Case study case 10 home depot implements stakeholders’ orientation

NATIONAL ECONOMICS UNIVERSITY SCHOOL OF ADVANCED EDUCATION PROGRAMS CASE STUDY CASE 10 HOME DEPOT IMPLEMENTS STAKEHOLDERS’ ORIENTATION Student: Hoang Hang Nga Student ID: 11224494 Class: International Business Management 64C Teacher: Ph.D Nguyen Bich Ngoc TABLE OF CONTENT NATIONAL ECONOMICS UNIVERSITY SCHOOL OF ADVANCED EDUCATION PROGRAMS HOME DEPOT IMPLEMENTS STAKEHOLDERS’ ORIENTATION TABLE OF CONTENT  Summary MANAGING CUSTOMER RELATIONSHIPS ENVIRONMENTAL INITIATIVES EMPLOYEE AND SUPPLIER RELATIONS NEW TECHNOLOGY INITIATIVES .5 A STRATEGIC COMMITMENT TO SOCIAL RESPONSIBILITY CONCLUSION .6  On the basis of Home Depot’s response to environmentalist issues, describe the attributes of this stakeholder Assess the company’s strategy and performance with environmental and employee stakeholders Company’s impact on Natural Environment: Environmentalists affect the Company’s Practices: Assess the company’s strategy and performance with environmental and employee   Environment Employee .9  As a publicly traded corporation, how can Home Depot justify budgeting so much money for philanthropy? What areas other than the environment, disaster relief, and affordable housing might be appropriate for strategic philanthropy by Home Depot? 10  How is Home Depot working toward reducing its weaknesses to increase its stakeholder orientation? 11  Timeline 1978 Bernie Marcus and Arthur Blank were fired from Handy Dan Home Improvement Centers 1979 The first two Home Depot stores opened on Memorial Drive and Buford Highway in Atlanta, GA 1981 The Home Depot stock went public on NASDAQ and raised $4.093 million 1986 Focus began on Pro Customers 1990 The Home Depot became the largest home improvement retailer 1987 Stores began using UPC scanning systems 1989 The 100th store opened 1994 Aikenhead’s stores were acquired to create Canada division 2000 Establish e-commerce site with test market in Las Vegas 2002 The Home Depot Foundation was established 2002 Expanded into Mexico with the acquisition of Del Norte 2005 The 2000th store opened 2007 Opened the first rapid deployment center, marking the beginning of one of the most dramatic supply chain transformations in retail history 2009 Launched Customer FIRST (Find, Inquire, Respect, Solve, Thank) Training and Power Hours to customer service in stores 2010 Debuted Spring Black Friday, a list in retail history Rolled out FIRST Phone device to US stores, a key enabler of interconnected retail ca- pabilities and supply chain improvements 2012 The Home Depot Foundation pledged an additional $50 million to veterans’ housing initiatives, increasing its total commitment to 80$ 2014 Opened first of three new Direct Fulfilment Centers to support the company’s interconnected retail capabilities 2016 The Home Depot Foundation pledged a quarter of a billion dollars to veterans’ causes by 2020 2017 Sales surpassed $100 for the fiscal year 2017 2019 The Home Depot celebrated its 40th anniversary and launched a new tagline: “How does get more done” 2020 The Home Depot responded to the Covid-19 pandemic by investing $2 billion in enhanced compensation and benefits for our associates and donating nearly $10 million in PPE to help strengthen communities  Summary When Bernie Marcus and Arthur Blank opened the first Home Depot store in Atlanta in 1979, they forever changed the hardware and homeimprovement retailing industry If a product is not provided in one of the stores, Home Depot offers 250,000 products that can be specially ordered Additionally, the company offers free home improvement clinics to teach customers how to tackle everyday projects like tiling a bathroom Currently, Home Depot employs more than 300,000 people and operates over 2,250 Home Depot stores in the United States, Mexico, Puerto Rico, China, the Virgin Islands, Guam, and Canada MANAGING CUSTOMER RELATIONSHIPS “Our mission is to empower our customers to achieve the home or condo of their dreams?" When Costello arrived in 2002 Home Depot's reputation was faltering The new philosophy was expressed by the new Home Depot mantra: "You can it” Despite Home Depot's proactive approach to customer issues, the company has had its share of challenges along the way However, the University of Michigan's annual American Customer Satisfaction Index in 2013 showed that Home Depot has consistently placed behind competitor Lowe's when it comes to customer satisfaction The increase in customer satisfaction was due to several efforts on the part of Frank Blake ENVIRONMENTAL INITIATIVES Home Depot began its environmental program on the twentieth anniversary of Earth Day in 1990 Home Depot initiated several programs to minimize the firm's and its customers' impact on the environment In addition, it was the first retailer in the world to combine a drive-through recycling center with one of its Georgia stores The company also began to replace its hardwood wooden shipping pallets with reusable "slip sheets" to minimize waste and energy usage and decrease pressure on hardwood resources In 1999 Home Depot joined a non-profit organization that promotes responsible forest product buying practices and the sale of wood from Certified Well-Managed Forests However, protesters led by an