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CONTEMPORARY ISSUES IN STRATEGIC

MANAGEMENT

CASE STUDY ASSGINMNET 1


HOME DEPOT CASE STUDY

NAME:
ID:
LECTURER:

QUESTION 1
Home Depot: economic forces, sociocultural forces, and ecological forces.

Ford: ecological forces, economic forces, and legal forces.

Common forces: economic forces and ecological forces.

 Economic forces: both companies can be significantly affected by the economic


condition, such as, during the recession period, customers are least likely to buy while the
sellers will also be unable to sell. As for Home Depot, they also provide some DIY
projects which are cheap and efficient, thus, customers may purchase during the recession
period. But this is like a substitute for more durable goods of the company which are
likely to enhance the profit margins.
 Ecological forces: Ford is a company specialized in automobile, thus, its product line is
limited. If the ecological forces come off as strong, it may significantly affect the
company in a negative manner as the company will have to invest heavily in their R and
D, which will be costly as well as time consuming. Whereas, Home Depot may not have
a significant negative impact from strong ecological factors as they have a wide product
line that seek to sustain the environment.

Different forces: sociocultural forces and legal forces.

 While Ford sees legal factors to be very significant than Home Depot, as the automobile
industry has much more strict regulations and standards than the retail industry.
 On the other hand, sociocultural forces are perceived to be more important by Home
Depot than Ford due to the nature and type of products they sell. The products they sell
depends upon the demographic and socio cultural factors of the market. Home Depot’s
customers are spread out across the whole US population, while needs and requirements
vary from customers to customers.

QUESTION 2
From the details provided, we assume that Home Depot engaged in provision of environmentally
free products only after extensive market research, from which they concluded that the present
day consumers are seeking for the same. The company has found a new opportunity while also
helping in conserving the environment through eco-friendly products option. Thus, I believe that
the company has really turned to green wave and not just doing it for the sake of profit
maximization. This way, the company contributes towards the well-being of both its customers
and the environment or planet earth. One proof for this is that the company has set strict
guidelines for its products prior to actually earning the eco options label.

QUESTION 3
I believe it is ethical to do so considering the fact that the products provided are actually eco-
friendly and the company engaged in this opportunity only after extensive research and study
which must have taken a lot of time, money and effort. the company is not only seeking to
maximize products by meeting consumer demands but also taking care of the environment it
exists in. in addition, the consumers are paying for a green product which had to earn the label.

QUESTION 4
HOME DEPOT

STRENGTHS

1. By displaying environmental concern, they have emotional connection with the


customers- consumer loyalty.
2. The concept of "green products" or eco-friendly products.
3. These products have different dimensions: low energy usage, saves water, low
pollution, and very sustainable.

WEAKNESS

One possible weakness could be the premium pricing strategy, although it is justified.

OPPORTUNITIES

1. Expansion of product line under green label


2. Further reduction in usage of energy and resources
3. Expansion of market

THREAT

Cut throat competition is a major and obvious threat to the company. Hence, the company must
be very efficient and effective in provision of products and services to meet consumer needs and
demands.

FORD MOTORS

STRENGTHS

1. Efficient and reliable cars.


2. International market share
3. Brand name and reputation

WEAKNESS

1. Product line limited to only cars and automobiles.


2. Takes a long time to carry out researches and studies to develop the product.

OPPORTUNITIES

 Update the automobile design and structure to be more ecofriendly and sustainable.
 Design engines that require low fuel consumption.
 Hybrid cars.
 Add sustainable features.

THREAT

The company is not investing in automobile which are more environmental friendly. There are
already innovative designs in the automobile industry offered by the competitors which are more
ecologically fitting and thus win emotional connection with the customers. Thus, to have a
sustainable market share they must start producing ecological and innovative products and
services.

 Ford faces a stronger threat for customers’ preference on environmentally adaptable


products. If ford does not produce more green products, there is a high chance of
customers witching to other companies and thus leading ford to lose its market share.
 On the other hand, it is an opportunity for Home Depot, since they produce green
products.
 Companies can turn threats to opportunities by thinking creative and reversing their
production method to green production.

QUESTION 5
 The company can create economic value through Eco Options in their products, while
customers who are environmentally conscious and demand for more sustainable products
do not mind paying a premium price or higher price for these sustainable products. Thus,
these products have a potential of generating more profits which will intern increase
profitability and therefore, the value of shareholders.
 The company is taking on a number of initiatives to ensure that the products being
provided meet all of the regulations and standards of geological sustainability. Hence, this
affects in the achievement of goodwill in terms of social and ecological serving basis for
customers, as they are meeting customer needs and also taking care of the environment
while earning profit.
 The balanced score card measures the efficiency of the company’s overall strategic vision
and determines it the objectives of the company are in line with it. The effects of global
warming and the need sustain natural environment was common knowledge and the
company was responding to this situation by providing sustainable “eco- options” or
“green labeled” products to the customers who were also seeking to sustain the
environment. And such customers are increasing in number as days pass. Thus, it can be
deemed that the profit margin of the company will significantly increase and affect the
balanced score card in a positive manner.

TASK 1
PORTER’S FIVE FORCES

 Threat of substitutes
The threat of substitutes for Home Depot is moderate as despite having a a wide and loyal
customer base, it is possible to lose customers considering competition and the dynamic
business environment. In addition, the prices are also slightly higher in this company.
Hence, if a competitor starts producing similar products at a much cheaper rate,
customers will switch to competitors.
 Customers bargaining power
Consisting of loyal customer who buy from them despite the premium pricing strategy
used, as they believe these products are ecologically and environmentally sustainable.
 Threat of new entrants
New companies entering the market possess a serious threat for Home Depot. Especially,
if they are able to produce more sustainable and innovative products at a reasonable rate.
 Bargaining power of suppliers
Home depot has a positive relation with its supplier’s like Masco (architects and tints), in
addition to Miracle-Gro, & Cree, along with Mohawk for home security. The suppliers
and the company has a favorable support system for each other.
 Other stakeholders involved
This group may consist of unions, government, and other significant organizations. In the
US, a company producing ecologically and environmentally sustainable products enjoy a
high support from such powerful organizations to save the mother earth and conserve
resources.
TASK 2
COMPETITIVE STARTEGIES

 Focus strategy: The main idea behind focus strategy is to focus on a particular group of
individuals as your target customer or in other words niche marketing. Although Home
Depot is serving at a national level, its main focus is on individuals who are bothered
about sustain the natural environment and also who can afford to buy with the premium
pricing strategy.
 Cost leadership: The Company has a strategy that involves pricing the product with a
premium price as the products are highly innovative and efficient and focuses on
preserving and sustaining the natural environment. The market they serve is the entire
country, thus, it is a largescale production.
 Differentiation strategy: The Company has implemented a strategy of differentiation in
way of reaching out towards the customers by addressing their concerns for sustainability
of the environment. Through this strategy the company is able to achieve goodwill and
connect with the customers. Moreover, they provide products which are highly
innovation, reliable and efficient.

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