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Home Depot and Lowes - A comparative Strategic Analysis

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Using your current work organization (or an organization of interest) and a second organization in the same industry as the subject matter, research the elements of business, compare and contrast the two selected organizations, and prepare an APA formatted paper that:

-Analyzes the basic legal, social, and economic environment in which the organizations operate
-Analyzes the managerial, operational, and financial issues impacting the organizations including:
-Company Culture and Performance
-Promotion Policies
-Strategic Decisions Making
-Decision-Making Style
-Management Style
-?Leadership Style
-Communication Style
-Use of SWOT Tool
-Operations Strategy Framework
-Analyzes the impact of potential change factors as they relate to the functions of management for both organizations including:
-Changing External Conditions

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Solution Summary

The solution discusses the overall environmental factors influencing the retail industry specifically with reference to Home Depot and Lowes. It also evaluates the internal capabilities and culture of both the companies and the management and leadership at both the companies. The solution also contains the SWOT of both the companies along with briefly describing the impact of potential change factors

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Environmental Factors influencing Home Depot and Lowes
Economic environment is slightly improving for the retailers as is evident from the following facts:
- Macy's Chairman Lundgren says that there is a strong consumer confidence this year as compared to previous year (Clifford, 2012: Feb. 21). This is also supported by the fact that Conference Board Consumer Confidence Index showed a slight improvement as compared to 2011 (Trading Economics, 2012: n.d). Bloomberg Consumer Confidence Index too matched with the best of last four years at minus 31.4 in the period ending April 15, 2012 same as that recorded in 2008 (Torres, 2012: 19 April).
- Charles Holley, Wal-mart's Chief Financial Officer stated that the unemployment numbers have gone down which is a positive signal for the retailers (Clifford, 2012: Feb. 21). This is also supported by the fact that U.S unemployment applications have fallen down as compared to last year (Wiseman, 2012: 11 May). The unemployment rate has been continuously declining in 2012 as is evident from the data of U.S Bureau of Labor Statistics wherein the unemployment rate has dropped to 8.1% as compared to more than 9.75% in 2011 (Trading Economics, 2012: n.d).
- Inflation rate in U.S is at 2.1% which is close to the Federal Reserve target of 2% but there are concerns that the inflation rate may rise (Saphir & Reid, 2012: May 1). If the Inflation rate rises then there will be an impact on the overall industry profitability but there has been a containment of the inflation rate till now within the specified target (Saphir & Reid, 2012: May 1).
- US GDP stands at $15319.4 billion (IMF, 2012: n.d). As per IMF data, U.S remains the topmost country in terms of GDP in value in terms of purchasing power parity followed by China and India (Banerji & Shah, 2012: 19 April).
Socio-cultural Environment
- U.S is becoming more diverse in its culture which is evident from the fact that a recent survey showed that the New York city is becoming more diverse with a composition of Hispanics- black and white, Mexicans, Asian Indians, Russians, Chinese, Arabs and people from different part of world (Roberts, 2012: May 10). This will compel retailers to diversify their merchandise mix.
Legal Environment
- Bernie Marcus, the Co-founder of Home Depot has emphasized that the stifling financial regulations such as Dodd Frank Wall Street Reform and Consumer Protection Act and unfair taxes are hurdles in job creation and are killing the businesses rather than building them up (Gross, 2012: 10 April 2012).
Company's Performance

Home Depot Financials
- Home Depot has been able to increase its revenue and profitability which is a resultant of its focus on retail and improvement in its supply chain as the net income of the company has increased by 32% to $774 million, sales rose by 6% to around $16 billion (Talaie/Bloomberg, 2012: Feb. 22).
- Same store sales of Home Depot has increased by 5.7% for the fourth quarter and transactions over $900 - the big ticket sales also increased for the company by 3% (Clifford, 2012: Feb. 21).
- The company's margin increased to 35% as compared to 0.29% last year (Talaie/Bloomberg, 2012: Feb. 22).

Lowes Financials
- Lowes revenues have increased by 11% to $11.63 billion beating the investor's expectation of $ 11.3 billion (Reuters, 2012: 27 Feb.).
- Gross Margins reduced to 34.2% from 35.6% ...

Solution provided by:
Himanshu Mahobia, MBA
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  • BCom, M.D.S University, Ajmer
  • MBA, M.D.S University, Ajmer
  • PhD, Suresh Gyan Vihar University, Jaipur
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