1. Topic SlidesCompany Snapshot3-6PEST7-11Industry Analysis12-15Competitor Analysis16-22Market Analysis23-26Internal & SWOT Analysis 27-33Back toStrategy Analysis34-40Table ofContentsRecommendations 41

2. Bigbox retailer of home improvement & construction products & services Headquarters: Cobb County, Georgia Established: 1978 Locations: US, Canada, Mexico, China 3. Industry: Home Improvement stores Big-box retailers Market Share: 21% Competitors Lowes Kingfisher, LLC. Lumber Liquidators Builders FirstSource Target Market Do-it-yourselfers Do-it-for-mes Home Improvement Contractors 4. Plumbing, electric, andkitchenHardware andseasonalBuildingmaterials, lumber andmillworkPaint and flooring 5. Data USOutside the US% of Sales 79%21%Sales$66.2 billion$7 billionStores1976Canada: 179 Mexico: 79 China: 10Warehouse/ 188Dist. Facilities 6. The housing market and economy is directly related to the market for homeimprovement. Social factors such as investments consumers are making and tendency towardhome improvement projects are of major concern for HD. The US government has invested huge sums of money to help the housing market. There are no technological factors that effect the home improvement market.FactorRank Political3 Economic 1 Social 2 Technological4 7. Trend Evaluation ImpactFED mortgage-buying isT4endingHome-buyer credit expires T4end of April 8. Trend Evaluation ImpactDecline of housing market to directly effect homeT5improvement salesEconomic downturn causes consumers to spendT4lessLow unemployment rates will cause consumersT2to spend less & they wont be buying housesRise in gas prices will increase cost of materials T3Continual rise in labor costs add to HD overheadcostsT3 9. Trend Evaluation ImpactAmericans cutting back on home T4improvement projectsCut-back on high-end kitchen and T4bathroom designs 10. Efficient supply-chain Brand loyaltymanagementPotential Influence over suppliers Centralized purchasingEntrantsoperations Price-cutting (Low)Supplier IndustryBuyer PowerRivalry Power (Medium)(Medium)(High) Substitutes Consumers spending Competition (Low) Brand Image restrictivemoney elsewhere 11. Market is saturated with many competitorswithin home improvement industry.Competitors Main competitors are Lowes (US) andKingfisher (overseas).Market Saturated market in US, so focus is onexpanding internationally. Saturation PriceDifferentiation Customer Service/Marketing 12. More competition gives customers a choice.Buyer Brand image is major indicator. Between Lowes and HD, some customersPowerhave a stronger preference for one over the other. Efficient supply chain management drivesSupplier expense and cost controls. Centralized purchasing operations and Power decreased inventories will also reduce supplier power. 13. Consumers can spend money elsewheresuch as buying a new car, or other highSubstitutes priced items. Another alternative is to save money usedfor home improvement projects. Strong influence over suppliers and Potentialdistributors, and price cutting haveincreased barriers to entry. Entrants Brand loyalty has also created a barrier toentry. 14. CompetitionOther home improvement storesElectrical, plumbing, and building material supply houses Lumber yardsSpecialty design stores andshowroomsHardware storesMail order firms Building supply stores Other retailers 15. KingfisherLowesHome DepotSales 10.4 billion48.82 billion 68.00 billionQuarterly -.90% 3.10% 3.80 %GrowthNet Income437 million 2.01 billion3.34 billion# StoresUK and Ireland: 550 stores in US2,244330 and CanadaChina: 41# Employees 65,399234,000 300,000Market Rank No. 1 (UK and No. 2 (Worldwide) No. 1China)(Worldwide) 16. Plumbing, electrical, & kitchen LowesHome Depot Hardware & seasonal Building materials, l umber, & millwork Paint & flooring AppliancesData on Kingfisher was not available for this analysis 17. Competitor StrategyKingfisher Improve sales margins and cost productivity Expanding proven growth business Establishing new opportunities for growth Capitalizing on key competitive advantagesLowes Focus on customer service Managing through economic downturn Preparing for economic recovery 18. Competitor ObjectivesKingfisher Open 240 stores this year New markets such as Brazil, India, Indonesia and eastern EuropeLowes Total sales increase 5-7% Store sales increase 2-4% Open 40-45 stores this year Entering joint venture for store in Australia 19. Competitor AssumptionsKingfisher Housing market will continue to riseLowes Unemployment, and interest rates will continue to rise Fuel and energy costs will remain the same or lower Personal income and consumer income will increaseCompetitor ResourcesKingfisher Highly qualified associatesLowes Metropolitan markets Availability of services, supplies and products 20. The home improvement industry is verysaturated. Lowes Companies Lowes is more concerned with managing thethrough the economic downturn, than expansion. Tough competitor domestically because of imageand customer service Kingfisher, LLC. Kingfisher is planning widespread expansion andwill be a tough competitor internationally. 