The Home Depot is one of North America’s biggest home improvement organizations. Since its creation in 1978, the company has accumulated significant operational experience and established strong and positive relations with its suppliers and customers. All this ensured the great expansion of the brand in Canada, Mexico, and the United States in terms of store numbers. Today The Home Depot accounts for 2317 retail stores in total (The Home Depot, n.d.). However, despite the success in North America, the company’s top managers almost did not make any attempt to expand the business outside this region, except for China, where the brand failed (Zheng, 2017). Although the company could grow significantly without exploring new markets even in recent years, it can be argued that very soon, following this strategy may not be as beneficial as before. For this reason, it is suggested that The Home Depot adopts a new strategy that seeks to expand internationally.
The Need for Change
The necessity for The Home Depot’s management to examine the possibility of entering other foreign markets is majorly based on the premise that the company has limited growth potential in North America. Indeed, considering all the firm’s and its competitors’ stores in the region, which account for approximately 38000 only in the U.S., it is reasonable to assume that supply will soon match the demand (Statista, 2022). It implies that there will be no need for more The Home Depot stores in the near future.
Additionally, geographic diversification would allow the company to diversify its risks and not be excessively dependent on the North American market. The former, for instance, can include the sudden drop in the local customers’ purchasing power, adverse events that would reduce the store’s popularity, or other losses related to the reduction of the firm’s market share. Moreover, foreign markets can offer the company new skillsets unavailable in Canada, Mexico, or the U.S. (The Economist Intelligence Unit, 2020). Last but not least, The Home Depot competitors that have already been expanding internationally or are considering this strategy would eventually have a greater competitive advantage than the former due to the economies of scale. For the reasons mentioned above, Home Depot must reconsider its long-term growth strategy.
International Expansion and its Impact on the Existing Employees
The decision to enter other foreign markets can significantly affect various employees currently working for the company. First of all, HR managers may encounter new challenges requiring additional training and knowledge. As such, the professionals would need to learn the cultural norms, customs, distinctive communication features, and local employment laws (The Economist Intelligence Unit, 2020). In addition, HR management would be required to decide how to effectively integrate new employees into the existing HR system (The Economist Intelligence Unit, 2020). Secondly, top management would need to adapt their overall development and operation strategies considering the new foreign markets as well as elaborate plans for each market separately. To accomplish this, the company leaders should also be aware of political, social, and economic conditions and trends in a certain region.
Next, all the middle-layer managers and frontline associates would encounter greater competition as well as new opportunities for professional growth. As for the former, the fact that international organizations provide channels for migration, some workers from other countries would want to be relocated to North America. This, in turn, would result in higher competition as the foreign labor force can offer new skillsets and cost cheaper. On the other hand, the new company branches abroad would require managers that are familiar with The Home Depot and its business and corporate cultures. Therefore, many workers in Canada, Mexico, or the U.S. may be consequently promoted.
Change and Potential Conflicts
Change is quite often associated with conflicts between various company stakeholders in the open form or as sabotage at any stage of business transformation. For instance, at the beginning of the change process, the firm’s leaders may face significant opposition from its investors because of the previous unsuccessful expansion attempt of The Home Depot in China (Zheng, 2017). In contrast, frontline employees and middle management may resist the expansion policy because it leads to changes in organizational structure and operations. In this respect, change is usually associated with reduced perceived control over work and increased fear of dismissal (Probst et al., 2018). Furthermore, certain groups of workers who will have additional responsibilities due to the expansion, such as in the case of HR managers mentioned above, may resist the change unless they are not adequately rewarded for their new duties.
At the implementation stage, as well as after the expansion to a certain market was accomplished, the conflicts may appear between the old and new workers in foreign countries. It is explained by the fact that people from various cultures have different attitudes towards work and relationships with colleagues and managers. In a similar vein, the language barrier can lead to misunderstanding and, as a consequence, conflict.
Practices to Resolve Potential Conflicts
There are several strategies that managers can perform in practice to manage the possible conflicts mentioned above effectively. First of all, to address fears concerning job loss, The Home Depot managers can ensure employees that there is no such kind of threat and instead emphasize the potential promotion opportunities. This can be communicated both personally by team managers and via email in the form of good newsletters, as such an approach would increase the trustworthiness of the information. As for the former, the research indicates that face-to-face communications are more impactful than other forms of interaction (Jensen et al., 2018). As for the latter, as top management cannot personally address each worker in all the stores, emails would serve as communication tools in this case.
Next, the firm’s top managers should explain that the benefits of the expansion are greater than the threats and convince them that entering the new market will be successful. This can be communicated during investor meetings, through emails, and personal communications as well. Generally, the communication channel is not as important as the way the managers present the information. In other words, the company managers should present the information in a succinct and analytical manner. For instance, they can present financial and sales projections and investigations of local demands and tastes, among other parameters.
Finally, The Home Depot should initiate training to increase the employees’ cultural awareness, especially those who would actively interact with their colleagues overseas. Previous research indicates that better cultural intelligence is negatively associated with an organization’s frequency of conflict appearance (Clark & Polesello, 2017). A corporate culture that recognizes and respects the diversity of its workers can be promoted through many channels, including personal and group communications, emails from top managers, brochures, and educational videos. As such, the frequency and intensity of communications would allow for cultivating cultural awareness faster.
Overall, it was argued that one of the crucial changes that Home Depot should implement in the near future is the expansion to foreign markets outside of North America. It is shown how this decision can affect various employees and even result in open opposition or sabotage. For this reason, the measures such as employee training, investor persuasion, and open communication with employees were suggested in order to prevent possible conflicts.
Clark, J. M., & Polesello, D. (2017). Emotional and cultural intelligence in diverse workplaces: Getting out of the box. Industrial and Commercial Training, 49(7/8), 337-349.
Jensen, U. T., Moynihan, D. P., & Salomonsen, H. H. (2018). Communicating the vision: How face-to-face dialogue facilitates transformational leadership. Public Administration Review, 78(3), 350-361.
The Home Depot. (n.d.). Built from all the right materials.
Probst, T. M., Jiang, L., & Benson, W. (2018). Job insecurity and anticipated job loss: A primer and exploration of possible. In U. Klehe & E. van Hooft (Eds.), The Oxford Handbook of Job Loss and Job Search (pp. 31-53). Oxford University Press.
Statista. (2022). Do-it-yourself and home improvement stores in the United States from 2017 to 2025.
The Economist Intelligence Unit. (2020). Growing pains: The HR challenges of international expansion. Always Designing for People.
Zheng, S. (2017). The Failure of Home Depot in China-A Case Study. Business and Management Studies, 3(4), 54-58.