Home Depot Swot Analysis Essay Example

Home Depot, it also has a couple of key weaknesses that need to be addressed. Growth has both a blessing and a headache for Home Depot. As the have expanded aggressively into new markets, they have seen their operating xpenses rise in direct proportion with their growth in revenue. While this is would be expected in most instances.

This means that Home Depot is not capitalizing on economies of scale in logistics and distribution provided to them by their market saturation strategy. Opportunities Because of Home Depot’s size they have some interesting opportunities available to them. With a solid foothold in North America, Home Depot will set its sights on other world markets to further expand and spread its business risk across many diverse world markets.Expansion will be the primary focus for growth into the year 2000. Home Depot has an opportunity in the global sourcing of their products as their scope and reach becomes global.

Sourcing from other countries may significantly grow their gross margin. Home Depot’s Service Performance Improvement (SPI) program is due to deliver huge paybacks in productivity of night team workers. Other IT projects pose great opportunities to increase efficiency, decrease costs and further increase margins. ThreatsBecause of the competitive nature of the retail industry, Home Depot’s success depends on price, store location, customer service, and wide product selections.

In each market that Home Depot serves there is a plethora of specialty home improvement stores that have the potential to cutting into Home Depot’s market share (Datamonitor). Home Depot’s overlap with primary competitor, Lowes, poses a potential threat. In the minds of consumers, Home Depot may be seen as interchangeable with

Lowes which would in turn decrease customer loyalty.Also when a Lowes enters a market that is only served by Home Depot, Home Depot’s sales have a tendency to decrease by up to 15% (Datamonitor).

As Home Depot and Lowes continue to compete head to head in primary markets and both continue their strategy of market saturation, the awareness of US market saturation becomes a very real possibility. According to Datamonitor, “The US home center potential is valued at approximately 3,500 stores. With Home Depot and Lowes opening a combined 300 stores a year, the industry could reach saturation in the next few years. ”