Inside Home Depot: How one company revolutionized an industry through the relentless pursuit of growth (1999) is a book about, as the name suggests, Home Depot, the largest home improvement retailer in the country, and perhaps the world. The book is written by Chris Roush, a self-described “first-time author” and a professor at University of North Carolina at Chapel Hill. (Professor Roush also mantains a regular blog that can be accessed by clicking here).
As Professor Roush describes on the first page of the first chapter, the book is “the story of Home Depot, the most succesful retailer to come along since Wal-Mart…, the story of a chain of stores that has arguably revolutionized its industry more than any other retailer…”. It is also a story “of two executives who made [Home Depot] happen”, … who “hit on a formula for success … never before tried in the hardware retail business.” It describes the history of Home Depot and how it became a leading player in its history.
The book is an unofficial version of the story of Home Depot, i.e., it is written without the cooperation of the founders of Home Depot- Arthur Blank and Bernie Marcus. In essence, the story of Home Depot is the story of Arthur and Bernie, so the book is really about Arthur and Bernie. As an unofficial version, I expected it to take a more critical look at Home Depot’s strategy (relentlessly pursuing growth via increasing the number of stores) or ethical issues (gender discrimination lawsuit) or culture (the Home Depot cult-like cheer). However, in all, I was impressed by the pleasant writing style in the book and the way it kept me engaged in the story from start to finish.
Business in Books 
“Inside Home Depot” tells the story of how two men, Arthur Blank and Bernie Marcus, built Home Depot to be the leading retailer in the hardware business. They created a formula for success based on providing customers with a wide variety of products, cut-rate prices, and exceptional customer service. Home Depot’s Bleeding Orange culture defines the principals, values, and beliefs of the company. It means taking care of people: reaching customers by reaching employees. Employees are given the authority to make decisions, and are encouraged to speak up and take risks. Employees help customers determine what products are necessary for their project, and how to complete it. Relationships are important not only with employees and customers, but also with vendors. Management aims to provide strong returns to reward investors for providing the capital necessary to grow the company. Lastly they give back to the community, helping people to help themselves. The Home Depot Bleeding Orange culture is followed by dedicated leaders and employees, and has helped make Home Depot the most successful retailer since Wal-Mart.
The beginning chapters provide a good summary as to why Home Depot has become so successful over the years. Top management provides training for current employees, new employees, and top management. Top management is involved in training employees, and visits store locations to speak to employees and receive feedback. This system brings a sense of equality between levels of the company and helps empower employees to take responsibility and action to better the retailer. Continuous training and leadership/team building activities makes sure that employees have the most updated information to help customers and work effectively with others.
The book was written without the cooperation of Home Depot’s founders which I think allowed the author, Chris Roush, to write more critically of Home Depot. He writes about Home Depot’s trouble with discrimination allegations, which the public is aware of. But more importantly, he writes about the “corporate bully” aspect of the Bleeding Orange corporate culture, said to include militaristic and macho overtones that the public does not know about. For example, when Lowes decided to expand into Atlanta, Home Depot gathered for a pep rally. Johnson said “We need to blow them off the face of the earth”. Also, Afterburner Seminars divided 1,800 managers into squadrons and had them defeat an enemy titled Lowesnia. If the book was written with the support of the founders, they may have prohibited Roush from revealing these negatives.
Bernie Marcus and Arthur Blank created Home Depot after they were unfairly fired by Sandy Sigoloff, the chief executive of Handy Dan’s. It seemed a disaster for Marcus and Blank but also a good thing for them because they can establish a unique home improvement company which they can fulfill their idea. By the support of Ken Langone, Marcus and Blank raised $2 million and opened the first two Home Depots on June 22, 1979, in Atlanta.
Since Marcus and Blank were unfairly fired, they decide that they never treat people that ways. These two executive respect employees and give them the freedom to make decision. Also, they give back to society while they are success. These two factors are the difference between Home Depot and its competitors and be a leader in the industry.
The business strategies of Home Depot are selling more products than competitors and providing lower price. Also Home Depot pays a lot of attention to training its employees. For new employees, company gives five days training classes. After training classes, they spend three weeks in store to learn order, stock, and sell. For current employees, they are required to have one hour training every week. The reason that Marcus and Blank emphasize training so much is that they believe only customer satisfaction can bring them back Home Depot.
Home Depot also builds its own culture “Bleeding Orange”. Bleeding Orange means taking care of people, encouraging employees to speak up and take risks, teaching customers, providing entrepreneurial freedom, giving chance to make mistakes, strong relationship between customers, employees, and company, providing strong return to investors, doing right things, and giving back to the community. Because of this strong Bleeding Orange Culture, Home Depot can provide unique Olympic job program to assist athletes. And they can overcome the allegation of sexual discrimination. This gives us the idea that only with a right vision and strong belief that company can succeed.
Home Depot operates a chain of 75 large building-supply stores. Its customers are mostly homeowners. Home Depot attractions are its low prices, large selection and, especially- outstanding service. We usually link outstanding service with high price charge. However, Home depot high sales volume enables it to afford such service because it can operate on a thinner profit margin than smaller rivals. The other great advantage of Home depot inside this book is Home depot’s success based on that two cofounder Marcus and Blank have always believed a strong corporate culture will help company makes important decision about the future of the business.
Home depot’s Bleeding Orange culture also reveals its unique and distinct culture- taking care of employee, recognizing and rewarding employee performance or employees have fully entrepreneurial freedom to make decision giving a say in the company’s success. Bleeding Orange executives itself in different ways from developing employee into next generation of Bleeding Orange leaders to providing customer service, teaching the customers, giving back to community, talking care of employees trying to win a spot on Olympic team, and responding to how town and cites react to Home depot
There are many managerial strategies that Blank and Marcus take in Home Depot. “Road trips” and show up unannounced at their stores. They say the experience is good for them because they are continually learning from their associates – that marketing strategies have changed because of these opportunities to learn from those on the floor that know more about the products and deal with the customers directly. In additnal, Blank and Marcus operate according to the “Running scared” method of management, where 90% of their meetings deal with problems, how to outdo competitors’ approaches, products that are in demand and what customers are not finding at their stores. Their longstanding objective is to continually work to improve today’s standards. And it certainly has worked for them so far.
In the chapter 4, it mentions Home depot been through a low tide period of a trial of race/ sex discrimination. The reason of Home Depot overcoming those criticisms is believe in its culture and compromise so that its culture could continue. Furthermore, they would will to keep improving what they saw as the most important aspect of their operation. It recalls me what we learn from the class that business strategy is dynamics. However, the core value and mission statement of one company should be firm and consistent. Home Depot exemplifies this consistent core value not only attribute its success but also build a model of what retailing should be.
The first couple of chapters focuses on the foundations of Home Depot and what differentiates them from their competition. Blank and Marcus take great pride in the service aspect of their business. Training employees one hour a week seems a bit extensive at first, but necessary if Home Depot plans on maintaining its high level of customer service. It was also interesting how such a small (relatively speaking) company sponsored the 1996 Summer Olympics.
I am impressed with what I have learned so far about Home Depot’s culture. They seem to run their business in a manner parallel to what we read in many textbooks about operating an efficient company. Home Depot invests heavily in their employees and knows how to keep their investment within the company. By providing competitive compensation packages, Home Depot is able to retain its investment in employees. Home Depot is also unique in that there is a sense of pride associated with the employees.
