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The Home Depot, Inc. Forecast And Recommendations

2939 words - 12 pages

When the housing market boomed, so did construction companies and building material suppliers. Every aspect of construction had an increase in demand from development companies looking for a large supply of building materials, and from a large consumer group of new homeowners. As a result, a company such as The Home Depot was able to capitalize from the success of the construction and home improvement markets. Unfortunately, the downturn in the economy is truly affecting Home Depot's revenue. However, evaluating market conditions and market trends will help provide the company with the needed data to help predict the future market of Home Depot and suggestions to consider in order to overcome the economic challenges of the upcoming months.The Home Depot, Inc., which was founded in 1978, is the world's largest home improvement store that operates 2,274 stores throughout North America, Puerto Rico, Mexico, China, and Canada. The company is the second largest retailer in the United States following Wal-Mart, and has approximately 300,000 employees as of the last quarter in 2008 (The Home Depot, Inc., 2009). The company supplies almost 45,000 items which are not limited to but include: lumber, floor and wall coverings, tools, paint, appliances, fixtures and almost every necessary item for home improvement. The company marketed itself to the large do-it-yourself consumer group and created the slogan, "You can do it. We can help."Although The Home Depot dominates the home improvement market it is far from a monopoly, it is however structured as an oligopolistic firm. As an oligopoly market structure, The Home Depot has very few sellers with similar or identical products, but has numerous amounts of buyers. With competitors such as, Tru Value, Orchard Supply Hardware (OSH), Ace Hardware, and its largest competitor, Lowe's, The Home Depot must take into account the actions of its competitors.During its initial stages, The Home Depot dominated the do-it-yourself, home improvement market. Although Home Depot entered the oligopoly market structure where there were existing companies offering home improvement remedies, such as Wal-Mart, K Mart, and OSH, none of these companies offered do-it-yourself remedies at such a large scale. With Home Depot's number one contender being Lowe's, offering comparable prices with the same do-it-yourself warehouse environment, Home Depot is still in the lead as the largest home improvement retailer in the US, even with the current economic crisis.Current Conditions and Market TrendsWhen the economy is in a downturn, indicators such as the unemployment rate, number of new building permits, money supply, and mortgage interest rates provide a representation of what economic issues businesses may face in the upcoming months. Therefore, monitoring such indicators will help determine the future market conditions and help identify the necessary actions to Home Depot should make to maximize its profits.It is a well known that...

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