Home Depot in China

Global Environment

* The political or legal framework of a country affects the business activities and practices.

* Expanding business in foreign country depends on the geographic location, economy structure, administrative differences and also the legal structure and clauses.

* Home Depot expanded its operations in Mexico, Canada and China.

* Home Depot was a success in Mexico and Canada.

* China was found to be:

 One of the highest ownership rates in the world.

 When measured in USD-exchange rate terms, it is the fourth largest in 2005 with $2.25 trillion.

 It the world's fastest growing economy with a population of 1.3 billion.

 China is the second largest economy in the world when measured by power parity.

 In 2005, real estate investment accounted for 8.65% of China's GDP.

 The home improvement market on the mainland is the most promising, with $50 billion in 2005.

Analysis

SWOT

Strengths

* Brand Awareness.

* Wide store locations.

* Variety of products for sale.

* Localized store facilities.

* Large employee base. Weakness

* Rapid expansion.

* Internal Promotions.

* Target only sub market- DIY.

Opportunities

* Very small market share existing.

* Overseas market.

* Partnership with large suppliers.

* Use internet technologies.

* Form advertising relationships.

* Increasing Real estate opportunity. Threat

* Merges.

* Local government.

* Low price competition.

* Could have been late in China.

 Home Depot can capitalize the existing small market share with their established brand value.

 Using their localized store facilities, they can cater the requirements of the local provinces in China. By doing so, they can consolidate the market in China.

 By coupling the increasing real estate with their store locations, Home Depot can enter the concentrated North/Northeast region.

 Rapid expansion of their stores may lead to the situation going out of control, but that can be converted into strength by using their large employee base, by training them.

 By consolidating the fragmented market, they can avoid the threat of merges.

 Forming large advertising relationships, Home Depot can advertise their large variety in products.

FIVE