K-Mart and Sears Operations and Target Groups - Term Paper Example

Term Paper Professor: Course Code: Date of Submission: Table of Contents: Executive Summary………………………………………………….. 3 Position………………………………………………………………….3 Sense……………………………………………………………………..4 Uncover…………………………………………………………………..6 Solve………………………………………………………………………8 Build………………………………………………………………………10 Achieve……………………………………………………………………13 Works Cited………………………………………………………………15 Executive Summary: Sears Company is a retailing unit established in 1893, but currently it is struggling to maintain a dominant position in the retail market. The company faces stiff competition from retail giants such as Wal-Mart, and Target. Despite its numerous resources, the company is unable to compete against these retail giants, and mainly due to its lack of a strong brand name. This arose due to the merger of Sears with K-Mart corporations and failure by the company’s managerial staff to re-brand and re-design its business units. This is because K-Mart and Sears had different operations and target groups. For instance, K-Mart produced cheap and low quality goods, while sears sold high quality and expensive goods. Their merger created confusion on the minds of consumers who were unable to mentally identify what this organization stood for. To correct this situation, Sears’s holding has to re-brand itself. Position: The company under review is Sears. Sears is an American company, which has its headquarters in Illinois, the Hoffman Estates. Alvis Curtis Roeback, and Richard Warren Sears are the founders of the company. In 2005, Kmart purchased the company, which thereafter changed its name to Sears Holding Corporation. In 1893, the company began as a mail catalog, to 1925 when it re-organized its operations by opening physical stores (Baer and Dayna, 16). This is a multi-national company, specializing in mid-range departmental stores, and operates under the official name of Sears, Roebuck and Co. The company operates under subsidiaries, which includes Sears Grand. This is a chain of hyper markets whose location is a further distance from shopping malls. Sears Grand sells almost all the items that a retail store sells, and this includes beauty and health products. Other subsidiaries of Sears are Sears’s departmental stores, Sears Essentials, Sears’s optical, Sears Hardware stores, etc. The mission of the company is to achieve growth through provision of quality products and services, whose values are high (Musicant, 178). Musicant (181) denotes that the aim of the company is to achieve growth through provision of their products at the right place and time. The company also aims to achieve this growth by building a positive brand name, and a relationship that lasts with its customers. The company has a series of values, and this includes making customers as its top priority, while serving its customers, the company advocates for a perfect service that includes going an extra mile to satisfy the needs of the customers (Musicant, 180). The company advocates for honesty, courage and accountability while engaging with all stakeholders of the business organization. The company also believes in helping the community that lives where its business operations are, and in conserving the environment. Another value of the company is belief in collaboration with all stakeholders in the retail industry for purposes of serving its customers in an efficient manner. Sense: The main problem that Sears has is of its brand name. The company has Kmart as its partner, and before the merger, the two companies had different brand perception amongst their customers. For instance, Sears was known for its expensive and high quality products, while Kmart was known for its cheap and low quality products. Kmart and Sears have a large capital base, and therefore equity is not a problem to them. On this note therefore, the company needs to focus on how to create a strong brand name as partners (Gale, 1937). For instance, the company competes against retail giants such as Wal-Mart, Target and Macy. These organizations have a brand name and customers judge them, basing on these names (Clankie, 51). A strong brand name enables a customer to gain confidence of the products of the company. Take an example of Wal- Mart and Target. The two retail giants have built their identity through the notion of best prices. However, this is not the main reason as to why customers shop at these retail giants. It is highly likely that the main reason as to why shoppers prefer these organizations is their provision of appealing shopping opportunities, and out of the mall setting. Due to this, the two companies have created brand awareness, and are connected to the needs of the customers. The partnership between Sears and Kmart does not have this brand relevance. The two companies occupy numerous locations, made possible by their large capital base. However customers are unable to place this organization into their mind. This results to poor sales, leading to losses by the organization. For instance the company closed around 100 to 120 of its branches because of poor sales, and declining profit margins. A decline in the company fortune is seen by its depreciating value, which stood at approximately 2.9 billion in 2004, and has declined to approximately 700 million dollars as at January 2011 (Sears, Roebuck and Company, 61). Closing the branches of this organization is