Value Line Publishing, October 2002 Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Value Line Publishing, October 2002 Case Solution

Strategic Issues Involved with the respective Companies

Both companies are new and performing well at their respective regions. Even though both companies are growing however,it is expected that benefits from the additional market share are not significant. Therefore,both companies are facing the financial problems with respect to top and bottom lines.

It is expected that both companies could generate more profit margins by reducing cost and by improving the efficiency of their operations as it could help both companies by improving purchasing behaviors and by increasing the number of tool rental centers. In addition to this, the management of both companies are facing criticism with respect to customer satisfactions therefore, the management of each company is taking measures in order to improve customer services.

The management of each company is trying to attract the more professional customers as it could help the company with respective to strategic and business objectives.Moreover, the issue of acquiring greater number of professional customers, stocking merchandise in bigger quantities and employees training are also critical aspects with respect to the strategic objectives of the company.

Industry Trends

The retail building supply industry is growing continuously. Currently, the total market capitalization of the retail building industry is $175 billion and it is expected that by the end of the year 2006 it will reach to $194 billion. Home Depot and Lowe’s are the two key players of the industry with 29% and 10.8% market share respectively.

It is expected that retail building supply industry is alienated between three formats which are hardware stores, lumberyards and home centers and due to the economic downturn the growth of each segment is showing negative results from last few years. Despite the negative results in these formats and slow economic growth, the retail building supply industry is growing continuously which could be due to low interest rates and strong housing market.

Position of each firm

Along with the increase in the market capitalization of the retail building supply industry, there is a significant growth in the number of retail stores of both companies and it is expected that each company will continue to expand in future. Each company is following its own worth in the retail building industry as Home Depot has both national and international presence with the market share of 29% while Lowe’s company is operating only in USA with the market share of 10.8% of the over all industry.
It is expected that each company is performing accordingly with its strategic objectives; Home Depot is focusing on well-situated shopping to heavily populated areas by establishing urban centers and focusing on one stop design while Lowe’s focusing on rural areas and target professional customers through its website “Accent and Style” and following s systematic approach in order to access the metropolitan areas. Nonetheless,both companies are expanding into installation services and following the strategy of price wars in order to achieve greater market share. In order to achieve faster growth and strategic objectives both companies have been made various acquisitions which helps both companies to further expand their business and to diversify their merchandise mix.

Historical trends and the Forecast of Macro Variables

Economic downturn affects the global economy and each sector, however it is expected that in late 90’s the economic conditions have become favorable and showed a low but positive growth which resulted in strong housing market. Nonetheless,economic downturn affects the economic variables adversely which affects the consumer price index adversely and it results in decrease in industrial production rate and increase in unemployment.
In the year 2002 and 2003 the economic variables have shown positive behavior and GDP, Real GDP and Consumer price index increases significantly which shows that economic conditions are becoming favorable and this process is expected to be continue in future.......................

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