environmental group, picketed Home Depot and other home center stores for years in an effort to stop the destruction of old-growth forests, of which less than 20 percent still survive Arthur Blank announced Home Depot would stop selling products made from wood harvested in environmentally sensitive areas Home Depot continued taking initiatives for the betterment of the environment which proved that the intentions of the company were actually for the betterment of the environment These efforts yielded many rewards in addition to improved relations with environmental stakeholders EMPLOYEE AND SUPPLIER RELATIONS Home Depot strives to apply social responsibility to its Supplier employment practices, with the goal of assembling a diverse workforce that reflects the population of the markets it serves Since the lawsuit, Home Depot worked to show it appreciates workforce diversity and seeks to give all associates an equal chance to be employed and advanced In 2005, Home Depot formed partnerships with the ASPIRA Association, the Hispanic Association of Colleges and Universities, and the National Council of La Raza to recruit Hispanic candidates for part-time and full-time positions It came into contact and did business with a diverse range of suppliers, including many minority and women-owned businesses The company became a founding member of The Resource Institute, whose mission is to help small minority and women-owned businesses by providing them with resources and training NEW TECHNOLOGY INITIATIVES Compared to its rivals, Home Depot lagged technologically Unlike its rival Lowe's, Home Depot did not allow customers to order products online and pick them up at the stores As more con- sumers choose to complete their transactions on the Web, this represented a weakness for Home Depot In 2010 Home Depot's online sales constituted only 1.5 percent of overall sales Home Depot was not adapting as quickly to the fast-paced world of technology It embarked on several technology projects, after realizing its limitations in this area These initiatives are intended to improve both its customer service and Home Depot's daily operations, for example investing $64 million to create First Phone, a device that replaces the old computers on associates' carts It released 25,000 First Phone Junior devices in 2013, a scaled-down version of First Phone that enables staff to more effectively manage inventory, help customers, and move through checkout lines Home Depot also redesigned its website to improve navigation and communication chan- nels In 2011 the website was launched for "Pros" (Professional and Contractor Services) Ad- ditionally, Home Depot is improving its logistics, having suppliers send trucks of merchandise directly to the stores Home Depot invested $1.3 billion in technology over a three-year period A STRATEGIC COMMITMENT TO SOCIAL RESPONSIBILITY Home Depot focuses corporate social responsibility efforts on affordable housing and disaster relief In 2002, the company initiated the Home Depot Foundation, which provides additional resources to assist nonprofits in the US and Canada to increase awareness and successfully demonstrate the connection between housing, the urban forest, and the overall health and eco- nomic success of their communities The Foundation invested $300 million in building and ren- ovating affordable, sustainable homes… $80 million in building homes for veterans, and donated $2.7 million to fund Repair Corps repairs to the homes of disabled veterans Additionally, Home Depot addresses the growing needs for relief from disasters such as hurri- canes, tornadoes, and earthquakes When Hurricane Sandy hit the American East Coast in 2012, Home Depot responded with millions of donations, gift cards, supplies, and contributions to or- ganizations that provided food, clothing, shelter, and volunteer efforts… the 2010 Haitian earth- quake, tornadoes in Oklahoma and areas of the Southwest in 2013 and many others The Home Depot Foundation created a $1 million fund to provide financial support for the vic- tims of the tragedies Home Depot strives to secure a socially responsible reputation with stake- holders, committed to social responsibility as a strategic component of the company's business operations CONCLUSION Over the past 35 years, Home Depot has changed the do-it-yourself home improvement retail environment The company started with a clear understanding of its various stakeholders and has developed a strong commitment to customers, communities, suppliers, employees, and the environment As with most large organizations, Home Depot has made some mistakes but seems to be able to recover quickly and respond to ethical issues Home Depot continues to pursue innovation and change to relate to its stakeholders The com- pany continues to upgrade and strengthen its competitive position and has earned a strong fi- nancial rating because of its effectiveness in implementing strategies targeted toward stakehold- ers  On the basis of Home Depot’s response to environmentalist issues, describe the attributes of this stakeholder Assess the company’s strategy and performance with environmental and employee stakeholders Bernie Marcus and Arthur Blank, the founders of Home Depot worked hard to make sure that they