therefore a temporary measure aimed at fixing the problems of the company, since the root cause of its losses lies on its lack of a strong brand name. This paper therefore denotes that the root cause of the problem at Sears’s holdings is its lack of a strong brand name. On this note, this paper identifies possible solutions to the problem, and how to apply them in order for the company to realize its objective. Uncover: The closing of more than 100 Sears Holding Stores created speculation of the former retail giant that dominated the markets in the last century. Clankie (32) observes that Wal-Mart and Target control a large percentage of the retail market. This is because of the failure of Sears company to remodel its image for purposes of reflecting the current needs of customers and effectively compete with this organizations. Sears, Roebuck and Company (51) observes that a decline in the sales of its products has led to a decline of its revenues. The company also denotes that it is unable to achieve higher levels of profitability because of the economic difficulties that its target customers face. Its target customers are the middle income earners, whose wages are unable to cope up with the high costs of the house hold basic goods. However, the company has the capability of attracting new customers, through re-branding and remodeling. Therefore this is not a sufficient excuse to explain its dwindling fortunes. One of the solutions to this problem that Sears Holding face is to change the strategy in which the organization operates under. The organization concerns itself with profit maximization, instead of customer satisfaction. If the organization develops strategies that will help in developing innovative products, chances are high that it will manage to create a positive brand name. This will lead to increased levels of profitability because the needs of customers are met. The organization will manage to acquire a variety of customers, whose main point of attraction is the innovative products and services of the organization. For instance, the company needs to decorate its stores, to make them catchy and attract the attention of customers. Another solution is for the company to sell some of its products through other retail units. For example the company has highly valued brands such as craftsman and Ken More. A person who needs these brands can only get them at the Sears Holding stores. To increase profitability that emanates from the sale of these brands, the company must diversify its distribution channel (Bedbury and Stephen, 32). For instance, the company can sell its crafts man tools at the Costco stores or the Ace hardware stores. Sears needs to re-invent and re-design its customer relations skills and capabilities. Take an example of IKEA, a Swedish multinational company that deals in the manufacture and sale of furniture products. The company managed to create a strong brand name, and dominate the furniture market by re-inventing the customer furniture shopping experience. For instance, while shopping at IKEA, the furniture company explains the importance of its products, and its relevance to the current ways of living (Stover, David and Grifith, 53). This makes people to enjoy shopping at their retail units. Sears Holdings can learn from this approach by IKEA, and incorporate customer relation techniques that will make it enjoyable to shop at the organization (Stover, David and Grifith, 51). By doing this, they will create a positive mental image on their customers concerning the quality and value of their products. People will identify this company on the quality of its products as a retailer, and not on the products they offer. On this note therefore, the company will manage to create a strong brand name that can curtail them to a higher level of profitability. Finally, the last solution I recommend is for the company to focus on how to position itself into the market for purposes of satisfying all the needs of its customers. The business organization should not have a specific target group of customers, but should develop products that can serve all groups of customers. The organization should also drop the K Mart holdings, as its products do not satisfy the needs of the current customer base. By initiating these policies, the company will manage to increase profits, as well as create a positive brand name. Solve: The best solution for the organization to adopt is to change their policies from the urge of profit maximization, to customer satisfaction. The company should seek to create an innovative culture amongst its employees, and this will make the organization to re-invest in its departmental stores so that they will be attractive to customers, creating a nice shopping experience. Innovation as a policy is customer oriented, and in the current competitive business world, an organization needs to rely on innovation in order to stay ahead of its competitors (Bedbury and Stephen, 27). Through innovation, the company will manage to attract high quality staff, and to gain back their lost retail shoppers. Through innovation, the organization can create new opportunities thatcan later transform into sources of revenue. Through innovation, the company will not only concentrate itself with seeking solutions on how to satisfy the current needs of customers, but it will also enable the organization to predict the future behavior