Company Analysis Sears Holding Corporation Essay Example For Students

Company Analysis: Sears Holding Corporation Essay Company Analysis: Sears Holding Corporation Abstract Sears Holdings Corporation (SHC) is the nations fourth largest broadline retailer with approximately 3,900 full-line and specialty retail stores in the United States and Canada. Formed in the later part of the 19th century it was the largest retail company in the country until the early nineties. SHC is currently the leading home appliance retailer as well as a leader in tools, lawn and garden, home electronics and automotive repair and maintenance. As a result of its merger with Kmart in 2005, SHC also has Martha Stewart Everyday products, which are offered exclusively in the U. S. by Kmart. SHC operates through its subsidiaries, including Sears, Roebuck and Co. and Kmart Corporation. In recent years Sears has undergone major changes in order to maximize its profits and beat its competitors. In the past several decade Sears has been the place to go shop for home goods, clothing, and fitness equipment and auto repairs. As time progressed they became very comfortable with what they hard as other companies such as Wal-Mart, Target, Lowes, JC Penny crept in and reaped a chunk of its market. In a struggle to re-invent itself, it tries to maintain focus on its primary and secondary target markets. Introduction The Sears Holding Corporation is a multinational corporation with retailers purchasing products in the United States, Canada, Mexico and Puerto Rico. It is the fourth largest retailer within the United States, with over 3900 locations and sells many different marketable goods for consumers. These goods include products such as tools, branded clothing, appliances, sporting goods, electronics, home maintenance and repair, and automotive from many different retailers (http://www. searsholdings. com/). The Sears Holding Corporation is a result of the merger between Kmart Holding Corporation with the Sears Roebuck Co. which occurred in 2005, and the headquarters is located in Hoffmann Estates, Illinois. The consolidated subsidiaries include Sears, Roebuck and Co. , Lands’ End Inc. , LRFG, LLC, Sears Brands, LLC, Sears Canada, Inc. , Sears Financial Holdings Corporation, Sears Reinsurance Company, Ltd. , Kmart Holding Corporation, Kmart Management Corporation, Kmart Cor poration, and the Sears Holdings Management Corporation(http://www. secinfo. com/dVut2. v3ap. 5. htm#1stPage). Brief History The Sears Roebuck Corporation was founded by Richard Warren Sears and Alvah C. Roebuck in 1893. Sears started as a jeweler who made a profit by selling watches. The most innovative and quite possibly the most famous method of sales synonymous with Sears was the Sears Catalog. Providing pictures of the products, the prices, and a handy item that could be ordered on a regular basis for sales was by far an ingenious method of marketing. Consumers would be able to purchase items with no markup, have knowledge of their budgets required for purchases, and be somewhat assured of the quality of the product based upon the appearance, color, and general attractiveness. The catalog spearheaded many different marketable ideas and mainly products which could be sold, thus expanding Sears’ enterprise. Mainly from the early 1900’s throughout the 1980’s, Sears maintained its stronghold in America’s consumer market, especially in the 40’s and 50’s with its tremendous expansion. However, towards the 90’s and 2000’s, as many other big businesses arrived, divestiture, as well as problems associated with employee wage issues, Sears’ marketability dropped off until its merger with Kmart in 2005 (http://en. wikipedia. org/wiki/Sears). Kmart first opened in 1962 and was founded by Sebastian S. Kresge. It was a relatively successful corporation and utilized marketing ideas within the store, namely â€Å"Blue Light Specials† which would entice customers to purchase the â€Å"blue light† or discounted items while they were shopping for their products. Unfortunately, due to failed ideas regarding consumer marketing, failure to utilize the computer technologies for supply chain management, and other setbacks, Kmart had to declare bankruptcy in early 2002. (http://en. wikipedia. org/wiki/Kmart). Merger The merger between Kmart and Sears clearly enhanced both of the companies’ mutual progressive goals. Sears invested many assets in the formation of Sears Grand stores, larger off store malls, and in the