Background In 1989, Sebastian Spering Kresge opened Kmart, a five-and-dime store in Detroit. The low prices appealed to shoppers and he was able to open 85 more stores in 1912. By 1927, the Kresge Company started opening locations that sold items for $1 or less. Ten years later, he opened a store in a shopping center in Kansas City, Missouri (Sears Holdings, History). In 1968, Kmart begin to air television commercials to entice shoppers to the stores. Harry B. Cunningham became president in 1959, and developed a new strategy for the organization. While Cunningham was president, Kmart opened their first discount department store in 1962 in Garden City, Michigan; that same year seventeen more stores were opened. In 1976, Kmart made history by opening 271 stores in one year. In 1977, the company changed its name to Kmart Corporation. In order to fully focus on discount merchandising, Kmart sold the remaining Kresge stores (Sears Holdings, History). In 1990, Kmart took on a new logo and a new plan. As part of the plan, Kmart opened the first Kmart Supercenter in Medina, Ohio in 1991. Kmart was totally redesigned in 1996 and became known as Big Kmart. In 1999, Kmart launched a Internet presence, BlueLight.com; it offered free internet services (Sears Holdings, History). In 2002, the company filed Chapter 11 in the US Bankruptcy Court. Julian Day was promoted to CEO in January of 2003. Under his leadership, the company emerged from the Chapter 11 reorganization process (Sears Holdings, History).

Strategic Direction
Mission Statement
The mission statement is a very important element in the business model of an organization. It is established that it should be clearly defined and capture the eight primary elements. Why is this so important? To most consumers, it probably does not matter if a company such as Hasbro has a proper mission statement. But in the competitive world of business, image is everything. There are some that purposely set out to dissect a company in order to find weakness and to gain an advantage. Companies are looking for ways to gain access to its competitors’ market share and profits. The company’s image does matter. And so does its mission statement. In the case of Sears’ mission statement, there are elements missing. Sears’ mission statement reads:
“We are committed to improving the lives of our customers by providing quality services, products and solutions that earn their trust and build lifetime relationships” (Retail Industry, Mission Statement).

In reviewing Sears’ mission statement, the organization makes reference to its profit and growth, product and services, customers and philosophy. The company failed to mention its markets, public image, employees and technology. After reconstructing the mission statement, it should read:
“We are committed to improving the lives of our customers by providing quality services, products and solutions that earn their trust and build lifetime relationships. We have employees that are highly trained that assist us in offering the best products and services to our customers all over the world. We are using the latest technology to ensure our operations are always effective and efficient. Customer satisfaction is a must. Our goal is to grow and prosper. We are committed to be socially responsible and environmentally sound.”

Vision Statement
Vision statements are not as common as an organization’s mission statement. The vision statement should build the foundation for the mission statement. It is usually short and always developed before the mission statement. Sears’ vision statement reads: “To be the preferred and most trusted resource for the products and services that enhance home and family life" (Making a Fortune, Vision Statement). Sears’ mission statement does build upon its vision statement.
Goals and Objectives
According to Sears, their goals and objectives are:

“Creating lasting relationships with customers by empowering them to manage their lives; Attaining best in class productivity and efficiency; Building our brands; Reinventing the company continuously through technology and innovation and Reinforcing "The SHC Way" by living our values every day” (Sears, Goals and Objective).

