BUSA 2100 – Management Project
by:
BrianFong
CindyWang
EmilyXu Team Inferno
MohammedMoizFMGT - Set 2N
NazaninSalehiMarch 2nd,2006
Neda SedighiDavidMeers
Table of Contents
Report
Introduction and Background
Organizations’ Vision, Mission and Goals
Organizational culture
The Environment
Social Responsibility and ethics
Strategic Planning
Organizational Structure and Design
Appendices
Introduction and Background – Appendix A
Organizational Culture – Appendix B
The Environment – Appendix C
Social Responsibility and ethics – Appendix D
Strategic Planning – Appendix E
Organizational Structure and Design – Appendix F
SWOT ANALYSIS – Appendix G
Resources – Appendix H
Introduction and Background
Canadian Tire is a primarily a retailer which offers customers a large selection of national and retail brands through three 'stores' under one roof - automotive parts, accessories and service; sports and leisure products; and home products. They also are involved in financial services (Canadian Tire Financial) and are the country's largest independent retailer of gasoline (Canadian Tire petroleum) with more than 250 gas bars and 55 Simoniz car washes in Canada. Canadian Tire employs over 48,000 people.
Canadian Tire has been in business since opening its first store on September 15, 1922.
It was founded by 2 brothers – J.W.Billes and A.J.Billes. The company today has been kept within the family. MarthaBilles, the current head of the company, is considered one of Canada's most powerful business women. She provides a role in where the company is heading in the future and is always on the lookout for places to obtain oil and areas to expand their retailing into. The CEO is a man named Wayne Sales, who regulates day to day business. Canadian Tire has an executive committee composed of 14 members. Please refer to Appendix A for more details about Canadian Tire.
Home Depot is a big box home improvement retailer that aims for do-it-yourself home improvement and construction. They have over 2000 stores across North America and employ over 325,000 people.
The company was founded in 1979 in Atlanta, Georgia by BernieMarcus and co-founder ArthurBlank. Marcus was CEO of Home Depot and Blank was Chairman of the board until 2000, when RobertNardelli took over the position of CEO in December 2000. He is their current CEO. Both Marcus and Blank co-chair the board of directors.
Please refer to Appendix A for more details about Home Depot.
Organizations’ Vision, Mission and Goals
Canadian Tire
Canadian Tire’s purpose and vision are to be a proud Canadian family of retail, retail-related and financial services business; be inter-related and strengthened by the triangle (a great Canadian Brand); and exist to create “Customers for Life” and “Shareholder Value”. This purpose and vision is very specific and clear for the development of Canadian Tire. This purpose and vision help its management run the business and to sustain development.
Canadian Tire’s glorious history is full of customer-focused activities and records. In their values, they announced that they respond to customer demand. In reality, they do what they say. When there was a customer demand for heating garages in the 1920s, Canadian Tire rented their heating garages to customers.
When car users preferred to repair their car rather than buy new ones during the Great Depression, Canadian Tire introduced their “super-lastic” tire guarantee, which was the first time in Canada that a tire was guaranteed for other than manufacturer’s defects.
Home Depot
In Home Depot’s mission statement, they speak about their purpose: to help people improve the places where they live and work. With their purpose being clear and simple, they also mention that their business is large, complex and growing.
Compared to Canadian Tire’s customer-oriented management, Home Depot focuses more on its customers. On Home Depot’s official website, it is very clearly written out that their key to success is treating people well. Management takes care of their people. When you step into Home Depot’s retailing warehouse, you can meet more sales people than in other retailing places. These people provide valuable suggestions and help. Apparently, Home Depot’s management depend on their people’s dedication and commitment to explore their expanding markets since 1978.
Rather than customer-oriented, they are relationship-oriented. With a good relationship with associates, their own people, and with the communities where their stores are in, they are paying attention to build up good relationships as well as good reputations with the whole society. This orientation helps management to have a more broad vision to their developing opportunities.
Comparison
Although Canadian Tire and Home Depot have some differences, their mission statement, vision and values both mention the customer’s satisfaction, shareholder’s value, respect, open communication, integrity, team and community, accountability and innovation. These modern concepts bring the two companies from scratch to retail giants, from local stores to huge, national & global retailing groups. Customers would like both companies to maintain their overall good quality of business and low prices on national and name-branded goods. Stakeholders expect to see increasing profits and more dividends.
Organizational culture
Home Depot
Canadian Tire and Home Depot both say that they are focused on both internal matters especially employees as well as their customers’ and its related profit and output.
