LOWE’S COMPANIES, INCORPORATED & THE HOME DEPOT, INCORPORATED Evaluation of Business Competition Strategies

Agenda Business Level Strategies Integrated Cost Leadership/Differentiation Strategy Lowe’s Companies Incorporated The Home Depot Incorporated Competitive Dynamics Competitor Analysis Future Objectives Current Strategy Assumptions Capabilities Conclusion

Business Level Strategies Before you begin  Who  What  How Manage customer relationships Positing through business-level strategies The four main strategies  Cost leadership  Differentiation  Focused cost leadership  Integrated cost leadership

Integrated Cost Leadership/Differentiation Strategy Different products/services at low cost Customers value differentiated features Defeating the five competitive forces  Customers are loyal  Lower consumer buying power  Higher profit margins  Entry barriers  Product/service substitutions are rare

Lowe’s Companies, Inc Large company with economies of scale Has a service based differentiation strategy  Lowe’s Creative Ideas  Showroom experience (Lowe’s Companies, Inc., n.d.)

The Home Depot, Inc Large company with economies of scale Has a service based differentiation strategy  FIRST phone  Mobile media  Web applications Serving customers when, where, and how (Merchant Circle, n.d.)

Competitive Dynamics The standard-cycle market Partially concealed competitive advantages Imitation of capabilities is costly Achieve a competitive advantage  Gain market share  Retain customer loyalty  Improve operations

Competitor Analysis Lowe’s and Home Depot are competitors  Operating in same market  Selling same products  Targeting same customers  Have similar resources Sizing up the competition  Future objectives  Current strategies  Assumptions  Capabilities

Future Objectives Lowe’s future objectives  Great service  Operational excellence  Innovative merchandising systems Home Depot’s future objectives  Customer service  Supply chain initiatives  Merchandising initiatives  Organized retail strategy

Current Strategy Lowe’s current strategies  Opening new stores  Gaining market share Home Depot’s current strategies  Closing stores  Improving logistics

Assumptions Lowe’s assumptions  Economy is recovering  Currently in a housing slump Home Depot’s assumptions  Economy is recovering  Currently in a housing slump

Capabilities Lowe’s strengths  Efficient merchandising  Increased sales  Strong logistics Lowe’s main weakness  Reliance on third-party manufacturers Home Depot’s strengths  Significant bargaining power  Improved supply chain  Improved customer satisfaction  Excellent proprietary brands Home Depot’s weaknesses  Mature market  Legal proceedings

Conclusion Lowe’s and Home Depot are competitors Both offer differentiated products/services at low prices Competitive dynamics enable companies to know the competition Companies conduct a competitive analysis to understand the competition Both companies have similar future objectives Both companies have opposite current strategies Both companies have the same assumptions about the economy Home Depot has more strengths and weaknesses than Lowe’s Home Depot is the leader in the home improvement industry

References Datamonitor. (2011a, December 02). Home Depot Incorporated: SWOT analysis. Retrieved from the Datamonitor 360 database. Datamonitor. (2011b, November 25). Lowe’s Companies Incorporated: SWOT analysis. Retrieved from the Datamonitor 360 database. Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2009). Strategic management: Competitiveness and globalization, concepts and cases (8th ed.). Mason, OH: South-Western Cengage Learning. Home Depot Incorporated. (2011) annual report. Retrieved January 30, 2012 from Lowe’s Companies Incorporated. (2011) annual report. Retrieved January 30, 2012 from nnual_report.pdf nnual_report.pdf Lowe’s Companies Incorporated. (n.d.). The Lowe’s Companies logo. Retrieved January 30, 2012 from Merchant Circle. (n.d.). The Home Depot logo. Retrieved January 30, 2012 from