Sears’ goals and objectives seem to have been developed from the concepts that are expressed in their mission statement. Sears’ goals and objectives are directly in line with their mission statement.
Industry Codes
Company SIC Code NAIC Code
Sears 53110000 45211
Target Corporation 53310000 452112
Walmart 53310000 452910
Amazon.com 59610000 454111 After researching Sears, it was discovered that Sears and its competitors all have different SIC and NAIC codes. Sears SIC code, 53110000, suggests that this company focus primarily on department stores. The NAIC code, 45211, suggests that this firm directs its focus on department stores. With the closeness of SIC and NAIC codes for Sears and Target, one would say that they are in the same market and are competitive. The SIC and NAIC codes of the other competitors implies that the competitive environment is not very competitive (Hoovers, Industry Codes).
Industry Environment
Rivalry among Competitors
Sears’ competitors consist of Target, Wal-Mart and Amazon. Sears’ annual sales revenue was 39.85 billion dollars in 2012. Amazon’s annual sales revenue was 61.09 billion in 2012. Target’s annual sales revenue was 73.30 billion in 2012. And it appears that Wal-Mart led the industry with annual sales of 469.16 billion dollars in 2012. (Hoovers, Rivalry Among Competitors). Sears definitely has competition and will have to strive to develop a strategy that would give them a competitive advantage in the industry if they want to achieve and maintain a high market share and corporate profitability. competitive structure.
The competitive structure of Sears is a monopolistic competition. There are a number of different companies in the market that try to differentiate their products enough to gain a competitive edge in the market. This type of competition has very intense rivalry. The top three competitors of Sears are Target, Wal-Mart, and Amazon.com. The competitive landscape shows that Wal-Mart had the highest amount of sales last year, followed by Target, Amazon, and Sears. Target, Wal-Mart, and Amazon had a positive net profit margin, while Sears operated at a negative net profit margin (Hoovers, Competitive Landscape). industry demand. Companies in this industry control physical retail establishments that sell items such as clothing, cosmetics, footwear, and home furnishings, typically from registers within individual departments. “The output of US department stores is forecast to decline at an annual compounded rate of 2 percent between 2013 and 2017” (Hoovers, Industry Description). Since the output will potentially become lowered, this also means that competition is increasing. cost structure.
The cost structure rule says that if the company’s fixed assets are greater than 50% of total assets, that company has a fixed cost structure. Sears’ fixed assets are 31.30% of total assets, so they have a variable cost structure. In 2011, their fixed assets were 30.76%, so it is safe to say that this company will always have a variable cost structure. Having a variable cost structure theoretically implies that as cost of goods sold increases, net income will also increase (Hoovers, Balance Sheet).
Barriers to Entry economies of scale.
Sears does not really experience economies of scale at this point in their business. Their revenue has been steadily decreasing with no positive numbers in the future forecasts. They simply do not have the means to operate on a scale as large as their competitors. For example, when comparing prices of the same product at Sears and Amazon, there is usually free shipping with Amazon and cheaper prices. Sears is not profitable so they cannot operate large scale and produce enough products to cause cost reduction (The Motley Fool, Economies of Scale). absolute advantage.
An absolute advantage found in Sears’ annual report is “The KMART® and SEARS® trade names, service marks and trademarks, used by us both in the United States and internationally” (Annual Reports, Absolute Advantage). This is a good thing because it helps Sears to protect their investment. As this organization perfects their strategies in this area, they will ultimately be able to keep out any new potential competitors and maintain a high market share and corporate profitability. customer switching costs.
By definition, customer switching cost refers to the cost or expense that a customer would incur by switching to a competitor. Every company desires to have high customers switching costs, but not every company has developed and implemented a strategy that will cause them to experience their desire. Sears is one of those companies that do not have customer switching costs. This organization should develop and implement a strategy to achieve high customer switching cost, if they want to prevent customers from going to their competitors, which will in turn cause them to lose their market share and corporate profitability. government regulation.
Sears has to adhere to governmental regulations. “Department stores are lightly regulated, primarily through consumer protection laws. Federal and state laws regulate consumer credit offers and employment. Local zoning and occupancy requirements can affect new store construction and remodeling” (Hoovers, Regulation). With this information being considered, governmental regulations can serve as a barrier to keep potential new competitors out of this industry. brand loyalty.
Sears does have brand loyalty with their products. They have a loyalty rewards program that helps customers receive discounts in the future. This keeps the customers coming back to their stores, creating brand loyalty. Also, certain products that they carry help to build brand loyalty. For example, Sears is the number one retailer for fitness equipment. This has helped Sears gain repeat customers (Sears, Brand Loyalty).
Substitutes
Sears has many fundamental substitutes. “Substitute products are products that take the place of a traditional purchase and take a portion of market share away from retailers. Most of the substitutes for the retail industry come from “nonstore competition”. These include home-shopping networks, catalogs, and Internet sales” (High Country Biz, Substitute Products). One could suggest that the substitutes could affect Sears’s profitability.
Power of Suppliers Sears have many different suppliers. They have a contract that allows merchants to advertise or sell products on the Sears Holdings Corporation family of websites. This allows the suppliers to make their own price on their products. “Seller shall be responsible for establishing prices for its Merchandise. Pricing information shall be entered via the Portal. Seller warrants that all pricing information it provides for its Merchandise Listings is accurate” (Sears, Pricing). With this information being considered, in this method of selling, the suppliers do have the ability to raise or lower their prices. This means that Sears profitability may be threatened by these types of suppliers.
Power of Consumers
The power of consumers is very high in the case of retail businesses. Because there are so many other similar product providers, customers tend to switch to another if they can find the same product in better quality or price. With this source of power, consumers tend to have a greater control over the manufacturers (Hoovers, Company Overview).
Power of Distributors
According to Sears’ annual report, the company is at risk of having its distributors raise their prices. The report states:
“We have entered into agreements with third-party service providers (both domestic and overseas) to provide processing and administrative functions over a broad range of areas, and we may continue to do so in the future. These areas include finance and accounting, information technology, including IT development, call center, human resources and procurement functions. Services provided by third parties as a part of outsourcing initiatives could be interrupted as a result of many factors, such as acts of God or contract disputes, and any failure by third parties to provide us with these services on a timely basis or within our service level expectations and performance standards could result in a disruption of our business” (Annual Reports, Power of Distributors).