of the retail market, and therefore come up with products that are meant to satisfy the needs of customers during the period in question. Due to this element of innovation, the company will manage to compete favorably with its major competitors such as Wal-Mart and Target, because customers will have a positive mental image of the company (Sears, Roebuck and Company, 41). Bedbury and Stephen (31) observe that creation of a positive image concerning the company results into the creation of a strong brand name, therefore transforming the company from a loss making organization, to a profit making organization. Innovation also concerns itself with the current business practice and processes for purposes of attracting a new group of customers, improving efficiency in the manner in which its customers carry out their work, and in the manner in which they sell their products, cutting down on unnecessary costs, and increase profitability of the organization. Innovation has an effect of retaining the current crop of its employees and attracting highly qualified workforce. Employees within an organization are the ones who determine on whether the company will achieve its objectives or not. This is because it is them who work, and relate with the customers. Retaining the best staff, as well as attracting highly qualified personnel will result to the efficiency in which the organization carries out its operations. For instance, in the sales division of the company, highly skilled sales team will result into the sale of the product under consideration. The team will also know on how to courteously handle its customers, leading to the creation of a nice customer shopping experience. This behavior from its workforce can result to the creation of a positive brand image on the customers mind towards the company (Schulman, 41). This will lead to an increase in the profitability of the business organization. On this note therefore, innovation is the key to building a positive brand image by the company. It adds value to the products and services of the company, and thus creates a positive image about the company. For instance if the organization develops an innovative idea that focuses on making a customer feel special while shopping, this image will be on the customers mind. This mind perception is what creates a brand image, and when it is positive, no matter the price, customers will shop at the organization because it satisfies their needs (Baer and Dayna, 23). Baer and Dyna (43) argue that selling the product of a company through other units not affiliated to it, is not a good strategy of building an organizations brand name. This is because its competitors will gain undue advantage, limiting the penetration of the organization into its target market. Solution such as re-invention of the company’s products, and positioning itself into the market are also not conducive. By innovating, the company will manage to re-invent the quality of its products and services. Build: There are various costs that the organization might face while engaging in the process of innovation. For example, the company might decide to re-design the outlook of its stores by decorating the stalls for purposes of catching the attention of shoppers, and inserting a music system that will give shoppers an exciting shopping experience (Ulrich and Norman, 42). To carry out this policy, the first step the organization needs to follow is to inform all the stake holders of the organization. This is for purposes of trying to achieve collaboration, without which the organization cannot achieve this objective. It is important to invite stakeholders of the enterprise in order to get their ideas on the issue. Bringing up this group requires capital, and is important to budget for this meeting. For instance the organization will incur transportation costs. These costs will cover the amount of money used to transport company officials from their areas of work/residences to the meeting point. Other costs include money for lunch, and a participatory allowance to everybody participating in the meeting, fees for decorative company and consultancy charges, costs incurred while delivering the message to the stakeholders. The following is an hypothetical cost benefit analysis of decorating the departmental stall of the company. Transportation costs (- $ 50,000) Lunch (-$ 50,000) Consultancy Fees (- $25,000) Decorative Products (- $150,000) Decorative Service Fee (- $ 75000) Expected monthly Revenue ($ 5000000) Net Savings (-$350,000 + 5000000) = $ 4,300000. This hypothetical cost benefit analysis denotes that it is prudent for the company to invest in innovation, because it will give the company monthly revenue of $ 4, 300,000. The following is an ethical screen that will provide guidance into handling matters that arise out of the inability of the members of the organization to follow the laid down codes of conduct and requirements. Core to this requirement is the promotion of innovative ideas in the business organization. The first step is to provide the employees of the organization information that relates to ethical screens. For instance, the organization should provide information to its employees on the importance of the ethical screen, and circumstances when it will be used (Ulrich and Norman, 37). For instance, if there is conflict of interests amongst employees in relation to their work, and it