address all the concerns of their stakeholders They focused on social responsibility and regarded it as their moral and ethical duty to try to philanthropic acts at a strategic level Whenever a company takes any action or decision, it involves all the stakeholders as stakeholders are all those people or companies that have an interest therein business Home Depot’s implementation of Environmental Programs and social welfare programs has an impact on the stakeholders including the corporate itself, customers, environmentalists, and employees Company’s impact on Natural Environment: The owner of Home Depot's used their powers to incorporate philanthropic acts as an element of their culture at a strategic level They implement different environmental programs to attenuate their effect on the environment The corporate started using recycled material content They also launched a reverse distribution program to recycle wallboard packaging used for shipping Aside from this, they decided to join a nonprofit 10 organization that aims to market responsible forest product buying and selling practices It had been seen that each year they took different initiatives to reduce the impact of the company's practices on the natural environment which shows the company’s urgency for taking action to handle environmental issues Began its environment program on the twentieth anniversary of Earth Day in 1990 by adopting a set of Environmental Principles It had shown that Home Depot initiated several programs to minimize the firm’s and its customers’ impact on the environment, for instance: The retailer began using store and office supplies, advertising, signs, and shopping bags made with recycled content The corporate established a process for evaluating the environmental claims made by suppliers Moreover, they became the first retailer in the world to combine a drive-through recycling center, the first home-improvement retailer to offer wood products, and certified as “well- managed” by the Scientific Certification System’s Forest Conservation Program The company replaced its hardwood wooden shipping pallets with reusable “slip sheets” to minimize waste and energy usage and decrease pressure on hardwood resources In 1999 Home Depot joined the Certified Forests Products Council, a non-profit organization that promotes responsible forest product buying practices and the sale of wood from Certified Well-managed Forests Even after such a large amount of environmental welfare programs were initiated by the corporate, still environmentalists believed that the company just wanted to indicate that they take care of the environment but their practices were harming the environment so they protested against it, but Home Depot continued taking initiatives for the betterment of the environment which proved that the intentions of the company were actually for the betterment of the environment and were legitimate as their steps may well be proved with the proper justification that how it helped them in reducing effect on the environment 11 Due to the destruction of old-growth forests, of which less than 20 percent still survive, Home Depot would stop selling products made from wood harvested in environmentally sensitive areas In an effort to reduce its carbon footprint, Home Depot aimed to decrease not only operations but also simultaneously reduce transportation emissions emitted by the company So they installed dual-flush low-flow toilets in stores that reduce water usage by 40 percent and switched to high-efficiency T5 fluorescent lighting, which lowered overall wattage and created more energy-efficient lighting in stores 12 The company then provided new irrigation systems that reduce water usage by 35 percent and only irrigate where and when it is necessary Home Depot also installed solar panels on 62 of its retail stores, making it the largest retailer to host solar programs For its efforts in social responsibility and sustainability, the company was honored with the ranking of one of the top 25 Socially Responsible Dividend Stocks, meaning it is recognized as being a socially responsible investment These efforts yielded many rewards in addition to improved relations with environmental stakeholders Environmentalists affect the Company’s Practices: Environmentalists have the power to influence the corporate to alter their practices Within the case of Home Depot, the environmentalists believed that the corporate was just pretending to be environmentfriendly but in actuality, their practices were harming the environment so they protested outside the store of Home Depot to force them to prevent the use of products made up of wood harvested from oldgrowth forests Because the stakeholders can influence the company, the environmentalists were ready to influence the company and as a result, the corporate announced that they will stop using woods of old-growth forests for their products The environmentalists showed urgency towards taking actions like protests etc so as to enforce the company to prevent using woods from old-growth forests and forests are important for the regeneration of important plant species and regulation of water flow and that they also influence weather patterns Only 20 percent of such forests survived but they put