Situational Analysis

1. Situational Analysis Team A1 Project Kerrie Cox Adrienne P. Love Jeff Koda Garland Collier Jim Clifton March 11, 2006

2. Company Overview • Founded in 1979 in Atlanta, GA by Bernie Marcus and Authur Blank • Robert L. Nardelli- president/chairman/CEO • Employees- 100,000 plus • Over 2000 stores throughout US, Canada, Mexico, Puerto Rico and St. Thomas • Approx. store size-108,000 sq ft, • 40,000+ SKUs • 2005 Revenue- $81.5 billion “World’s largest home improvement retailer”

3. Company Culture • Very customer focused • 8 core values • Taking Care of our People • Respect For all People • Doing the Right Thing • Strong Relationships • Giving Back • Excellent Customer Service • Shareholder Returns • Entrepreneurial Spirit “Excellent Customer Service”

4. Company Culture • All businesses under corporate umbrella follow the same values • EXPO • Apex • Home Depot Landscape Supply • Welcome Aboard broadcast from chairman • Extensive Community Relations Program • Building and refurbishing playgrounds • Ensuring safe community spaces • Building affordable housing • Preparing communities for emergencies • Hire Nice • 100,000+ employees hired annually “Communicate Corporate Value Throughout”

5. Revenue Plan • 9 to 12 percent sales growth guidance over the next 5 years • Open 175 new stores www.yahoofinance.comwww.homedepot.com

6. Operating Margin • Focus on increased revenues and cost control www.yahoofinance.comwww.homedepot.com

7. Earnings • 10-14 percent earnings guidance www.yahoofinance.comwww.homedepot.com

8. ROA-ROE • Efficient use of assets and equity for profitable returns www.yahoofinance.comwww.homedepot.com

9. ROIC • Wise use of capital to grow the business www.yahoofinance.comwww.homedepot.com

10. Average Sale • Focus on higher dollar products and transactions www.yahoofinance.comwww.homedepot.com

11. Main Competitors www.hoovers.com

12. Contractors Do it yourselfers Handymen and Women Designers Retail Customers Customers www.homedepot.com

13. Company Strengths • Size, diversity and continuous growth • Business Model • Broad assortment of high-quality merchandise and services at competitive prices using highly knowledgeable, service-oriented personnel and strong marketing and co-op promotions • Knowledgeable associates • Distinctive product range • 40,000 SKUs including both national brand name and proprietary items • Strategic alliances with certain suppliers to market products • New Capital Expenditures • Yearly revenue growth • 9 Billion return to shareholders “Continuous Growth” www.mindbranch.com/listing/product/P313-8421.html - 9k

14. Company Weaknesses • Weak new store productivity • Rising expenses • 5 consecutive years • Expense ratio has increased at a faster pace than competition • Lowe's expenses per foot 19% lower • Store layout and appearance • Criticized for inconsistencies in layout/appearance • Resulted in negative publicity and customer dissatisfaction “Rising Expenses” www.mindbranch.com/listing/product/P313-8421.html - 9k

15. Company Opportunities • International Expansion • Acquisition • Additional Products and Services • Vendor Strategic Alliances “Global Expansion” www.mindbranch.com/listing/product/P313-8421.html - 9k

16. Company Threats • Competitive Environment • Polictical and Regulatory Issues • Entry to New Markets • Cost of Capital and Expenses “Proceed with Caution” www.mindbranch.com/listing/product/P313-8421.html - 9k

17. Opportunity Threat Matrix

18. References • www.homedepot.com • www.mindbranch.com/listing/product/P313-8421.html - 9k • www.yahoofinance.com • www.mindbranch.com/listing/product/P313-8421.html - 9k • Joint Center for Housing Studies by Harvard School 2005

19. Chart Appendix