affects their ability to efficiently conduct the affairs of the company. While erecting the ethical screen, it is important for the company to lay out all the procedures it will follow, to ensure that no step is left aside when the actual process begins (Schulman, 31). The next step is to inform the employee under investigation, that he or she is being screened for their performance. The organization might achieve this by writing a memo to the concerned parties. The third step is to notify all individuals working on the screened matter on the need to display professionalism, and fairness. The fourth and the fifth steps is to prohibit communication across the screen, and minimize any chances of those working on the screen and the employee under screen meeting (Ulrich and Norman, 41). This will create a positive outcome, which is reliable and truthful. Because chances of a person who is under screen influencing the results are not there. The sixth step involves limiting an access of the files containing information and results of the screened matter.It is unethical for disqualified personnel to access the screened files, as it will comprise the verdict of the organization. The next step is to monitor the ethical screen, by keeping records on the time it develops, and dismantles the screens (Ulrich and Norman, 41). The organization can delegate this duty to professionals, as it will improve the efficiency of the screen and save on costs. The organization also needs to constantly remind employees under investigation that a screening process concerning their work performance is under way. The organization must preserve this reminders and information that comes out from the screen. This is for future references. Achieve: Vosh and Bashar (150) observe that to effectively implement this type of solution, it is essential to involve all the stakeholders of the business enterprise. Their duties will be to offer suggestions on the best way to improve the departmental stall. This is in relation to decorating these stalls for purposes of catching the attention of the customer. Inviting stakeholders to a meeting, and conducting the meeting should take a period of three days. This is because a memo has to be sent and a feedback given concerning whether the invited guest will attend or not (Voss and Bashar, 151). This will give the organization tome to prepare for their transportation costs, and lunch. The estimated budget for this process is approximately $ 100,000. After a meeting is held, and an idea picked on how to decorate the organizations stalls, the company will need to hire a consultancy firm that specializes in decoration of business organizations, and homes of individuals. This will take place a week after the meeting of stake holders. The reason of hiring this firm is to get a professional advice on the viability of the idea picked and how to implement it. The estimated cost for this process is about $ 25, 000. The next step is for the company to look for highly skilled decorators to do the work. The company should do this immediately after it gets advice and recommendations from the consultancy firm. Due to the large number of the organizations stalls, this process would last in about two weeks, and the estimated cost is $ 225, 000. This cost covers the cost of buying decorative materials, and fees paid to the decorators After the decorations, there must be measures of evaluating its performance and contributions to the business organization. The first step of evaluating its performance is by asking for feedbacks from the customers of the organization. The organization can achieve this by developing a series of questions that touch on the decoration, and given to customers to fill in the answer after they shop. This should be voluntary. It is necessary to evaluate the impact of the decorated stall on the organizations customers on a weekly basis. This will enable the organization to keep in touch with the current needs of the customers, and on issues that get their attention. Works Cited: Baer, Robert, and Dayna Baer. The company we keep: a husband-and-wife true-life spy story. New York: Broadway Paperbacks, 2012. Print. Bedbury, Scott, and Stephen Fenichell. A new brand world: 8 principles for achieving brand leadership in the 21st century. New York: Viking, 2002. Print. Clankie, Shawn. A theory of genericization on brand name change. Lewiston: E. Mellen, 2002. Print. Gale, Thomson. "Retailing Today." Discount Houses 45.11 (2008): 1935-1956. Print. Musicant, Marilyn. "Mass-Produced Merchandise and Standardized Stores: Karl Schneiders Designs for Sears, Roebuck and Co. (1938-45)." Getty Research Journal 4 (2012): 173-180. Print. Schulman, Donniel S.. Shared services: adding value to the business units. New York: Wiley,1999. Print. Sears, Roebuck and Company. Sears, Roebuck & Co.: catalogue no. 114. New York: Skyhorse Pub., 2012. Print. Stover, Jason, David Byers, and Grifith Towle. "Franchising (& Distribution) Currents." Franchise Law Journal 29.1 (2009): 40-56. Print. Ulrich, David, and Norman Smallwood. Leadership brand: developing customer- focused leaders to drive performance and build lasting value. Boston, Mass.: Harvard Business School Press, 2007. Print. Voss, Kevin, and Bashar Gammoh. "Building Brands through Brand Alliances: Does a Second Ally Help?." Marketing Letters 15.2/3 (2004): 147-159. Print. Top of Form Bottom of Form Read More