10/13/13

Matthew Lucht mattcat09@email.phoenix.edu CST

Organizational Structure of Home Depot

The company that I am actually really familiar in organizational structure is Home Depot, since I used to work there. “The Home Depot was founded in 1978 by Bernie Marcus and Arthur Blank. Along with investment banker Ken Langone and merchandising guru Pat Farrah, the founders’ vision of one-stop shopping for the do-it-yourselfer came to fruition when they opened the first two Home Depot stores on June 22, 1979, in Atlanta, Georgia.” (The Home Depot, 2012, para. 1). They started in a large open warehouse which carried thousands of products, with nationally known brands along with the Home Depot brand. The Home Depot has given great customer service right from the start and has employed knowledgeable people to help offer assistance and answer any questions customers have with home renovation projects. The Home Depot has seen an incredible growth and today is one of the largest home improvement retailers in North America. On an international scale, Home Depot has expanded to Canada, Mexico, and even in China. The competition consists of Ace Hardware and Lowes, which is the main competitor. There are three structures used within businesses: simple, functional, and multidivisional structures. Simple structure is mainly used within smaller companies, and usually the head of the company makes all of the decisions and the employees follow directions from the head of the company. The functional structure is where the business has a CEO with a small company staff along with managers in operational areas such as production, accounting, and human resources just to name a few areas in a company. Separating the different areas of a company allows for specific people in each functional area. But it does negatively affect the communication between each department. The multidivisional structure is made up of different parts of the company which represents different businesses which corporate officials govern responsibilities to. This allows each official to effectively determine how well that part of the business is doing. These officials have the ability to compare each division within the company and straighten out a division that is doing poorly. Home Depot's biggest competitors are Lowe's, Ace Hardware, and Menard's (which is two blocks from where my current hometown’s Home Depot is located). Although each of these stores all carry similar products, they each are very different in their strategy of attracting customers. Ace Hardware (which I worked for as well) is the most different from the other companies because they are a much smaller business and tend to focus more on being customer-friendly. Menard's is a privately owned company that is believed to be one of the larger if not in the top five largest home improvement companies in the United States. Menard's is very similar to that of Lowe's and Home Depot. My brother used to work at Lowe's, and this me some understanding how they are trying to be different than Home Depot. Lowe's has a functional structure following that is reinforced by a price leadership strategy. Lowe's shows leadership by their “low price guarantee.” They will offer 10% off on any in stock product that the competitor has in stock as well, such as Home Depot. Lowe's also uses another strategy called differentiation to separate from Home Depot by trying to become more appealing to women, with the thought that women make the more creative design decisions when it comes to home improvement. It is believed that Lowe's stores are much cleaner and their blue and red colors are more welcoming to customers than Home Depot’s orange and black colors. They also pride themselves in being customer focused by employing "experts" who can offer customers the knowledge required to handle projects by themselves, which is reinforced by Lowe’s slogan, “Let’s Build Something Together.” CEO Frank Blake has reintroduced the “Inverted Pyramid”, which displays the retailer's ladder; with customers and employees above all others within the company even himself as CEO at the bottom. Blake is trying to separate himself from the previous CEO and bring back the Home Depot that was known before. The “new” Home Depot is currently trying to distance itself from a cost leadership strategy, like Lowe’s, and use more of a differentiation strategy. Blake wanted to be customer focused driven company with knowledge employees to offer help to customers and to reinforce this quality of customer service, he also enforced better training and now have learning modules or lessons via a company intranet that trains employees to be knowledgeable before they start to assist customers on the service floor. Another improvement Frank Blake has done is given all employees radios to respond to customer pages from each department. If an associate does not respond to the customers page within a certain allotted time limit then a report is sent out, this reinforces the driven to be customer focused at all times. Home Depot is also differentiating itself by involving children through programs such as Kid's Corner. On the first Saturday of every month kids can come into the store and employees have little projects ready for them to build or paint, that gets parents out to the store as well as the kids. The kids even get their own orange aprons just like employees to make them feel like the Home Depot team. Like the family oriented program, Home Depot has an Eco-label program where Home Depot labels thousands of products to inform customers that is eco-friendly or is an energy saver. Home Depot’s vision for the future is to be a clean, organized, and readily stocked store that offers friendly, knowledgeable associates to assist customers through their home improvement projects and that goes for international customers as well.

Reference:

The Home Depot. (2012). Retrieved from https://corporate.homedepot.com/ourcompany/history/pages/default.aspx
Bateman, T. S., & Snell, S. A. (2011). Management: Leading & collaborating in a competitive world (9th ed.). New York, NY: McGraw-Hill Irwin.