Business

Order Description

In 2000, after the retirement of Marcus and Blank, Robert Nardelli was appointed chairman, president, and CEO. Nardelli resigned as Chairman CEO on January 3, 2007, amid controversy over his salary, the company’s stagnating stock price, and poor customer service. He was succeeded by executive vice president and vice chairman Frank Blake. Although a longtime deputy to Nardelli at GE and Home Depot (HD), Blake has been said to lack Nardelli’s hard edge and instead prefers to make decisions by consensus. Indeed Blake repudiated many of his predecessor’s strategies, and it has been reported that the two men have not spoken since Nardelli departed Home Depot.

Nardelli had pushed hard to make the company more efficient, instituting many metrics and centralizing operations, while cutting jobs to meet quarterly earnings targets. While this initially doubled earnings and reduced expenses, it alienated many of the store managers and rank-and-file store associates, and by extension the customers. Nardelli, who regarded home improvement store-by-store sales as less important due to market saturation from competition such as Lowe’s, aimed to dominate the wholesale housing-supply business though building up HD Supply, a unit that Blake sold for $8.5 billion in August 2007 since it was not part of Home Depot’s integrated business. In comparison to Nardelli whose numbers-driven approach never appreciated the role of the store and its associates, Blake’s strategy has revolved around reinvigorating the stores and its service culture (engaging employees, making products readily available and exciting to customers, improving the store environment, and dominating the professional contracting business, an area in which Home Depot’s closest rivals trail far behind), as he recognized that employee morale is a more sensitive issue in retail compared to other industry sectors like manufacturing.

1.Why did Robert Nardelli fail at Home Depot?

2.What specific things did he do wrong?

3.Does the skill requirement discussion in the previous question have any bearing on his
failure?

4. How has his successor done?

5. What did you learn from doing this assignment?

Business

Order Description

In 2000, after the retirement of Marcus and Blank, Robert Nardelli was appointed chairman, president, and CEO. Nardelli resigned as Chairman CEO on January 3, 2007, amid controversy over his salary, the company’s stagnating stock price, and poor customer service. He was succeeded by executive vice president and vice chairman Frank Blake. Although a longtime deputy to Nardelli at GE and Home Depot (HD), Blake has been said to lack Nardelli’s hard edge and instead prefers to make decisions by consensus. Indeed Blake repudiated many of his predecessor’s strategies, and it has been reported that the two men have not spoken since Nardelli departed Home Depot.

Nardelli had pushed hard to make the company more efficient, instituting many metrics and centralizing operations, while cutting jobs to meet quarterly earnings targets. While this initially doubled earnings and reduced expenses, it alienated many of the store managers and rank-and-file store associates, and by extension the customers. Nardelli, who regarded home improvement store-by-store sales as less important due to market saturation from competition such as Lowe’s, aimed to dominate the wholesale housing-supply business though building up HD Supply, a unit that Blake sold for $8.5 billion in August 2007 since it was not part of Home Depot’s integrated business. In comparison to Nardelli whose numbers-driven approach never appreciated the role of the store and its associates, Blake’s strategy has revolved around reinvigorating the stores and its service culture (engaging employees, making products readily available and exciting to customers, improving the store environment, and dominating the professional contracting business, an area in which Home Depot’s closest rivals trail far behind), as he recognized that employee morale is a more sensitive issue in retail compared to other industry sectors like manufacturing.

1.Why did Robert Nardelli fail at Home Depot?

2.What specific things did he do wrong?

3.Does the skill requirement discussion in the previous question have any bearing on his
failure?

4. How has his successor done?

5. What did you learn from doing this assignment?