Q 1) On the basis of Home Depot’s response to environmentalist issues,

describe the attributes (power, legitimacy, urgency) of this stakeholder.

Using the Reactive-Defensive Accommodative-Proactive Scale in Chapter
2(Table 2.5), assess the company’s strategy and performance with
environmental and employee stakeholders.

Answer:

Bernie Marcus and Arthur Blank, the founders of Home Depot worked really hard in order to
ensure that they address all the concerns of their stakeholders. They focused on social
responsibility and considered it as their moral and ethical duty to do philanthropic acts at
strategic level. Whenever a company takes any action or decision , it involves all the
stakeholders as stakeholders are all those people or companies that have interest in that
business. Home Depot’s implementation of Environmental Programs and social welfare
programs have an effect on the stakeholders including the company itself , customers ,
environmentalists and the employees.

Company’s impact on Natural Environment:

The owner of Home depot’s used their powers to include philanthropic acts as a part of their
culture at strategic level. They implement upon different environmental programs in order to
minimize their effect on the environment. The company started using recycled material
content. They also launched a reverse distribution program in order to recycle wallboard
packaging used for shipping. They also started offering word products from forests that were
certified as “well managed” by Scientific Certification System’s Forest Conservation
Program in order to reduce their usage of waste and energy. Apart from this they decided to
join a nonprofit organization that aims to promote responsible forest products buying and
selling practices. It was seen that every year they took different initiatives in order to
minimize the impact of company’s practices on natural environment which shows the
company’s urgency for taking actions in order to address environmental issues. Even after so
many environmental welfare programs initiated by the company , still environmentalists
believed that the company just wanted to show off that they care for environment but actually
their practices were harming the environment so they protested against it , but Home Depot
continued taking initiatives for the betterment of the environment which proved that the
intentions of the company were actually for the betterment of environment and were
legitimate as their steps could be proved with proper justification that how it helped them in
reducing effect on environment.

Environmentalists effect the Company’s Practices:

Environmentalists have the power to influence the company to change its practices. In the
case of Home Depot, the environmentalists believed that the company was just pretending to
be environment-friendly but in actual their practices were harming the environment so they
protested outside the stores of Home Depot in order to force them to stop the use of products
made from wood harvested from old growth forests. As the stakeholders have the powers to
influence the company, so the environmentalists were able to influence the company and as a
result the company announced that they will stop using woods of old growth forests for the
production of their products. The environmentalists showed urgency towards taking actions
like protests etc. in order to enforce the company to stop using woods from old growth forests
as such forests are important for regeneration of important plant species, regulation of water
flow and they also influence weather patterns. Only 20 percent of such forests survived but
they putted their efforts to stop the company from the destruction of such forests and they
were able to change company’s decision too. The intentions of environmentalists were
legitimate as the point on which they were forcing the company was for the betterment of the
environment as old growth forests are really important for the society.

All the efforts of Home Depot helped them in making better relations with the environmental
stakeholders as they received many rewards for their continuous efforts for the betterment of
environment but it doesn’t mean that their practices won’t be questioned by the
environmentalists. As their practices were also questioned, when they were doing business
with two Chilean wood suppliers that were supporting the building of dams in a region that
could cause so much harm to the ecosystem so the environmentalists raised an issue on this .
The Environmental chief of Home Depot said that those suppliers were obeying 2003
agreement as they were not cutting down any endangered forests neither they were supplying
wood products to Home Depot from old growth forests so the company had no Legitimate
reason to cancel the contract so the environmentalist were not able to legally challenge the
Home Depot neither the company had sufficient grounds to cancel the contract with those
Chilean Suppliers.

The company’s strategies shows that they are really keen on taking actions while considering
its pros and cons on all the stakeholders including employee and environmental stakeholders.

The Leaders of Home Depot were proactive as they considered the potential ethical issues
before time and took decision and implemented programs in order to minimize their unethical
and harmful actions. They had a passion to do right and that is why they always considered
all the stakeholders before taking decision. They considered the interests of all the
stakeholders, not only those who had an economic impact. Home depot provided volunteer
services to their employees in order to educate and make them adhere social responsibility in
the organization. They also focused on having diverse workforce and giving everyone equal
opportunities to grow. So it is right to say that Home Depot was a stakeholder oriented
company and they focused on addressing the concerns of their stakeholders by giving their
best performance and it also lead towards more stakeholders engagement hence leading
towards better performance of the organization as whole.