Sears’ strategy definitely shows signs of weakness. This weakness could ultimately cause them to experience problems in terms of getting their products or services to their end users. They are potentially giving their distributors the power to raise their prices. Sears should consider developing and implementing a sound strategy in order to ensure that they do not hinder their chances of achieving and maintaining a high market share and corporate profitability.

Macroenvironment- Opportunities and Threats
Legal/ Political
Sears was faced with a major legal issue last year. A maintenance worker named Alejandro Gamiz set up 20 hidden cameras in the dressing area of one of their stores. Sears was held responsible because they waited four months before telling the authorities about it. All together, 25 plaintiffs (customers and employees) accused Sears of negligent hiring, supervision, retention of employees, and invasion of privacy. This could pose a threat to Sears in that customers may not shop at their stores anymore for fear of being watched while trying on clothes. In turn, this could hurt the profitability of the company (Huffington Post, Legal).
Economic
Sears has an elastic demand curve, meaning that as price goes up, the demand for the product goes down. Sears’ current level of debt is 42.7% and their current rate of interest is 6.625% (Morning Star, Debt). The current prime rate of interest is 3.25% (Bank Rate, Prime Rate). This implies that Sears has opportunity for refinancing. The latest inflation rate is 1.2% (US Inflation Calculator, Inflation Rate). This is an opportunity for the company because inflations is not increasing at a fast rate. Also, they could safely invest with minimal risk. The current unemployment rate is 7.2%, which is slowly decreasing. This is an opportunity for Sears because if more people are working, then more income is coming into home. More people have more money to spend. Sears Holding does hedge its funds. There are currently 20 hedge funds in place with Sears Holdings (Insider Monkey, Economic).

Technological In the business world, a lot of businesses have technological opportunities and threats. Opportunities and threats are defined as factors that contribute to the success or failure of achieving the organization’s mission, which are outside of the organization’s direct control. Sears has many external factors that can make or break their company. Sears has many opportunities. An opportunity of Sears would be the advances in technology. Radio Frequency Identification (RFID) is used to create value. “The use of RFID in retail to deliver enhanced customer experiences is growing as well. For Macy’s, installing RFID in the shoe department will be their first “broad use of RFID.” After shoes, Macy’s plans to expand into basic merchandise - items that they need to make sure are always in stock and are in need of constant replenishment. At the end of the day, RFID is about simplicity and innovation. By automating manual tasks, RFID technology can improve the customer experience while driving sales and reducing costs” (Thing Magic, Technology). One would expect that Sears would benefit greatly by new technology.
Sears also has many threats. A threat to Sears would be the competition it gets from online retailers. “In addition, the spread of malls and online retailing are threatening to replace department stores as principal venues of shopping, even before the latter have had time to win a loyal customer base” (Asahi, Competition). With this information being considered, competition from online retailers does affect Sears; it could possibly affect their profitability.

Social
Not long ago, Sears was the major employer after Wal-Mart. In 2011, Sears had 280,000 employees in the United States and 32,000 employees in Canada. Since then, these numbers have decreased. Sears is operating at a negative profit margin, so things are not really looking hopeful for the company. Sears merged with Kmart thinking that it would increase their numbers, but so far it has not been successful (Hoovers, Social).
Demographic
How does a company’s research on demographics help them to achieve and maintain a high market share and corporate profitability? Demographics refer to age, gender, geography, ethnicity, social class and in some cases sexual orientation. When a company does research on demographics they are attempting to gain an advantage by analyzing the opportunities and threats of their company’s external environment. In the case of Sears, their target market is primarily middle class men and women. Since the recession, the people that Sears is targeting have become more conscious of their spending. They are more conscious about preparing for their future. They are focused on making wiser decisions in regards to making purchases versus saving and investing in order to have a better retirement amount. This is a possible threat to Sears. A recent survey states:
“Yet for the vast majority, the shock of the Great Recession lingers — and that’s a good thing in terms of how most folks are managing their money. In a new survey from Fidelity, nearly half of respondents say even now they are saving more, reducing debt and building an emergency fund. A new survey from Principal Financial finds that the number of workers preparing for retirement is on the rise and that most workers who expect a tax refund plan to save or invest it, or pay down debt. Before the crisis, people commonly cited going on vacation and buying big ticket items as well. Perhaps most telling, the Fidelity survey found that 78% of those who have taken steps to shore up their finances say the measures are part of a new and permanent personal financial strategy. “The sheer number of people who say the changes are permanent was probably most surprising,” says Ken Hevert, vice president of retirement products at Fidelity” (Business Time, Demographics).

