Company Analysis: Sears Holding Corporation Essay

Company Analysis Sears dimension confederacy Abstract Sears attrisolelyes partnership (SHC) is the nations fourth largest broadline retailer with approximately 3,900 full-line and intensity retail com vester memorys in the United States and Canada. make in the later part of the ni last-placeeenth century it was the largest retail each(prenominal)iance in the country until the aboriginal nineties. SHC is soon the starring(p) kinsfolk appliance retailer as substantially as a loss attractor in as wellls, lawn and garden, billet electronics and automotive jam and bread and butter. As a forget of its optical fusion with Kmart in 2005, SHC as well as has Martha Stewart Everyday harvest-festivals, which ar offered exclusively in the U.S. by Kmart. SHC operates with its subsidiaries, including Sears, Roebuck and Co. and Kmart f scummyerpot. In late classs Sears has chthoniangone major changes in order to maximize its wages and beat its competitors. In the pas t some(prenominal) decade Sears has been the place to go store for internal goods, wear, and fitness equipment and auto repairs. As time progressed they became very comfortable with what they big(p) as brisk(prenominal) companies much(prenominal)(prenominal) as Wal-Mart, orient, Lowes, JC centime crept in and reaped a orchis of its securities industry. In a struggle to re-invent itself, it tries to fight back revolve around on its primary and subaltern target trades.Introduction The Sears guardianship potful is a multinational corporation with retailers buy products in the United States, Canada, Mexico and Puerto Rico. It is the fourth largest retailer at heart the United States, with over 3900 locations and shifts numerous contrastive marketable goods for consumers. These goods include products much(prenominal) as tools, branded change state, appliances, sporting goods, electronics, home maintenance and repair, and automotive from to a greater extent a ntithetic retailers (http// www. searsholdings. com/). The Sears prop Corporation is a result of the union between Kmart Holding Corporation with the Sears Roebuck Co. which occurred in 005, 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 Corporation, and the Sears Holdings Management Corporation(http// www. secinfo. com/dVut2. v3ap. 5. htm1stPage). brief History The Sears Roebuck Corporation was founded by Richard warren Sears and Alvah C. Roebuck in 1893.Sears started as a jeweller who made a profit by selling watches. The approximately innovative and kinda possibly the most famous manner of gross tax in act synonymous with Sears was the Sears Catalog. Providing pictures of the products, the pric es, and a cl perpetually item that could be ordered on a regular basis for sales was by far an ingenious method acting of marketing. Consumers would be able to purchase items with no markup, charter knowledge of their budgets required for purchases, and be somewhat assured of the grapheme of the product based upon the appearance, marketable ideas and principally products which could be sold, thus expanding Sears enterprise.Mainly from the early 1900s through forth the 1980s, Sears maintained its tronghold in the Statess consumer market, especially in the 40s and 50s with its fearful expansion. However, towards the 90s and 2000s, as many another(prenominal) big af lovelyes arrived, divestiture, as well as problems associated with employee wage ignores, Sears marketability dropped off until its fusion 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 victorious corporation and em ployd marketing ideas within the store, namely Blue Light Specials which would inveigle nodes to urchase the blue light or discounted items mend they were shopping for their products. Unfortunately, out-of-pocket to failed ideas regarding consumer marketing, failure to utilize the computer technologies for supply chain management, and other setbacks, Kmart had to decl ar bankruptcy in early 2002. (http//en. wikipedia. org/ wiki/Kmart). Merger The merger between Kmart and Sears clear enhanced both of the companies mutual imperfect goals.Sears invested many assets in the formation of Sears gm stores, larger off store malls, and in the process bought many of the Kmart locations which were going out of business. Therefore the merger jocked this process so that it would enable the further festering of Sears at a quicker pace as well as enhance the productiveness and comprise the Kmart Corporation. This was clearly a steadfast decision made by the exe flash backive directors in combining forces so that the marketability of both companies would increase. on with this, the sh arholders could make a tremendous profit with this alliance.Prior to the merger, if the independent companies were not steady increasing their taxation sh atomic number 18holders would lose funds from their investings. The combination of both of the corporations would mprove sh areholder 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 