The opening chapters of Chris Roush’s “Inside Home Depot” describe how Home Depot’s founders, Arthur Blank and Bernard Marcus, have used an unwavering commitment to the customer to transform their company from small start-up to retailing behemoth. Also detailed early in the book is their notion that in order to treat your customer well, you must treat your employees well. Such ideals are highlighted by discussions of Home Depot policies such as ‘Breakfast With Bernie and Arthur’, a television show in which Blank and Marcus talk to customers and employees and give them updates on what is going on within the company, and the Olympic Job Opportunity Program, which allows employees to balance work with the rigors of Olympic training. Roush also portrays how these ideals have been challenged by gender discrimination lawsuits and large-scale growth. The constant emphasis on Home Depot’s customer-oriented culture, whether it be by Blank, Marcus, Roush, or one of the many employees quoted in the book, helps the reader to understand one of the major parts of the company’s operations.
I think Roush has done a good job of introducing the reader to Home Depot through the first third of the book. By quoting Blank and Marcus at length about Home Depot’s values, he demonstrates how important things such as customer service and employee training are to the company’s survival. It doesn’t take the reader long to understand what it means to “Bleed Orange”. I question, however, whether Roush does this in a completely unbiased manner. Although he does present negative aspects of the company’s history (i.e. the discrimination lawsuit mentioned above), I also think, at times, that he casts the company in an overly favorable light. It will be interesting to see whether or not this stance changes in the remaining portion of the book.
The first few chapters of “Inside Home Depot” focus on the core competencies that drive the success of the company started in Atlanta in 1979. Roush goes into detail about the idea of 360-degree feedback and the benefits of listening to both subordinates and the end consumer. Compared to other companies, Blank and Marcus value the opinion of people within the company. The co-founders see the importance of more and more input and feedback as their operations continue to grow. Another element of their success is the “Bleeding Orange” movement and the personal responsibility given to every Home Depot employee.
One thing I find interesting is how malleable the concept of “Bleeding Orange” is. The end result is the same but how people get there is different. Blank’s shouting match with the Mike Modansky (lumber provider) is classified as “Bleeding Orange”. At the same time, “Bleeding Orange” can be putting millions of dollars into local projects in the surrounding community. The idea is that “Bleeding Orange” is any initiative that maintains a focus on providing the consumer with the low prices and high quality customer service.
‘Inside Home Depot’ by Chris Roush demonstrates to the world how the empire of Home Depot was built right from the scratch by two men Arthur Blank and Bernie Marcus. How successful can a company become by dealing with ‘Do it yourself’ type of hardware products? Of course the concept certainly means something to the customers in that those products help them save a lot of time and money. But there have been many companies competing with a similar or even wider range of products. What makes Home Depot unique and special to the customers? Is it the Quality of its products? Price? Or Customer Service?.
Well it may be a combination of all these factors that may have contributed to the success of Home Depot. But the most important factor is the management’s attitude towards the employees. Blank and Arthur has been consistently working on bringing about in the organization a culture that fosters humanity, employee morale and excellence in customer service. Home Depot attracts not only customers but also thousands of employees from all over the country. The benefits that an employee receives from Home Depot is better than what other competing companies have got to offer. A significant incentive to be a part of Home Depot is the Stock option available for employees. Further the ‘Outward Bound’ program molds the employees and helps them realize the importance and strength of team work and humanity. All these factors directly motivate the employees to work towards the company’s primary goal of providing excellent service to the customer.
From the first three chapters that I have read so far, I can say that this book is truly inspiring and there are great lessons that people can learn from the success of Home Depot. The management itself is unique in various aspects such as, Arthur and Bernie who are the top most people are available to their employees if required, they personally train employees all over the country throughout the year, they pay their employees ‘What they are worth’, They put themselves in the shoes of the customers and strive hard to set the standards that they would expect from a company like Home Depot etc. Ultimately customers get the pleasant experience of shopping at Home Depot.
The book has described ‘Home depot ‘as an experience of Bernie and Arthur in first few pages. The Author, considering Walmart as standard of measurement puts forward the words of the David Glass about Home Depot in his opening lines. Further, providing the description of founder’s life and development of Home Depot, he takes us through the culture of Home Depot.
The book starts with description of the Bernie Marcus and Arthur Blank. The book does this to give feeling of why Home Depot was actually brought to existence. It also shows the strong will power of the two mentioned above to devote their whole time in industry. The first chapter talks about their jobs in the industry. Both worked in the industry for a long time. After, getting fired from the firm, for which they contributed a lot, they decided to open a store providing a different work culture then they actually worked in. First chapter also describes the extent and growth of the firm in comparison to other firms.
Later chapter talks about the work culture of firm. It talks about classes and training being one of the important parts of the culture. It talks about the management providing training to its employees. It finds pride in this worker friendly, you be the boss kind of work environment , where you have freedom to say what you feel and learning being part of your life not just the initiation.
“Inside Home Depot” is the story of Home Depot. Chris Roush wrote his first book after long-lasting examination and studies about the company and its founders. This is a story about two fired people that could turn their ideas into one of the most admired companies in about 20 years. Bernie Marcus and Arthur Blank started the retainler store chain in mid 1979 and were able to turn it into the second largest retailer store in the country with sales ecceeding $30 billion. The book speaks about the culture that was applied in Home Depot that made it prosper. This is an interesting story how two completely different people had same vision and goals. They started a company that would focus on the customers meanwhile maintaining low prices. The book speaks about the positive impact that the humanity of the managers as well as ongoing trainings had on the quality of customer service and hence the company itself.
Even though the book sheds light on many aspects of the business of Home Depot, it seems to be a bit biased. The author did a good jod in terms of research on the company and making sitations to the founding managers stressing their role in the success of the company. And even though Roush speaks about the negative developments (trials on discrimination ect.) around Home Depot, he doesn’t make enough efforts to explain why all that happened and throughout the text stresses positive facts more.
The beginning chapters of Chris Roush’s Inside Home Depot outline some of the preliminary steps that the founders, Arthur Blank and Bernie Marcus, took to develop one of the largest retailing stores in the world. There are a few key mantras that are prevalent in these chapters. Clearly, building a workforce that is educated and knowledgeable is one of the main aspects in developing a cohesive strong team. The first chapter outlines how much time and effort the company puts into their education system. As Arthur Blank states, “Training is not an event…Training is a way of life.” Teaching and training can be seen as an expense for many companies but at Home Depot it is seen as an investment.
Furthermore, the Home Depots corporate culture is not strictly hierarchical like most companies of their size. They do have a very strong and vibrant corporate culture which they call “Bleeding Orange” which some say is almost militaristic. But unlike the military, various ranks of workers are able to express their opinion and ideas without fear of punishment. This is a key factor in the success of this company. Not only does Home Depot listen to their customers but they listen to their employees. Being open minded in any establishment or organization is essential to growth.
Finally, we see that the work environment extends beyond the parking lot of the corporate offices or the retail stores. External outings, pep rallies and group excursions all bring workers together in different environments. This is essential to team building and helps dissolve corporate titles which sometimes get in the way of ideas. One of Blank and Marcus’ goals in establishing this business was to make it grow through an entrepreneurial spirit. Getting rid of political issues was necessary to the early success of the company. As one former employee said, “bureaucracy is like weeding a garden. Just when you’re done, you’d better go back and start again.” I believe that the blue color spirit which seems to run from the entry level workers all the way up to the CEO’s is one of the key factors which helped the Home Depots success.
