Home Depot SWOT Analysis
“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.
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Home Depot SWOT Analysis
Strengths, Weaknesses, Opportunities and Threats (SWOT)
Location of Factor
TYPE OF FACTOR
Favorable
Internal
Strengths
Unfavorable
Weaknesses
¾ Strong market position
¾ Higher returns than
competitors
¾ Sub optimal capital
structure
¾ Product recall
¾ Balanced brand mix
External
Opportunities
¾ International presence
¾ Growing popularity of
power tools
¾ Increasing online sales
Threats
¾ Intense competition
¾ Slowdown in US
housing market
¾ Rising labor wages
in the US
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