Where was a mistake of the company

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Reference no: EM133398937

Case study "Company failed Internationally from a lack of social understanding"

Home Depot is known as the place to go for those who embody the DIY mindset when it comes to home improvement. In the late 20th century, China started to commercialize and privatize urban public housing to encourage homeownership. For the first time since the 40s, Chinese citizens could own homes. Up until this point, Home Depot didn't even think about expanding to China. But, as more and more Chinese citizens started to own homes, the demand for home improvement and construction materials boomed. As a result, Home Depot acquired Home Way in 2006. Unfortunately, in 2012, Home Depot closed all its Home Way stores and left the market.

- So, why the quick exit from the Chinese market for Home Depot?

The problems they encountered can be boiled down to two main issues. First, the Home Way stores were predominantly located in Chinese suburbs. While being located in the suburbs makes sense in the U.S. - as this is where people tend to move when they gain wealth - this is not the case in China. Chinese citizens who acquire wealth will typically stay in the cities and live in apartments or condominiums, which typically don't require the need for renovations. Home Depot took their time when it came to deciding whether or not to enter the Chinese market. However, it seems they still lacked the proper amount of preparation and social understanding it takes to successfully navigate a new and foreign market.

Question:

Where was a mistake of the company? (global strategy, evaluation of international risks, inaccurate information, extremely different market, problem with market analysis etc). Suggest your decision as a market analyst to avoid this failure in the future.

Reference no: EM133398937

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