COMPETITIVE CORE RESOURCE ANALYSIS

We have identified four core resources:

1)        Personnel - Home Depot’s personnel represents the raw labor that will work in the stores.  This raw labor will be trained on products and customer service.  Customer surveys indicate that the service that the personnel provide to the customers is just as good as its competitors.  Due to Home Depot’s excellent image this resource can be of great competitive advantage, which would be hard for the competitors to imitate.

2)         Company Size  - Home Depot is the largest home-center warehouse.  It has over 900 stores in the U.S., Canada and Latin America.  The size of the company in terms of the number of stores, gives Home Depot a tremendous price advantage over its competitors. 

3)        Name Recognition –Due to the large number of stores in a particular region, people recognize Home Depot as the home-center warehouse to go to.  In addition, Home Depot promotes its name recognition by sponsoring NASCAR and hosts its own golf open.  This type of name recognition gives Home Depot a competitive edge over its competitors.

4)        Financial Strength -  Home Depot achieved over $30 billion in net sales in 1999, generating profit than its competitors.  The large amount of profit gives Home Depot its financial strength.  Home Depot’s financial strength is a competitive advantage over its competitors.  It has more money to spend on advertising to increase its Name Recognition and to expand even further.

Core Resource - Core Competence Realtionships

                                                                                       Core Resources        

    Relationship between Personnel and Economies of Scale – (weak) Personnel has a weak relationship to Economies of Scale.  Personnel does not affect the economies of scale.  Personnel does not have an effect the large volume of products to, so that prices are lower.

    Relationship between Personnel and Service Delivery Process  - (strong) Personnel has a strong relationship to service delivery process.  Personnel has a direct input into the delivery of services.  Employees in the stores provide customer service.

    Relationship between Personnel and Competitive Expansion – (weak) Personnel has a weak relationship to competitive expansion.  It does not directly contribute to the expansion of Home Depot.

    Relationship between Personnel and DIY Experience – (strong) Personnel has a strong relationship to the DIY Experience.  Personnel is an integral part of part of the experience in the stores.

    Relationship between Company Size and Economies of Scale – (strong) We have defined company size to be the number of stores Home Depot has.  Company size has a very strong relationship to economies of scale.  The number of stores that Home Depot has directly affects its economies of scale, because it can obtain a large volume of it products.

     Relationship between Company Size and Service Delivery Process – (medium) Company size has a medium relationship to service delivery process.  As the number of Home Depot stores increases, the service delivery process will also need to be adjusted to accommodate the new stores.  However, the service delivery process is not being changed completely. 

     Relationship between Company size and Competitive Expansion – (strong) Company size has a strong relationship to competitive expansion.  A large amount of stores results on high revenues, providing Home Depot with money to spend.

     Relationship between Company Size and DIY Experience – (weak) Company size has a weak relationship to the DIY experience.  The number of stores Home Depot has does not affect the DIY experience of the customers in the store.

     Relationship between Name Recognition and Economies of Scale – (medium) Name recognition has a medium relationship to economies of scale.  Home Depot’s name does affect the economies of scale that it achieves, with advertising and consumer awareness.

     Relationship between Name Recognition and Service Delivery Process – (medium) Name Recognition has a medium relationship to the service delivery process.  Home Depot’s name does not directly affect the service delivery process.  Customers are not aware of the actual process.  They are only aware of Home Depot’s name and the type of store to expect.

     Relationship between Name Recognition and Competitive Expansion – (medium) Home Depot’s name has a medium relationship to the competitive expansion.  Home Depot’s name recognition helps to increase its sales and customer awareness.  This generates more money to spend on expansion.  The expansion also helps to increase its name recognition.

     Relationship between Name Recognition and DIY Experience – (strong) Name recognition has a very strong relationship to the DIY experience.  Home Depot’s name affects the positioning of the company with the customers’ minds, affecting their DIY experience.  In sum, Home Depot is part of the DIY experience.

     Relationship between Financial Strength and Economies of Scale – (medium) Financial strength has a medium relationship to economies of scale.  The financial strength that Home Depot has does not directly affect the activity of providing a large volume of its products to keep prices down.

     Relationship between Financial Strength and Service Delivery Process – (weak) Financial strength has a weak relationship to the service delivery process.  Home Depot’s financial strength has no input to the actual process of service delivery.

     Relationship between Financial Strength and Competitive Expansion – (strong) Financial  strength has a very strong relationship to competitive expansion.  Home Depot is able to expand as it is currently doing, because of its financial strength.  It has a tremendous amount of capital to spend on opening new stores.

     Relationship between Financial Strength and DIY Experience –  (weak) The strength that Home Depot has financially does not affect the DIY experience of its customers.

 Competitive Benchmarking of Core Resources

     Personnel – (Good) Home Depot’s personnel is competitive with the other companies. Its biggest          competitors also scored the same.  Home Depot can improve the use of  this resource to get a competitive edge over its competitors.

     Company Size  - (Excellent) Home Depot is by far the largest DIY home-center compared to its competitors.  It has more stores than its competitors.  This provides the company with more revenue and it gives the company an excellent competitive advantage in increasing customer awareness, name recognition and financial strength.

     Name Recognition – (Excellent) Home Depot promotes its name far more than its competitors.  It sponsors the NASCAR and hosts its own golf open.  In addition, it also does direct marketing.  These are all activities to increase familiarity that customers feel with Home Depot and its products. 

     Financial Strength  - (Excellent) Home Depot has the most financial strength in comparison to its competitors.  It has generated more profit than its competitors.  And it uses the money to advertise Home Depot and its products, as well as to expand.  This gives the company a larger competitive edge, which the competitors do not have. 

 Competitive Goal for a Core Resource Performance

The highest Core Resources Competitive Score in the home improvement industry is 20, comprised of the following Core Resources and the corresponding competitive scores:

        Personnel (5)

        Company Size (5)

        Name Recognition (5)

        Financial Strength (5)

Define Core Resource Performance Percentage

In comparing the firm’s actual utilization of its core resources and its competitive goal, The Home Depot shows the highest Core Resource Performance percentage (95%), comprised of the following percentages:

        Personnel (80%)

        Company Size (100%)

        Name Recognition (100%)

        Financial Strength (100%)

Among the competition, Sears Hardware follows with 73%, Lowe’s with 61% and Menard’s with 35%.

Define the Core Resource Competitive Scores and Ratios

Befitting its current status as the market leader and demonstrating the strongest core resources, The Home Depot has the competitive advantage  with in terms of core resource-competitiveness with a score of 19, the highest in the industry whereas Sears  Hardware follows closely with a score of 15, trailed by Lowe’s at 12 and Menard’s at 7.

Core Resource Value and Cost Contribution

Home Depots core resource value contributions are distributed relatively evenly across the four core competencies. Competitive Expansion shares the largest percentage of core resource contribution followed by DIY Experience, Service Delivery Processes, and Distribution and Logistics.

Select Core Resources for Strategic Development

Based on the core resource value and cost contribution scores, we can select resources for development that contribute the most for the competitive advantages in core competencies.

Personnel

            Personnel are the most important resource. They contribute substantially to the service delivery process and DIY experience which also happen to be the core competencies with the highest value contribution/cost efficiency. For the home improvement industry, personnel are they most significant resource which contribute to the important customer value factors.

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