process bought many of the Kmart locations which were going out of business. Therefore the merger helped this process so that it would enable the further growth of Sears at a quicker pace as well as enhance the productivity and save the Kmart Corporation. This was clearly a strong decision made by the executives in combining forces so that the marketability of both companies would increase. Along with this, the shareholders could make a tremendous profit with this alliance. Prior to the merger, if the independent companies were not steadily increasing their revenue shareholders would lose money from their investments. The combination of both of the corporations would improve shareholder investment returns and thus facilitate the growth of the Sears Holding Corporation. The more investors receive higher returns, the greater investments into the company thus fostering its overall growth. The proprietary brands, selling the aforementioned products, under both companies would be able to reach the target demographic groups with greater ease. The real estate holdings of individual Kmart or individual Sears stores, now under the umbrella of the Sears Holding Corporation, could be leveraged, thus enhancing the ability to sell more of their combined products to a vast variety of consumers. This was reported to increase revenue by nearly 200 million dollars per year. Along with the increased revenue, a decrease in overall cost for maintenance of both corporations due to the merger would save nearly 300 million dollars per year (http://en. wikipedia. org/wiki/Sears_Holdings_Corporation). A general projected net increase of 500 million dollars per year is a phenomenal growth rate. As mentioned previously, a global distribution of these stores in the North American continent (from Mexico to Canada) has enabled the Sears Holding Company to expand even further. Leadership Overall, this merger helped Sears Holdings Corporation be a force in the United States market. As the eighth largest company in the US, the profits and revenue have increased tremendously, but the lack of leadership and the constant changing of executive power has been a preventative factor in its further growth and development. Native American EssayThis dedication to the community has help exposed it to consumers Weaknesses The weakness of this corporation stands from what may have been one of its strengths. Though it has a large customer base, Sears has allowed its sales volume to plummet because they are not keeping up with the changing market environment. They have lost touched with the consumers and competitors when it comes to soft-lines (clothing) and some hard-lines divisions. Sears has undergone too much diversification and has thus lost focus on retail services (Prentice-Hall, 2003). Most of it retail stores today are not reflective of the needs of the consumer. Sears clothing line is old, outdated and out of touch with fashion trends. Currently retail stores are old worn out and do not attack customers. At present its current CEO has been interim so for 18 month indicative of managerial or leadership problems (Gorenstein 2009). Opportunity The merger of K-mart in 2005, was thought be the â€Å"silver bullet’ that would revamp the company, providing a variety of products and obtain an expanded customer base. So far SHC has post several quarterly losses with the most recent of 94 million dollar (SHC 2009). Sears has the opportunity to revamp or improve sales in the soft-lines department by buying and capitalizing on brands such as Liz Cleburne, Nine West that are appealing to customers. They currently have brands such as LL Cool J and Joe Boxers that are thriving in the male department. For the Hard-line department, while it is thriving sears can still provide affordable and durable products with the kind of guarantee that they have for Craftsman tools. In general a change to inventory that appeal to the consumers will bring in revenue and make Sears a better competitor. Threats Like any other company in business Sears faces a constant threat from its competitors. Sears current faces threats from retail giants such as Wal-Mart and Target. More over departmental stores such as Macy’s and JC Penny are also fighting for its customers. It is worth noting that all these business were babies compared to Sears in the past. More discount stores are opening further driving down sails in certain departments. Sears risk losing its customers if it doesn’t re-invent the stores