Q 2) As a publicly traded corporation, how can Home Depot Justify

Budgeting so much money for philanthropy? What areas other than the
environment, disaster relief, affordable housing, and at-risk youth might be
appropriate for strategic philanthropy by Home Depot?

Publicly Traded organization is the one whose shares are sold to the public for ownership and
can be freely traded. Business core stakeholders include customers, employees suppliers and
investers. A business is nothing without its customers. A business implements many different
strategies for capturing customer attention and loyalty. When a company does philanthropy,
customers feel good about that company as they believe that there are spending money on an
organization that will contribute some part of it on the social welfare. Therefore Philanthropy
helps a company in gaining customer attention and enhancing their brand image. Good Brand
Image leads to positive response from the investors as when a company have good brand
image and highly profitable returns so it also attracts the [Link] Budgets allotted
or spent on philanthropic acts helps the company in reducing taxes as the money spent on
charitable purposes are considered to be spent on the welfare of society so there is tax
reduction on amount spent on philanthropy. Therefore Home Depot spends so much money
for philanthropy in order to enhance their brand image, gain customer attention and also for
lowering their taxes as well as for the welfare of the society as every organization which
earns money basically have a responsibility of giving something back to the society as the
revenue they are earning is because of the people belonging to the society.

Home Depot has included many different social welfare projects as a part of their culture at
strategic level such as environment, disaster relief, affordable housing, and at-risk youth.
Now a days many organizations are committed towards social responsibility and most of
them focus on the same areas on which Home Depot focuses. In my opinion, other areas
which might be appropriate for strategic philanthropy by Home Depot includes:

1) Home Depot can include financing money for critical and expensive medical treatments
to needy and poor people who die just because they can’t afford expensive medical
treatments. This is another area which they can include in their strategic philanthropy.
2) Home Depot can help physically disabled people financially or by giving them
employment opportunities. If we think about moral values of individuals, most
individuals usually think it as their moral duty to help physically disabled people. So it
might be appropriate for them to include this as a part of their culture at strategic level.
3) Home Depot can help elderly people in the society, by funding and fulfilling the needs
of elderly people in the society can help Home Depot in gaining huge appreciation from
the society leading to more improvement in brand image and will also help them in
fulfilling their ethical responsibility.
4) In order to do more better in social welfare acts, Home Depot can assign every store’s
manager a right to find and support one local group in their community.
Although Home Depot is already addressing all the main areas that should be brought
under strategic philanthropy but the factors mentioned above might also be
appropriate for strategic philanthropy and can help them in serving or giving back to
the society in a better way and in earning customer attention and business appeal to
the customers and fulfilling their ethical responsibility.

Q 3) Is Home Depot’s recessionary strategy of eliminating debts and halting

growth a wise one? What would you recommend to the CEO?

Home Depot have always emphasized on expansion as they believe more stores in different
areas would help them in serving more people and hence generating more revenue. They used
to open two new stores every year. But their strategy of expansion changed drastically due to
recession in 2008-2009. Their recession strategy was to limit their expansion instead of
borrowing money from the government. They focused on improving their current stores and
using a careful approach instead of taking huge risk.

In my opinion the recessionary strategy of eliminating debts and halting growth is a wise one
as they are focusing on limiting their expansion which is leading to a reduced risk.
Obviously, if they continue expanding at a vast rate can help them in generating much more
revenue if they are able to survive the recession period but it is a huge risk and there are also
chances of getting devastating results due to spending more and more money. So I think their
recessionary strategy is a wise one and there are doing exactly right by focusing on
improving the same stores as by pulling back money from opening new stores, they are trying
to ensure that they fulfil their basic expenses like bills, salaries etc, so I don’t think CEO is
doing anything wrong as he is acting responsibly in such circumstances and making sure that
they are behaving economically responsible to stakeholders. They may need to bring
aggressive strategies to lift their revenues in future if the revenue continues to fall for a longer
period. Only suggestion that can be given is that the CEO should focus on customer retention
in this period rather than increasing market. Customer retention will help them in smooth and
sustainable working of the business in the recession time.