their efforts to prevent the company from the destruction of such forests and they were able to change the company's decision too The intentions of environmentalists were legitimate because the point on which they were forcing the corporate was for the betterment of the environment as old-growth forests are really important for society All the efforts of Home Depot helped them in making better relations with the environmental stakeholders as they received many awards for their continuous efforts for the betterment of the environment Still, it doesn’t mean that the environmentalists won’t question their practices Their practices were also questioned once they were doing business with two Chilean wood suppliers that were supporting the building of dams in a region that might cause such a lot of harm to 13 the ecosystem that the environmentalists raised a problem on this The Environmental chief of Home Depot said that those suppliers were obeying the 2003 agreement as they were not reducing any endangered forests neither they were supplying wood products to Home Depot from old-growth forests therefore the company had no legitimate reason to cancel the contract so the environmentalist was not ready to legally challenge the Home Depot neither the company had sufficient grounds to cancel the contract with those Chilean Suppliers Assess the company’s strategy and performance with environmental and employee stakeholders 14 The company’s strategies show that they are keen on taking action while considering its pros and cons for all the stakeholders including employee and environmental stakeholders The Leaders of Home Depot were proactive as they considered the potential ethical issues before time and took decisions and implemented programs to reduce their unethical and harmful actions They had a passion to right which is why they always considered all the stakeholders before making a decision They considered the interests of all the stakeholders, not only those that had an economic impact  Environment Guided by the principles which have been adopted by the National Retail Hardware Association and Home Center Institute, Home Depot initiated several programs to minimize the firm’s and its customers’ impact on the environment In my point of view, these programs were good for the balance of the environment Although previously, environmentalists believed that the company just harmed the environment so they protested against it, Home Depot continued taking actions for the betterment of the environment and tried to reduce the effect on the environment Hence, Home Depot had proven that they had suitable strategies with environmental stakeholders and their endeavors to preserve and protect the environment, and think about the community As a result, these efforts yielded many rewards in addition to improved relations with environmental stakeholders These programs earned the company an A on the Council on Economic Priorities Corporate Report Card, a Vision of America Award from Keep America Beautiful, and a President’s Council for Suitable Development Award And it has also been recognized by the US Environmental Protection Agency with its Energy Star Award for Excellent These achievements showed the effectiveness of the company in its performance and strategies  Employee Home Depot provided volunteer services to their employees to educate and make them adhere to social responsibility within the organization They also focused on having a diverse workforce and 15 giving everyone equal opportunities to grow So it is right to mention that Home Depot was a stakeholder-oriented company and that they focused on addressing the concerns of their stakeholders by giving their best performance It also led to more stakeholder engagement hence resulting in better performance of the organization as a whole Home Depot encourages employees to become involved in the community through volunteers and civic activities It strives to apply social responsibility to its employment practices, intending to assemble a diverse workforce that reflects the population of the markets it serves 16 Since the lawsuit, Home Depot worked to show it appreciates workforce diversity and seeks to give all associates an equal chance to be employed and advance Home Depot is also a member of the American Association of Retired Person’s featured Retirement Program that helps connect employees 50 years or older with companies that value experiences In 2005, the company became a founding member of The Resource Institute, helping small minority and women-owned businesses by providing them with resources and training The company made great efforts to apply social responsibility to its employment practices so that Home Depot‘s supplier diversity program won it numerous recognitions The result of ranking number 13 for the Top 50 American Organizations for Multicultural Business Opportunities in 2012 and was named the Georgia Minority Supplier Development Council Buyer of the Year Transportation and Logistic The company started with a clear understanding of this stakeholder and developed a strong commitment to employees Despite making some mistakes, the company seems to be able to recover quickly and respond to ethical issues  As a publicly traded corporation, how