Another factor Sears has to consider in a demographic study is age. Sears offers their products and services to all that have the capacity and desire to purchase their product; so therefore, this can be seen as an opportunity for Sears. But the problem is that Sears’ primary target market is the middle class. If the middle class customers that Sears is targeting happen to be 35-50 years of age, this could be a threat according to the data gathered. In the article, At what age should you start retirement planning?, one should start:
“making retirement plans is going to be when you are in about you mid thirties. You should also be looking at your savings so that you can determine where you stand and how realistic your goals are. The real planning for retirement should start when you get into your mid forties. At this point you will have a better understanding of where you are financially and how realistic your goals are. Even at this stage most of your planning will be about goals more than definite plans. However you should have a good idea of how much money you will have available to retire with. It is when you get into your fifties that you are going to want to start doing the really serious planning for retirement” (Bridge Web, Demographics).

Most of these people have decided to curtail their spending because of lingering thoughts of the recession and the need to prepare for retirement. This may cause Sears to experience a threat in terms of age.
Sears definitely has presence in the global market and they appear to have taken advantage of this opportunity. Gender does not appear to be a factor in our current times, but instead an opportunity for Sears. At this time there are just as many women, as there are men in the marketplace; which means that they are more likely to be able to purchase Sears’ products. Social class does not pose a threat because their products and services are not considered to be luxury items. This is an opportunity for Sears. This company like any other successful company has to be aware of the trends in their industry if they want to gain and maintain a high market share and corporate profitability. New and potential companies are always looking for ways to gain access.
Global
Sears is currently running operations in one country outside of the US which is Canada. “Sears Holdings Corporation is a U.S. based company headquartered in the Chicago suburb of Hoffman Estates, IL. With over 2600 retail stores in the U.S. and Canada, Sears is one of the major brands and leading retail stores in the U.S.” (Google, Global). Global market presents a significant opportunity to businesses because it opens the doors for expansion.
Sears does outsource jobs. “Over the past decade, Sears increasingly outsourced the technology development to third party technology outsourcing vendors and independent contractors, with limited coordination or strategic focus to how they were deployed. Over time, the number of vendors and contractors grew to the point that it began to deteriorate in-house technology capabilities and resulted in the loss of intellectual property” (Google, Outsourcing). Outsourcing provides an opportunity to Sears because it can increase their gross margin and profit.
Internal Environment- Strengths and Weaknesses
Finance
Analysis of Financial Performance. vertical analysis. BALANCE SHEET | 2012 | | 2011 | *in millions | | | | Cash | 3.15% | | 3.49% | Net Receivables | 3.28% | | 3.25% | Inventories | 39.08% | | 39.32% | Net Fixed Assets | 31.30% | | 30.76% | Other Noncurrent Assets | 20.80% | | 21.33% | Total Assets | 100.00% | | 100.00% | | | | | Accounts Payable | 16.65% | | 17.03% | Short Term Debt | 7.10% | | 8.22% | Other Current Liabilities | 26.99% | | 28.63% | Long Term Debt | 11.72% | | 12.21% | Other Noncurrent Liabilities | 37.55% | | 33.92% | Total Liabilities | 100.00% | | 100.00% | | | | | | | | | INCOME STATEMENT | | | | *in millions | | | | Revenue | 100.00% | | 100.00% | Cost of Goods Sold | 73.62% | | 74.50% | SG&A Expense | 26.75% | | 25.65% | Operating Income | -2.10% | | -3.61% | Net Income After Taxes | -2.64% | | -7.51% |
Sears’ cash decreased slightly from 2011 to 2012. It went from 3.49% to 3.15%. This is a weakness for the company, showing that they are paying out too much money somewhere and are not able to stop a significant amount. Inventories decreased slightly also. This is because they did not produce as many products in 2012 as they did in 2011, from looking at their cost of goods sold. Current liabilities decreased slightly, as well as long term debt. This is a strength for the company, showing that they do not owe as much money as they did the previous year. Sears’ SG&A increased from last year to this year. This could be a weakness for the company is the expenses continue to rise (Hoovers, Balance Sheet). ratio analysis. Sears Ratio Analysis | | | Target | Wal-Mart | Amazon | | | 2013 | 2012 | 2013 | 2013 | 2013 | Industry Average | Liquidity | | | | | | | Current Ratio | 1.10 | 1.11 | 1.17 | 0.83 | 1.12 | 1.41 | Quick Ratio | 0.15 | 0.2 | 0.06 | 0.2 | 0.78 | 0.37 | | | | | | | | Leverage | | | | | | | Debt-to-Total Assets | 0.16 | 0.16 | 0.37 | 0.27 | 0.09 | - | Debt-to-Equity | 1.13 | 0.82 | 1.07 | 0.71 | 0.38 | 1.22 | Long-term Debt-to-Equity | 0.71 | 0.49 | 0.89 | 0.54 | 0.38 | - | | | | | | | | Activity | | | | | | | Inventory Turnover | 3.51 | 4.94 | 6.34 | 8.52 | 9.25 | 3.45 | Total Assets Turnover | 1.90 | 1.94 | 1.61 | 2.39 | 2.56 | 1.51 | Accounts Receivable Turnover | 63.54 | - | 26.53 | 83.27 | 25.74 | 26.65 | Average Collection Period | 5.74 | - | 13.76 | 4.38 | 14.18 | 13.69 | | | | | | | | Profitability | | | | | | | Gross Profit Margin | 25.39% | 25.50% | 30.21% | 24.92% | 26.55% | 33.01% | Operating Profit Margin | -3.93% | - | 5.68% | 5.47% | 0.56% | 1.46% | Net Profit Margin | -3.80% | 0.31% | 3.69% | 3.61% | 0.19% | 0.35% | Return on Total Assets | -7.22% | - | 5.92% | 8.62% | 0.48% | 0.53% | Return on Stockholders' Equity | -42.96% | - | 16.97% | 24.09% | 1.59% | 1.86% | | | | | | | | Growth | | | | | | | Sales | -4.12% | - | 4.92% | 4.97% | 27.07% | -1.80% | Net Income | - | - | 2.39% | 8.28% | - | 31.21% | Earnings Per Share | - | - | 5.61% | 10.57% | - | - | Dividends Per Share | - | - | 20.00% | 8.90% | - | - |