boilersuit growth. The proprietary brands, selling the aforementioned products, under both companies would be able to murder the target demographic assemblages with greater ease.The palpable estate holdings of some(prenominal)(prenominal) 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 pr oducts to a wide variety of consumers. This was reported to increase gross by nearly 200 one thousand jillion dollars per class. Along with the increased revenue, a slump in overall address for maintenance of both corporations due to the merger would save nearly 300 million dollars per class (http//en. wikipedia. org/wiki/ Sears_Holdings_Corporation). A ecumenic projected net increase of 500 million dollars per year is a phenomenal growth rate.As mentioned previously, a global statistical 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 supportered Sears Holdings Corporation be a force in the United States market. As the eighth largest company in the US, the profit and revenue have increased tremendously, but the lack of leadership and the constant changing of executive power has been a safety factor in its further growth and means that a co mpany cannot go new marketable strategies that allow come to fruition.Employee stability and satisfaction in a large company is evermore an issue as well, because Job security is always in question when companies merge. Another heapside to much(prenominal)(prenominal) mergers means that the people in executive positions can relocate o other positions at different companies, and strategies that were used to natural spring a single company ability not work due to eightfold variables involved to create a critical point company. Initially, the decisions to run the Joint company big businessman cause disagreements that might not conductfully increase the percentage of revenue on an annual basis.However, after testing market strategies over a period of time, implementing different methods to sell products, and keep investors happy by generating sugar on a per year basis, the company will eventually observe through innovation and investment. SHC faces stiff contention from bi g box retailer such as Wal-Mart and Target. In the mid-tier its competitors include Macys,J. C. Penny and Kohls. Organizational Structure SHC recently employ an judicatureal structure and direct mould that aids in the management of its some(prenominal) business lines thus creating autonomy and accent for business building block management teams.This 5 unit structure enables each organization to focus on their core capabilities and categories which are survive, operating business, brands, online, operating business and real-estate. These endorse units tender administrative and operational support to the areas of arketing, store operations, guest strategy and finance. distributively unit thus comes with a designated leader and an advisory group which is composed of Sears Holding executives. Giving autonomy to each unit futures the business by allowing them to focus on management and profitable of that Unit and the company as a whole (Reuters 2008).With these changes I beli eve SHC will be go against placed to compete and maximize profits. Target market The primary target market for sears is arguably home owners between the ages of 25 to 55 with a moderate folk income 25,000 to 60000 dollars. Homeowners make he majority of the world shopping at sears stores. This accounts for the sale in the hard lines department. Sears proffers home rise solutions to this group of people. This group is attracted by products such as home appliances, entertainment centers, home d?cor, and fitness equipments.The main call down to these customers is home appliances and lawn and garden tools. This is so because Sears has a character for Secondary market targeted by SHC consists mainly the new-madeer generation. In an effort to operate itself up to par with its competitors, they have been providing brands and clothing items in the soft lines department. This group consists of coach age children (4-18). Sears offers products like the kids advantage computer progra mme where parents can purchase shoes for their kids and be able to switch it for a new pair sometime down the road. last-place year Sears teamed upped with LL dispassionate J and MTVto entrust the LL Cool J brand petition to the teenage population. This brand resonates break-dance with young African American and Latino teenagers. Competitors In the hard lines division sears faces major disceptation from hardware retail giants such as Lowes and Home Depot. These deuce have managed to cut off some primary more variety home improvement products than sears. Their yearly sales post better profits than SHC. The soft lines department faces major mop up from JC penny, Macys, Target and Wal-Mart.Macys and JC Penney have managed to minute away some of the market by providing better quality brand named garb such as Liz Claiborne, Baby Phat, and Anne Kline to these customers. twain companies have managed to post better revenue than SHC the previous quarters. Retail Giants such as Wal-M art on-goingly ( presently No. 1) and Target similarly provide stiff tilt for SHC. These two also have managed to fair better than Sears during this harsh frugal period ith Wal-Mart providing a variety of products at super low prices, date target provides more quality apparel at equivalent prices. new Performance The company destroyed revenues of $46,700 million during the financial year (FY) ended January 2009, a less(prenominal)en of 7. 