can Home Depot justify budgeting so much money for philanthropy? What areas other than the environment, disaster relief, and affordable housing might be appropriate for strategic philanthropy by Home Depot? A publicly traded organization is one whose shares are sold to the general public for ownership and may be freely traded Business core stakeholders include customers, employees, suppliers, and investors A business is nothing without its customers A business implements many various strategies for capturing customer attention and loyalty When a company does philanthropy, customers feel good about that company as they believe that they are spending money on an organization that will contribute some part of it to social welfare Therefore, Philanthropy helps a company in gaining customer attention and enhancing its brand image Good Brand Image ends up in a positive response from investors when a corporation features a good brand image and highly profitable returns so it also attracts investors Secondly, budgets allotted or spent on philanthropic acts 17 help the company in reducing taxes because the money spent on charitable purposes is taken into account to be spent on the welfare of society so there is a tax reduction on the quantity spent on philanthropy Therefore, Home Depot spends a lot of money on philanthropy to boost their brand image, gain customer attention, and also for lowering their taxes furthermore for the welfare of society every organization which earns money has a responsibility to give something back to society as the revenue they are earning is because the revenue they are earring is due to the people belonging to the society 18 Home Depot has included many various social welfare projects as a component of their culture at a strategic level like environment, disaster relief, affordable housing, and at- risk youth Nowadays many organizations are committed to social responsibility and most of them target the identical areas on which Home Depot focuses In my opinion, other areas which could be appropriate for strategic philanthropy by Home Depot include: - Firstly, I believe that education is the key element in the development of a company or organization so Home Depot should invest some money in education, for example for the children of workers or for the skill training of workers, from which the capacity will increase and the qualifications of the workers will be better - Home Depot can include financing money for critical and expensive medical treatments for needy and poor those who die simply because they can’t afford expensive medical treatments This is often another area that they will include in their strategic philanthropy - Home Depot can help elderly people in society, by funding and fulfilling the needs of elderly people in society can help Home Depot in gaining huge appreciation from society resulting in more improvement in brand image and can also help them in fulfilling their ethical responsibility - Home Depot can help physically disabled people financially or by giving them employment opportunities If we think about the moral values of individuals, most people usually think about it as their moral duty to assist physically disabled people So it might be appropriate for them to incorporate this as an element of their culture at a strategic level - In order to better in social welfare acts, Home Depot can assign every store’s manager a right to seek out and support one local group in their community Although Home Depot is already addressing most main areas that ought to be brought under strategic philanthropy the factors mentioned above might additionally be appropriate for strategic philanthropy and can help them in serving or giving back to society in a better way and in earning customer attention and business appeal to the customers and fulfilling their ethical responsibility 19  How is Home Depot working toward reducing its weaknesses to increase its stakeholder orientation? - Managing customer service: Home Depot has a proactive approach to customer complaints, but there have been obstacles along the way The company had to deal with negative press about customer- satisfaction initiatives that were published by outside sources Home Depot's customer satisfaction ratings have considerably increased over the last few years However, the annual American Customer Satisfaction Index published by the University of Michigan in 2013 revealed that competitor Lowe's routinely outperformed Home Depot when it 20 comes to customer satisfaction The company's performance is down 1% from the prior year, but Lowe's position is unchanged Former Home Depot managers attributed the company's poor customer service to a culture based on military-inspired values Nardelli was ousted and Frank Blake was named the new CEO after months of declining customer satisfaction and other metrics For the previous three years, Home Depot has been ranked by Harris Interactive's Reputation Quotient Survey, however, the corporation has fluctuated in its performance Several customers have previously expressed their appreciation for Home Depot's high- quality services Home Depot was 24th on the list in 2011 The following year, it increased to 14, but in 2013, it dropped to 17 Home Depot's customer satisfaction