Company Analysis - Sears - Research Paper Example

This study attempts to provide an analysis of a publicly-traded company named Sears. The research identifies the mission and vision of the company and the primary stakeholders of the company. The work illustrates the five forces of competition and how they impact the company. This paper finally provides a SWOT analysis of the company and discusses the various levels and types of strategies the firm may use to maximize its competitiveness and profitability. Henceforth, the study attempts to determine the recent corporate governance issues that are currently affecting the company's decisions and to report how the company is or should be handling the issues. Mission, vision, and primary stakeholders: The most important mission of the company is to build customer relationships by providing better qualities of wide ranges of goods and services, like clothing, footwear, bedding, furniture, jewelry, beauty products, appliances, housewares, tools, and electronics. Profitability or the policy of making more money is another important mission of the company. The final mission of the company is to make improvements in each and every day in the business domain and also in the market and to the customer through achievement of greater customer satisfaction. The most important vision of the company is explained by the company itself which is: “Sears is committed to improving the lives of our customers by providing quality services, products, and solutions that earn their trust and build lifetime relationships” (Vision, mission, values, 2012, p. 1). The company was founded by Richard Warren Sears and Alvah Curtis Roebuck in 1886. From its beginning, the primary stakeholders of the company were Richard Warren Sears and Alvah Curtis Roebuck. In 2005, the company was merged with Kmart and created Sears Holdings Corporation. Since then, the owners of Kmart also become the primary stakeholder of the company (Corporate History: A retailing legend is born, 2012, p. 1). Five forces of competition and its impacts on the company: Threat of new entrants: The large size of the company, the large size of the market share of the company, the high level of customer satisfaction, cost-effective business strategies, as well as high level of profit making ability are creating potential threats for new entrants to enter into competition with the company. This is in effect raising the level of profit and market share of the company. Threat of Substitute Products: Since the company is only a departmental store of various goods and services which are products or services of other production houses, therefore, the theory of substitute is not directly related to the company. However, the company faces competition from other departmental store like WalMart. In this case, the company takes strategies like lowering prices of various products and/or increasing the quality of these products to create treats to substitute companies and their products. These strategies are helping the company to increase the share of the market and also to make more profits. Bargaining power of suppliers: The bargaining power of the suppliers of various goods and services supplied to the company depends upon the markets for those products and services. Since the markets for various products sold by the company are very large, therefore, these suppliers are also gaining little bargaining power in the market and, hence, the amount of earned profits of the company is very high. Between 1950s and 1970s the high quality of products sold by Sears and greater volume of profits gave the company’s suppliers negligible amount of bargaining power. Bargaining power of customers: The greater level of customer satisfaction is the most important part of the success story of the company. In this regard, the level of bargaining power of the customers of the company is also low. However, this does not mean that the company implements whatever policies it wants to take for the only purpose of increasing the level of profit. This strategy of the company helps it to achieve greater market share and at the same time helps it to gain greater customer satisfaction. Competitive rivalry within an industry: Sears holds the largest market in the retail business and also in the supply chain industry of various products. Therefore, the level of competition that the company faces is really low. However, the company has been facing significant level of competition from WalMart. But the level of rivalry in this industry of retail sector is not as strong as in consumers’ goods sectors. This is also helping the company to acquire greater share of the market and, thus, to make more profits (Porter's Five Forces; A model for industry analysis, 2011, pp. 1-5). SWOT analysis of the company: Location of factor Type of Factor Favourable Unfavorable Internal Strengths Strong retail network Leading market position Balanced brand mix Broad product offerings Weaknesses Weak comparable store sales Low inventory turnover Lax quality control External Opportunities Growth in private label products Increasing online sales Decentralizing operations Growing US healthcare spending Threats Intense competition Low consumer confidence Subprime crisis In overall terms, the company is highly strong in the domain of retail industries of the world and the greater customer satisfaction is the most important reason for the company to achieve the biggest market share and profit. But the high level of competition from WalMart is creating potential threat for the company by increasing the