Home Depot’s Problems
Home Depot is a well-known and large American company that offers a wide range of construction products and tools. Although this corporation is quite successful to date, it had several problems with output not so long ago. At the company, two points were considered problematic: the CEO Nardelli’s “notoriously imperious manner” and the decline in sales in retail stores (Grow, 2007, para. 4). The first issue involved constant Nardelli’s disputes with shareholders, who were dissatisfied with the lack of results of the company’s shares growth and the incredibly high salary that Nardelli got. The second problem was that in 2006, sales in Home Depot declined 5.1%, while the rival Lowe’s sales only increased (Grow, 2007). Therefore, the primary output problems of the organization caused decreasing in profit.
The Causes of the Output Problems
These issues mainly arose because employees and shareholders did not accept Nardelli’s style of ruling the organization. Initially, his ambitions, desire to outperform competition firms, and “need to be front and center” had contributed to sales growth from $46 billion in 2000 to $81.5 billion in 2005 (Grow, 2007, para. 6). However, the firm started having problems: sales declined, but Nardelli’s salary grew. Employees began to doubt that “they were working for a person who put the company’s interests ahead of their own” (Home unimprovement, 2007, para. 27). Thus, since, in most cases, input issues cause problems with output, Home Depot’s challenges arose due to inner tension between staff and its CEO and Nardelli’s centralization.
Recommendations for Remedying These Problems
It is possible to solve the output problems of Home Depot due to the implementation of several changes in the firm’s organization. Firstly, I would recommend a decentralized management system as the primary way to rule the company. It would contribute to increasing employees’ trust in officers and expanding wholesaling business (Hogan, 2006). Secondly, it would be helpful to show the workers that they are highly appreciated and each of them is important. Finally, excellent customer service and a wide range of products would provide thousands of clients and good profits. Thus, solving these problems would make Home Depot even more prosperous.
References
Grow, B. (2007). Nardelli: Out at Home Depot. Business Week. Web.
Hogan, M. (2006). Big box battle: Home Depot vs. Lowe’s. Business Week. Web.
Home unimprovement: Was Nardelli’s tenure at Home Depot a blueprint for failure? (2007). Knowledge@Wharton. Web.