The comapny is Home Depot. The countries are Brazil, Argentina, Chile. Executive
ID: 357061 • Letter: T
Question
The comapny is Home Depot. The countries are Brazil, Argentina, Chile.
Executive Summary [Half a page]-2pts
A. Who (company), what (product), where (country), why (identified market opportunity), how (mode of entry), results (anticipated profits and growth over 3 years horizon)
3. Your Company in its Competitive Environment. [2-3pp]-6pts
A. Key elements of product/service: What it is, how it is made and sold
B. Profile your domestic target customer market segment: key characteristics, purchasing criteria
C. Key features of your industry: major trends (e.g., market maturity, innovation, etc)
D. Major competitors: competitive advantages? [Note: Data on major competitors' size, profit margins, market share (US, foreign if available), should be placed in an Exhibit]
E. Competitive advantages/disadvantages of your company in its competitive environment?
F. Relevant international experience of your company? [Details in Exhibit]
i. Answer the question, "Why should we go international?"
ii. Has your company gone abroad before? Degree of success and reasons for it?
iii. Analyze degree of global standardization vs. local responsiveness
Explanation / Answer
A. Who (company), what (product), where (country), why (identified market opportunity), how (mode of entry), results (anticipated profits and growth over 3 years horizon)
Home Depot is an American home improvement supplies retailing company that sells tools, construction products, and services. Its now planning to expan to Latin america as countries like Brazil, Argentina & Chile are developing economies & thus have very high potential for products like tools, construction products & services. These countries are currently developing infrastructures, thus all these products are in high demand.
Company is planning to start their subsidiary in these conuntries to cash in its already exciting US brand name, thus will have an marketing edge over the local competitors.
Company is expecting high growth on year on year basis, with expansion plans to launch stores in all the major cities. With profitability at 10%, company can easily grow at 100% on year-on-year basis.
A. Key elements of product/service: What it is, how it is made and sold
Product & Services: Outdoor & Bath product & Services.
- Home services: Outdoor installation, Flooring installation, door & windows
- Customized solutions
All products to be sourced from exicting manufactures, as majority of the products are already being sourced internationally (Keeping in mind sourcing cost). Same channel can be used.
Intial ads & discounts to be given to attract the customers & more imphasis to be given on complete home solutions rather than just product.
B. Profile your domestic target customer market segment: key characteristics, purchasing criteria
Target Customer: To start with higher income & Mid-high income customers to be targeted to exploit their purchasing power & intent to buy an International brand, also they will have disposable income to spend on value added services & products.
Customer's Purchasing criteria: Main attraction point will be one point solution to all the customer's need. Thus, instead of running to a no. of services like plumbing, tilling, outdoor fittings, etc, It will be one stop shopping & will provide hassle free service.
C. Key features of your industry: major trends (e.g., market maturity, innovation, etc)
Industry Trends: Market Maturity: This is a matured market in a developed economy like US but in brazil, Argentina & chile its a growing industry as Individual's income is increasing & thus the purchasing power.
Innovation: Company will bring in more innovation & years of experience in this field with newer designs & concepts.
Capital Requirement: This will be a capital intensive industry, as company will launch its own stores, which attracts huge investments.
D. Major competitors: competitive advantages? [Note: Data on major competitors' size, profit margins, market share (US, foreign if available), should be placed in an Exhibit]
Home Depot's major competitors are Lowe's & Bed Bath & Beyond. BBB is biggest in home solution & product provider, but exact competitor is Lowe's which in exactly same business area but whose revenue is much lower (Approx.FYI 2017: Lowe's: $ 65 Billion & Home Depot: $ 100 Billion).
Net Incomes: Home Depot: FYI 2017: $8.6 Billion & Lowe's : $ 3.06 Billion.
Thus, Home Depot holds are much bigger market share compared to Lowe's.
E. Competitive advantages/disadvantages of your company in its competitive environment?
Advantages: - Existing International Brand Name
- Support of US parent company to infuse huge initial investment.
- International sourcing, thus insuring good quality products.
Disadvantages: - New territory to work, thus offers cultural barriers.
- To compete with cost effective local competitors, who already have good customer base.
- Bulky model, which increases company's liabilities in case of unsuccessful stint.