eco 561 Business proposal
jueelz
business_proposal.doc|
RUNNING HEAD: THE HOME DEPOT |
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THE HOME DEPOT |
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The Home Depot
Juliana Gonzalez
ECO / 561
May 31, 2015
Matthew De Point
The Home Depot
The Home Depot was founded in 1978, and opened their first retail home improvement store in Atlanta, Georgia (Home Depot, 2015). To provide a range of assortments to customers the Home Depot organization developed strategic product analysis. This assisted customers who wish to complete structure projects on different job locations the organization’s innovative merchandise focused on customers of the organization for professional contractors, free how to clinic, do it yourself projects, free how to clinic and children workshops. The Home Depot progressed worldwide and recognized as a specialty retailer that markets building materials, home improvement supplies (Home Depot, 2015). The Home Depot has over 2,200 convenient locations throughout the United States and Internationally.
Examining policies and procedure requirements for an additional customer service is one of the organizations possible solutions to address and fulfill the organization’s future expectations. Future home retail improvement products and services will increase productivity from departments. These services consist of policy is written and business procedures services from the growth of new products that demand customizations from business associates. This will help the organization to fit in the company’s organizational structure both domestically and globally. To improve every resource in producing an effective competitive advantage and manage logistics within the supply chain, Home Depot offers an extending guarantee.
Variables
Depending on the number of sellers in the industry, the differentiation of products and the barriers to entry, the market structure. The higher the price elasticity of demand, the more a change in price will impact demand for your product. The Home Depot boasts various domestic and international customers, ranking as one of the largest home improvement retailer in the United States and fifth largest in the world. Home Depot customers range from in-house associates to external novice homeowners to industrious commercial contractors.
The Home Depot works closely with suppliers to ensure customer satisfaction globally, and domestically. The company’s merchandising execution team helps suppliers deliver client expectations. The merchandising execution team project focuses on providing the best products and services while diversifying options. The Home Depot also offers a well-designed Internet site that highlight supplier collaboration. The New Supplier Toolbox designs create successful partnerships without complicated rerouting and puzzling forms. Even pricing and SKU number changes have clear procedures.
Revenue and Profit Maximization
Understanding what the customer perceives as value is important. A company like Home Depot needs to review its services to maintain and develop a customer base. Adjustments in trends in the market because of economic factors or to the point that they current established practice of services does not meet the customer's demands. The domestic outlook of expectations on procurement policies and procedures explains Home Depots Annual report. Home Depot has changed their procurement policies and buying procedures. At one time, Home Depot set up design centers for kitchens and baths.
Home Depot's operating strategy was to close the companies EXPO design centers and other internal businesses for example, HD Bath designs. The policy focuses on make the most of the stores productivity of the existing store base instead of offering services like kitchen design and bath design. The focus for 2009 was to reduce inventory and to improve stock rate (Home Depot, 2015). Procurement policy has changed to include higher product lines like Thomasville furniture and RIDGID tools known high-end items in the furniture and professional grade tools industry. "We also announced our partnership with Martha Stewart Living Omni media to offer an exclusive Martha Stewart Living brand of home improvement products in select categories including outdoor living and paint" (The Street, 2012).
Marginal Factors
When operating from a global perspective, it is important to understand what patterns arise from the local markets. Sourcing to these local markets is a critical part for a company like Home Depot to establish. Setting a policy for local sourcing develops an entrenched market presence. From the global arena outlook, Home Depot maintains a global sourcing merchandise program. Home Depot maintains their procurement and service through a Store Support Center that purchases from a global perspective to support all of the Home Depot stores worldwide.
Profit is maximized when Marginal Revenue equals Marginal Cost. To use it, a business needs to know how much it costs to produce one more unit of a service. A business can also use total revenue - total Cost method (McConnell, Brue, & Flynn, (2009). Profit is maximized when the TR and TC curves are farthest apart. By setting this global sourcing strategy the expectation for Home Depot is that they understand what sells in a local market and sourcing that from the local area. Local contacts and pricing will support Home Depot's goal of global expansion because the customer base will recognize local product lines and materials.
Pricing
In the Reference Manual, the Home Depot outlines the company’s Supplier information. To ensure successful partnerships and collaboration the company’s Supplier Reference Manual provides categorical information. The Home Depot’s ordering cycle includes electronic data interchange requirements, distribution information, purchase order methods, store environment conditions, manufacturing excellence, customs compliance, and transportation constraints (see Appendix A).
The electronic data interchange system provides a resource for recurring supplier collaboration. Suppliers are encouraged to use the electronic data interchange system weekly to ensure business and supply chain initiatives are met. The electronic data interchange includes mandatory transaction sets, a product catalog, image requirements, and computer system access needs.
Distribution information includes product flows, product and packaging characteristics, and freight requirements. The Home Depot defines distribution requirements to limit confusion and predicaments upon arrival. The information designates where product deliveries should be depending on the point of origin, product, and final dispersal.
The final requirements of The Home Depot supplier reference manual include customs compliance and transportation. The Home Depot outlines how suppliers need to handle international imports or exports, from having the appropriate documentation to sufficient packaging and security. Transportation conditions include a routing guide suppliers follow. Deviation from the routing guide could cost a supplier the right to work with the successful merchandiser. The transportation section also includes information on the bill of lading requirements, off-cycle shipping guidelines, labeling, and facilities drop-off arrangements (Home Depot, 2015).
Pricing strategies involve movement along the Demand Curve (McConnell, Brue, & Flynn, (2009). In a market with high price elasticity of demand, such as a monopolistic competitive market, a small reduction in price will have a large effect on demand. Non-pricing strategies involve shifting the demand curve to the right, such as by a TV advertising campaign. This is a common strategy in markets with low price elasticity of demand, such as oligopolies. Choosing a combination of strategies having the biggest effect on demand in the company's industry may be best.
Barriers and the Service
Patents or lobbying for increased industry regulation, or making service expensive while entering the industry by selling a service that requires specialized tools in a workforce like Home Depot is a definite barrier entry. Money back guarantee is another option for dissatisfied service or products within product and service differentiation. Labor cost is reduced by capital.
Conclusion
Home Depot’s organization demands the highest levels of product quality, availability, on-time delivery, safety, and compliance with laws and codes of conduct. The supply chain streamlines many global and domestic opportunities, product and service outsourcing and is a cognizant to personnel support. The selection of products, analyzing, sourcing approaches, freight and import cost, export, shipping, import details, contracts information, and processes broaden potential business movement controlled by procurement decisions and influences of policies. The affiliation with many state and federal laws restricts and offer different business treatment and regulations.
References
Home Depot, 2015, Stores, Products, and Services, retrieved from: https://corporate.homedepot.com/OurCompany/StoreProdServices/Pages/default.aspx
Appendix A
The Home Depot Customer Service Branding Home Improvement and Procurement Process
Figure 1: The Home Depot Ordering Cycle Diagram