ratings are still significantly higher than their 2007 position of 27, despite its variety The increase in customer satisfaction was due to several efforts on the part of Frank Blake ⇒ The company's Twitter feed was inundated with comments from unsatisfied customers about the customer service they encountered in the stores Blake swiftly acknowledged the company's issues with customer service, apologized for the inconvenience it caused the customers and urged them to keep providing feedback so that improvements might be made Each one of the complaints was addressed; some angry followers were appeased by phone calls from store managers and personal emails responding to their specific issues ⇒ The responsiveness of Blake and his Senior Manager of Social Media, Sarah Molinari, not only transformed angry protesters into enthusiastic fans but also resulted in a strategic advantage for the company in terms of how it deals with customer feedback It is impossible to avoid standing in line during busy times While consumers wait in line, Home Depot employees can scan the items in their baskets and give them a card that contains all of their purchases Simply scan the card and make the payment when the consumer gets to the register ⇒ Home Depot was also the first company to collaborate with PayPal, making it simpler for customers who not want to carry cash or their wallets around to make payments 21 - Environmental initiative Home Depot became a member of the Certified Forest Products Council in 1999 This nonprofit organization supports the ethical purchasing of forest products and the sale of wood from certified wellmanaged forests However, the business continued to market goods produced from wood taken from old-growth forests Fewer than 20% of old-growth forests now exist, so protesters led by the environmental organization Rainforest Action Network picketed Home Depot and other home improvement businesses for years Arthur Blank made the announcement that Home Depot would discontinue selling goods 22 produced from wood obtained in environmentally sensitive locations later that year, during the company's twentieth-anniversary celebration - Employee and supplier relations A class-action lawsuit launched by female employees who claimed they were paid less than male employees, received fewer pay raises, and were promoted less frequently was settled by the corporation in 1997 At the time, the $87.5 million payment was one of the biggest gender discrimination cases in American history In announcing the settlement, the company emphasized it was not admitting to wrongdoing and defended its record, saying that it offers equal opportunity to everybody and has a reputation for promoting women in professional roles Since the lawsuit, Home Depot has made an effort to demonstrate that it values workforce diversity and aims to provide each employee with an equal opportunity to be hired and advance - New technology initiative Compared to its rivals, Home Depot lagged technologically Unlike its rival Lowe's, Home Depot did not allow customers to order products online and pick them up at the stores As more consumers choose to complete their transactions on the Web, this repre- sented a weakness for Home Depot In 2010 Home Depot's online sales constituted only 1.5 percent of overall sales Home Depot was not adapting as quickly to the fast-paced world of technology It embarked on several technology projects, after realizing its limitations in this area These initiatives are intended to improve both its customer service and Home Depot's daily operations, for example investing $64 million to create First Phone, a device that replaces the old computers on associates' carts It released 25,000 First Phone Junior devices in 2013, a scaled-down version of First Phone that enables staff to more effectively manage inventory, help customers, and move through checkout lines Home Depot also redesigned its website to improve navigation and communication channels In 2011 the website was launched for "Pros" 23 (Professional and Contractor Services) Additionally, Home Depot is improving its logistics, having suppliers send trucks of merchandise directly to the stores Home Depot invested $1.3 billion in technology over a three-year period - A strategic commitment to social responsibility Home Depot works to establish a positive reputation among stakeholders for social responsibility Although it has previously received low ratings on customer satisfaction 24 surveys and the American Customer Satisfaction Index, the company is persistently making an effort to raise those ratings It developed new guidelines and guiding principles to control its connection with its suppliers in response to worries about its environmental impact Despite its accomplishments, Home Depot will still encounter obstacles in the future Even so, Home Depot remains a well-liked shopping location thanks to its charitable initiatives and promotion of its products at low costs, and great quality Home Depot management made social responsibility a strategic part of the company's business operations because they understood that stakeholders, especially customers, have positive feelings about a company that actively contributes resources to environmental and social issues 25