Sears can meet its short term debt obligations pretty easily, but only with the sale of their inventory. Their amount of debt is pretty close to average when compared to their top competitors and the industry. Sears’ average collection period is above average. Their collection period is 5.74 days as compared to Target and Amazon that is 13 or 14 days. The industry average is 13.69. Sears is below the average in the profitability section (Hoovers, Income Statement).

Analysis of Common Stock historical trend.

This chart represents the stock quote for Sears. It is benchmarked against the Nasdaq Composite Index and compared to its top competitor, Target. The performance of stock for Sears is steady fluctuating. By looking at this chart, one could suggest that Sears started to decline below the level of their competitor in 2012. They are doing worse than their competitor, Target (Hoovers, Stock Quote and Chart). current performance.
The current price of Sears’ stock as of November 18, 2013 is $64.02. Sears had a 52 week high of $65.19 (Hoovers, Current Performance). They had a 52 week low of $62.07 (Hoovers, Current Performance). They are not currently yielding any dividends. This is a weakness that could investors to take a second look at whether or not they would want to invest in Sears.

risk.
The beta of Sears is 2.19, making it more volatile than the market. This means that investing in this company’s stock is high risk. There were a couple of stock splits, one in 2010 and one in 2012 (Hoovers, Market Data).
Marketing
product.
Sears is determined to capture the market in its industry. Sears has a variety of products and services to offer its customers. Sears’ product and services includes:
“Sears Holdings is the leading home appliance retailer as well as a leader in tools, lawn and garden, fitness equipment and automotive repair and maintenance. Key proprietary brands include Kenmore, Craftsman and DieHard, with a broad apparel offering, including such well-known labels as Lands' End, the Kardashian Kollection, Jaclyn Smith and Joe Boxer, as well as Sofia by Sofia Vergara and The Country Living Home Collection. We are the nation's largest provider of home services, with more than 14 million service and installation calls made annually,” (Sears, Product/Services Description).

Their total revenue is reported to be 39.85 billion in 2012. This is considered to be a strength in their marketing strategy. This will also cause Sears to gain a high market share and corporate profitability. price. Sears’ target market is middle class men and women. They are in competition with Target, Wal-Mart and Amazon. The retail industry is an extremely competitive industry. Some of Sears’ products and services are offered on a seasonal basis. Considering this information, Sears has to keep their pricing competitive in regards to the industry’s average. Sears has to pay close attention to their pricing if they want to remain competitive. Sears has to monitor its gross margin percentage to see if their price is sufficient or competitive. If their pricing is not correct it could ultimately affect their market share and corporate profitability. place.
Sears’ customers are able to partake of their products and services in many different outlets such as catalogs, online and department stores. The variety of outlets is a strength in their marketing strategy. This will help Sears to gain and maintain a high market share and corporate profitability. promotion.
Sears promotes their company through several advertising methods. Sears uses print, TV, Internet or digital-media in order to make their brand known to their target market. These methods have proven to be effective for Sears thus far. According to Sears’ mission statement, “We are committed to improving the lives of our customers by providing quality services, products and solutions that earn their trust and build lifetime relationships.” They are attempting to allow their customers to know that they have developed their product and services to meet their needs and gain their loyalty. This a strength in their marketing strategy. This all adds up to satisfied customers and a high profit margin and corporate profitability.
Operations
Sears has close partnerships with their third party vendors and factories and they regularly communicate with them about ethical manufacturing issues. Sears has long term contracts with their suppliers, so this usually eliminates any timing issues. According to their cash flow statement, Sears has invested in new fixed assets in the amount of $497M. Sears also puts into place every inventory control measure that they possibly can to keep inventory loss at a minimum (Market Watch, Cash Flow).
Sears is committed to offering quality, safe products. They require their vendors to warrant the products sold to them that they follow all applicable laws. Sears takes extreme measures to make sure that each product is of the best quality (Sears Holdings, Quality).
Location is really no problem for Sears because their products are shipped worldwide. This is a strength for the company in that, no matter where they are headquartered or the location of their warehouses, the products are being sold internationally.
Sear’s sustainability is pretty weak as of present. Sears’ business model for the industry could use some improvement so the public will have a positive view of them. This will happen when they start operating at a positive profit margin. Sears does have sustainability goals for which they strive to maintain (Sears Holdings, Sustainability).
Human Resource Sears has a key person that provides a strength to the company, Edward Lampert. “Mr. Edward Scott Lampert, Eddie, serves as the Chairman of the Board of Sears Holdings Corporation and has been its Chief Executive Officer since February 1, 2013. Mr. Lampert serves as the Chief Executive Officer, Chief Compliance Officer, and Chairman of ESL Investments, Inc and its Founder since April 1988. He serves as the Chairman of Kmart Holding Corp.” (Business Week, People). This key person creates a strength for the company. After researching Sears Holdings, it seems that they do have a work life balance. According to an employee as Sears, “I have been working at Sears Holdings Corporation full-time for less than a year. Pros – flexibility to work in any technology. Cons – no cons as such I found yet” (Glass Door, Reviews). With this information being considered, the work life balance is a strength to Sears. Also after researching Sears Holdings, it seems that they do not have any employee training programs in place. This creates a weakness for the company. Also, there was not anything found that states how Sears value their employees; this is also looked upon as a weakness.

