The Home Depot Firm’s Strategic Management

Topic: Strategic Management
Words: 2041 Pages: 7

Technology Plan for Strategic Implementation

The technology plan for strategic implementation includes the purchase of new software and updates for the replacement and modernization of equipment. Further, after replacing outdated equipment, software configuration and training of personnel in its use are necessary (Zhao et al., 2021). To improve the online marketing of Home Depot, the company’s website should be updated, followed by the introduction of backup systems and security procedures with the use of appropriate technological personnel. After that, it is necessary to develop policies for the use of computers and other technological devices.

Management & Organization Revisions on Strategic Implementation

Management revisions on strategic implementation for Home Depot will include a transition from a liberal to a democratic management style. A liberal style requires a team of professionals who are very difficult to find and convince to come to the project. The team also has a lot of freedom, so it can and disrupt deadlines. Therefore, the liberal style will be used at Home Depot only when working with very experienced employees — for example, top management (Zhao et al., 2021). For the rest of the employees, a democratic management style will be applied, giving employees less freedom.

Organization revisions on strategic implementation will be aimed at adjusting the employee motivation system in order to suppress resistance to change. The first condition for organizational revisions at Home Depot will be to increase employee motivation. Changes in the company forces employees to act in a new way, that is, it causes changes at the level of personality and entails a stressful state, which leads to resistance to change (Zhao et al., 2021). Organization revisions on strategic implementation at Home Depot will help each employee to be aware of their beliefs, identify and critically evaluate their initial attitudes in order to begin to change their own behavior and successfully achieve the goals of the organization.

Community Involvement & Social Responsibility

The necessary community involvement in the process of implementing changes at Home Depot will be customer loyalty. Community members must remain loyal to the brand after the changes are implemented. Social responsibility will consist in understanding that employees and the company as a whole need to get used to changes in order to get into the usual rhythm of work. Therefore, community members should not be dissatisfied with employees who may work a little slower than before the introduction of changes, due to familiarization with new technologies. Moreover, social responsibility will include a willingness to support changes by adopting them (Phillips et al., 2019). Community will need to express their opinion as clients, honestly and objectively provide feedback on what is happening.

Development, Milestones, & Contingency/Exit Plan

The development of strategic implementation should take into account all the circumstances that arise. In order to identify the problems that have arisen, it is necessary to regularly analyze the results obtained at each stage (Osthuizen et al., 2005). If the indicators have become worse, then it is a sign that the external environment has a negative impact on the development of strategic implementation, so a number of changes should be made. The first milestone of strategic implementation at Home Depot occurs after the formation of a new vision in the organization’s team is carried out through the socialization of its members. The next milestones come at the stage of complete replacement of the old norms and procedures of activity. The final milestone in Home Depot can be considered the introduction of innovations into all structures of the organization and borrowings from other system units of the external environment.

The contingency plan for strategic changes at Home Depot will consist of carrying out a number of measures to reduce the scale of the emergency situation. First of all, the staff should be notified and a general meeting organized. Further, a preliminary assessment of the possible development of changes will be carried out, and measures will be taken to correct them. The exit plan for strategic changes at Home Depot will consist of a gradual return to the initial state. The former organizational structure of Home Depot will be updated and approved. Then the management structure will be brought into line with the previously adopted one. After these events, the procedure for returning employees to work with more familiar equipment will be regulated. Next, the existing questionnaires with feedback from customers will be detailed to study customer satisfaction for sufficient information on the success of the exit plan.

The Financials

Financial Objectives

The main financial goal of Home Depot is to increase the market value, taking into account the maximum reduction of risks. It can be achieved by implementing such financial objectives as accumulating the necessary amount of material resources, achieving profitability and balancing equity, and bringing borrowed capital to compliance with regulations. Moreover, at Home Depot, the planned goals of finance are to optimize the asset structure and reduce financial risks.

Sales & Expense Forecast

In forecasting Home Depot sales, the figures are 10-15% higher than achieved in the previous reporting period (Nobre & Neves, 2019). This is due to the fact that the company has already built a sales system, and each manager has minimum acceptable performance indicators that will increase as a result of the changes. For the first period after the implementation of strategic changes, Home Depot can sell 1.2 million units of goods (Williamson & Babcock, 2020). This is due to the fact that the product already has a history of sales in the market, and when preparing the target forecast were improved as a result of changes. The average value of the expense forecast for each quarter for all years for Home Depot is 0.6% for the first, 0.8% for the second, 1.5% for the third, and 0.9% for the fourth (Williamson & Babcock, 2020). Excluding the seasonal component, the fluctuations of which are reduced due to strategic changes, the forecast values of the expense forecast is reduced by 0.7% (Zhao et al., 2021).

Break-Even Analysis

The average bill for building materials at Home Depot is $150 (Williamson & Babcock, 2020). Then the break-even point for the month as a result of strategic changes will consist of the following indicators. The expenses consist of renting premises, salaries to employees and the purchase of the goods themselves. After the calculation, it turns out that the break-even point for Home Depot will be at least 1000 customers with an average check (Williamson & Babcock, 2020).

Financial Control

Financial control at Home Depot faces such tasks as promoting a balance between the need for financial resources and the size of the organization’s cash income and funds. It is also aimed at identifying intra-production reserves for the growth of financial resources, including reducing costs and increasing profitability (Zhao et al., 2021). Financial control at Home Depot aims to promote the rational use of material assets and monetary resources in organizations, as well as proper accounting and reporting.

