...A resurgent Kmart, home of the blue light special, is buying the once-dominant Sears department store chain in a surprising $11 billion gamble it is counting on to help both better compete with Wal-Mart and other big-box retailers. Led by Kmart Holding Corp. chairman Edward Lampert, the new Sears Holdings Corp. would be the nation’s third largest retailer. Both chains would survive, but several hundred stand-alone Kmarts throughout the country are expected to be transformed into Sears stores. The goal: A quick kick-start to sales away from Sears traditional base of shopping malls. Lampert and Sears chairman and CEO Alan Lacy, in announcing the deal on Wednesday, promised up to $500 million a year in savings within three years from store conversions, back-office job cuts, more efficient buying of goods and possible store closings. Shares of both Kmart and Sears, Roebuck and Co. surged on the news, but some analysts are skeptical that it amounts to a home run. “Both have been broken in some sense,” said Dan Hess, president and chief executive of Merchant Forecast, a New York-based independent research company. “Kmart has to learn to survive in a Wal-Mart world and Sears needs to learn to survive in a world of Home Depot and Lowe’s.” Lampert, 42, was as an assistant to Robert Rubin at Goldman Sachs & Co. before leaving to form a hedge fund at the age of 25. He orchestrated the deal and will lead a new board that will be dominated by Kmart directors. “We need to have a very...
Words: 1392 - Pages: 6
...Kmart: A Strategy for Survival Lindsay Huston Hamilton Lee Chris Shewchuck Renee Welsh Economics of Competitive Strategy April 30, 2003 Introduction Discount retail has evolved into a highly competitive industry. As a result, discount retail pioneer Kmart, has faltered and fallen into Chapter 11 reorganization. This paper provides analysis of the industry, and a discussion of the firm-specific strategy that Kmart should undertake in order to reestablish itself as a player in the market. Relevant Industry Forces Entry Barriers Entry barriers in the discount retailer industry are high. In order to compete with the likes of Wal-Mart and Target, a company would need a minimum efficient scale to compete on cost. To Kmart’s advantage, it does benefit from a certain amount of economies of scale. The company is still the third largest retailer in the U.S. Once the restructuring plan has been implemented, Kmart plans to have 1,500 stores remaining. But Kmart has to realize, “Everybody today lives under the shadow of Wal-Mart.” 1 Kmart should not fool itself into thinking that its economies of scale in purchasing or its distribution system can compete with Wal-Mart’s. Wal-Mart is known for its expansive, powerful, and efficient inventory and distribution capabilities. It’s also known for its low-cost structure from real estate to labor (non-union). Wal-Mart is now one of the leading buyers of consumer products in the world. Wal-Mart claims it has the biggest private satellite communications...
Words: 3553 - Pages: 15
...Kmart has made some horrible decisions in the past few years. They have numerous competition throughout America from Wal-Mart and target. Kmart failed to keep with the times and update their stores. The store designs have not changed since their inception and it seems that no money was ever invested into modernization. Even their cash registers were out of date and obsolete from the current systems in use by Wal-Mart. “No matter what Sears said, they weren’t keeping the promise. Consumers are pretty sophisticated, and they walked into these stores and it was the same old place … without the freshness, the excitement or the interactivity of the experience.” (Knutson, 2011). Kmart is owned by Sears Holding. In recent years Sears has closed dozens and dozens of Kmarts. I believe this is due to the lack of interest in the store…the old dirty feel of Kmart is not on par with that of Wal-Mart or Target. The assumptions by Kmart management were that sales would continue without change to the store as they had for decades. The second assumption was that acquisition of other chains such as Walden, Borders, and Office Max would boost their sales by expanding their product sales line. The first assumption was incorrect because Kmart failed to recognize their competitor’s advantages. One key advantage was simply the new updated feel and cleanliness in superstore shopping that Wal-Mart offers. The second assumption was incorrect also because during Kmart’s buying spree they failed...
Words: 513 - Pages: 3
...Scott C. Kearns MGT6890 6/20/12 Kmart and Sears: Still stuck in the middle? Just two years after filing bankruptcy, Kmart Corporation stunned the retail industry with the acquisition of Sears in November of 2004. The acquisition of Sears for Kmart was a part of a growth strategy to help build and strengthen the once dominant giant discount retailer. Between the 1960’s and through the 1980’s Kmart was the number one leading retailer in the discount department store industry. For 30 years Kmart seemed to be doing everything right but as they were growing they were also slipping into a deep hole. Many factors played into their eventual retrenchment but supply chain management was their biggest fault. During the 1990’s growing competitors like Target, Sears, and Home Depot took a piece of Kmart’s market place pie with Wal-Mart taking the biggest slice. As sales declined over time due to the increased competition, management also was neglecting the company’s supply chain operation. This neglect created a surplus of goods doomed for blue light specials that would have to be stored in semi-trucks beds behind the store because the current products on the shelves weren’t moving. By the start of 2000, Kmart locations looked like they had been foreclosed on with giant cement parking lots filled with maybe a dozen cars on a good day. Eventually retrenchment day came Kmart filed for bankruptcy in January of 2002. Kmart was able to regain control of the company and emerge from...
