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mergers and acquisition of sears and kmart
mergers and acquisition of sears and kmart
SEARS leadership problem
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Sears, a company spanning 131 years that began as R.W Sears Watch Company was once the largest retailer in the United States. Kmart, its runner up, began as a general retailing store just thirteen years after Sears as S.S Kresge Company in 1899. Sears had been the largest retailer in the United States until Wal-Mart rose and surpassed them, and Kmart bought out Sears and merged the two struggling companies in 2005 (Meyer, 2017; New York Times, 2002). From there, Sears and Kmart have been steadily making their way towards what many believe will be an inevitable closing. According to Michelle Ma (2017), an avid business author: Sales at stores open at least a year declined 11.5% in the fiscal second quarter as the company scaled back the number of pharmacies and electronic products in its stores. Kmart's same-store sales fell 9.4%, compared with …show more content…
Nearly four decades past its peak, Sears strives to maintain steady profits against its competitors (Howard 2017; Meyer 2017). Kmart, contrarily, entered behind Wal-Mart as the second largest retailer in the United States after Sears’ reign. They, however, suffered a similar affliction to what felled Sears when Kmart ruled discount retail so heavily that they seemed almost unstoppable. However, with lack of solid knowledge on the business’ purpose and Wal-Mart as a strong competitor, there began a steep decline, along with Sears, that led to filing for Chapter 11 bankruptcy (New York Times 2002). Kmart began as a five and dime store in Detroit founded by Sebastian Spering Kresge and John McCrory. The partnership dissolved and they took over the separate stores, Kresge mainly sold costume jewelry, houseware, and personal care products, always for thrifty prices. The company was incorporated in 1912 with 85 stores producing $10.3 million in annual
I don't see Wal-Mart as a huge retailer trying to take over the world with cheap prices. I see Wal-Mart as business that has played their cards the way they were dealt. Our economy is poor right now; banks are hurting because people a...
According to the Kohl’s Corporation Hoover Report (2014), in the late 1920s, a man named Max Kohl opened a grocery store in Milwaukee, Wisconsin (Hoover Report, 2014, pg. 9). By 1938, Max and his three sons had developed his store into a successful chain and incorporated the business. Max Kohl had experienced enough success by 1962 that he opened a department store right next to his Kohl’s grocery store. In 1972, Max Kohl and his family’s “65 food stores and five department stores were generating about $90 million in yearly sales” (pg. 9) In the same year, the British American Tobacco’s Brown & Williamson Industries (BATUS) purchased 80% of the Kohls’ two operations. Six years later, BATUS proceeded to purchase what remained of Kohl’s. In the early 1980s, BATUS decided that “Kohl’s discount image did not fit in with BATUS’s other retail operations” and decided to ultimately separate the two operations in order to put them up for sale (pg. 9). The president and chief executive officer at the time, William Kellogg, “and two other executives, with the backing of mall developers Herbert and Melvin Simon, led an LBO (leveraged buy-out) to acquire the chain’s 40 stores and a distribution center” (pg. 9). By the time Kohl’s managed to go public in the year 1992, they “had 81 stores in six states, and sales topped $1 billion” (pg. 9). At this time Kohl’s began its expansion and within the next five years managed to top sales at two billion dollars. Kohl’s then “acquired a former Bradlees store to enter New Jersey and opened stores in Washington, DC; Philadelphia; New York; and Delaware” (pg. 9). The following year Kohl’s managed to expand into Tennessee by adding new stores. The company named Larry Montgomery CEO in 1999 and short...
Kmart has many competitive and environmental forces impacting the industry today. As all organizations do some or these forces are opportunities for them while others are threats to the organization. A few of the forces are their rivals or competitors, the substitutes that can be used, and the new entrants into the market.
Kmart needs to find a certain area that they are better at then Wal-Mart. They are not going to be able to beat their prices so they have to provide better customer service. They have select a specialized department that they can dominate and at least take away a little of the business from Wal-Mart. For example develop a top of the line auto care station for tune ups, inspections, oil changes etc.
