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Running head: HOME DEPOT CASE ANALYSIS

Home Depot Case Analysis
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HOME DEPOT CASE ANALYSIS

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Home Depot Case Analysis
Several factors determine whether certain companies can be established in different
countries. The factors range from political, economic and social issues. Some of the political
factors include the acceptability by the government to allow different companies established in a
foreign country to set up its branch in their country while economic issues revolve around
whether the firm provides employment opportunities for the countries citizens and complete
compliance of taxes and whether the country creates favourable economy policies that allow
investments in their country (Pflüger, 2004). Social factors revolve around the cultural practices
of the native people, their belief and values system, and whether the company entry would in a
way affect the associated social factors in the market. All of these factors have to be taken into
consideration before any company focuses on establishing its business operations in different
countries across the globe. Israel remains one of the countries that has close ties with the United
States, and therefore countries whose origin is in the United States are more likely to be accepted
in Israel (Banalieva & Dhanaraj, 2013). The two countries share a good working relation
meaning that some of their cultural practices are considered to be the same. In fact, most Israeli
Jews escaped to the United States during the Nazi invasion of their country. Therefore issues
revolving around social factors would not significantly affect the business operations of the
company if it is located in Israel. It is more likely to benefit the company interested in investing
in this part of the world. The company of interests in Home Export, a company established in
the United States that deals with various home products classified under the home improvement
items (DeLisi, 2007). The company was established in the 1970s in the United States and has
become a major supplier of various home items over the years. It faces less competition with the
United States. Today the company is segmented to deal with various products in the market

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including home improvement goods, installation services, appliances and rental services. The
company is enlisted in the New York Security Exchange, and its only competitor in the United
States is Lowe. The company has opened up several important outlets in a different part of the
country though it has not utilised its brand name to increase the number of global outlets
(Charan, 2006). Establishing the company in a different part of the world such as Israel would
provide the right means for global expansion of the company. Several issues relation to the
country where the country needs to be established and how the company will perform in its
market segment is discussed and analysed in the subsequent pages.
Main Issues
The political climate and property rights is the first important factors that Home Depot
should consider before spreading its wings to different parts of the world. Some countries across
the world have formed habits of confiscating products that belong to different companies or
incorporations being owned by the state making it difficult for capitalist companies to invest in
the areas (Pflüger, 2004). Additionally, the entry of the company such as Home Depot in a
country like Israel is likely to spur the establishment of similar companies in the same market
segment increasing the competition in the industry. Some local companies may have an upper
hand since they are already aware of the political, social and economic factors of their country
and may use this to their advantage (Banalieva & Dhanaraj, 2013). In essence, companies will
prefer to invest in locations where the political risks are minimal and do not have an effect on
their business practices irrespective of where the county originates.
The second major issue is the economic situation of the country. Countries with low debt
to gross domestic ratios as well as those that have declining levels of unemployment and strong
consumer spending are regarded as the best economic zones to invest since the economic,

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cultural practices of the people is geared towards investment of different products provided high
quality services are being offered by the company (Bianchi & Arnold, 2004). Other important
indicators that need to be considered include a growing middle-class economy, rising incomes
among the people and low inflation rates. Establishing a country in a stable economy or an
economy that shows best practices is easier compared to establishing a company in a stagnated
environment.
The third important factor to consider before establishing in any country is the specific
knowledge of the industry and all the surrounding factors associated with the industry.
Essentially, some companies dominate the market in their home countries because they were
founded based on providing a specific service to the industry. Such a similar service may already
be available to the other foreign country or may not be necessarily important in the other
country. There have been cases where a replica company is formed in a different nation only to
be closed after a specific period after the company fails to deliver in the market as initially
anticipated (Banalieva & Dhanaraj, 2013). Market research of the associated industry would help
reveal all factors at play in establishing the company. A specific amount is supposed to be set
aside in setting up a trial shop
The next factor is the language barrier and the incorporation process for the business in
the different setting. In case there are several different language, s translator may be utilised in
the translation process. The incorporation process refers to the exact time that it takes to set up a
company following all legal rules and procedures. The amount of time, costs and all the legal
procedures to the country. It relatively takes different time in different countries with the longer
it takes to establish a company the more the bureaucratic processes and the likability for business
operations to develop in such a country (Arbatli, 2011).

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Analysis

Israel remains one of the most stable countries in the whole of the Middle East. The
country has been stable after the conflict with Palestine ended close to a century ago. It shares a
close working relationship with the United States and remains one of the closest allies of the
United States in the Middle East. Israel is a capitalist country that has placed more emphasis on
the investments by foreign countries. The country organisational climate is good for business and
has numerous incentives to attract companies from different parts of the world. The Home Depot
will be able to establish its operations in Israel without fewer inconveniences due to the position
the country (Sellers, 2007). The favourable political climate allows the establishment and growth
of the company within the new business setting. Home Depot has already established several
branches in Mexico and ...