Forecasting and Final Operations Analysis (Essay Sample)

Forecasting and Final Operations Analysis Name of Student Institutional Affiliation Forecasting and Final Operations Analysis Introduction In the wake of modern economic conditions, the American fastest growing retailer in history, Home Depot, has transfigured various enhancements by offering one-stop shopping for its clients. Home Depot is an intercontinental organization operating brick and mortar stores in the United States, Mexico, Canada, and China. The present economic situation in the US has increasingly remained unfavorable to many organizations. Founded in 1978 by four visionary thinkers who derived the idea of one stop shop do-it-yourself, Home Depot offers an array of products targeting home perfection enthusiasts. Particularly, the outlet stocks products, among others, building materials, lumber, hardware, electrical, and flooring. They also offer services including carpeting, flooring, and countertops installation alongside rental tools. While the company experienced some challenges in their attempt to improve the industry subject to harsh economic conditions, it has faced a reduction in the levels of new construction materials purchased. The firm has since begun to invest in stock, which serves to outclass its competition and earn revenue return for the investors. In appreciation of the above, it is vital to analyze the company’s forecasting and financial set-ups strategies in a bid to determine its performance about stock and financial ratio. Company History Investors Arthur Black and Bernie Marcus formed a partnership with Plat Farrah, a retailing pundit, and Ken Langone, an investment banker, to form Home Depot in 1978. The four investors first opened a store in Atlanta, Georgia, in 1979, starting on a small scale. At present, Home Depot is one of the fastest growing retail outlets in the US, moving public on NASDAQ in 1981 and a subsequent move to the New York Stock Exchange in 1984. The organization marshaled its financial operations and strategies in the period from 1980 to 2000, progressively devising innovative procedures to become a customer’s destination (Home Depot, 2016). Today, Home Depot investors pride themselves of instituting massive warehouse-style stores planned to be robust compared to other US retailers. The company further boasts of an average size of 104,000 square feet of indoor retail space in addition to 24,000 sq. feet for garden centers. In relation to revenue, Home Depot generates approximately 10 percent of its kitchen department and indoor gardening at 9.1 percent of the proceeds. The paint department generated 8.8 percent while the outdoor garden amassed 7.7 percent of the total revenue for the trading year 2015. These good results, according to Hess (2012), are direct outputs of forecasting and financial operations founded on the strong management plan, interest rates, home prices, and increased home ownership. SWOT Analysis Strengths One determinate of the organization’s strength rests on its advantage over the competitors. Home Depot had further demonstrated its determination in market consistency, especially during the financial crisis when the overall market fluctuated. The company exhibits the two features, hence remains the leader in the home performance industry. Other areas of excellence include employee relations, executive leadership, brand exclusivity, sustainability efforts, and product authority among others. Weaknesses The Home Depot’s rapid development over the past three decades makes it a forerunner in the market of declining cost of home improvement. Even though its business model has proved efficacious, providing vast revenue returns over the years, it has failed to transform existing structural challenges. The global market today incorporates increased levels of technology, which have forced many retailers to migrate to digital business operations (Market Line, 2013). Nonetheless, Hope Depot appears to have abandoned its online activities by the wayside. Opportunities The firm’s opportunities revolve around the histrionically changing eco-friendly environment of building materials. The side-to-side allotment of its experience in adopting sustainability efforts in retail spaces has opened prospects for management of supply chain surrounded by green protocols besides expanding the Saturday How-To sessions to integrate eco-friendly building standards. Threats Despite the perceived strengths, Home Depot continues to struggle in its attempts to cushion to the changing customer preferences, unlawful activities, and state of the economy on the housing sector. In the same way, the retail giant struggles to compete against Lowes’ outstanding customer service. With some of Home Depot’s workforce appearing unskilled and untrained, the company seems incapacitated in customer service for do-it-yourself, and who takes a lion’s share in the company’s customer base (Market Line, 2013). Forecasted Financial Management Plan for 3 Years The management abilities of Home Depot demonstrate the element of outstanding agents of shareholder capital. Following the resignation of Frank Blake from the position of a CEO in 2014, Craig Menear stepped forward to continue improving the image of management. He scaled down the lavish expenditure of the executive and dedicated two-thirds of his remuneration in the form of stock option. It is worth observing that the company is overall conventional concerning leadership and bears the potential to sustain long-term goals. According to its financial data, Home Depot’s store comps, a procedure of estimating their yearly profits, the firm will stand at 4 percent until 2018 (Bor, 2016). The company has developed a detailed plan to repurchase $23 billion and maintain a dividend ratio of 50 percent. Given the scenario, Home Depot projects that the sales will grow from $88 billion in 2015 to $100 billion in 2018. Further, EBIT is estimated to grow from $11 billion to $14 billion, but the most attention-grabbing plan the management has laid down is the process of improving the EBIT margin from 13.7 percent to 14.7 percent. At its core, the company managed to advance the efficiency of supply chain based on innovative management approach termed at "Project Syncâ...