Home Depot was the brainchild of Arthur Blank and Bernie Marcus, both of whom were ex-employees of Handy Dan, a do-it-yourself chain, who had been fired after being accused of creating a cash fund to decertify a union that represented the employees of Handy Dan. Blank and Marcus always maintained their innocence and founded Home Depot with the strong intent to always treat their employees fairly, which ultimately helped to shape their company culture. The culture they created was called the “Bleeding Orange” culture and was twofold. The first part emphasized always doing the right thing for customers and their employees, which included continuously training employees so that each customer left the store happy and with all of the materials and information they needed, as well as trusting employees with important decisions and allowing mistakes to be a learning experience rather than a career ender. The second part emphasized a ruthless competitive spirit, in which employees were rallied like troops headed for war to compete against other retailers threatening Home Depot’s market position. In response to the threat of Home Depot’s culture in the early nineties by lawsuits claiming that the culture lead to discrimination against female employees, a settlement was reached which allowed Home Depot to keep its culture, which it found instrumental to its success, while incorporating promotion standards and training to help all employees meet these standards.
I thought it was interesting how Home Depot was charged with treating their employees unequally when their inspiration for creating the Bleeding Orange culture was a case of being treated unfairly. One would think that when a culture is founded on such a principle that equality would be addressed. Perhaps it is due to the fact that both founding members of the company, as well as majority of the workforce, due to the nature of the work, are male. Because of the overwhelming majority it may have been that the issue was never even considered until the lawsuit was brought to court.
Home Depot not only believes the customer is number one, but they act on it. Employees go beyond what is required of them to best serve customers. For example, an employee working in Baton Rouge, Louisiana learned sign language to better serve their deaf customers. When a Home Depot on Long Island ran out of a product, the manager drove to another location to stock up and purchased the products with his personal credit card. This attitude has helped differentiate Home Depot from its competitors.
Home Depot believes they should instill confidence in their customers to complete their projects, and to help them reach their goals. They offer classes for many types of projects, for adults and kids. They hope this will expand their brand equity and customer loyalty. Customers feel they’re being taken care of, and want to come back. In addition to holding classes, they have a television show and magazine.
Home Depot has a unique corporate giving strategy. They allow each store to decide where to donate money, services, or products. This allows each store to be active in their community, and for employees to help a cause they’re passionate about. Home Depot has been able to use their products and services to be active in organizations such as Habitat for Humanity, helping to build houses. Lastly, Home Depot knows some of their products have an impact on the environment, and so they have taken many steps to become an environmentally friendly company.
Home Depot is known for its strong corporate culture. They have an aggressive attitude towards competition, and will take any necessary action to move forward. “Inside Home Depot” discusses the problems Home Depot encountered with the residents of Greensboro. Locals didn’t want added congestion to the area, and wanted to keep the noisy traffic away from their homes. They protested aggressively, signing petitions, writing to the local newspaper, and attended planning board meetings. They even sued the company developing the property saying the rezoning wasn’t in the interests of the homeowners. Home Depot fought back and the store eventually opened. I think Home Depot should have responded differently to residents’ concerns. By ignoring their concerns and responding so aggressively, Home Depot alienated these residents and lost their potential business. These customers were part of Home Depot’s target market! Perhaps Home Depot should have considered their concerns and discussed possible solutions to make both sides happy. They could’ve agreed to build a fence between the store and the housing development to prevent noise, paid for added traffic lanes to reduce any traffic congestion, or bought some local hardware stores to prevent owners from losing their jobs. These are just a few ideas that maybe could have prevented Home Depot from losing potential business. Although Home Depot was still successful in the area, what was the cost?
Studies suggested that by 2000 Home Depot would have saturated their markets. Striving for growth, Home Depot researched new ways to expand, into new markets and abroad. Previously Home Depot had concentrated on putting their stores in urban city centers. They decided to expand in rural markets with smaller populations. This would allow them to expand their customer base. In addition, there were many potential cost savings, and land, salaries, and operational costs would be cheaper. Competition wasn’t as fierce as in the cities. Rural populations were increasing, along with the average income. Home Depot was able to tailor the product mix to better meet the needs of their rural customers. Although they initially opened the store under the name of Crossroads, they eventually brought the store back under the Home Depot name, and it was a success. Home Depot realized they could grow and benefit from expanding into these rural markets. Home Depot then tried expanding to the higher end market. The store would focus on home remodeling and design, and focused on seven core areas—kitchen, bath, appliances, carpeting/rugs, ceramic tiles, lighting, and window decorations. Although the Expo would have a smaller customer base, the average money spent per purchase would be higher. The biggest mistake Home Depot made in the beginning of the Expo project was borrowing too heavily from Home Depot. They corrected this and broke away from the Home Depot mold, making the Expo its own store serving a different, higher end customer. Now Home Depot had expanded to two new markets, leaving the competition in the dust. Home Depot then tried to expand globally. They started looking at Europe, but failed to expand there. They were able to acquire a number of stores in Canada, and were able to create a successful market in Canada. However, it was a slow and difficult process trying to align Home Depot with the acquired company. This helped set the attitude for the future, that Home Depot would not acquire other companies. Over time they were able to expand into Chile, where the process went fast and they were immediately successful. This success came with much potential for expanding to other countries in South America. These steps have taught Home Depot the importance of considering all options for expansion and growth. They continue to research new ways to better reach customers and how to best serve them.
It has been a decade since Chris Roush wrote “Inside Home Depot”. Since then, Home Depot has been successful in rural markets. However, their vision of a successful Expo has failed. Expos have closed around the country. The downturn in the housing market and the hurting economy is mostly responsible for this. Right now people will focus more on budget projects than the lavish products and services offered by the Expo. All 34 stores are closed, and 7,000 people lost their jobs. When “Inside Home Depot” was written, Home Depot had high hopes of expanding abroad. Now I see that they are only in Canada and Mexico. In the past, Home Depot failed to expand in Mexico. All the plans were ready to go when Mexico’s economy took a hard hit, and so the plans for expansion were cancelled. So, it is good to see that after all this time they were able to expand successfully. The author discusses Home Depot’s joint venture with Falabella in Chile, and how it was immediately successful. The companies meshed well, and customers were happy with the store from the start. Home Depot planned to use their success in Chile as a platform to expand to other South American countries. But, an article by Scott Larson (Home Channel News) in 2001 reports that Home Depot stores in Chile and Argentina closed in 2001 due to culture clash! The stores were only open for four years. I’m surprised how quickly Home Depot failed considering their huge initial success in the market. I am guessing Home Depot has changed their global expansion strategy to countries closer to home where they can keep a closer eye on their projects.
Information has arguably become the most valuable commodity in the modern world. Education and knowledge are essential components to any successful enterprise. But all too often companies focus on internalizing these assets. Companies are concerned about their own employees being knowledgeable. Training and retraining sessions have become the norm. Home Depot embraces this mentality but goes a step further. Externalizing their knowledge onto the consumer has proved to be one of the key facets to the Home Depots success.
The first part of Roush’s book examines how important customer service is to the home depot and how Marcus and Blank encourage learning within their organization. Surly customer service is important and it helps differentiate the Home Depot from its competitors but what really sets them apart is their commitment to educating the consumer. By are empowering the consumer with knowledge the average person psychologically feels pleasure when they complete a job. The consumer feels powerful and proud. By setting up workshops, publishing books and working with children the Home Depot has embedded a ‘do it yourself’ attitude into the consumer. By doing this the consumer feels encouraged to tackle larger and more difficult (maybe more expensive) tasks. Additionally, home depot employees become more of a supporting force rather than a crutch. Although, educating the consumer can be relatively costly its results can be very lucrative and lasting.
