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HOME DEPOT IN CHILE

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Omar Sher

on 30 April 2015

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Transcript of HOME DEPOT IN CHILE

HOME DEPOT IN CHILE

BY Omar, Kat & Kelly

Was set up in 1978 on the saying ;
''one-stop shopping for the do-it-yourselfer''
1981
, Home depot went public on NASDAQ
1984
, went on to NYSE
2001
, expanded into Mexico through its acquisition of the home way.

BACKGROUND OF HOME DEPOT

ARTHUR BLANK & BERNIE MARCUS
Question.1;

What strategy was Home Depot pursuing as it expanded into Chile- a multidomestic strategy, a global strategy or an international strategy? Explain.

They adopted the '' International strategy''


In 1994, started ''internationalization process'' by entering Canadian market through acquisition of Aikenhead's home improvement. (5 stores & 17 site reserves for future development.



Same Objective every time:


implement the same;
''one-stop shopping for the do-it-yourselfer''
in foreign markets.

They always targeted the DIY(Do-it-Yourself) market.

How did they enter foreign markets?

MARKET!
BENEFIT OF HOME DEPOT'S INTERNATIONALIZATION
Increased market share:
Accelerated Home Depot’s expansions & eliminated a potential competitors in those markets.
Greater revenue & return on their Initial Capital:
Reported Net sales of 71.3 Billion USD (Fiscal Year 2009).
For ex;Toronto, Canada’s biggest market.

locational advantages:
acquired access to prime locations.
Successful Factor; Customer Value & Relations:
Assortment, price and great customer services along with community support.
Q.2; What elements of the host environment affected the performance of Home Depot in Chile?

1.Market Share
2.Strong competition
3.Existence of substitutes

4.Cultural differences
5.Negative relationship with suppliers
fragmented home improvement industry:

Only 25% belong to 3 major retailers including Home Depot.
75% belong to ferreterias (small neighbour stores).

Cencosud & Sodimac were the main competitors.

Sodimac prepared an aggressive strategy to compete with Home Depot new arrival, owning over 50 shops.
Cencosud participated on variety of reatil businesses. They opened 5 stores in Santiago called Easy, with an ambition to expand nationally.
Substitutes:

Home Center or Easy; more comfortable and enjoyable for shopping.

Consumers:

Do it yourself startegy failed; Chileans did not have the time nor the knowledge of how to repair and maintain their houses themselves. They hired low cost workers to do it for them.
DIY market is undeveloped in Chile.
Suppliers:

at first, Home Depot had a good relationship with suppliers due to their market size.
However, employees and managers were prohibited to speak to compititors, which was viewed as "unfriendly".
Policies were strict and written in English instead of spanish.
locals did not like the attitude.
Therefore, suppliers stopped selling.

Q.3 why do you think Home Depot’s strategy failed? what could it have done to succeed in the Chilean market?
1.Chile’s custom and behaviors
2.Company main Objective(DIY) not sync with the customs

3.Unattractive Home Depot store
4.Poor relationships with Suppliers and Consumers
5.Poor Management styles and decision making
What could Home Depot it have done to succeed in Chilean Market?
3.Reassess their management styles & decision making
4.Building trust into the Home Depot corporate culture
2.Use different marketing strategy
effort has to be to understand the chilean corporate culture
apply different approaches based on the culture in the country

since 75% of the home improvement services in Chilean Market is sold to those small business
Home Depot should consider to sell part of their products via retail stores and selling the rest to those small business
Always consider advices from their partner especially when the partner had more than 100 years of retail experience in this marketplace.
select better executives to manage the company
1.Study the customs in Chilean Market

Q.4; Why do you think Home Depot became the largest home improvement chain in Mexico within just a few years?

Simply By Acquisition!
QUESTIONS?
Maintain good relationships with their partners/suppliers/consumers
Home depot failure is based on poor relationship with partners, local suppliers and consumers.
Hence, trust is vital.
References
Kirn, S. (2000). The home depot considers entering china. Warrington College of Business Administration, nil(nil), nil. Retrieved from http://bear.warrington.ufl.edu/oh/IRET/Cases/Home_Depot_China_Revised.pdf
Strom, S. (1994, February 9th). Company news; home depot buys chain in canada. The New York Times. Retrieved from http://www.nytimes.com/1994/02/09/business/company-news-home-depot-buys-chain-in-canada.html
TLC, H. (2003). The home depot. Retrieved from https://corporate.homedepot.com/Pages/default.aspx
1994: CANADA
1978: USA(FOUNDING)
1998: CHILE
2001: MEXICO
2006: CHINA
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