Home Depot’s generic competitive 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 of the company’s generic strategy for competitive advantage 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 competitive strategy and intensive growth strategies also address the market effects of other retail firms, like Aldi and Whole Foods Market, which are not direct competitors.
Home Depot’s Generic Competitive Strategy (Porter’s Model)
Home Depot’s current generic strategy is differentiation combined with cost leadership. The company’s initial generic competitive 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 differentiation as its main generic competitive strategy. Based on Porter’s model, differentiation entails offering unique products or services to compete against other home improvement retailers, especially Lowe’s. Home Depot still uses cost leadership as its secondary generic competitive strategy to maintain leadership in an increasingly tough competitive market.
The objectives of these strategies are to enhance competitive advantages and to 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 differentiation as a generic competitive strategy, the retail company’s strategic objectives are to offer high-quality service and to provide high-quality home improvement goods. 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 cost leadership as a generic competitive strategy, Home Depot’s financial objective is cost minimization. The related strategic objective of developing close and exclusive relationships with suppliers helps the company achieve cost minimization.
Home Depot’s Intensive Growth Strategies (Ansoff Matrix)
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, the company acquired Interline Brands in July of 2015 to achieve successful entry into the market segment of non-industrial businesses. Home Depot also acquired The Company Store’s e-commerce operations in 2017 to access more markets. Additional strategic acquisitions related to home improvement business can provide further growth. 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 utilizes the value of quality and uniqueness achieved through Home Depot’s generic competitive strategy of differentiation. Corporate decisions for this growth strategy consider industry conditions, including the external factors examined in the PESTLE/PESTEL analysis of Home Depot, to ensure that the company’s development matches market and industry trends.
Product Development. Home Depot applies product development as a secondary intensive growth strategy. This intensive strategy contributes to business growth through new products to attract more customers. For example, new products under the company’s house brands, like Husky 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 differentiation supports this intensive growth strategy by ensuring high value for product competitiveness. 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 another secondary 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 competitive strategy supports this intensive growth strategy of market penetration. Also, Home Depot’s marketing mix (4Ps) provides strategic support that facilitates reaching target buyers and improving the company’s market share.
References
- Altin, M. A. (2023). Home Improvement: The Intersection of Functionality, Economics, and Aesthetics. Transforming Issues in Housing Design, 157-169.
- Leppänen, P., George, G., & Alexy, O. (2023). When do novel business models lead to high performance? A configurational approach to value drivers, competitive strategy, and firm environment. Academy of Management Journal, 66(1), 164-194.
- The Home Depot, Inc. – About Us.
- The Home Depot, Inc. – Form 10-K.
- The Home Depot, Inc. – Timeline & History.
- U.S. Department of Commerce – International Trade Administration – Retail Trade Industry.