Words: 1418 - Pages: 6
...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...
Words: 894 - Pages: 4
...problem solving. The most widely used parts included in this type of essays are: business plan, financing strategy, organization of the company, business project, competition, strategic planning. The rapidity of business development requires the knowledge of all processes associated with leading companies in Canada and the United States as well as in the rest of the world. This is a free extract from business school essay created by one of our writers. This sample is the property of Essay-Paper.net. If you use this paper, you should cite it properly. [...] The Kmart Holding Corporation informed about its intention to acquire Sears and all business publications all over the country reported on the outcomes on the retailers, the real estate implications and the resolve of this step. It is clear that the acquisition of Sears by Kmart Holding Corporation may change the course of future corporation’s actions and plans. The Kmart is presently number three retailer after Wal-Mart and Target in the country. An academic analysis that was conducted on this event states the positive and negative results of the acquisition. [...] Tom Speh, the Rees Distinguished Professor of Distribution at Miami University, thinks the acquisition is a wrong step in this situation: "I do not think these companies...
Words: 633 - Pages: 3
...JAMES W. CULLITON DAVID F. HAWKINS JACOB COHEN Superior Manufacturing Company New Management Do No Upon taking office in February 2005, Waters decided against immediate major changes. Rather, he chose to analyze 2004 operations and to wait to see results for the first half of 2005. He instructed the accounting department to provide detailed expenses and earnings statements by products and departments for 2004 (see Exhibit 2). In addition, he requested an explanation of the nature of the company’s costs including their expected future behavior (see Exhibit 3). Company and Industry The Superior Manufacturing Company made only three industrial products: 101, 102, and 103. They were sold by the company’s sales force for use in the processes of other manufacturers. All of the sales force, on a salary basis, sold the three products but in varying proportions. Superior sold ________________________________________________________________________________________________________________ Professor James W. Culliton prepared the original version of this case, HBS No. 156-004. This version was prepared by Professor David F. Hawkins and Jacob Cohen, Affiliate Professor of Accounting and Control at INSEAD. HBS cases are developed solely as the basis for class discussion. The company mentioned in the case is fictional. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2004 President...
Words: 3364 - Pages: 14
...A Once-Touted Kmart In Discount-Store Race --- When Antonini Took Over, His Chain Was in Front; Walton's On-Line Bet --- Shabby to Chic -- and Back By Christina Duff and Bob Ortega Staff Reporters of The Wall Street Journal 03/24/1995 The Wall Street Journal A1 (Copyright (c) 1995, Dow Jones & Co., Inc.) Was Sam simply smarter? The forced resignation Tuesday of Joseph Antonini represents an official verdict. For seven years, he led a discount store to battle against what appeared to be its twin. The two chains looked alike, sold the same products, sought each other's customers. They even dated back to the same year -- 1962 -- and bore similar names: Kmart and Wal-Mart. The competition, however, is over: Sam Walton's Wal-Mart Stores Inc. won. So bleak are the prospects for Kmart Corp. that in February an advertising agency bidding for its business, N.W. Ayer & Partners, recommended that it stop competing against Wal-Mart and transform itself into a big convenience chain where customers could go for milk and cigarettes. "It seems that the only way for [Kmart] to survive is to find a different niche," says one person familiar with the presentation. Kmart rejected the idea. Though a savvy new leader could spark high hopes for ringing cash registers, Kmart still has "major operational and managerial issues to deal with," says Marilyn Weinstein of the College Retirement Equities Fund, a Kmart shareholder. While an air of inevitable defeat had recently settled over Kmart, a short look...
