SEARS CASE STUDY
1.What were the initial indications of the problem?
2.What was the organizations reaction ?
3.What was the result of their reaction?
4.What should the organization have done ?
5.Identify significant symptoms and root causes ?
6. What must they now do to rectify the issues ?
Summary :
Faced of declining revenues (an average of 8% per year for the past three years), shrinking market share (an average of 3 % per year for the past five years) and an increasingly competitive market (with an average increase of 20% in automotive stores over the past three years). the management of Sears, failed to raise their level of thinking to the Explore, Discover and Design phase of the Model. Instead they implemented a series of policies and procedures which gave pressure to bringing sales lead to the motivate of employees that misleading and selling unnecessary parts and services to the customers.

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Answer
ISSUE STATEMENT : Facing an average of 8% per year decline on revenues for the past three years, shrinking market share of 3% per year for the past 5 years, as well as the increasing number of competitors, the management of Sear roebuck & co. had failed to think critically and strategically in order to come up with a new, suitable plan but spurring performance of its employees via a flawed incentive compensation scheme which resulted in misleading and selling customer unnecessary goods.

1. Due to the face of declining revenues (an average of 8% per year for the past three years), shrinking market share (an average of 3 % per year for the past five years) and an increasing competitive market (with an average increase of 20% in automotive stores over the past three years).
2. Automotive stores Sears’s management attempted to spur performance of its auto centers by increasing minimum work quotas and introduced productivity incentives for mechanics.
- They increased minimum work quotas and introduced productivity incentives for mechanics.
- The automotive service advisors were given product specific sales quotas. Sell so many springs, shock absorbers, alignments, or brake jobs per shift and get paid a commission based upon the sales.
- According to advisors failure to meet quotas could lead to a transfer or a reduction in work hours.
3. The result of their actions was many employees had the pressure to bring in sales that created conditions under which employees felt that the only way to satisfy top management was by selling customers products they really didn’t need.
And lead to problem that the Consumers and Attorneys General in more than 40 states accused the company of misleading customers and selling them unnecessary parts and services, from brake jobs to front-end alignments.
The CEO must acknowledged management’s responsibility for putting in place a compensation and goal setting system that created an environment in which these mistakes occurred.

4.
- Responded strategically to their declining revenue, shrinking market share, and an increasingly competitive market.
- Utilizing a cross functional team, gathering information by conducting a SWOT analysis and environmental scan may have shed light on what was in their control to resolve their problems.
- They should have done the GAP analysis to find what are their desired performance and considered their currently performance. Then they should identify and summarize their symptoms and conduct root cause analysis so that they can design a tactical & strategic solutions and create action plans to resolve their problems.
5.
Symptoms Limited growth and development : Increasing competitive market (with an average increase of 20% in automotive stores over the past three years). Lack of profitability : Revenues declined an average of 8% per year for the past three years Poor performance : Shrinking market share (an average of 3 % per year for the past five years) Employee complaints : Many employees spoke of the pressure to bring in sales. Process errors : Misleading customers and selling them unnecessary parts and services, from brake jobs to front-end alignments.
Root causes Give the inappropriate commission policy to the advisors. Increasing the work quotas lead to the pressure to employees CEO of Sear roebuck & co. had failed to think critically and strategically in order to come up with a new, suitable plan.
6. The CEO should acknowledged management’s responsibility for putting in place a compensation and goal setting system that created an environment in which these mistakes occurred.