Organization transformation is one of the ways companies can reinvent themselves to survive a crisis. However, organization transformations don’t always work for some companies. The purpose of this paper is to discuss the positive and negative changes that took place at Home Depot during the time Bob Nardelli was CEO. The writer will discuss current performance and other company information. And last, the writer will conclude with a Christian worldview regarding Home Depot’s transformation and present success. Bob Nardelli’s top down approach that he was used to for so many years at General Electric was not the path to take for Home Depot (Brown, 2011). The managers at Home Depot were used to being independent and decentralized. They were not used to taking orders from the corporate office. In fact, they had always made their own decisions doing what they thought would work best for their stores. Because of Home Depot’s entrepreneurial culture that they were accustomed to for twenty-two years, the stores would not survive a top down approach to change. Moreover, a change that drastic would have to be strategically done to have any success. Nardelli, coming from a background of structured management, failed to realize that what worked for one organization might not work for another. Home Depot was known to have an unstructured and entrepreneurial type of culture, entirely different from GE where Nardelli had previously worked (Brown, 2011). Therefore,
Home Depot’s corporate-level strategy is one of internal growth. This conclusion was reached based on the increased focus that Home Depot has placed on growing its existing online and traditional retail operations. Between 2016 and 2018, Home Depot is expected to invest approximately four billion dollars into improvements in its online and physical retail locations in order to make both work more synergistically and grow sales (Petro, 2016). Home Depot hopes that these investments will continue to increase sales at both its physical and digital retail locations, thereby growing the company without adding significant numbers of physical locations.
Lowe’s is the 14th largest retailer in the United States and is presently planning aggressive expansion, opening a new store on average every three days. Lowe's revenue growth is primarily a function of penetration of the market increase resulting from a burst of new locations instead of the same store sales. Although Lowe’s has grown tremendously, it remains half the size of Home Depot and has serious debt burden that increases its risk level drastically. Lowe’s is Home Depot’s largest competitor because both companies have the same products, services, and enormous warehouse formats. In this major retail market Lowe’s and Home Depot stores go toe
Transforming an organization is not just an ingenuous change in direction, it requires the leadership’s acknowledgment of organizational derailment with a strategy for positive change. Pryor, Humpreys, and Taneja (2011) analyzed the transformation of a Texas organization that encompassed dynamic changes of strategic transformation in action. The transformation began with the Corporate Headquarters acknowledging the significant negative numbers of the Texas Plant. The Texas Plant had substantial differences as compared to its sister plant. Their conversion rates and production speed drove the costs of the Texas Plant to closure consideration. Moreover, the Texas Plant’s character of leadership discouraged recommendations for
Home Depot strives to provide the highest quality service to its customers. Home Depot achieves this by hiring professionals such as, carpenters, plumbers, and paint specialists. These experts are invaluable resources for less knowledgeable customers looking for a certain product or working on a new project. The Home Depot staff can help customers pick out larger and more difficult items such as showers, vinyl siding, carpet, appliances, and plumbing. After the purchase, Home Depot will have the items delivered and installed in the customer’s home. Home Depot’s focus on “product authority” is one of the main and drivers for the company’s high quality service.