to provide items that appeal to them. The economic down turn hasn’t been fair to SHC as they have posted record losses for the whole year and until the situation improves SHC has to take steps to reduce cost and increase profits or revenue. Supply Chain Management Sears main focus when supply chain management is concerned, is to replenish its inventory as quickly as possible. SHC has 3 basic products: seasonal products such a s lawn mowers and snow blowers, perennial best sellers and fast moving products that need to be replenished rapidly. Unlike many of its competitors, SHC provides 6 million home appliances/home improvement deliveries directly to customers’ homes every year. To do this effectively SHC uses Cross-docking which is a type of distribution in which inbound products are unloaded at distribution centers, sorted by destination and then loaded onto delivery trucks. Thus the goods are not warehouse i. e. they are just moved across ducts This reduces the days in inventory and thus reduces the cost of supplying products. Through cross-docking Sears has positioned its inventory in 4 regional warehouses so it can provide next-day delivery to it customers and quickly replenish store supply. Recommendations How can we stars fixing the problems faced by sears? Starting from the top, a permanent CEO, not another Interim should be put in place to take charge of long term decision making. An environmental analysis would help Sears see where it is and help guide it to where is should be in the market place. Showing them who their customers are, what the customers want and how they can out-beat the competition for more customers. It is no secret that the brands and styles in the soft-lines department have to be ever changing to appeal to customer in time. SHC needs to invest more money into remodeling each departmental store, making it easily accessible and more appealing to consumers. In light of the fact that SHC has lost touch with its customer base, decentralization should be considered. This will allow specialty stores that carter to consumers in each region thus increasing customer base and revenue. References About Sears Holding Corporation (2009) Retrieved September 4, 2009 from website: http://www. earsholdings. com/about/ About Sears Holding Corporation (2009) Retrieved September 4, 2009 from website: http://www. searsholdings. com/about/ About Kmart (2009)Retrieved September 4, 2009 from website: http://www. searsholdings. com/about/kmart/ Alan Wolf. (2008, October). Sears Reasserting Its Appliance Supremacy. TWICE, 23(21), 6. Retrieved October 7, 2009, from Business Module. (Document ID: 157418966 1). Anne Moore. (2008, August). Sears: Finally, A Reason To Brag. Business Week,(4094), 62. Retrieved October 7, 2009, from ABI/INFORM Global. Document ID: 1542853331). Heher, A.. (2008, July). Sears Targets Teens with MTV Film, LL Cool J GEAR. Marketing News, 42(12), 32. Retrieved October 7, 2009, from ABI/INFORM Global. (Document ID: 1522480461). Michael Rudnick. (June 2006). A Crowded Playing Field: Lowe’s and Home Depot Continue to Steal Market Share from Sears. HFN : The Weekly Newspaper for the Home Furnishings Network, 80(23), 26-29. Retrieved October 7, 2009, from ABI/INFORM Trade Industry. (Document ID: 1063281881). http://www. forbes. com/global/2000/1113/0323054a_2. html Peter Gorenstein (2009). Its Too Late to Save Sears. Investing, Recession. Sep 10, 2009. Retrieved September 21 2009 from Yahoo Finance Prentice-Hall. (2003). Can Sears Reinvent Itself? http://wps. prenhall. com/bp_laudon_essmis_5/0,,155336-,00. html Sears Holdings to Introduce Revised Internal Management and Organizational Structure (2008, Jan 22). Reuters Retrieved September 7, 2009 from website: http://www. reuters. com/article/pressRelease/idUS190789+22-Jan-2008+PRN20080122 Sears Archives (2009) Retrieved September 8, 2009 from website: http://www. searsarchives. com/history/ Sears Holding Corporation (2009). Retrieved September 5, 2009 from website: http://en. wikipedia. org/wiki/Sears_Holdings_Corporation Sears Holdings (SHLD) (2009) Retrieved September 7, 2009 from website: http://www. wikinvest. com/stock/Sears_Holdings_(SHLD) Sears Holdings (SHLD) (2009) Retrieved September 22, 2009 from website: http://www. searsholdings. com/pubrel/pressOne. jsp? id=2009-08-20-0005080431 Sears hopes return of cosmetics counters can lead to prettier profits http://archives. chicagotribune. com/2009/aug/28/business/chi-fri-sears-beauty-0828-aug28