company is impacted by several elements including interest rate, saving rate, inflation rate, economic cycle, and foreign exchange rate (Academies, 2004). Indeed, the above elements seem to influence AutoZone’s determination of aggregate investment and aggregate demand in the company’s financial system (Porter & Kramer, 2006). Moreover, this firm is also affected by microenvironment elements such as competition factors that effective its competitive advantage. Based on the above information, AutoZone is therefore subjected to different economic challenges from Auto Parts Stores industry that is growing at a higher rate (Parnell, 2017). Furthermore, the above factors have made it hard for AutoZone to compete effectively with its rivals.
Still, AutoZone has presently experienced lots of changes that affect its operations in a negative manner. First, this company is forced to come up with new methods of attracting consumers. To illustrate, AutoZone has come up with product and price differentiation strategy in order to be able to serve all its clients in an effective and efficient manner (Academies, 2004). Nevertheless, this organization has also adopted a new strategy of stocking products that are highly demanded in the market. Also, AutoZone has greatly invested in research and development to ascertain that all its products and services are aligned with the demands of contemporary markets (Porter & Kramer, 2006). As a matter of fact, all the above strategies have played a vital role in enhancing AutoZone’s stability in the market. Because of various environmental changes, AutoZone is forced to come up with strategies that enable it to compete effectively and efficiently with its opponents. Based on the above information, this company has a tendency of making different organizational transformations on yearly basis. For instance, in 2018, this firm has launched a distribution center in Florida at Ocala, hence, managing to serve its clients in a convenient manner (Autozone. (n.d.). As a matter of fact, this tactic provides AutoZone with the capability of outshining its rivals.
The investigation indicates that AutoZone is not invulnerable to financial downturns since its operations can be influenced by the experienced economic changes. However, there are various factors that aid AutoZone to perform remarkably excellent during the economic crisis. For instance, this company has skilled managers who are able to come with standards and guidelines that aid the company to tolerate various economic changes within the organization (Academies, 2004). Irrespective of AutoZone’s administration being competent, there is a challenge relating to less money in the general marketplace (Autozone.com, 2012). As a result, the consumers are unable to maximally consume all products and services offered by the AutoZone (Parnell, 2017). Based on the above information, there are higher chances that this firm may end up being weaker compared to the opponents because of failing to establish suitable methods of controlling the available resources.
Otherwise, AutoZone has effectively capitalized on DIY market segment. To illustrate, this firm has made 50% profits by utilizing DIY, particularly while selling its products and services. At this point, AutoZone appears to focus largely on aftermarket auto brands to enhance its Valucraft and Duralast as well as its own labels. Significantly, these labels seem to facilitate more than half sales and also promoting more than half sales carried out by AutoZone (Porter & Kramer, 2006). In consideration of the above information, this company is capable creating awareness about its policies with vendors, a thing that lower costs of acquiring products and it also reduce the expenses relating to working capital (Parnell, 2017). Indeed, the application of DIY by AutoZone has enabled this company to outweigh its competitors.
SWOT ANALYSIS
| StrengthsStable brand equityHaving loyal clientsEffective financial performance | WeaknessesGeographic industryA higher level of merchandise |
| ThreatsReduction in consumer spendingHigher competitionChanges in fashion trend | OpportunitiesProduct expansionNew Store Openings |
There are numerous strengths, weaknesses, opportunities, and threats that affect AutoZone operations. To be specific, this company have different factors that strengthen its performance and they include strong brand equity, having loyal clients and enhanced monetary performance (Autozone.com, 2012). Moreover, AutoZone is negatively affected by weaknesses such as geographic industry and high merchandise level, hence, being unable to compete effectively with its opponents (Parnell, 2017). On the other hand, this company is threatened by several elements including changes in fashion trend, reduction of customer spending, and increased competition (Porter & Kramer, 2006). Otherwise, AutoZone has opportunities such as product expansion and new stores opening, an indication that this company can expand its operations in other localities.
While operating as AutoZone’s Chief Executive Officer (CEO), I realize that the changes that can bring about new opportunities in this company entail availability of older trucks and cars in the American market. In consideration with the above information, this company can instigate car repair project as well as using DIY strategy while promoting its products. Furthermore, this company must motivate customers to continue investing in high margin accessories and products in order to enhance AutoZone’s sales (Autozone.com, 2012). Otherwise, there are numerous alternatives that can promote AutoZone’s operations and sales. First, this company should focus on subsidizing the prices of products and services in order to attract more client (Parnell, 2017). The above action can also contribute to problems such as reduction of profits. Secondly, this firm can also offer products with the high quality compared to its competitors in order to increase its sales. Indeed, this course action may subject AutoZone to the increased cost of production (Porter & Kramer, 2006). Moreover, AutoZone can also focus on marketing to ensure that clients aware of its products in the entire universe. Indeed, I will recommend this company to focus on advertising for it to attract more consumers.
References
Academies, A. (2004). Academy of legal, ethical and regulatory issues, 1-211.
Autozone. (n.d.). Retrieved December 23, 2018, from AutoZone.com: https://www.autozone.com/company/history/timeline.html
Autozone.com. (2012). Retrieved from http://www.autozone.com/autozone/
Gao, M. H. (2013). Culture determines business models: Analyzing Home Depot’s failure case in China for international retailers from a communication perspective. Thunderbird International Business Review, 55(2), 173-191.
Howard, R. G. (2012). “The Home Depot” and other works: Critiquing vernacular video. Cinema Journal, 51(4), 191-197.
Parnell, J. A. (2017). Strategic management: Theory and practice, (5), Ohio, Academic Media Solutions.
Porter, M. E., & Kramer, M. R. (2006). The link between competitive advantage and corporate social responsibility. Harvard business review, 84(12), 78-92.
Secon, H. (2018, November 14). Home Depot is coming full circle. Retrieved from greenbiz.com: https://www.greenbiz.com/article/home-depot-coming-full-circle
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