I. Problem
For Sears Holding Company (SHC) to come up with a business strategy that will address competition, culture, and synergy and create a distinct brand image and identity for the company, which will help them succeed in the long run.

II. Subproblem
For the two companies, Kmart Holding Corporation (“Kmart”) and Sears, Roebuck & Co. (“Sears”) to be able to act as one company and create value.

III. Objectives
1. To create a brand image identity
2. To create a culture of success
3. To generate consumer loyalty
4. To appropriately position the company in the retailing business industry
5. To be able to address competition
6. To make SHC a profitable company in the long term
7. To build a broader customer base

IV. Case Facts and Analysis
The merger of Kmart and Sears in late 2004 occurred to gain competitive advantage over its competitors by combining strengths of Sears and Kmart for the long-term value for SHC. This merger will benefit both companies in an ever changing and competitive retail industry. SHC will be able to enter into new markets with its combined expertise of Kmart in discounter stores and Sears in department stores. This merger benefits both companies in different ways separately and to the new merged entity – SHC.

Kmart will benefit from the planned cost sharing of several of Sears leading proprietary brands as well as present opportunities to capture significant revenue and cost synergies including merchandise and non-merchandise purchasing, distribution and other administrative expenses.

Sears will be out of malls, and will benefit from Kmart’s stores locations which are in high-income customer target market.

By combining these two forces, SHC will increase its market share presence. This merger becomes a strategic fit that allow a company to expand into new markets and benefit from cost synergies.

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