The key issues for K-Mart strategies are finding the right cost level for an opportunity to be aggressive, and differentiating the product for consumer in terms of different consumer and different intangible product attributes. K-Mart and Sears should be combined with a new overall corporate competitive strategy using a cost focus. This may turn out to be the only sensible strategy, and the one which best describes the strategy adopted. Strategies of cost leadership and product differentiation are often described as if they were mutually exclusive you can either pursue one or the other, but not both.
Sears has seen many different changes in business and has had to adjust to t...
Kmart is a huge vintage company that had peeked at one time and now is
As shown in the table above, both companies have returns on capital near 20%, although the source of profitability differs among them. In the case of Sears the main source of value creation is the rotation of the assets of the estate. This high turnover can be explained largely by its funding through debt, allowing the assets represent a minor portion of the assets. Wal-Mart for its part has a high turnover of assets on their sales. This product of your business model focused on selling high volumes, thus increasing the profitability of their assets.
When the company was increasing in size and work, Roebuck could not handle the work and quit the company. Sears bought Roebuck’s half and fully owned his company again. Until he met Julius Rosenwall, he bought a dozen factories to be able to get all the products made and shipped out on time. Storekeepers were not staying in business, they were basically fighting a losing battle. Further more, Sears allied with the federal mail and delivered the packages for free, this boosted his revenue. Although the Sears company is not what it used to be, Richard Sears was a genius in retail sales and made everyones life easier with his products and delivery. One of the largest key to own a successful company is to be able to anticipate the changes and Sears defiantly knew how to appeal to every costumer in each time
Wal-Mart’s competitive environment is quite unique. Although Wal-Mart’s primary competition comes from general merchandise retailers, warehouse clubs and supermarket retailers also present competitive pressure. The discount retail industry is substantial in size and is constantly experiencing growth and change. The top competitors compete both nationally and internationally. There is extensive competition on pricing, location, store size, layout and environment, merchandise mix, technology and innovation, and overall image. The market is definitely characterized by economies of scale. Top retailers vertically integrate many functions, such as purchasing, manufacturing, advertising, and shipping. Large scale functions such as these give the top competitors a significant cost advantage over small-scale competition.
Concluding, Best Buy has advanced and achieved so much since their beginning in 1966, and with the importance of its employees and managers being put first and into definitive roles, will only make the company go further on their road to success. I am excited to see what the future holds for Best Buys organizational behavior changes and advancements to keep current and on the cutting edge.
Our Strategic Issue for SHC is, "How can Sears Holdings Corporation strengthen Kmart's position and regain its competitive advantage? Our recommendations are as follows: 1. Differentiation Strategy: Appeal to low and middle income families with children, Quality clothing and decorating store. 2. Stable & Effective Management: Retention, Value Chain Analysis: Supply Chain, Inventory Control (Product Selection), Technology (Reserve), Overall Consistency, Continue Value Adding Strategic Alliances, Similar to alliance with Joe Boxer. 3. Continue to Evaluate Store Portfolio, Focus on owning more/ Premium space. 4. Meet Customer Expectations, Customer Service, and Continuous Research & Development.
The Wal-mart is the largest retail chain in United States and in the world. The wal-mart was founded in the year 1962 by Mr Sam Walton. It was originally named as Wal-Mart discount city in Rogers, Arkansas. At the time when the Wal-Mart stores started in the year 1962 it was focused only in small rural cites and town which had a population of 5000 to 25000. It was soon increased to 18 stores in 1969. In the next 30 years it had more than 4750 stores across 50 states in USA and 9 countries with $245 billion sales. It started its international operations in Mexico in the year 1991 and then it expanded it to different countries across Europe and Asia.
Over the last several years, Sears has continued to watch its stores decline towards the brink of death. Since 2012, Sears has lost more than $9
As revealed by the SWOT analysis earlier Kmart has potential to pull itself out of its current position of facing closure. In order to exploit opportunities and counter threats Kmart needs to build on these competencies to strengthen its position and counter internal weaknesses against the single largest industry threat - increased competition in a mature market.