Internal Assessment

Weight Rating Weighted

Key Internal Factors Score

Strengths

1. Business Segmentation .05 4 .2

2. Lost less money in 2010 than in the previous two years .15 3 .45

3. Closed nearly 100 less stores in 2010 the 2009 in the U.S. .15 4 .6
& Canada

4. Reduction in Accounts Payable over each of the last 3 .05 3 .15

years.

5. Utilizes website in 40+ countries outside of North America .15 4 .6

Weaknesses

1. Have lost money every quarter in 2011 .15 1 .15

2. Closed close to 20 more stores Internationally than the .1 2 .2

previous year.

3. Decrease in Stockholders Equity .1 1 .2

4. Reduction of Current Assets from the previous year. .05 2 .1

5. Deduct of property plant and equipment each of the last .1 2 .2

three years

TOTAL 1.00 2.85

Business segmentation receives a low weight rating, because it is not as big of a strength

as some of the other strengths for Office Depot. Office Depot has 3 separate divisions with
North American Retail, North American Business Solution Division, and an International

Division. The weakness of this segmentation is the North American BSD, as it is narrow with

private brands and small- and medium-sized customers (David p. 81). It does receive a high

strength rating because Office Depot has spread itself internationally.

Another strength for Office Depot is that they have lost less money in 2010 than in the

past two years, and that is why it is tied for the top weighted score. Now this section does receive

a 3 rating as it is only a minor strength. This is a catch twenty-two for the company as they are

showing improvement compared to the past two years, but they are still losing money. Now in

2010 Office Depot lost $37,291, which is a major improvement compared to the $265,005 that

the company lost in 2009 (David p. 81-83). As long as Office Depot keeps showing

improvement over the next couple years then this can become a major strength for the

organization.

Another strength for Office Depot is that they have reduced the accounts payable over the

past three years. Now this does not have a great impact because it is not a large reduction, and

that is why it only receives a .05 weight. Accounts payable has dropped from $2,433,812 in

2008, down to $2,271,077 in 2010 (David p. 83) Again, since it is just over $160,000 reduction

over the past year it is only a minor strength. It is still good to see that the company is reducing

their debt.

There are two other item that is tied for the highest weighted score, and it is the fact that

Office Depot has closed less stores over the past year in North America and they have reached

40+ countries online. Now both of these items are major strengths for Office Depot, because they

are not downsizing like the company has in past years. In 2009, Office Depot closed 121 stores

and only opened 6 additional stores. In 2010, Office Depot closed 22 stores, but opened 17 new
stores (David p. 82). This shows a significant improvement from prior years. With local areas

stores getting more stable Office Depot is able to focus on reaching forty plus companies outside

of North America through the internet. These websites provide extensive service, while offering

products and payment methods (David p. 85).

Now one weakness that continues to be a major factor for Office Depot is they continue

to lose money. According to the text they have lost money every quarter so far in 2011, and that

is why this carries the highest weight, and is a major weakness of the company. After such a

major drop from 2009 to 2010 many thought that 2011 would be the year that Office Depot turns

it around. Well, at this point in the year this does not seem to be the case, and is a major

weakness for a company trying to turn things around.

One item that received an average weight is the fact that Office Depot closed more than

20 stores compared to the previous year Internationally (David p. 82). Now this is just a minor

weakness for Office Depot. It is a small setback because it is for the company as they try to

expand globally. Also, it is not the biggest deal as long as the organization have expanded their

websites full service to these areas, they just lose out on an actual store front.

Another thing that is a weakness for Office Depot is reduction of stockholder’s equity of

the past couple years. Now this has received an average weighted score because it is not their

biggest weakness, but it is still an area to be concerned with. It does not look good to investors

when they see a drop over a few years. In 2008, the stockholder’s equity for Office Depot was

$1,362,950 and dropped down $695,496 in 2010. The big difference over this span is the drop in

the retained earning (David p. 84).

Another weakness, though it is not a big concern, hence the lowest weighted score is the

reduction in current assets from last year. The main reason that this is considered a weakness is
because it has fluctuated the past couple years. Total current assets have gone from $3,122,387 to

$3,206,329 to $3,027,942 in 2008 2009 and 2010 respectively (David p.83). The main cause of

this is the reduction of net receivables of nearly $500,000 over the three-year span. When the

receivables goes down it shows that they are not bringing in as much money.