In practice, however, Canadian Tire has paid more attention to internalities such as being more moral and open to suggestions which make Canadian Tire’s culture more or less a Clan model. Home Depot is very much concerned about output, market, productivity, and profit that make its culture more of a Market model. For instance, Canadian Tire and Home Depot both have staff meetings to “hear suggestions and increase the cohesiveness of employees”. In Canadian Tire these meetings are very informal, management is very open and flexible and employees can say anything they want. But, during the Home Depot meetings, it is the management who does the most talking trying to motivate their “associates” to sell more.
Culture is very important in the company’s success and overall we think Canadian Tire is more successful in this case because its culture has provided a friendly and relaxing environment for management by making their staff feel relax and cared for. Home Depot’s environment is a little bit tensed in the management side as a result of every one trying to increase profit. They treat their customers well though, but there have been a few instances where customer service has wavered, which has cause Home Depot to lose some customers to other retailers.
(refer to Appendix B for a CVF diagram)
The Environment
PEST ANALYSIS
Political factors
Comparing both companies, Canadian Tire has more to worry about due to the surging oil and natural gas prices in Canada. Canadian Tire has a motto of keeping its prices low for the everyday consumer, and with rising gasoline and oil prices they may need to increase their prices to retain profit at their petroleum bars. Home Depot doesn’t really need to worry about gas prices as they don’t have a gas bar and don’t plan on creating one. Home Depot plans on expanding to other countries such as Asia and Europe, so they will need to consider the political factors of those nations to be successful.
Economic factors
The Canadian economy is strong. Since 1994, Canada's economic performance has been characterized by growth, low inflation, stable unit labor costs, improved cost competitiveness, record exports, and a healthy level of business investment. In general, Canadian Tire and Home Depot are making profits on their homeware sales.
However, there are some factors that affect these two companies differently.
- Exchange rate
- Oil price
Social factors
Safety:Both companies have written safety policies and procedures, but Home Depot provides training for all of its current and new employees and they have a more comprehensive safety program compared to Canadian Tire.
Public Opinion:
It is difficult to compare Canadian Tire to Home Depot in this field because Home Depot is the larger corporation that has more locations in other places than just in Canada. Generally, there is more resistance met with Home Depot expanding into smaller communities since they plan on opening a lot more stores than Canadian Tire.
Corporate Social Responsibility:
Both companies have set up charitable organizations within their corporations that basically have the same goals of helping people who have financial difficulty. Canadian Tire is more people and activity oriented, while Home Depot is more people and environment oriented.
Technological factors
Home Depot Technological improvements
Since 2006 Home depot has been invested 500,000 million alone on updating technology. Today’s customers value speed and convenience, by improving the signage and also installed 800 self-checkout counters, which 33 percent of customers use, cutting queue time by 40 percent. The investment in 90,000 wireless bar code readers makes it easier for customers with bulkier items to check out
Canadian Tire Technological improvements
In 1996, Canadian Tire turned to technology as a building block of its supply chain. As a result, they implemented new operations and transportation-planning processes supported by the vendor's transportation-management technology. Canadian Tire also built a robust data-warehousingsolution around the technology.
Canadian Tire is currently working with Fujitsu to supply Point of Sales (PoS) terminals, with Windows XP software. They also plan to have PRIMERGY servers to meet business-critical computing needs at each store location This system has the cumulative effect of reducing maintenance costs over the lifecycle of technology systems and can have a tremendous impact on the business performance by helping keep costs down and prices competitive for customers.
Comparison:Both companies’ are improving the way they process sales, and in the future we can expect to see more self-serve, wireless terminals that could help reduce line ups and overall provide more efficiency.
(refer to Appendix C for more information)
Social Responsibility and ethics
Both of the Home Depot and Canadian Tire pay a lot of attention to the environment, health, safe and social responsible operation. They build a lot of policies to ensure their direction and action. Both of them have the Foundation Company to cooperate with non-profit organizations to contribute to people, families, communities, and society. They donate money to the disaster regions around the world, and help people with building their homes after suffering from disaster.
Difference:
Home Depot insists on doing the right thing instead of just doing things right. It believes that establishing the right goals is the most important issue. It strives to understand the impact of our decisions, and it accepts responsibility for its actions. Refer to the appendix for information about The Home Depot Foundation.