Philanthropy and community engagement is also an important component to the Home Depot’s culture and personality. Marcus and Blank boast that their organization has been community oriented from the beginning. Furthermore they stress their community involvement as a stronger form of giving back then simply writing a check. Blank explains that, “there is no magic formula for being socially responsible”, (pg 139) it is doing what is right and genuine not what is trendy and lucrative. This kind of mentality can clearly be seen from the Home Depots reaction to the Oklahoma City bombing. Marcus and Blank didn’t even have to tell their store managers to go help out after the blasts occurred, they were already there. Immediate sharp reactions like this truly illustrate how the members of the Home Depot care.
Whereas the first third of “Inside Home Depot” tends to focus on how Home Depot established itself as a major player in the business world, the next third leans more towards describing how it plans to keep itself there. Chris Roush describes the many ways Home Depot is diversifying itself, while at the same time staying true to its customer-oriented approach. He explains how, through the use of books, TV shows, magazines, and classes, Home Depot is able to get the expertise available in its stores into people’s homes. He also details some of the societal and legal backlash the company has met in its quest to eliminate competitors through geographical expansion. Finally, Roush talks about some of Home Depot’s philanthropic endeavors which, although they may go unnoticed by many, nonetheless stress Home Depot’s focus on customers and help to enhance its brand image.
I think that Roush has touched on a very underrated topic in this section of his book. Successful business practice is not always about having the widest selection or the lowest prices. Philanthropy, community involvement and other intangibles that have no direct effect on a company’s bottom line often carry significantly more weight than any marketing campaign ever could. By forming a connection with people on a personal level, as opposed to a vendor-consumer level, Home Depot is building relationships with them that will keep them coming through Home Depot’s doors. Yes, the aforementioned books and magazines are circulated with profit in mind, but it is the empowerment and confidence that these media give to do-it-yourselfers that pays dividends in the long run. Likewise, practices such as the company’s Kids Workshops and its involvement in Christmas in April are about more than just helping a kid build a birdhouse or patching a senior citizen’s roof. They are about endearing members of the community to Home Depot, which will keep them loyal customers for a very long time. It is quite clear that Bernie Marcus and Arthur Blank understand this notion, and that they have made it a central part of their business model.
Customer service is always the first priority for Home Depot. Marcus believes customers are everything and Home Depot cannot survive without them. Therefore, Home Depot adopts many plans to satisfy and attract customers. First, Marcus tells employees to ask questions and find out what customers need. It is important because this step helps customers clearly tell employees their questions so employee can give them an appropriate suggestion. Also, Marcus trains employees not to force the customer to buy a product. This builds the trust between customers and Home Depot. And Home Depot provides low price. Therefore, like Marcus said “The service they receive from us is what will bring them back to Home Depot.”
As for its competitive strategy, Home Depot adopts the Overall Low-Cost Provider Strategy. It believes “low prices, they reasoned, would mean more customers and more sales,” and “they were committed to offering customers the lowest price.” The way they do is to buy directly from the manufacturer and avoid warehouse distribution that adds cost. Crafting their values chain really helps them to reduce the cost and give the lowest cost.
Also, Home Depot listens from customer and finds out the different types of customer. Though it focuses on do-it-yourselfers, still some customers don’t have the time to learn or don’t want to learn. For these customers, Home Depot has a chance to diversify its market to provide installation service.
The ultimate goal, for Marcus and Blank, is to make Home Depot customers as knowledgeable as their employees. It is a tough task but Home Depot builds its reputation, loyalty, and sales while it trains the customers. First, Home Depot provides many classes such as wallpapering, painting, installing a garage door, laying tile, or building a storage shed to teach customers to use the right products. Second, Home Depot offers “Home Depot Kid’s Workshop” in its stores to teach young generation to make their bird houses. Third, Home Depot starts to produce books and TV shows to teach people how to do it yourself. Through those activities, Home Depot builds it professional status in customers’ mind and customer loyalty. It increases the sales and definitely set Home Depot a unique advantage from its competitors.
With its success, Home Depot also meets many challenges. In several areas, residents don’t want Home Depot to operate in their neighborhood. The local or area competitors try to stymie Home Depot growth. However, Home Depot can stand its ground, focus on its long-term plans, and not be afraid to fight back for what they think is right.
For a successful company, it is important to interact and give back to the communities. For Home Depot, there is no exception. Marcus and Blank give local managers and employees enough power to decide what is good for their communities. Perhaps, it is why Home Depot can get a good reputation all over the country. In April 19, 199, a bomb exploded in Oklahoma City. The local managers gave the support immediate without waiting to Marcus’s approval. One thing I would like to praise is that Home Depot start to use recycled material. We have limited resource in the earth and recently people waste too much. Most of this situation comes from that companies try to boost their sales and use not environment-friendly product. It is good and important that a company, especially a leader in their industry, becomes a pioneer to tell customers what is good for them for company and for our society. For me, this is the reason Home Depot can gain the reputation from the customers.
Since my last post, I have learned some interesting things about Home Depot through reading more of “Inside Home Depot”. For example, critical years faced the company as discrimination charges were being investigated on the West Coast. Home Depot founders eventually came to an out of court settlement, but the process taught the company a lot about itself. Unwilling to change its values, which relied on putting the people in the positions they were qualified for, they had to look to other ways to expand the knowledge of their employees. Systems like the “Job Preference Process” and diversified training programs enhanced the know how of the entire Home Depot workforce.
I find this section to be particularly interesting, due to the fact that in the face of serious threat, Marcus and Blank did what was in the best interest of the consumer. In the retailing industry, this remains the most important element of running a successful business. Home Depot has achieved the level of commitment from workers and loyalty from its consumers by humanizing their business. No matter what you are selling, you need to provide your customers with a reason to choose you over other players in the market. Home Depot continually demonstrates their ability to provide the customers they serve with unparalleled knowledge and reliability.
I still find this book to be very biased despite the fact that it was not sponsored by Home Depot. Chris Roush continues to present Home Depot in the best light. It doesn’t take to much for anybody to understand that in a retail industry, that Home Depot is, Customer Service is central. So basically across companies only the way of achieving customer satisfaction varies. At Home Depot they decided to empower their employees and run them through continuous training. Roush presents these steps as a uniquely smart and efficient ways to do. But I find some drawbacks in them. Employee empowerment can sometimes bring to very successful and beneficiary outcomes as in a number of cases described in the book, but if it is not ‘regulated’ it can bring to some negative outcomes as well, that is extremely undesired. As for trainings I wonder how much real excitement do employees feel when they have to wake up at 5am to see Arthur and Bernie. Meanwhile the author himself brings examples where Home Depot fought to the end as it has “win-at-all costs mentality” causing some dissatisfaction and discomfort to local community. The cases of gender inequalities are more described as challenges that were overcome rather then shameful acts of human rights violations.
Another way to make customers more happy is to invest in corporate social responsibility. And I think that Home depot did a better job here. Their educational programs served to at least two purposes: first they build consumer loyalty and secondly these events serve as trainings where people could see and learn how to use tools and become more confident that they can do a lot of work on their own. Another good thing in community involvement is that it was mainly done on local bases giving freedom of choice to every single town that hosts a Home Depot store. This was especially important as Home Depot moved into rural areas.