SWOT Matrix | Strengths * Current liabilities and long term debt is decreasing * Location within the market (place) * Promotion * Key personnel * Work life balance | Weaknesses * Cash decreased * SG&A increased * Not yielding dividends * No employee training * No statement on valuing employees | Opportunities * Refinancing * Steady inflation rate * Decreasing unemployment rate * RFID’s * Global presence * Outsource jobs | S-O Strategy * Use promotions to reach the working class * Use work life balance to obtain more global presence | W-O Strategy * Lowering SG&A could possibly help to outsource more jobs * Begin employee training in order to take advantage of more outsourcing | Threats * Litigation * Competition from online retailers * Target market | T-S Strategy * Use market location to possibly become more competitive with competitors * Use promotions to reach other target markets | W-T Strategy * Work on increasing competition with competitors * Offer employee training to avoid litigation |

In the S-O strategy, if Sears continue to use good methods of promotion to reach the working class; this could possibly increase their gross margin and profit. Also, they should continue to create a work life balance for their employees; tis could possibly create more global expansion, since people like employers that offer a great work life balance.
In the W-O strategy, Sears should work on lowering their SG&A expense; this could possibly save the company some money. The money saved could be used to outsource jobs which will in turn save the company money. Also, if they trained employees, people with the “know how’s” could create more jobs worldwide.
In the T-S strategy, Sears should continue to work on their marketing locations to boost their competition with their competitors; this can possibly increase their gross margin and profit. Also, they should use promotions to reach other target markets; which would also increase their gross margin and profit.
In the W-T strategy, Sears should work on increasing their competition with their competitors. Increasing competition could possibly cause Sears to be a lead seller and in turn increase their profitability. Also, they should offer employee training to possibly avoid some litigation.
Distinctive Competence and Competitive Advantages Sears is doing very well in the department store industry. They are the leading home appliance retailer as compared to their competitors. They were named the 2011 Mobile Retailer of the Year, recipient of the 2013 ENERGY STAR " Partner of the Year - Sustained Excellence Award" for product retailing and energy management and were named one of the Top 20 Best Places to Work for Recent Grads. This is looked upon as a plus for Sears.
Key Weaknesses
A key weakness for Sears would be them not issuing dividends. This is a weakness that would cause investors to take a second look at whether or not they would want to invest in the company. Companies that pay a dividend is a good sign of that company’s financial stability. When companies pay dividends, it indicates they can afford to share profits. Dividends represent tangible profits because companies are paying them in cash directly to stockholders. Dividends also help contribute to total return and provide an opportunity to reinvest.
Central Problem One of the central problems that Sears has is who they are targeting. Their target market is the middle class population. This population of people has made some adjustments in their priorities in light of this country recent recession. They have decided to decrease the amount of money that they would normally spend on purchases, so that they will be able to save and invest more money for their retirement. This is definitely going to hurt Sears’ market share and corporate profitability.
Strategic Recommendations and Implementation
Sears has to re-evaluate who their target market should be in order to remain competitive and increase their market share and corporate profitability. Another problem that Sears is experiencing is an increase in SG&A expenses. If they were to lower this expense, this would give them some of the funds needed to make an adjustment in their marketing strategy. Their marketing strategy has to be analyzed and adjusted if Sears is going to have any hopes of competing and regaining a higher percentage of the industry’s market share. Sears has some great products and services that have stood the test of time. Sears needs to create a strategy that would help them to draw in customers that are in a lower income bracket without hurting their gross margin by selling what they are offering for prices that are insufficient or less competitive. This would cause Sears to then be able to compete with their competitors, keep out any new or potential companies and regain a higher market share and corporate profitability. This is one solution that could work, if the executives at the top would be open to working it. In order for this strategy to be considered and implemented, Sears would have to face another problem that they are having head on and that is the problem of employee training. Training should start at the top. The managers at Sears should receive relevant, proper training on how to market their products and services to this new target market. The top executives will need to be properly trained in order to set the tone for the other employees. This is actually another major problems that Sears is having according to an article entitled “Dysfunctional Competition, the knowing-Doing Gap and Sears Holding.” The article states:
