Home Depot’s Generic Strategy, Intensive Growth Strategies

Home Depot’s generic strategy, intensive growth strategies, Porter’s model, strategic objectives, case study and analysis
A Home Depot in Markham, Ontario, Canada. Home Depot’s generic strategy (based on Porter’s model) and intensive growth strategies are aligned to support success in the home improvement retail market. (Photo: Public Domain)

Home Depot’s generic strategy and intensive growth strategies are interrelated to ensure continued business growth. The company is the biggest player in the home improvement retail industry in the United States. Home Depot’s generic strategy guides the firm in terms of its overall approach to capturing the biggest market share. On the other hand, Home Depot’s intensive growth strategies specify the approaches used to sustain business growth in the international home improvement retail market. Business leadership and goal fulfillment for Home Depot’s corporate mission and corporate vision are linked to the successful implementation and combination of its generic strategy and intensive strategies for growth.

Home Depot’s generic strategy is supported through the company’s intensive strategies for growth. The related strategic objectives help sustain business strengths and competitive advantages, such as the ones enumerated in the SWOT analysis of Home Depot, in support of the company’s leading position in the home improvement retail market. These strengths ensure competitiveness against other retail firms that offer home-improvement products, such as Lowe’s and Ace Hardware, as well as Walmart, Amazon, and Costco.

Home Depot’s Generic Strategy (Porter’s Model)

Home Depot’s current generic strategy (based on Porter’s model) is broad differentiation combined with cost leadership. The company’s initial generic strategy was cost leadership. For example, when the first Home Depot stores opened in 1979, the company’s cost leadership generic strategy emphasized Everyday Low Prices to attract customers. However, Home Depot now uses broad differentiation as its main generic strategy. Differentiation entails offering unique products or services to compete against other home improvement retailers, especially Lowe’s. At present, Home Depot uses broad differentiation as its primary generic strategy and cost leadership as its secondary generic strategy to maintain leadership in an increasingly tough competitive market.

The objectives of these strategies aim to enhance competitive advantages and protect the business against competition, which imposes a strong force in the saturated retail market, as illustrated in the Five Forces analysis of Home Depot. Based on the broad differentiation generic strategy, the retail company’s strategic objectives are to offer high-quality service and to provide a wide array of products. Many employees at Home Depot warehouses/stores are field experts like carpenters and plumbers, who provide expert advice to customers. On the other hand, based on the cost leadership generic strategy, Home Depot’s financial objective is cost minimization. In addition, the strategic objective of developing close and exclusive relationships with suppliers helps the company achieve cost minimization.

Home Depot’s Intensive Strategies (Intensive Growth Strategies)

Market Development. Home Depot uses market development as its main intensive growth strategy. This intensive strategy supports business growth by establishing the firm’s presence in new markets or new market segments. In Home Depot’s case, market development is generally applied through acquisitions. For example, Home Depot acquired Interline Brands in July of 2015 to achieve successful entry in the market segment of non-industrial businesses. A strategic objective based on this intensive growth strategy is to continue acquiring more firms to establish a strong market presence. This intensive strategy for growth also supports Home Depot’s generic strategy of broad differentiation.

Product Development. Home Depot applies product development as its secondary intensive growth strategy. This intensive strategy contributes to business growth through new products to attract more customers. For example, the company’s house brands, like Husky, Glacier Bay, and Commercial Electric, contribute to the firm’s competitiveness and growth. This intensive growth strategy is linked to the strategic objective of expanding the company’s product mix. Home Depot’s generic strategy of broad differentiation is supported through this intensive strategy for growth. Product development is also supported through Home Depot’s operations management in the business areas of product design, quality management, and process and capacity management.

Market Penetration. Home Depot uses market penetration as its supporting or tertiary intensive strategy for growth. This intensive strategy supports business growth through more sales of the same products to customers in the same or current market. For example, Home Depot implements discount sales and special offers to get more customers from its current markets. Based on this intensive growth strategy, a strategic objective is to offer products at affordable prices. Through low costs and the affordable selling prices of home improvement merchandise, the cost leadership generic strategy supports this intensive growth strategy. Also, Home Depot’s marketing mix (4Ps) provides strategic support that facilitates reaching target buyers and improving the company’s market share.