Financial Statements & Ratio Analysis

Home Depot’s cash flow financial statement contains all receipts and expenditures of the company’s funds for the period. It lists items such as an advance to employees, rent, purchase of goods and a loan to the owner. Moreover, Home Depot regularly provides a profit and loss statement. It clearly illustrates such indicators as revenue, cost, profit before tax, tax and net profit (Nobre & Neves, 2019). These two reports are considered in relation, since the first report shows the actual movement of funds, and the second — the obligations that the business has assumed.

Ratio Analysis

The following ratio of revenue, costs and profit of Home Depot is taken as the initial equation for ratio analysis. The profit of an organization consists of deducting fixed and variable costs from revenue. Revenue at Home Depot is presented as the product of the unit sales price and the number of units sold, and costs are recalculated per unit of product. Thus, at the point of critical production volume, $175,000 (Zhao et al., 2021). Thus, ratio analysis was used to determine the volume of sales required to obtain the desired profit.

Income Statement: Annual

The total final figures in the profit and loss statement for the year period show how and from what the financial result of Home Depot has developed. They provide income that increases the profit received by directly attributing it to capital, indicating the amount of the total profit of the period adjusted for these incomes. The document also provides Home Depot’s profits and losses per 1 share (Zhao et al., 2021).

Income Statement: Three-Year Projection

The following indicators were revealed in the Home Depot profit and loss statement for three years; the results for all three years have been increasing (Phillips et al., 2019). According to accounting data, the figures calculated according to the report coincided with similar turnover and totals for the corresponding accounting accounts. In the income statement for three years, no amounts with a negative sign were recorded. Profit growth was recorded at 90% for core business and 91% for other income and expenses (Osthuizen et al., 2005).

Cash-Flow Projection: Monthly

Monthly cash-flow projection Home Depot reflect three types of company activities: operational, investment and financial. Income from the sale of goods and the provision of services and other sources of income, such as rental payments for the granting of rights, commissions, and so on, were attributed to the inflow of Home Depot funds for the month (Osthuizen et al., 2005). Payments to suppliers of construction goods, employees to the payroll and payment of taxes, insurance premiums and excise duties were transferred to the outflow of funds from Home Depot for the month.

Cash Flow: One-Year Projection

The largest cash flow indicators during the year for Home Depot arose within the framework of the company’s investment activities. The inflow of funds to Home Depot arose from the sale of fixed assets and other non-current assets, shares of other companies, as well as shares in joint ventures and from the repayment by other parties of loans issued to them (Williamson & Babcock, 2020). The outflow, in turn, was caused by the costs of acquiring fixed assets and other non-current assets, shares or debt instruments of other companies, as well as shares in joint ventures.

Balance Sheet: Annual

The annual balance sheet of Home Depot allows to see not only the specific financial and economic situation at the reporting date, but also to analyze its change in comparison with the data for the past years. Taking into account long-term development plans, it makes it possible to make a forecast of the company’s activities and, accordingly, a forecast balance sheet for the year (Osthuizen et al., 2005). The initial data presented in the Home Depot balance sheet are accounting data, which are confirmed by the results of the inventory. They include transportation and procurement costs, fixed assets, research and development work and intangible assets.

Balance Sheet: One-Year Projection

In one-year projection Home Depot, a significant part consists of data on financial investments, which are loans issued and monetary investments in banks. Work-in-progress, inventory items and contributions to the social insurance fund are also indicated (Phillips et al., 2019). The financial result in the annual balance sheet is the result of the activity for the year, while not being a negative value.

List & Sources of Funds

The sources of financial resources for Home Depot are funds and cash flows that are directed to the implementation of monetary expenses and deductions necessary for the implementation of the company’s activities. Home Depot’s own sources of financing include authorized capital, additional capital and profit (Nobre & Neves, 2019). Home Depot’s borrowed sources of financing include: loans from banks and credit organizations, as well as funds from bond issues.

Assumptions Sheet

When forming the Home Depot financial plan, the following basic conditions and assumptions were accepted. The calculation was performed for a period exceeding the payback period of strategic changes and repayment of borrowed funds (Nobre & Neves, 2019). At the stage of investment and development of production capacities, calculations were made on a monthly basis, then by quarters. Calculations in current prices were performed during risk assessment and sensitivity analysis of the project as an additional variant of the basic calculation in constant prices.


Nobre, J., & Neves, R. F. (2019). Combining principal component analysis, discrete wavelet transform and XGBoost to trade in the financial markets. Expert Systems with Applications, 125(1), 181-194.

Osthuizen, K., Both, E., Robertson, J., & Montecchi, M. (2020). Artificial intelligence in retail: The AI-enabled value chain. Australasian Marketing Journal, 8(27), 1-10.

Phillips, F., Libby, R., & Libby, P. (2019). Fundamentals of financial accounting. New York, NY: Mc Graw Hill Education.

Williamson, S. K., & Babcock, A. (2020). Attracting long-term shareholders. Journal of Applied Corporate Finance, 32(2), 78-84.

Zhao, Y., Yu, Y., Shakeel, M., & Montenegro-Marin, C. E. (2021). Research on operational research-based financial model based on e-commerce platform. Information Systems and e-Business Management, 282(1), 232-240.

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