level of consumer satisfaction of this company. The higher level of competition from other companies like WalMart is also becoming a potential threat for the company (Sears Holdings (SWOT Analysis), 2011, p. 1). SWOT analysis and possible solution: The most important policy that the company can implement to capitalize on its strengths is increase in the varieties of products which are sold in various departmental stores. This will also help the company to increase the market share through greater amount of customer satisfaction and, hence, will ultimately help the company to earn greater profits. At the same time, the company needs to implement lots of policies to minimize its weaknesses and threats. First of all,, the company needs to improve its comparable store sale facilities with opening up of new stores across the countries. Secondly, the company needs to improve qualities of products which are sold by its departmental stores. This policy will help the company to increase the level of customer satisfaction which is lacking at present times. This will also help the company by reducing the intensity of rivalry from other departmental stores (Sears Holdings (SWOT Analysis), 2011, p. 1). Policies to maximize competitiveness and profitability: Policies which can affect the competitiveness from the rival firms and, thus, affect the profits earned by the company are mainly related to both qualitative as well as quantitative improvements made by the company. Sears needs to implement policies which will raise the level of qualities of various products sold by the company. These qualitative improvements can be made through proper investments in research and developmental projects which will lead to technological advancements. These technological advancements will ultimately raise the level of customer satisfaction and will help the company to gain greater market share, hence, greater amounts of profits. This policy will also increase the level of fair competition in the industry and, thus, the market efficiency in the industry will be achieved. The company also needs to increase the number of stores not only in the US, but also all over the world to gain greater market share and, hence, higher profits by increasing the volume of sales (Official website of Sears Holding Corporation, 2012, p. 1). Corporate governance issues and Sears: The system of controlling and directing companies is known as the issue called Corporate Governance. This issue was introduced in 1992 by the Cadbury Committee. The issue was introduced for the purpose of reducing the level of conflict between a company and its stakeholders. After the introduction of this issue, the board of directors is responsible for evaluating the long-term strategic plans of the company, as well as polices and strategies which are implemented for the purpose of increasing market share and profits. These strategies are accepted at board meetings after setting up a proper agenda. Other internal decisions like selection of CEO, setting responsibilities of directors, compensations of each employee, as well as including compensations for directors are made at these meetings. This issue of corporate governance affected the company by reducing the effort of many directors to implement policies instantly for the betterment of the company. Hence, the level of internal conflict in the company is also increasing, negatively affecting the market share and profit-earning ability of the company. Under these circumstances, the company needs to implement polices to centralize its power and control and also its direction abilities. This will help the company to take quick marketing and sales decisions and, thus, will increase its market share and the company will be able to earn higher profits (Dyck and Zingales, 2002, pp. 1-2). Conclusion: Sears is one of the largest and most popular chains of departmental stores in United States of America. The market share of the company is very high and the profit earned by the company is also highly significant. The level of customer satisfaction is also very high for the company. In spite of these positive sides or strengths, the company faces several threats and suffers from various weaknesses. The introduction of the issue of Corporate Governance also raised the conflict within the company in terms of reduction in efforts of directors in the process of betterment of the company. However, if these threats, weaknesses, and internal conflicts are solved, the company will become the giant at the market and in the industry. References Corporate History: A retailing legend is born. (2012). Official Website of Sears Holdings Corporations, Retrieved on February 21, 2012 from http://www.kmartcorp.com/about/kmart/history.htm Dyck, A. and Zingales, L. (2002). The Corporate Governance Role of the Media, Harvard Business School, Retrieved on February 21, 2012 from http://sticerd.lse.ac.uk/dps/extra/zingales.pdf Official Website of Sears Holdings Corporations. (2012). Retrieved on February 21, 2012 from http://www.sears.com/ Porter's Five Forces: A model for industry analysis. (2011). University of Warwick, Retrieved on February 21, 2012 from http://research3.bus.wisc.edu/file.php/139/Toolkit/Content/Porter_forces_3.pdf Sears Holdings (SWOT Analysis). (2011). YouSigma, Retrieved on February 21, 2012 from http://www.yousigma.com/comparativeanalysis/searsholdings.html Vision, mission, values. (2012). Official Website of Sears Holdings Corporations, retrieved on February 21, 2012 from http://www.sears.ca/content/corporate-info/about/vision-mission-values Read More