Home Depot’s management has been continuously striving to maintain a strong culture that foster employee empowerment and motivation. They also have been striving to maintain in good
Status, the company’s stock price as a decline in the stock price would upset the employees due to the stake they have in the company. The management also has been fostering an entrepreneurial spirit in the minds of the employees by giving them the ability to make decisions for the well being of the company. Apart from focusing only on the culture and service to the customers, Home Depot also has been focusing on helping the communities where its stores were located by giving away supplies for charities. The management not only monitors employees for performance but also motivates them by promoting employees for exceptional performance and by doing this employees rise to set an example to other employees who can learn from them. Further Home Depot identified employees interests and supported them in achieving their goals, for example, Home Depot provided support for more than 100 employees
In pursuing their dreams to participate in the Olympics. In spite of allegations for discrimination, the management always strives to expand the roles of women in the company. Also this led to more woman customers shopping in its stores.
Bernie and Arthur founded Home Depot with a special vision- to create a company that would keep alive the values that were important to us. Value likes respecting among all people, excellent customer service, and giving back to communities and society. Although Home Depot optimal goal is to provide best customers service possible, one of the biggest obstacle that Home Depot has to face- not every employee treats customer’s service is vital or treat it by different standards. Home Depot really serious about this issue since if just one employee in a store has bad attitude or is rude to a customers, the whole stores suffers. Well-training program and employee management effectively help Home Depot gaining consumers credibility and brand service reputation.
Some innovative customers service strategy really breakthrough what used customers service in customer’s mind and successfully differentiated Home Depot with other competitors. For example, to alleviate crowds and long line, Home Depot opened new stores close to existing sites, essentially cannibalizing sales form older location. However, the result turning out, overall sales growth in many locations and consumers response is all positive. In addition, by doing this way, Home Depot not only relieve customer traffic at the older location but also develop a new based of customers who are attracted to more convenient location. To Home Depot, customer service is not narrowly improving service to its used customer based, but also broadened to general public let more people can join and enjoy be served with Home Depot.
Home Depot has a well corporate social responsibility strategy. Home Depot has different community involvement allowing each store to decide where to donate money, services, or products. Simulating each store to be active to community they were belonged to, and for employees to help a cause they’re passionate about. By doing this way, Home Depot deepens it relationship with different local area and also releases fully freedom of decision making to each stores. Home Depot has been able to use their products and services to be active in organizations like helping to build houses or Habitat for Humanity. Home Depot awares that some sales came from environmental harmful product which could embarrass Home Depot in a culture beginning to pay more attention to how its actions affected the world in which it lived, and in order to deal with that, they have taken many steps to become an environmentally friendly company. For example, Home Depot is the first home improvement retailer to sell independently certified wood that wasn’t stripped out of forests without regard to the environment. By having many environmentally friendly movements and projects, consumers can associate Home Depot with strong environmental commitment that none of its competitors.
The latter part of Inside the Home Depot focuses on the Home Depots expansion projects into new markets and new store types. The expansion of Crossroads and EXPO was Home Depots attempt to reach out toward the more rural and cosmopolitan customers. Both ventures seemed like logical growth methods in segments of the market that seemed to have a demand that needed to be filled. Although, both business extensions grew tremendously in the early years, they would prove to be a burden on the company and would eventually close.
Finally, the book looks at how the Home Depot is situated against its major competitor: Lowes. Clearly, Lowes has done a good job of trying to gain market share from the Home Depot. Marcus and Blank responded to Lowes aggressive strategic movements by retaliating with an iron fist. Specifically, The Home Depot has instated new small scale business ideas such as tool rentals and 24hour stores. The company seems to have made a lot of progress with these programs because they as low risk and easy to manage. The future of the company looks to be promising and sustainable. Although, the housing crash has hurt the company, a recent report in the NY times shows that the retail industry is bouncing back and that the Home Depot is recovering in many of its weakened markets. http://www.nytimes.com/2009/11/18/business/18shop.html?scp=2&sq=home%20depot&st=cse
The last part of “Inside Home Depot” is about expansion that the company undertook.
During early 1990s executives of Home Depot started to think about expanding to new markets, not so much because they were more attractive, but rather based on long run prospectives. They wanted to test rural areas and opened stores under the name Crossroad. Soon they were surprised with the success of those stores and changed the name to Home Depot. Of course a major role in achieving this success was differentiation (the stores were carrying whatever would have higher interest for locals). Being very excited with the success of Crossroads, Home Depot targeted another niche. They opened EXPOs they were more of design and décor oriented and aimed high end customers. Here the store did pretty much the opposite. They started as a Home Depot store and later on changed the image of EXPOs keeping Home Depots “brand equity”. The stores were predicted to do great, but they were expanding very slowly. Next step would be to go global. Home Depot wanted to go overseas, but considering all the difficulties they never did. Instead they acquired a company and expended into Canada and later on to Chile. The author how smart did Home Depot arrange their business in both markets (depending on cultural and business environment differences). And eventually the last chapter talks about all the new products and services that Home Depot is introducing in order to be able to keep its leading position as well as for further expansion.
Of course this book is relatively old and a lot has changed after it was written (Home Depot had to close its stores in South America, EXPOs were shut…). But still I find that the author is very biased by presenting everything in good colors. For example the failure (as it turned to be later) in South America was not only because of cultural difference and economic crisis in Latin America, but also because of inability of Home Depot to build good relations with its suppliers. Another example could be development around the EXPOs. According t Chris Roush the fact of slow expansion was a well worked out strategy, despite all the projections of the analysts. Meanwhile I guess the fact of slow business in these stores played not a small role.
Chapters 5 – 8
Customer service continues to be an underlying theme to Home Depot’s success. Marcus and Blank’s passion on the subject seems to be almost contagious and to the point where it sometimes crosses the line to community service. For example, employees in one store went as far as to build a ramp for a wheel chair bound customer, who initially could not even afford the supplies. Along the lines of customer service is the education that Home Depot is willing to give its customers. Experts in various home improvement topics are available throughout the stores and Home Depot even offers free classes for various projects. In chapter 7, the opposition from competitors and communities is explored. As with the expansion of any large company, small business owners complain that they cannot compete with the giant’s low prices and selection. Marcus and Blank try to respectfully counter their competitors and community organizers. Immediately following a chapter that shows some negative impacts of Home Depot’s expansion, Roush explains how they aim to better society as a whole. He gives examples of the 1995 Oklahoma City bombing and how local store managers were able to act and send supplies without the permission of corporate in Atlanta. Home Depot is also an industry leader with their green initiatives by increasing the recycled material usage in their store supplies such as signs and shopping bags.
Two things in these four chapters really seem to stand out. First, in chapter 5, it is made apparent that Marcus and Blank’s devotion to customer service is contagious. Employees seem to have a sense of pride about them that makes them want to help customers, no matter to what extent. The second and most impressive trait of the Home depot is how store managers are allowed to act without the approval from corporate. This style of decision making shows that the Home Depot executives trust the store managers with their decision making abilities. I think that many companies fail in this area and try to micromanage too much sometimes.
Whereas the first two thirds of ‘Inside Home Depot’ focused on Home Depot’s past and present, the final section of the book was centered on how the company planned to continue its operations into the future (the late 1990s and beyond). Chris Roush discusses a number of initiatives aimed at broadening Home Depot’s operations, including CrossRoads and Expo stores, and international expansion. While each was implemented with varying degrees of success, he makes it clear to the reader that such diversification is certainly no walk in the park, even for an industry leader like Home Depot. Roush closes the book by examining what the company is doing to maintain its success, how it plans to deal with the emergence of Lowe’s, and by talking briefly about the effects of Bernie Marcus stepping down in 1997 from his CEO position, thereby handing control of Home Depot to Arthur Blank.