8 % over 2008. The operating profit of the company during FY2009 was $251 million, a ebb of 83. 8% from 2008. The net profit was $53 million in FY2009, a decrease of 93. 6% over FY2008. The decline in operating and net profit was due to decrease in gross bound and higher impairment spudrs. Stock mart Chart SHC http//www. reuters. om/finance/stocks/graph? image=SHLD. OQ The graph chart above illustrates how SHC has performed in the stock market since the merger in 2005.SHC has plann a constant struggle since the merger, the highest gros sing year being 2007 when SHLD stock went for $ 190 and currently at $78 thanks to the current economic crisis. Of all the revenue grossed by SHC in recent and past years only 11% comes from Sears Canada meaning the most of SHC revenue is generated here at home 55% form Sears domestic and 34% from Kmart as demonstrated by the Pie chart below. http//www. wikinvest. com/stock/Sears_Holdings_(SHLD) SWOT Analysts For decades the hard-lines department brought the highest revenue to the business and is considered one of the strengths of sears.Here we see the power of Sears owned brand named products such as Craftsman, Kenmore and the usual home improvement tools and equipments. Such are products that are nationwide recognized as very received tools. In the soft-lines department sears brands such as Lands End and Diehard are also heavy sellers and nationally recognized. One other strength of sears is that it is dedicate to its community and customers. Sears has taken upon its self to p rovide excellence in customer work and for years has had a tring of dedicated customers. Sears is also involved in serving the community and helping the less fortunate.Programs like Heroes at Home and innate Makeover Home Edition has Sears written all over it. This dedication to the community has help exposed it to consumers The weakness of this corporation stands from what whitethorn have been one of its strengths. Though it has a large customer base, Sears has allowed its sales hoi polloi to plummet because they are not keeping up with the changing market environment. They have muddled troubleed with the consumers and competitors when it comes to soft- ines (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 wind 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 silverish bullet that would revamp he 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 luck to revamp or improve sales in the soft-lines department by acquire and capitalizing on brands such as Liz Cleburne, cabaret West that are appealing to customers. They currently have brands such as LL Cool J and Joe Boxers that are comfortable 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 plug 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 manage any other company in business Sears faces a constant scourge from its competitors. Sears current faces threats from retail giants such as Wal-Mart and Target. More over departmental stores such as Macys 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 doesnt re-invent the stores o provide items that appeal to them.The economic down turn hasnt been fair to SHC as they have posted record losses for the whole year and until the postal service improves SHC has to take steps to reduce cost and increase profits or revenue. contribute Chain Management Sears main focus when supply chain management is concerned, is to fill up its inventory as quickly as possible. SHC has 3 basic products seasonal products such a s lawn mowers and sn ow blowers, perpetual best sellers and fast moving products that need to be replenished rapidly. Unlike many of its competitors, SHC provides 6 illion home appliances/home improvement deliveries straightaway 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 therefore loaded onto delivery trucks. Thus the goods are not warehouse i. e. they are however moved across ducts This reduces the days in inventory 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 t he 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 bills into remodeling each departmental store, making it slow 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 websitehttps//searsholdings.com/abouthttps//searsholdings.com/about/kmarthttps//www.forbes.com/fdc/welcome_mjx.shtmlhttp//wps.prenhall.com/bp_beekman_compconf_6/http//ru.reuters.com/http//www.searsarchives.com/ archives/history1886.htmhttp// www. wikinvest. com/https//searsholdings.com/ht tp//archives.chicagotribune.com/