Internal Risk Assessment †Home Depot Essay

Former president and psyche executive officer of the online auction site eBay stated, A business attracter has to keep their organization focused on the mission. That sounds easy, but it can be trem stopously challenging in todays warlike and changing business environment. A leader also has to motivate potential partners to merge (Whitman, n. d. ). These wise words expressed from a wise and highly palmy business leader speak soundly in relation to motivate employees and a sustaining a competitive business advantage. Along with a competitive advantage arises the need to assess the firms internal risk.departmental military strengths and weaknesses, strategical endurance, and financial foundation all substantiate the level of allowable tolerance for internal risks. A publicly traded global firm, The plateful shop, unified leads the world in sell building supplies and sign improvement goods. check to the 2009 Form 10-K tracked to the Securities and Exchange Commission ( SEC), the caller maintains 2,244 retail sites determined through and throughout the get together States including the Commonwealth of Puerto Rico and the territories of the U. S. Virgin Islands and Guam (U. S. ), Canada, China and Mexico (The kinsfolk memory one-year Report, 2009).The Home Depot wisely forecasts and assesses its risks while maintaining flexibility to assume increased or decreased influences affecting internal operations. check to the annual report for 2009, The Home Depots returns lowerd as comp ard with its 2008 earnings, as did stock prices. The company forecasted for this decline with the closure of several(prenominal) underperforming repositings in 2008. keen the ties of projected threats made capital resources available to concentrate on heighten strengths and astir(p) upon weaknesses. Company growth does not solely equate to the dupe of more real property.Growth produces many internal facets through improving and enhancing capabilities to overcome weaknesses within the organization. The companys fiscal 2009 operational outline maintains a centralized focal point in their core retail business. In this strenuous economy, they also realize that Success depends upon our ability to attract, necessitate and act highly qualified associates while also controlling our comminute be (The Home Depot Annual Report, 2009). Lean production with ameliorate employees becomes essential while awaiting the economys upward trend.Customer subjection and return business starts at the frontline through guest operate. The operating outline gears its strategic decisions toward raising improving capital allocation, controlling expenses to generate semipermanent value for its servingholders, the bottom line. To further the companys 2009 internal strategic stability, in 2008 it opted to exercise valuable capabilities whereby counteracting short-term and long-term threats with the closure of several underperforming stores, shelving new stor e construction projects, and parting with business contracts loosening hindering obligations.The reevaluation of the strategic business plan provided a means to target emerging opportunities that supported the restructuring planned objectives for 2009. Success of reducing threats evidenced opportunity to countersink the company for future growth in projecting a strengthened economy in forthcoming years. The Managements Discussion and compendium of Financial Condition and Results of Operations reveals 13 store openings with a immersion toward the Core retail business, investing in our associates and stores and improving our customer service (The Home Depot Annual Report, 2009).The report also ascertains that The slowdown in the global economy and weakness in the U. S. residential construction, housing and home improvement securities industrys negatively impacted our Net Sales for fiscal 2009 resulting in a 7. 2% declined Net Sales (The Home Depot Annual Report, 2009). The comp any maintains the decrease in gross revenue as a bring correlation to the underperforming store closures. Asserting that the weakened sales figures correlate to the competition, The Home Depot estimates a 21% market share in the United States. Reduced pricing drove an operations increase evidenced with the down-to-earth profit margin for fiscal 2009.Compared to last year, the operating income as a percent of net sales rose 1% for $4 one thousand million over 2008 figures. A substantial savings exhibited with a decline in Operating Expenses in that expenditures shrank 10. 9% from last year. Employing new merchandising tools maintenance the company in realizing lean production taprooms with its supply chain. Forecasting capabilities substantiated through The combined efforts of our supply chain, merchandising, operations and finance police squads, we reduced inventory by almost half a billion dollars in 2009, while at the selfsame(prenominal) time improving our in-stock positio n (Datamonitor 360, 2010).The organizations strengths gild an emphasis in positive marketing, as brand awareness continues to retain The Home Depot as the largest home improvement retailer in the world, boosting its negotiating influence concerning capital financing. Competitive positioning emanates as a strength through the human resources department as the charge to maintain employee knowledge geared toward the customer elevates as a long-term objective. The sales team continues to revolutionize efficient processes in bettering supply chain management to continue efficient production.Additional strengths, as found with its customer satisfaction measure through a store performance survey called, Voice of the Customer, is a marketing and research effort to sustain market share strengths. A new education program, Customer First, launched in 2009 afforded each employee training, by the end of that fiscal year, aimed at placing the customer first. This measure supports managements lo ng-term commitment toward putting the customer first and gaining feedback to achieve peak customer service. Supplying the customer with exclusive and well-known brands is also a precedence to distinguish public visibility and improve traffic flow.Top manufacturers carried solo at the retailer include Behr Premium Plus, Husky, Ryobi, Pegasus, and Glacier Bay. The Home Depots chief executive officer stated in the annual report that While our supply chain team is proceeding with the rollout of these new RDC facilities, we are also restructuring and improving other parts of our supply chain. We have unopen legacy distribution centers, optimized distribution center operations and enhanced our merchant vessels management systems, driving further supply chain efficiency in addition to the RDC rollout.Creating exclusivity and optimal vendor relations develops a stronghold on the supply chain, along with securing customer loyalty. A weakness that The Home Depot notes in their Annual Repo rt reveals that Sustained uncertainty regarding current economic conditions and other factors beyond our control could adversely affect demand for our products and services, our costs of doing business and our financial performance (The Home Depot Annual Report, 2009). The decline in new residential housing construction displays a diachronic low of 43. 5%, according to the census report, and as compared with 2008 data (U.S. census Bureau, 2009).This figure reveals strategic business planning to maintain company stability, at a minimum, although ideally growth is the target. Competition is noted as another(prenominal) weakness as it negatively affects pricing, causing an upset in sales figures should a competitor win over the organizations market share. A decline in product demand and services provided to customers also decreases the companys market share, lessening sales, company profits, and shareholder wealth. The stores mindfulness of the competition remains at the forefront of planning. harm to maintain attractive stores and to timely identify or effectively serve to changing consumer tastes, preferences, expectations as to service levels, spending patterns and home improvement inescapably could adversely affect our relationship with customers, the demand for our products and services and our market share (The Home Depot Annual Report, 2009). The risks associated with large companies are endless. Some of the place risks with this company include changes or a failure with information technology systems, alterations in regulations and laws or bank billing standards, and third party vendor relations.This guesswork list of risks, or weaknesses, create potential financial repercussions with the way the company conducts its business plan. Cognizance of each area should be taken into account when preparing the SWOT Analysis, along with the strategic business plan. Overlooking an item may prove a detriment in company earnings. The Home Depot continues its strategic business plan to include forecasting for internal changes and underdeveloped capabilities that positively affect profitability as evidenced in revenues, operating profit, and net profit.Recorded 2010 revenues of over $66 million, showed a decrease of 7. 2% over 2009, the operating profit was $4,803 million, for an increase of 10. 2% over the same period. The annual report indicated a net profit of $2,661 million, which was an increase of 17. 7% over the previous year (The Home Depot Annual Report, 2009). strategically assessing internal factors and employ its resources pertaining to the companys strengths and weaknesses position its stronghold, enduring as the largest home improvement retailer in the world.