The biggest takeaway I got from the book’s final chapters was related to Home Depot’s shortcomings, not its tremendous success. I found it very interesting to learn about how the company reacted to strategic moves that didn’t exactly pan out as planned, such as the acquisition of Aikenhead’s Home Improvement in Canada and the roll-out of Expo stores, and to moves that just plain failed, such as the attempted expansion into the British home improvement market that died in its preliminary stages. Reading about how such troubles were resolved helped to shed some light on what was going on inside the minds of Arthur Blank and Bernie Marcus. Furthermore, getting a sense of the many factors that go into making strategic decisions, for instance international expansion, helps you to appreciate how complicated running a multinational firm can be, let alone one as expansive and successful as Home Depot. It is unfortunate that this book is so old (published in 1999)- it would have been interesting to see how Home Depot has dealt with more modern business issues.
In the later chapters in this novel, Roush highlights the more difficult areas for Home Depot. While Blank and Marcus saw their business thriving, they knew that they were running out of space in the United States to further expand the company. Efforts were made to move into different segments of the retail industry, but these did not happen overnight or in a smooth fashion. The successes and failures of numerous projects such as “Expo” and “CrossRoads” in different cities taught Home Depot the importance of understanding the target markets. These same lessons were reinforced as the company attempted to expand into international markets. Home Depot knew that it needed to get into emerging markets that were not attractive at the time, but would prove to be attractive in the future.
This last section of the novel illustrates the patience and planning that Home Depot co-founders take in mapping out the future of their business. Blank and Marcus could have easily rolled out their Expo stores all over the United States simultaneously, or used Home Depot’s “muscle” and name overseas to acquire companies to convert to “agent orange”. But this was not how they did business. Home Depot was interested in providing the best service possible to the customer, while maintaining a profit. While these initiatives may have been profitable, Marcus and Blank saw the potential problems with expanding too quickly. While they wanted to reap the benefits of the new brand images they were creating and take advantage of emerging markets overseas, they understood that they could not do this without gaining the same know how in those markets that Home Depot currently enjoys in its position, allowing the Depot to best serve its customers.
The beginning of the book explains key features of Home Depot’s culture that co-founders Bernie Marcus and Arthur Blank passionately promote. Home Depot encourages training at all levels and encourages continuous self-growth in order to provide good customer service in order be able to maintain its advantage over its competitors. Furthermore, Home Depot promotes an open environment that allows employees to be honest and bold, all for the benefit of the company. Home Depot received positive acknowledgement when it decided to give back to its workers by employee potential Olympic athletes to help them achieve their goals. However, Home Depot faced a challenge when it was hit by discrimination lawsuits by female employees who felt they weren’t given the same opportunities as male employees. However, Marcus and Blank’s strong conviction of innocence and desire to maintain its company’s independence and culture led them to settling the charges.
Home Depot’s open culture is an important approach that creates the opportunity for many improvements yet that many companies do not provide or properly encourage. From one aspect, workers possess knowledge on how best to do things because they are the one closest to the customers, who know the products and facilities. At the same time, regardless if the employees suggestion is put into action or not, the worker feels as if they have a say and are thus socialized and become more committed to the company. Therefore, both aspects result in improved situations.
The second part of the book starts off by discussing how Home Depot differentiates itself by truly focusing on providing superior customer service and works to constantly improve it by listening to suggestions and complaints. Home Depot also sets itself apart from competitors and retailers in general by teaching its customers how to use its products either individually or in a class. Therefore, through individual assistance, how-to classes, do-it-yourself books and television, and its kids program, Home Depot is creating confidence in the customer to tackle more projects and establishing loyalty for current and future Home Depot customers. However, Home Depot has faced a lot of resistance by community groups and competitors in attempts to expand but has fought back strongly to defend its culture and its considerate expansion plans. Giving back to the community, whether it’s related to the business or not, is important to Home Depot and they encourage employees to take initiative for a good cause.
Home Depot is accomplishing several things by teaching its customers that ultimately give it an advantage over its competitors. Customer know they can get more than a product at Home Depot and become loyal customers because they can rely on their knowledge and advise. At the same, Home Depot is assisting these individuals by helping them become more confident in their abilities and by providing them the knowledge to do the project themselves and ultimately save money from doing so. Therefore, Home Depot has strategically created an advantage for itself while servicing other.
In the last part of the book, we talk about the expansion in rural area. Home Depot focused its business on large metropolitan markets first. It was very successful but also caused confusion that can this model work in rural area? However, Marcus and Blank proved that they can succeed and found experienced people to evaluate and plan the new strategy. Tom Smith was a small-town America retailing expert who worked in Wal-Mart. Wal-Mart had a successful experience to expand its business to rural area. Tom first chose Quincy, Illinois as the first place to start. They carefully analyzed the needs in country area and tailor the product offering for Quincy customers. Though the product lines are so different from the urban area, Home Depot was successful to catch customers’ need and proved that Home Depot can succeed in rural area.
Home Depot tried to change store layout and products offerings to attract customers. It believes that changing can keep its entrepreneurial spirit. Home Depot already had a large group of customers who satisfy with large choices and low price. However, it wants to do best and find new ways to attract customers. Therefore, Home Depot opened a decor store “Expo”. Expo offered a new concept of purchasing and shopping experience different from traditional Home Depot. Expo focused on the interior design and provided professional advices of decoration. Also, Home Depot made Expo as a roll-out chain so many customers would come and learn how to design its house. Expo was positioned as a pioneer of Home Depot. It provided many new concept products and services. This helped Home Depot test the markets. For example, the installation service that Home Depot provides now stated in Expo. Home Depot made Expo a smaller store and emphasized on a handful of product lines that customers wanted. So it can easily control the cost and slowly trim its strategies to find customers’ want.
In the international market, Home Depot was carefully to expand its business into in foreign countries. Before entering the new foreign markets, it observed the local demands and government policies first. Then it tried to find appropriate people who understood the local market and channels. This can help Home Depot expand quickly with lower risks. For example, Home Depot found James Hodkinson who worked in B&Q in England at that time. James was very familiar with the environment of British market and provided many good suggestions. At the same time, Home Depot evaluated the difference between developing and developed countries to find a good time to enter those markets. Mexico was once thought a good choice to expand Home Depot business. Mexico had a good economic growth and low labor costs and Home Depot found a good partner to work with. However, Mexico economy crashed almost at one night. The peso lost 40% of its value. It made Home Depot to stop the invest. Also, Home Depot considered about different strategies to go into different countries. For example, Home Depot acquired Aikenhead’s Home Improvement in Canada, and cooperated with government in China. Though meeting many challenges in foreign countries, Home Depot learned how to adjust its self to the different markets, and all these experience became invaluable assets to Home Depot.
The author of the book continues to describe how Home Depot has been striving to achieve its goal of providing exceptional service to the customers throughout the stages
Of development of the company. The author also describes the several challenges that
Home Depot faced as it emerged to be a larger company. Bernie and Marcus strongly believed that if their employees will treat their customers in the same way that the management treats them. Therefore through continuous training and motivation they had to maintain superiority in the way the employees treat customers. Also the management’s initiatives to educate customers about using their products helped Home Depot to stand out from the competition. Home Depot started another company called “Expo” for providing home owners interiors designs and services. Also, Home Depot continuously sought opportunities to expand nationally as well as globally. The best thing about the book is it is not sponsored by Home Depot’s management, so it is an unbiased history of its growth. There are quite a lot of lessons to learn from Bernie and Marcus’s consistent efforts to improve the company.
