Home Depot Inc. SWOT & PESTLE Analysis

Weaknesses

1) High debt level from the industry perspective: Home Depot has a debt to equity ratio of almost 7:1, which is high from the industry perspective. An interesting fact which can be observed from the balance sheet of Home Depot is that it has less amount to be paid in short term loans but has significantly high amounts accumulated as long term loans. These high levels of debts will result in high interest and a negative impact on the profitability and cash flows of the company.

2) Majorly concentrated in U.S., Canada, and Mexico market: Home Depot has established a good market in the U.S., Canada, and Mexico but, in a move to enter Chinese market it failed miserably because the company’s service model of “do it yourself” was rejected by the Chinese people as they perceive manual labor as an activity only for low-class citizen and they hold a snug preference for “do it for me” business model. Also, the venture with United Kingdom and South America, which grew wings with great optimism, eventually tanked. Thus, it can be stated that Home Depot is majorly concentrated in U.S., Canada, and Mexico markets and this dependency is bound to hurt revenues if these economies fail to perform well.