Words: 2167 - Pages: 9
...The key factors for success in this industry are: *Compared together, Wal-Mart, Target and Kmart are very close competitors. They are all retail-variety discount stores making their existence known throughout the world, except Target, which you cannot find globally. These three companies are constantly vying for the reputation as the lowest priced retailer. *In the competitive profile matrix, the most critical success factor would be advertising with this, Target was scored the highest with a rating of 4 while both Wal-Mart and Kmart are rated as a 3. This is because Target does a lot more advertising then Wal-Mart and Kmart. *The next most critical success factor is global expansion with Wal-Mart was found to be rated the highest with a 4 with Kmart was rated next with a 3, and finally Target rated as a 2 because Wal-Mart was the highest are found around world, than Kmart was next because they are only found in a few other countries. And finally Target, ranking last, does not have any global branches that insignificant weakness. *Price competitiveness and financial position with Wal-Mart, the highest in both cases with a 4, is above all competitors. This is because they price reasonably with lower prices then all the competitors and their financial position is great. Target is next with a rating of 3 in both price competitiveness and financial position because somewhat high prices and people tend to see that and want to go shopping elsewhere like Wal-Mart. Their financial...
Words: 475 - Pages: 2
...businesses—core business, their size, financials, global presence, use of e-business (marketing, sales, etc.). A great example of companies that utilized completely opposite paths in the business world is Wal-Mart and Kmart. Recently, Kmart is on an endless downhill spiral while Wal-Mart has risen to the top of the retail industry and is their financial strength is strong. Wal-Mart is the largest business enterprise in the world as well as the nation’s biggest employer and the number one retailer in the U.S. There are over 5000 Wal-Mart stores and they report sales over three-hundred billion dollars. Two million people are employed by Wal-Mart in twenty-eight countries in the world. Fortune magazine’s 2010 Most Admired Companies Survey ranks Wal-Mart among the top ten retailers. Kmart is now the #3 discount retailer behind Wal-Mart and Target. There are 1,300 Kmart stores located in 49 US States as well as Puerto Rico, Guam, and the US Virgin Islands. Compare and contrast their outcomes (one successful, one unsuccessful). Kmart and Wal-Mart both began in 1962 and they both sold the same products. The difference in their outcome is in their individual diversification strategies. Kmart paid little attention to its core business as well as its competition. Instead, Kmart purchased the Sports Authority, Office Max, Borders, Payless Drugs,...
Words: 1410 - Pages: 6
...Diversification Strategies Arissra Stamps Strayer University Diversification Strategies Types of Diversification Strategies Diversification is a business strategy that allow a company to establish additional lines of commerce that maybe different from the current products or services. Depending on company’s directions, the different types of diversification that company utilize are: Horizontal, Vertical, Concentric, Heterogeneous (Conglomerate) and Corporate Diversifications (Small Enterprise Strategic Development Training, 2009). Horizontal Diversification is used when the company wants to develop new product or offer new service that could appeal to current customers. For example, a dairy who produces cheese wants to expand its products with new types of cheese. A construction company may choose Vertical Diversification; it may venture into new selling product such as paint and construction materials while the core business remains in providing construction services. Concentric Diversification is the method a company uses to enlarge the production portfolio by adding new products and aiming to utilize the potential of existing technologies and market system. The best example of this strategy would be a bakery who sales bread, pastries and cake who begins to sale dough products. Heterogeneous or Conglomerate Diversification is opposite from Concentric because it focus on new products or services that do not use existing technologies and does not have any commercial...
Words: 1684 - Pages: 7
...Introduction Sears, the ten largest retailer in the united states was founded by Richard W. Sears in 1925. By 1963, Sears became the number one retailer in the US. Kmart was founded by S.S. Kresge Co in 1967, becoming the second largest retailer in the US. In November 2004, Sears and Kmart announced the merging of the company. The initial purpose of both companies merging is to leverage the combined strenghts of Sears and Kmart. They merger also to obtain greater long term value. The new corporation, which selected preferred name is Sears Holding Corps over Kmart, planned to offer customers a new experience. The Problem The preliminary problem statement is “through organizational behavior, how would Sears Holding Corp improve their current CEO approval rating. The approval rating sits at 30%. Some suspect the approval rating is a reflection decisions made under the CEO watch. One decision that was questioned was fund manager tur ned CEO Eddie Lampert purchasing a $40 million dollar home, while 173 stores were being closed. Forbes magazine called him the second worst CEO in an American company with views suggesting that he has destroyed Sears. Since Sears and Kmart merged, the organization has been on the decline. There was a lost of 4.7 billion in revenue, which is the second worst among peer group. No matter how hard Sears is trying to change their image, they are not having much success. Preliminary Solutions Now that the problem was discovered. The...