The last part of the book mainly discusses Home Depot’s expansion programs. One of which was Crossroads, which involved targeting rural areas and modifying the products sold and stores to better serve the different clientele. Home Depot also began making strides to attract a different clientele by opening up Expo stores, which focused on providing higher quality décor products and services. To enter markets outside the United States, Home Depot had to research not only where but how and with whom Home Depot would make the leap abroad. In all its endeavors Home Depot faced challenges and worked to learn from its mistakes. It’s through this approach of constant evaluations and renewal that Home Depot competes and maintains a strategic advantage.
I think the considerable research and consideration involved in the planning of its new projects gives Home Depot a good starting point when it launches them. Furthermore, Home Depot has demonstrated a lot of creativity in its ventures into new markets that can still be related to Home Depot’s original business. Although, Home Depot faced challenges before and after each expansion idea its attitude to succeed and to learn from its mistakes has been a major factor in its achievements. Home Depot demonstrates to stay competitive it is important to not only continuously improve your current business but to enter into new ones.
The first part of the book explains how Home Depot was founded by Bernie Marcus and Arthur Blank, who were fired from Handy Dan over unproven charges and some personal feelings of Sandy Sigoloff. The book tells how they made this dramatic event into a great opportunity and used it as an example of how not to treat their employees. In the following pages that talk about the reasons of Home Depot’s success, we learn how, as a company, they care about their customers, shareholders and employees, and how they form the culture of the company around continuous improvement. They maintain this continuous improvement by providing dense and continuous training to employees of all levels and utilizing 360 degree feedback. Furthermore, all employees get to express their ideas and opinions, regardless of their positions, therefore creating a collaborative and effective environment under the “Bleeding Orange” culture, despite it being perceived as a militaristic one.
As I read through the first couple of chapters, I was amazed by the utilization of training and high quality customer service by Home Depot’s culture. Caring about customers and trying to help them in every way they can, and making sure that they leave the store happy, instead of seeing them solely as income sources, definitely helped Home Depot reach and maintain its advantageous position among its rivals in the retail industry. Marcus and Blank, being heavily involved in the training process themselves, maintain this culture by setting examples of themselves and taking care of their employees as they expect the employees to take care of the customers. I liked the way Roush quoted them and gave specific examples when explaining the training policy of the company; it helped me imagine myself as an employee and therefore taste a bit of the boost in their motivation. I believe that the first part of the book satisfactorily introduces Home Depot and its culture, and keeps the reader somewhat engaged.
The second part of the book focuses on the application of “customer service” aspect of Home Depot’s culture. There are lots of examples where the actions taken for the customers exceed way beyond what one would call regular service. Furthermore, Home Depot utilizes multiple programs such as do-it-yourself workshops, books, children’s classes and TV shows to educate its customers and encourage them. These programs, combined with the attitude of the staff towards customers, successfully support the customer-oriented service strategy of Home Depot. The book also talks about the interaction of Home Depot with the community and gives examples of its interactions at exceptional times. In this part, we learn about the corporate social responsibility strategy that the company follows.
Although I knew about the customer service oriented approach of Home Depot from what I’ve read in the first chapters, I was amazed by the specific examples about the actions taken by the employees. I believe that Arthur and Bernie did a good job on imposing their attitudes toward customers to their employees, and made them understand the importance of customer satisfaction. How the local managers of the company acted to support the community after the Oklahoma City bombing clearly shows how dedicated the staff of Home Depot are to helping their customers. I believe that this corporate culture favors the company’s reputation and therefore is one of the major reasons behind the success of Home Depot, if not the most important one.
Home Depot’s employees are given a large amount of autonomy especially when it comes to helping customers and they are encouraged to do whatever is necessary to make sure that customers leave the store satisfied. Part of that satisfaction is knowing that they can complete the task at hand, which is why Home Depot so passionately encourages passing on the knowledge of how to do a project to customers. They embrace this idea so fully, that most stores hold workshops for customers of all ages to learn new skills. Throughout the years Home Depot has clashed with many other do-it-yourself or hardware stores and even community groups as they have expanded. Throughout these clashes the company has always maintained that customer service will prove them to be the winner, as they win over competitors’ customers and even turn opposing community group members into their customers. Home Depot employees embrace the idea of above and beyond customer service so greatly that it is almost natural for them to give back to the community by helping in any way that they can and it can be seen from many examples that the employees do just that.
I find it amazing how much autonomy that Home Depot gives its employees especially in the area of helping the community. Many companies would require a manager to talk to corporate headquarters and go through mountains of red tape before they would be allowed to donate a $3 tape measure for a cause. By allowing managers to make those approvals on site they are able to mobilize supplies and be there to help in times of distress much more quickly. Such autonomy really shows how much Marcus and Blank trust their employees and was perhaps born of the fact they were distrusted by Handy Dan and fired because of it. By breaking the cycle of distrust Marcus and Blank have helped their employees better serve their community and helped to empower employees to make more decisions and do the right thing.
In chapters 9 through 12, Roush focuses mostly on Home Depots expansion tactics. Home Depot’s rapid growth during the 1980s and 90s struck fear in Marcus in Blank because they thought they would soon saturate every metropolitan area within a few years. They began to experiment with rural stores which proved to be successful. Marcus and Blank also ventured into a high end market niche by opening Expo. The store offered designing services and installations. Home Depot later explored entering international markets. Mexico and England were their initial targets, but both eventually fell through. Mexico’s economy crashed and James Hodkinson, whom they hired to run operations in England, left midway through training. Marcus and Blank turned to Canada to compete with Aikenhead’s Home Improvement (owned by Molson). While Home Depot was exploring the Canadian market, Molson decided to unload Aikenhead’s which Home Depot acquired for $150 million. The acquisition was successful after a rough first couple of years due to cultural differences. Marcus and Blank were still interested in expanding overseas. In 1994, the Tianjin North Building Materials Trading Company asked for Home Depot’s help in establishing vendor relationships and training employees. This allowed Marcus and Blank to observe if such a store in China could be successful, without using their funds. The Home depot later opened stores in Chile because of its economy and government’s stability.
Roush, in these four chapters, efficiently depicts the evolution of Marcus and Blank’s expansion strategies. They began by slowly reaching out of their target market of metropolitan areas to test the waters before taking the plunge. Marcus and Blank seemed to learn important lessons with every level of expansion they reached, which could then be applied towards consecutive plans of new market entry. The mistake that Marcus and Blank made by acquiring Aikenhead’s, however, is quite surprising considering they faced a similar situation earlier in their careers. They should have investigated the company more diligently in the beginning so that the transition could be smoother. It appears that they may have taken a more relaxed stance since it was operated by one of Home Depot’s former executives, Stephen Bebis. It is possible that a personal relationship caused Marcus and Blank to overlook the cultural differences and potential problems in the company that they ended up having to fix.
After Home Depot had exhausted its original market in large cities across the United States, they began to look at smaller and smaller cities as potential new markets for expansion. They also explored the idea of Expo stores, which were design stores catering to more upscale clientele. To ensure that the company always had a market in which to expand, they began looking outside the United States for expansion. They attempted quite a few ventures internationally with mixed results, including failures in China, Mexico and England and successes in Canada and Chile. Home Depot also looked at non-traditional shoppers as potential customers, expanding some of their efforts to cater to mail order customers and contractors.
I think it is wonderful how much effort is put into expanding Home Depot by the top management. They perform a lot of research and put great thought into developing new ideas that no one has come up with yet. Unlike many other companies, they are not afraid to try new things and see if they are a success or a flop. I think this is most evident in their idea for Expo store where they decided to try an entire new name and approach in addition to their already successful company, something that no other competitor would dream of trying.
