II. Requirements
Part A: Strategy and Industry analysis
Answer each of the following questions using the information contained in this case as well as each company’s most recent form 10-K, paying particular attention to Part 1, Item 1. Business.
Identify the competitors, input suppliers, and major classes of customers for the industry group in which Home Depot and Lowe’s operate. Then, use Porter’s five forces framework (Porter 1979) to analyze the industry, as of 2019.
What are the key macroeconomic forces that affect the industry in which Lowe’s and Home Depot operate? Looking into the future, how do you think these forces will affect the industry’s operating performance and profitability?
What is the generic operating strategy that each company pursues? Same or different? Identify the statements that each company has made in their 10-K that demonstrate that strategy?
Both companies have taken steps in the past to close a substantial number of stores. Looking at Lowe’s most recent action (2019) to close under-performing stores, what are the near-term financial implications, and what are the longer term expected financial results? Specifically, what would you expect to happen to sales, net profit margins, and total asset turnover. Why? How long would you expect it to take to achieve the intended results?
