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Home Depot (SWOT Analysis)

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“SWOT is an acronym for the internal Strengths and Weaknesses of a firm and the environmental Opportunities and Threats facing that firm. SWOT analysis is a widely used technique through which managers create a quick overview of a company’s strategic situation. The technique is based on the assumption that an effective strategy derives from a sound “fit” between a firm’s internal resources (strengths and weaknesses) and its external situation (opportunities and threats). A good fit maximizes a firm’s strengths and opportunities and minimizes its weaknesses and threats. Accurately applied, this simple assumption has powerful implications for the design of a successful strategy.”

Home Depot 

Home Depot is the world's largest home improvement retailer and the second largest retailer in the US, based on net sales for the fiscal year ended January 2008. Home Depot stores average about105,000 square feet of enclosed space with approximately 23,000 additional square feet of outside garden area. The company operates 2,234 stores in total including 2,193 Home Depot stores in the US (including the territories of Puerto Rico, the Virgin Islands and Guam), Canada, China and Mexico. However, tight labor markets, government mandated increases in minimum wages and a higher proportion of full-time employees resulted in an increase in labor costs, which would increase the overall costs and affect the company’s margins.

Strengths, Weaknesses, Opportunities and Threats (SWOT)

Location of Factor

TYPE OF FACTOR

Favorable

Unfavorable

Internal

Strengths

  • Strong market position
  • Higher returns than competitors
  • Balanced brand mix

Weaknesses

  • Sub optimal capital structure
  • Product recall

External

Opportunities

  • International presence
  • Growing popularity of power tools
  • Increasing online sales

Threats

  • Intense competition
  • Slowdown in US housing market
  • Rising labor wages in the US
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"Home Depot (SWOT Analysis)";