Published by MBA Skool Team, Last Updated: March 13, 2021
PESTLE Analysis of Home Depot analyses the brand on its business tactics. Home Depot PESTLE Analysis examines the various external factors like political, economic, social, technological (PEST) which impacts its business along with legal & environmental factors. The PESTLE Analysis highlights the different extrinsic scenarios which impact the business of the brand.
PESTLE analysis is a framework which is imperative for companies such as Home Depot, as it helps to understand market dynamics & improve its business continuously. PESTLE analysis is also referred to as PESTEL analysis.
The political factors in the Home Depot PESTLE Analysis can be explained as follows:
The company is headquartered in incorporated Cobb County, Georgia, United States. In case of Home Depot the political external factors in the remote environment affected demand. High level of taxation would be very demotivating for the company as they would not be able to maximise their profits. Factors like government intervention in the market and the related markets also plays a major role in setting up prices and attracting customers. The level of political stability in the country also impacts the business operations. This is because it acts as an opportunity for expansion. Unpredictable government spending could be a threat for the company as they are also one of the largest potential customers of the company. Change in government and government regulations could affect company decisions very often with regards to business. International trade doctor an opportunity for Home Depot. But this also depends on the government on how trade restrictions are implemented.
Below are the economic factors in the PESTLE Analysis of Home Depot:
Millennials have been renting their own homes rather than buying homes.
This is done to avoid down payments, credit and mortgages. Search changing consumer needs would impact a company like Home Depot as people would be less willing to decorate rented homes. The increasing cost of capital has hence acted as a threat for the company. Such a situation could improve with the increase in disposable income for the upcoming generations which could lead to a gradual recovery of the housing market. The interest rates of a country also affect how much people are willing to borrow or invest. Higher interest rates on savings encourages people to save more for future and vice versa. The exchange rates of the country in which the company is operating also effects its profitability. Fluctuations in exchange rate makes it difficult for the company to operate efficiently.
Following are the social factors impacting Home Depot PESTLE Analysis:
Analysing the trends in the market where the company serving plays a major role in the stock to be maintained for sales. This thereby affects sales and profitability. The middle-class families makeup for the majority of the company sales. They like to purchase good quality at low prices. This is not the only class that Home Depot serves and hence it must analyze the income groups and the families it is catering to. Keeping the consumers happy and providing a good ambience for shopping also plays a major role in getting the customer back to the store for the next purchase. factors like leisure interest in the society, educational level, demographics, culture and attitude of people in the society also plays a major role. Not losing the connection with previous customers should be one of the prime objectives for the company as repeat customers are the ones who help the company flourish.
The technological factors in the PESTLE Analysis of Home Depot are mentioned below:
Having the right technology to produce the goods and to sell them is of fundamental importance as technology is changing at a fast pace. Being ahead of competitors requires a good research and development team in place. This helps to adapt to required innovation buy either matching with technology or finding newer alternative methods. The automation in the Home Depot’s business has been increasing day by day and hence to improve productivity and standards of quality there must be the best technology in place. Along with this great attention should be given on selling online has the customer base for online shopping has been increasing. The application and website should mainly aim to serve the millennials and be design accordingly so that maximum return can be obtained from the investment.
The supply and distribution chain must also be looked upon and modified for better business operations.
Following are the legal factors in the Home Depot PESTLE Analysis:
The legal factors may include all the laws that the Home Depot company must abide by to function efficiently in the industry. Some of these laws maybe employment law, antitrust laws, consumer protection laws, intellectual property laws, health and safety laws etcetera. Such laws are in place to ensure that the workers, consumers, business owners and any other stakeholder are free from risks. The health and safety laws must be followed on the retail locations ensuring a good working condition for all the employees. The information system must be regulated and modified in order to maintain security. The antitrust laws are in place to ensure that the business follows fair practices and is healthy to compete in the industry. Discrimination laws are also in place to protect people song different cast, creed, age, disability, religion, gender, ethnicity etcetera to be treated equally whether they're employees over consumers for the company.
In the Home Depot PESTLE Analysis, the environmental elements affecting its business are as below:
The weather conditions have the ability to impact shopping visits, deliveries, order's etcetera. In case of a monsoon season the customer visits to the stores may decrease and online ordering may increase. Therefore, arrangements may be made accordingly. There may also be delays in deliveries due to search weather factors and hence dose must also be taken care of. On the other hand, materials required on the store may also be delayed for a similar reason.
Home Depot should continue to improve the waste management system or waste disposal system in place as it could produce waste in huge quantities which could harm the environment if not taken care of. Renewable sources of energy may also be an exceptionally good idea for the company to sustain in the long term and do its bit for the environment. The preference for green products has been increasing day by day and supplying them may also boost up the sales for the company.
To conclude, the above Home Depot PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.
This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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