Case Analysis - Home Depot
Set up in the late 1970s, Home Depot grew rapidly over the 1980s and early 1990s, adding stores at the average annual rate of 20 percent. In the late 1990s, the company's comparable store growth rate began declining. It was also experiencing operational difficulties due to its tardiness in developing systems to manage its rapid growth. In this situation, the board decided to bring new leadership to the company that can focus on new technologies, build efficiencies and reallocate resources while keeping the core culture intact that was built on principles like providing “Excellent Customer Service”, “Taking Care of the Employees”, “Recognizing, and Promoting Entrepreneurial Spirit” and “Creating Shareholder Value”. For this reason, The Home Depot board hired Bob Nardelli as the CEO of the company in 2000.
However, despite brining more operational discipline to the company the Nardelli failed to keep the company culture intact and convince shareholders to see Home Depot as strong candidate for their Return on investment. This case study analysis is primarily based on discussion around changes implemented by Nardelli at Home Depot between 2000 to 2007 and especially examine the reasons for Home Depot comparatively low shares price despite its improved financial performance in Nardelli’s era.
When Nardelli became the CEO of Home Depot in late 2000, there was widespread interest in industrial circles. Home Depot had thus far been managed only by its founders (Marcus until 1997 and then Blank till 2000). Nardelli was brought to Home Depot to implement new initiatives that reduce overall cost, increase profit margins and raise stock price. Over six to seven years of his tenure, Nardelli accomplished his financial goals but failed to raise share prices or create value for Hope Depot shareholders.
Even though the stock is right where it was when Nardelli got the job, the company's market value of Home depot shares dropped 40% between 2000 to 2006 period.
However, despite brining more operational discipline to the company the Nardelli failed to keep the company culture intact and convince shareholders to see Home Depot as strong candidate for their Return on investment. This case study analysis is primarily based on discussion around changes implemented by Nardelli at Home Depot between 2000 to 2007 and especially examine the reasons for Home Depot comparatively low shares price despite its improved financial performance in Nardelli’s era.
When Nardelli became the CEO of Home Depot in late 2000, there was widespread interest in industrial circles. Home Depot had thus far been managed only by its founders (Marcus until 1997 and then Blank till 2000). Nardelli was brought to Home Depot to implement new initiatives that reduce overall cost, increase profit margins and raise stock price. Over six to seven years of his tenure, Nardelli accomplished his financial goals but failed to raise share prices or create value for Hope Depot shareholders.
Even though the stock is right where it was when Nardelli got the job, the company's market value of Home depot shares dropped 40% between 2000 to 2006 period.