Tanglewood, founded in 1975, has undergone rapid growth over the years. The rapid growth, however, has caused issues across the organization. Each store manager has their way of doing things when it comes to running the store. Because of the differing of attitudes across stores and the unstructured staffing process, Tanglewood has experienced significant turnover and financial loss. Tanglewood primarily hires internally because they feel “individuals who are promoted from within the organization to the department manager level are typically viewed by other employees as very qualified and integrated into the corporate culture and mission of Tanglewood (41).” Tanglewood
Department stores are not easy to manage, and take a whole team of individuals to run daily operations smoothly. Dillard’s success at the turn of the century came from balancing finances properly, incorporating a friendly atmosphere, and building its reputation as a welcoming upscale department store. In recent years, however, Dillard’s Inc. has surfaced in headlines for being listed as one of the worst companies in the nation to work for. With stiff competition and acquisition factors, the department store industry is not one to lag behind in and
However, in 1999, Lowe’s recorded very high sales growth alongside its expansion in preparation for the new millennium. From 1999 to 2001, Lowe’s began to assert itself as a worthy competitor for Home Depot, embodied in its significantly better margins and turnover ratios despite the recessionary economic environment. This improvement in ratios is indicative of positive change in the management of the
Today’s companies are challenged by frequent changes in market demands and consumers’ desires for new products and services. Companies which fail to adapt to these changing conditions often find themselves struggling to survive. This is the situation for the Texas Plant, as described in the case study by Pryor, Humphreys, and Taneja (2011). The Vice President, Human Resources Director, and Organizational Development Manager find themselves not only facing the struggles of transforming the Texas Plant, but also the difficulties of working together to achieve it. The following paper describes these difficulties and examines how the actions of the leaders impacted the change process. Recommendations to assist the plant’s leadership in moving forward will be offered.
Businesses have to adapt to the ever-changing economy. It is not much of a choice for business leaders to change elements of their organization to stay in competition with their peers. The hardest part, most of the time, is changing the people in the organization to develop the necessary outcome or goal. As a business leader getting rid of people or changing their job specifics is one of the many responsibilities they have to be comfortable performing. Organizations have to take into consideration their competitors, customers, shareholders, employees, and the community to make decisions. Change is an aspect that many people are afraid of. In the new millennium, organizational leaders have to embrace
If the centricity concept is being blamed for not meeting earnings and the decline in Best Buy’s stock price and market capitalization, the question becomes was there a need for this change to the company’s strategy, was the strategy poorly implemented, was there a delayed market response to the change, or was the launch an overly aggressive action of a newly appointed CEO? The Best Buy leadership team first needed to evaluate whether there truly was a need for a (drastic) change and if so, was centricity the appropriate response to the market.
Home Depot 's target market is individual homeowners/small contractors. Even though the traditional ideology is that cost leadership and product differentiation business strategies are mutually exclusive, Home Depot was successful at using a combination strategy. First, Home Depot optimized the cost leadership strategy by offering low and competitive prices to its customers by emphasizing higher sales volumes with lower margins, while instituting a high inventory turnover. Home Depot successfully offered a warehouse product strategy to the individual consumer for the first time. Previously, this type of price discounting was only available to professional contractors who earned product price
The purpose of this book is to make us see that nearly all-operating prescriptions for creating large-scale corporate change are nothing but myths and that changes do not happen from one day to another by a miracle, the change from good to great is the result of a successful plan who
The company transformation from private equity ownership with an immediate shift of CEO marked new challenges for the company. The company has been going through rigorous changes to keep up with the strong
For any business in the rapidly evolving world of business, planning and implementing successful organizational change is indispensable. Essentially, organizational change refers to a process whereby an organization strives to optimize performance in order to achieve its ideal state characterized by high performance and profitability (Côté & Mayhew, 2014). Any business would be more likely to lose its competitive edge, as well as fail to meet the demands of its loyal consumers if it doesn’t plan and implement change. Weiss (2012) emphasizes that all organizations ought to embrace change, and it’s imperative to note that successful organizational change doesn’t involve simple process of adjustments; instead it requires appropriate change management capabilities.
The case study Renovating Home Depot was the case of a leader who joined a successful business only to discover that the company was running out of growth opportunities and also did not have the basic systems needed for increased growth in place. Robert “Bob” Nardelli was chosen as the CEO of Home Depot based on his proven ability to reenergize slow-growth businesses. He was a leader that went all out to achieve his goals and was identified as someone who was “comfortable in his own suit”, and believes in being successful his own way. He made several innovations which were used in General Electric (GE) where he recorded past successes. We see the success demonstrated in the growth of revenue in Home Depot, as well as opening