“"At the beginning of 2010, Lampert hired 20-year Wal-Mart Stores veteran Jim Haworth to run Sears and Kmart stores as president of retail services. Haworth, an affable, mustachioed Midwesterner, saw immediately that Kmart’s food and drugs were more expensive than those at Walmart and Target. So he met with a few top executives, including Chief Financial Officer Mike Collins and operations chief Scott Freidheim, to look into discounting goods such as milk and soda. That summer the group asked the company’s internal research team to study the idea, according to eight former executives. The researchers came back with a proposal: Cut prices at several dozen Kmarts across the country, bringing the cost of items to within 5 percent of Walmart’s. The business unit presidents agreed. But when Haworth’s group tried to get them to cough up $2 million to fund the project, no one was willing to sacrifice business operating profits to increase traffic. The reason, according to the story, that no President was willing to cough up any funds was that cutting into their businesses operating profit would, in turn, reduce their bonuses. The parent company refused to fund the effort as well and the key executives involved in pressing for the proposal are no longer with Sears. In short, it is a nearly perfect example of how -- even though everyone knows the right thing to do for the collective good -- no one does it because they live in zero-sum, I win and you lose, world. As the article shows, this mindset can create some mighty ugly scenes: "The bloodiest battles took place in the marketing meetings, where different units sent their CMOs to fight for space in the weekly circular. These sessions would often degenerate into screaming matches. Marketing chiefs would argue to the point of exhaustion. The result, former executives say, was a “Frankenstein” circular with incoherent product combinations (think screwdrivers being advertised next to lingerie) This me me me mindset might work in situations where there is no need for collaboration, information sharing, or even pooled resources. But it doesn't work when people and units depend on each other to succeed” (Bob Sutton, Recommendation).
This shows the great need for training of the top level managers. Again, they set the tone for the company’s success or failure. The CEO has to take a look at the strategic plan that has been implemented to see if it is the best plan for Sears. Plans can and should be adjusted when necessary. The order for training should come from the top and start with the top without exceptions. Those that refuse to be trained because of their status or years at the company should be dismissed. No company will be able to succeed in the culture that Sears’ CEO is allowing. If they do not stop the inward fighting and begin to work as one team with one goal, Sears’ demise is inevitably at hand. They will continue to experience loss of net profits, and they will not regain nor maintain a high market share.

References
Absolute Advantage. AnnualReports.com N.p, n.d. 17 November 2013 http://www.annualreports.com/Company/4391
Balance Sheet. Hoovers.com N.p, n.d. 13 November 2013 http://library.umobile.edu:2137/H/company360/balanceSheets.html?companyId=137766000000000 Brand Loyalty. Sears.com N.p, n.d. 13 November 2013 http://www.sears.com/shop-your-way-rewards/dap-100000000380008

Cash Flow. MarketWatch.com N.p, n.d. 13 November 2013 http://www.marketwatch.com/investing/stock/shld/financials/cash-flow

Company Overview. Hoovers.com N.p, n.d. 13 November 2013 http://library.umobile.edu:2137/H/company360/overview.html?companyId=137766000000000 Competition. Asahi.com N.p, n.d. 12 November 2013 http://ajw.asahi.com/article/economy/business/AJ201308120101

Competitive Landscape. Hoovers.com N.p, n.d. 13 November 2013 http://library.umobile.edu:2137/H/company360/competitiveLandscape.html?companyId=137766000000000 Current Performance. Hoovers.com N.p, n.d. 17 November 2013 http://library.umobile.edu:2137/H/company360/detailedStockQuote.html Debt. MorningStar.com N.p, n.d. 13 November 2013 http://quicktake.morningstar.com/stocknet/bonds.aspx?symbol=shld

Demographics. BridgeWeb.com N.p, n.d. 18 November 2013 http://www.bridgewp6.com/at_what_age_start_retirement_planning.php

Demographics. Time.com N.p, n.d. 17 November 2013 http://business.time.com/2013/04/03/scared-to-prepared