Canadian Tire applies its social responsibility within its daily operation management. It strives to address environmental issues in all aspects of its operations. For example, its operations include environmental programs that cover such issues as Storage Tank Management, Energy Efficiency, and Waste Reduction and Diversion. Customers can check material safety data on its website. Its'Buy a Tree - Help a Family' Program and ‘Buy a Helmet - Help a Family' Program motive people to protect our environment.Canadian Tire is good at promoting its brand and products through the social issues and hot spots. Refer to Appendix Dfor an example.
Strategic Planning
Strategy of Home Depot:
Home Depot competes on price and serves the broad spectrum of the home improvement industry. Over the next five years, Home Depot expects to maintain and grow its leadership position in home improvement retail worldwide, become the nation's largest diversified wholesale distributor, and become number one in services and also try to dramatically increase direct-to-consumer channels.
New initiatives in 2006 include:
- The launch of the broadest, most commanding tractor selection under oneroof
- Continued proprietary and exclusive brand leadership
- New product resets, including a new CountertopSolutionsCenter and newtool and millwork corrals
- Expansion of the home organization and storage category
- Increased lighting assortment in stores
- Four convenience store openings in the first half of 2006, with thepossibility of 300 by 2010.
Strategy of Canadian Tire:
Canadian Tire's Strategic Plan focuses on five strategic imperatives across all lines of business, to:
- Grow sales and revenues
- Improve earnings performance
- Embed a "Customers for Life" culture
- Extend growth and performance beyond 2009
- Enhance value creation through financial flexibility and maximization of real estate assets
Comparison:
Home Depot- Focuses on expanding the business by opening more outlets and convenience stores by the end of 2010. 4 by 2006 and 300 by 2010.
- Plans on opening stores world wide
- Will expand the stores and bring in new products which will result in increase in prices
- The launch of the broadest, most commanding tractor selection under one roof
- Continued proprietary and exclusive brand leadership
- Focuses on building strong customer relationships with the customers and focuses on ways to lower costs and give higher returns to the share holders.
- No plans to go global
- Promises to maintain the profit margin.
- Promises to make the products that are required by its potential customers.
- Enhance value creation through financial flexibility and maximization of real estate assets
(refer to Appendix E for more information)
(refer to Appendix G for the SWOT analysis)
Organizational Structure and Design
Home Depot and Canadian Tire are both successful retailing companies. Home Depot isconstructed internationally (USA/Mexico/China) while Canadian Tire is constructed nationally (Canada).
According to geographic situations, products and services lines, Home Depot constructs its organizational structure in its 1818 Home Depot stores, 54 Expo Design Centre stores, 5 home depot supply stores, 11 home depot landscape supply stores, and other stores or organizations under The Home Depot brand. The management of each branch or store is responsible to their upper level directors, and all of them are subjected to an inspection from the Board of the company, as well as stockholders and customers. As a public company, Home Depot publishes its annual financial reports and speaks about important decisions to its shareholders, employees and the whole society.
Although no Canadian Tire is exactly the same, the typical set-up for Management personnel usually consists of a General Manager, Store Managers, Logistics Manager and Department Manager. See the appendix for more details.
Differences:
As corporations, Home Depot, as a US based company, applies a one share-one vote policy, Canadian Tire, as many other Canadian long-history companies, has a duel-voting structure. Under this structure, when people buy Canadian Tire’s common stocks from the stock market, there are amount of stocks which are held by some special people giving those people more control on decision-making and operation of the company. This specific difference of Canadian Tire and Home Depot’s organization structure and design imply there are more chances for Canadian Tire to make decisions by small group people who more concern their own benefits.
Same as Home Depot, there are marketing, financial, human resource and other business-related departments in Canadian Tire. These departments, as well as the dealers and associates help the company functions well in a very huge structure under Canadian Tire’s triangle brand. This structure and design are consistent with Canadian Tire’s vision and conduct code. Under Customer and quality orientation, Canadian Tire demonstrates its incredible potential in retailing industry. With a slogan “There are always opportunities to fulfill your ambitions”, Canadian Tire puts it a special emphasis on recruiting its work force and fostering its own people. With sufficient human resources and abundant products lines, Canadian Tire has more opportunities to survive than it did when it started in 1922.
(refer to Appendix F for more information)
Introduction and Background – Appendix A
Canadian Tire trades on the Toronto Stock exchange. Home Depot trades on the New York Stock exchange. As seen by the 2 diagrams below, Home Depot’s stock is at $42.59 and Canadian Tire’s is at $64.40 as of March 2nd, 2006.
Both companies have executive management which basic job is to oversee the operations of the company and increase shareholders’ value.
Home Depot