The final part of the book talks about the expansion strategy of Home Depot. Through the CrossRoads stores, the company tried to expand into rural areas. Whereas through the Expos, they tried to attract high-end customers by providing high quality designs. In addition to these two major attempts that were targeting new segments of their main market, the book also covers Home Depot’s strategy of expansion into international markets and how the company conducts significant research before expanding to foreign soil.
I was impressed by the effort that Home Depot puts into researching about new markets, before attempting to enter them. I would consider their expansion strategy to be unique among their rivals in the aspect of how they come up with new ideas and test them to see if they are applicable, and I believe this quality of theirs will make them even more successful in the long run.
Overall, I found the book to be based on thorough research, comprehensive but a little biased. I’ve learned a lot about the company itself, its culture and strategies and found it to be a pleasant reading experience.
Chapter 4 – Chapter 8
In chapter 4 we learned about how Blank and Marcus faced a potential crisis with a class-action lawsuit. Chapter 5 showed us again some of the level of commitment Home Depot required from and inspired in its associates. On page 92 of Chapter 5, Roush suggests that Home Depot has almost generated this vast market of do-it-yourselfers by being as much a destination for products as a destination for information on how to use these products. In “Teach the Customer” we see Home Depot harnessing this interesting aspect of the Home Depot phenomenon—that they are relied upon to teach the customer how to use Home Depot’s many different products. In “Home Depot’s Foes” and “Getting Involved” we see the not so nice aspects of the company’s expansion efforts and the fantastic level of community service the company is engaged in from their cashiers to their CEOs.
Comments on HD’s teaching children: There’s something that makes me a tiny bit uneasy about Home Depot’s classes for the younger generations. Of course they are wonderful experiences for children and potentially necessary—it seems like every week there is some on the radio speaking about how this country has really lost the more handy skill sets and how there’s a ridiculous tendency for people to not appreciate technical schools. So it’s fantastic that Home Depot is reintroducing this into our culture. But there is something just a bit not genuine about it. Maybe I just don’t like the thought that I probably have been raised to buy some of the things I buy. And I will take my children to the classes offered by these corporations. (This is not a significant problem—more just musings on a somewhat funny situation.)
Prologue – Chapter 3
The prologue tells a great story about how the company came to be—how founders Marcus and Blank, working for Handy Dan out west, were wrongly accused of using funds to disengage the union that represented the company’s workers. Not given a chance to prove themselves innocent, Bernie and Arthur were sent packing. (Hopefully this schlep over at Daylin Inc. learned his lesson!) They wanted to start a company that respected people. In chapters that follow Chris Roush shows how intense it was to make a company that was constantly looking out for the best interests of its customers. It required an intense dedication to the associates serving the customers. These chapters were appropriately followed by a chapter all about how Home Depot helped a group of one of the most dedicated people on this planet—the athletes striving to get a spot on the Olympic team.
Comments on Home Depot’s Decentralized Structure: In Prof. Kirkizlar’s class, Business Process Reengineering and Outsourcing, we’ve learned that the centralized governance of large companies is really a structure that evolved directly out of the industrial revolution; where there were many people who were only trained to do one task and so the process as a whole had to be monitored by a superior. Nowadays most of the population have jobs in the service industry, have achieved higher levels of education, and can use technology to complete more difficult tasks at once. I think that Marcus and Blank’s decentralized structure is an early example of this evolution of business. (Now, CEO Frank Blake is attempting harness the 21st century technologies to really make the decentralized structure successful.)
Chapters 9 – Epilogue
In these chapters we learn more about Home Depot’s expansion efforts. (I had no idea EXPO was a Home Depot company!) In chapter nine I was surprised to discover that originally Home Depot sprouted in the more urban areas. But as chapter 9 clarified, being such a big store, it makes sense that the warehouses need to be located in more densely populated areas. The chapter, which talks about expanding into the rural areas, begins with Arthur Blank saying that Home Depot had to cater to all people—here is a clear statement of what their generic competitive strategy is. This is particular interesting when applied to Home Depot’s global expansion. Roush says that it’s accepted that global expansion is the inevitable next stage of their expansion but so much of what makes Home Depot is their culture. A bit of a dilemma here?
Comments on adapting to the local customs. It is interesting how there are so many little differences that a retail store needs to be aware of—and these differences actually amount to being different markets. Like the difference between shoppers in the suburban/urban areas and the rural markets. Or when Home Depot moved from the Sun Belt to the colder climate places like Detroit—perhaps figuring out which tools would be necessary in these snowy parts of the country, but figuring which tools would sell the best and where to source them and what strategic alliances did they already have that would help them or what alliances needed to be created. The difference in language and culture could potentially prove to be a very daunting obstacle for this company that is so invested in its culture. There was a particularly informative piece in EXPO chapter where Marcus had to figure out what are the similarities among these groups so that the large company can achieve economies of scale. He had been so excited about the EXPO centers but eventually realized that its investments were not well-aligned with Home Depot; and so they couldn’t expand as rapidly as they originally intended (at least not until the EXPO model was refined and the uncertainties taken care of).
One of problem that Home Depot might face is saturated market, since Home Depot takes aggressive expansion strategy in order to broaden its customer base. At first, Home Depot mainly focuses on metropolitan area which average consumers income is much higher than other area. However, through competitive competition in the market and saturated profit margin, Home Depot start to expand its expansion plan to rural area or small-town location coming up a new type of Home Depot which mainly targets to rural shoppers- called “Cross Road”. By offering innovative and special product selections which specifically tailored the taste and need of rural shoppers, like selling Lee or Wrangler jeans, special farm products and creating lumberyard drive through, each Cross Road Home Depot unique itself in its own way providing products for sales other stores didn’t have. Home Depot expansion plan is not just purely multiple the other successful Home Depot stores, it has different marketing segment strategies. “Home Depot Expo” is another product mix that try to capture décor products and service through using its own home improvement brand reputation. Home Depot Expo is well accepted by public market since it offer unique customers service and consultation. Nevertheless, technology upgrade and training become one of main potential disadvantage of Home Depot Expo, Expo stores has thwart growth lately. Expo needs to invest more on costly new software and specialized training than regular Home Depot to cater consumers’ special orders and installation showing that business strategy should keep same pace with technology improvement.
Home Depot also aim at international market. But it would come with more troubling issue, entering unfamiliar market means radically changeling the store’s product to cater to different home building technologies or different environments. Through numerous missteps before it finally made the right moves, Home Depot finds out a way to cater its offering to the specific market. However, established economics and growing middle class customers also have some extend of stimulations providing stable sales when expanding overseas.
Home Depot is continuously looks for ways to keep growing whether it’s by changing its advertising, introducing catalogs or buying mail-order business. There are many numerous marketing strategies which Home Depot uses to attract different type of consumers and boost its sales volume. For example, using Pro Book catalog to attract contractor sales, establishing Maintenance Warehouse for apartment and hotels two consumers group and providing Pro Packs product line which aims at professional builder and remodelers. It is also one of Home Depot successful methods keep looking for new ways to help customers doing repair and remodeling jobs, and grab more sales in the home improvement market.
i must read it..sound so great
How come there isn’t more books about Home Depot? My experience and research about Home Depot suggest they control any negative information about the company. How many people have been injured and killed in their stores and other information. Given the number of stores, people interaction etc., one can not find information on such things????????
Hi there to every one, because I am really eager of reading this blog’s post to be updated regularly. It contains pleasant data.
Helaine