21. Industrial/Consumer Market Organizational MarketsDemographics Mid 20s to Late 50sIndustry Home builders Males Contractors FlippersIncome Middle/working classLocation RuralLife-cycle New home-owners Metropolitan Existing home-ownersLocation Rural neighborhoods SuburbiaLifestyle9-5ers Family life 22. Industrial/ Organizational Consumer Market MarketsSize of purchase Medium to largeImportance ofHigh involvementpurchaseBrand loyaltyLowPurchasing Bulk/economies ofPurpose of use Repair procedurescale ImproveChoice criteriaDiversePurchasing High involvementbehaviorDistribution channel Delivery PickupImportance ofVery importantpurchaseChoice criteriaQuality Diversity Durable 23. Industrial/Consumer MarketOrganizational MarketsProduct similarity High Assistance from suppliers Economies of scaleSpecialty productsPrice preference Lowest price with high End alternativeBrand preferenceHighBrand preference Medium to High Desired featuresDiverse to givecustomers optionsDesired features Quality PriceQuality Diverse to appealto all customersQualityHighService requirementsWarrantiesProduct trainingService agreements 24. Marketis very fragmented and difficult tomeasure scope. Consumer Market Target market is mostly males with DIY homeimprovement projects Focus is on quality, price, and diversity Industrial/OrganizationalMarket Target on contractors who buy raw materials Focus on price and durability 25. The Original ModelSimpleDIY Focused One-stop-shopHelp and AdviceThe Old-New Model InfrastructureHigh-endBroad DIYers &AcquiringSupply firms suppliershome dcor FocusContractors The NEW ModelCustomer ServiceSimplifyRefocus Back to Basics In-store experience 26. Net Earnings Associates6000 370 3605000 3504000 3403000 3302000 320 3101000 300 0 2902005 20062007 2008 20092005 2006 2007 2008 2009Stores Net Sales 230080000 2250 2200 75000 215070000 2100 2050 65000 2000 1950 60000 19005500020052006 2007 2008 20092005 2006 2007 2008 2009 27. Market leader Strengths Brand recognition Inability to adjust businessWeaknesses model for other markets Broad market outlook 28. Emerging internationalOpportunities housing markets Housing market decline creates lessdemand Economic downturn makesThreats consumers want to save not spend Consumers spending less on homeimprovement 29. Resources CompetenciesThreshold ThresholdResources Competencies Personnel DesignThreshold Name recognition ConstructionCapabilities Company size Staffing & Training Financial strength Marketing 30. ResourcesCompetencies Unique ResourcesCore Competencies Economies of scaleCapabilities for Service delivery Site location Competitive DIY Experience Store openings Advantage Competitive expansion 31. HDsbusiness model has undergone manychanges, but are now going back to itsoriginal business model. HD has no room to improve in the USmarket, and must look overseas forexpansion. In order to do this, they must do ample research to know the market and cater to their needs IfHD utilizes its resources and corecompetencies they will have a competitiveadvantage in each market they enter. 32. 3530 Plumbing, electrical, & kitchen25 Hardware & seasonal2015 Builing materials, lumber, &10 millwork Paint & flooring50 2006 2007 2008 2009 2010 2011 33. StarsQuestion Marks BuildingHigh Hardware & Materials,SeasonalLumber & MarketMillwork Growth RatePlumbing,Paint & Electrical, & FlooringLow KitchenCash CowsDogs Relative Market ShareHigh Low 34. Overall Cost LeadershipDifferentiation Ace HardwareBroadCompetitiveScope Lumber Baldwin BrassLiquidatorsNarrowCost FocusDifferentiation Focus Competitive AdvantageLow Cost Higher Cost 35. High DifferentiationHybrid 18 2FocusedDifferentiationPerceivedProduct/servicLowe Benefits7 3price Strategies6 4destined forultimate failureNo Frills5 Low PriceHigh 36. HybridLow Cost No Frills Moderate selection of HD can compete for low Warehouse styleproductscost leadership becausestores Wide price rangeof: Simple marketinggives customer the Economies of scale strategychoice Supplier relationships 37. ComponentCommentInnovation HD is constantly using innovation to streamline the supply chain & distribution channels in order to keep a competitive edge.Market Development In current markets, HD is constantly researching options-if any- for store openings.Market Penetration HD will enter markets when it sees an opportunity for success in that market.Product DevelopmentHD will always offer the most competitive products at the lowest cost possible in order to stay in their current position as market leader.Research and Development HD will continue to research new markets for opportunities for advancement into them. 38. HD clearly has two product areas that are taking market share from the rest: Plumbing, electrical, & kitchen Hardware & seasonal HDcurrently competes in an overall costleadership strategy along with all other big-box home improvement stores. HDs current strategy consists of no-frillsstore design, low price competiveness andhybrid lines. 39. HD must concentrate on international markets Dont repeat mistake in China Fully research the market and find out what they want and cater to that If HD is going to compete with Lowesdomestically Continue to offer better customer service Emphasize change in market focus It wouldnt hurt to look into appliance retail Fight for brand loyalty