Economic. InsiderMonkey.com N.p, n.d. 13 November 2013 http://www.insidermonkey.com/insider-trading/company/sears+holdings+corp/1310067/purchases/ Economies of Scale. TheMotleyFool.com N.p, n.d. 13 November 2013 http://beta.fool.com/kwmatt82/2013/02/20/dont-gamble-turnaround-candidate/24793/ Global. Google.com N.p, n.d. 6 November 2013 http://www.google.com/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=8&ved=0CFUQFjAH&url=http%3A%2F%2Fwww.iaop.org%2FDownload%2FDownload.aspx%3FID%3D2133&ei=xHV6UrPmK4uikQeKjIHgCw&usg=AFQjCNEadCWHcxYBeevkc0rE2ypTHOxGlA Goals and Objectives. SearsHoldings.com N.p, n.d. 17 November 2013 http://www.searsholdings.com/careers/learnmore_diversity.php

History. SearsHoldings.com N.p, n.d. 12 November 2013 http://www.searsholdings.com/about/kmart/history.htm

Income Statement. Hoovers.com N.p, n.d. 13 November 2013 http://library.umobile.edu:2137/H/company360/incomeStatements.html?companyId=137766000000000 Industry Codes. Hoovers.com N.p, n.d. 6 November 2013 http://library.umobile.edu:2137/H/company360/overview.html?companyId=137766000000000 Industry Description. Hoovers.com N.p, n.d. 6 November 2013 http://library.umobile.edu:2137/H/industry360/overview.html?industryId=1529

Inflation Rate. USInflationCalculator.com N.p, n.d. 13 November 2013 http://www.usinflationcalculator.com/inflation/current-inflation-rates/

Legal. HuffingtonPost.com N.p, n.d. 13 November 2013 http://www.huffingtonpost.com/2012/06/14/sears-lawsuit-videotaping-dressing-room-voyeurism_n_1596717.html Market Data. Hoovers.com N.p, n.d. 13 November 2013 http://library.umobile.edu:2137/H/company360/financialMarketData.html?companyId=137766000000000 Mission Statement. RetailIndustry.com N.p, n.d. 17 November 2013 http://retailindustry.about.com/od/retailbestpractices/ig/

Outsourcing. Google.com N.p, n.d. 6 November 2013 http://www.google.com/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=8&ved=0CFUQFjAH&url=http%3A%2F%2Fwww.iaop.org%2FDownload%2FDownload.aspx%3FID%3D2133&ei=xHV6UrPmK4uikQeKjIHgCw&usg=AFQjCNEadCWHcxYBeevkc0rE2ypTHOxGlA People. BusinessWeek.com N.p, n.d. 12 November 2013 http://investing.businessweek.com/research/stocks/people/person.asp?personId=1088656&ticker=SHLD&previousCapId=7675730&previousTitle=SEARS%20HOLDINGS%20CORP Power of Distributors. AnnualReports.com N.p, n.d. 17 November 2013 http://www.annualreports.com/Company/4391

Pricing. Sears.com N.p, n.d. 11 November 2013 https://seller.marketplace.sears.com/SellerPortal/s/docs/legal/fbm_agreement.htm

Prime Rate. BankRate.com N.p, n.d. 13 November 2013 http://www.bankrate.com/rates/interest-rates/prime-rate.aspx

Product/Service Description. SearHoldingss.com N.p, n.d.179 November 2013 http://www.searsholdings.com/

Quality. SearsHolding.com N.p, n.d. 13 November 2013 http://www.searsholdings.com/govern/code.htm

Recommendation. BobSutton.com N.p, n.d. 19 November 2013 http://bobsutton.typepad.com/my_weblog/2013/08/dysfunctional-

Regulation. Hoovers.com N.p, n.d. 12 November 2013 http://library.umobile.edu:2137/H/industry360/description.html?industryId=1529

Reviews. GlassDoor.com N.p, n.d. 12 November 2013 http://www.glassdoor.com/Reviews/Sears-Holdings-Corporation-Pune-Reviews-EI_IE419689.0,26_IL.27,31_IM1072.htm Rivalry Among Competitors. Hoovers.com N.p, n.d. 17 November 2013 http://library.umobile.edu:2137/H/company360/

Social. Hoovers.com N.p, n.d. 13 November 2013 http://library.umobile.edu:2137/H/company360/productsOperations.html?companyId=137766000000000 Stock Quote and Chart. Hoovers.com N.p, n.d. 14 November 2013 http://library.umobile.edu:2137/H/company360/detailedStockQuote.html?companyId=137766000000000 Substitute Products. HighCountrybiz.com N.p, n.d. 6 November 2013 http://www.highcountrybiz.com/docs/retail.pdf

Sustainability. SearsHoldings.com N.p, n.d. 13 November 2013 http://www.searsholdings.com/about/recognition/
Technology. ThingMagic.com N.p, n.d. 12 November 2013 http://rfid.thingmagic.com/rfid-blog/bid/87834/RFID-in-Retail-No-Stopping-it-Now Vision Statement.Sears.com N.p, n.d. 17 November 2013 http://www.makingafortune.biz/list-of-companies-s/sears-holdings.htm