Words: 429 - Pages: 2
...a few are Kenmore, Craftsman, and Diehard. They also have various clothing brands two of the best known are Lands’ End, and Joe Boxer. Sears and Kmart also offer the Country Living Collection. Among the companies’ many other attributes they were named the Energy Star Retail partner of the year for 2011. The corporation has several subsidiaries through which it operates; these are Sears, Roebuck and Company and Kmart Corporation. Sears merged with Kmart in 2005 after the shareholders of both companies voted to do so (Sears Holdings Corporation, 2011). Kmart and Sears felt that by merging they could be more demographically accessible. Both companies shared a “customer-focused” culture and this would help them to improve revenue. Maintaining the two brands allowed the corporation to focus on different demographics without making anyone feel left out. Now the company is ran by a board of directors which includes members from both companies. Shareholders from the Kmart Corporation were given stock in the new company. Shares of Sears Corporation were separated into a percentage of stock and a percentage of cash and the shareholders could choose one or the other. According to press releases and other news about the take over led the public to believe this was a smooth merger; when in fact it was quite the opposite. Kmart had run into financial problems and filed bankruptcy, and had sold some of its stores to Sears. When...
Words: 1196 - Pages: 5
...Walmart It all began in 1962, Sam Walton opened his first Wal-Mart store in Rogers, Arkansas. This was when grocery stores were becoming popular and he wanted to take a different spin on the idea. He followed behind Kmart and Target. Today Walmart has over 8500 stores in 55 different countries and employees over 1.4 million people. Walmart has set a precedent that others have tried to follow, but have not been as successful. Walmart has built its empire on the “one stop and shop.” Walmart offers everything from groceries to clothes, cell phone service, tires, oil changes, and even gas at discount prices. Walmart’s organizational structure has been successful and is still growing. It is evident in the amount of revenue generated each year, their marketing strategy, and the number of new stores they open yearly. Walmart vs. Target vs. Kmart Walmart’s structure consists of a board of directors and below the directors is the senior management. This type of structure is vertical. The board consist of 15 members, including the head chairperson Sam Walton and Mike Duke the CEO. The committee also has inside directors. Target is another store that also has vertical structure with a board of directors. Kmart is on a smaller scale due to recent financial and restructuring of their organization. Target Target is also a discount store, but they offer a different spin. They are more focused on the style. Target’s corporate strategy is one that has changed little over the years: to provide...
Words: 992 - Pages: 4
...Kmart და Sears: ისევ პრობლემები??? 2002 წლის 2 იანვარს კორპორაცია Kmart გახდა უდიდესი საცალო მოვაჭრე ამერიკის ისტორიაში, რომელსაც დასჭირდა გაკოტრების საქმის წარმოება. Kmart-მა მოითხოვა რეორგანიზაციის საქმის დაწყება აშშ–ის გაკოტრების კოდექსის მე-11 თავის მიხედვით და განაცხადა, რომ დაფარავს კრედიტორულ დავალიანებას და გააკეთებს ბიზნესის რესტრუქტურიზაციას ისე, რომ შეძლოს სასამართლოს დახმარების შემდეგ დარჩეს კონკურენტუნარიან მოთამაშედ საცალო ბაზარზე. Kmart-მა თავი დააღწია გაკოტრება 2003 წლის მაისში, თუმცა, ამ დროისთვის ჯერ კიდევ არ ჰქონდა ჩამოყალიბებული ძალზედ კონკურენტულ ბაზარზე წარმატების სტრატეგია. ამერიკულმა დაბალი ფასების საცალო ბიზნესმა 2004 წელს განვითარების მწევრვალს მიაღწია და ამ დროისთვის Kmart-ს უკვე აღარ ჰქონდა მკაფიოდ გამოხატული პოზიცია ამ ინდუსტრიაში. მისი ძირითადი კონკურენტები იყვნენ Wal-Mart, Sears, Target, Kohl’s, J.C. Penney, გარდა ამისა, იყვნენ მეორადი კონკურენტები კონკრეტული კატეგორიების მიხედვით. ამ ბაზარზე ლიდერი იყო Wal-Mart, რომელსაც ჰქონდა ყველაზე დიდი გაყიდვები და მცირე დანახარჯები (შესაბამისად, დაბალი ფასები). Wal-Mart-მა მოქმედება დაიწყო ამერიკის არაურბანულ ნაწილში და აქტიურად იზრდებოდა საერთაშორისო მასშტაბით. წლიური გაყიდვების მხრივ მეორე ადგილზე იყო Sears, რომელიც ბაზარზე პოზიციონირებული იყო მყარი საქონლით, როგორიცაა საოჯახო ტექნიკა, ასეთი საქონლის გაყიდვების 40% კონტროლდებოდა Sears-ის მიერ. თუმცა Sears-ის გაყიდვები მაინც შემცირდა, რადგან მომხმარებლები უფრო და უფრო ამჯობინებდნენ Sears-ის მოლის ტიპის მაღაზიებს ავტონომიური ბიგ ბოქს ტიპის ჰიპერმარკეტებს...
Words: 818 - Pages: 4
