Sears Case Study

Sears is our nation’s fourth largest retailer. With over 4,000 stores in the United States and Canada, Sears has grown from its humble beginnings. Sears is a leader in apparel, home appliances, home, lawn and garden, tools, automotive repair, maintenance, and electronics. Sears also provides home service, serving 11 million service calls yearly. Richard Sears founded Sears as a mail order company and it grew to be one of the largest retailers. He opened the first department store in Chicago in 1925.

Sears found success and by 1928 three more stores had opened. Now Sears employs 249,000 employees and it has grown quickly. In 2005, Sears merged with K-Mart and has helped both evolve and the merger proved to be both successful and positive. Although they have faced challenges along the way they have been able to gain a large market share because of their product mix, quality services, products, and solutions. No matter what difficulties they have faced Sears has been a leader in the retail industry and they will strive to be sure that doesn’t change.

Sears has come a long way from its beginnings as a catalog. Sears has many unique attributes that make it a place that people want to shop. Despite their great accomplishment and striving to become one the largest and most competitive retailers, Sears is facing several key issues. Sears must reevaluate their internal and external environment in order to implement the changes and solutions necessary to get Sears back to where it needs to be. Company Analysis Organization and Leadership Sears has an overall good practical structure.

This has definitely been key to their success because they are able to tailor their products to their customers needs using an integrated cost leadership/differentiation strategy. Sear is competing in a very competitive industry and if they follow through with their differentiated strategy they will continue to improve. Sears was able to pursue low cost and provide differentiation to their customers. Rosa Corporate Financial Position Sears financial position is currently improving. They are dealing with not only a let down on their fourth quarter losses but the sales have decreased as well in both their department stores and Kmart unit.

To deal with their losses they are in the process of selling 11 stores to make up for their finances which has made their stocks go up at 19% (MarketWatch, 2012). If they sell these properties they could earn around $270 million in proceeds. It could go either way though since when sales decrease selling assets may not be the right way to bring in growth in the future. Also if they follow their plan of moving Sears Hometown and Outlet stores they could bring in between $400 million to $500 million of proceeds during the third fiscal quarter (SHLD: Nasdaq, 2012). Sears net income has dropped continually year after year from $235. M to a mere $133. 0m. One reason being is the percentage of sales has been more focused on the SGA (Sales General & Administration) costs which has made it go from 23. 69% to 24. 09% (SHLD:Nasdaq GS, 2012). Core Competency The main core competency would have to be in there customer service. They offer great service to their customers which has gave them a competitive advantage against competitors. They use this to differentiate themselves from competition. They have built up a good customer base. They make sure they have their best associates available for customers especially through peak hours.

Although, things could be a little different in terms of bargaining power from product to product, Sears has the advantage of being a top retailer and leads the way with relative bargaining power. As the number one home appliance retailer as well as a leader in tools, lawn and garden, and home electronics, Sears has established deep roots in their line of business. Sears remains honest with their customers and provides high-quality products at bargain prices. As a result of long, developed relationships with suppliers, Sears has the ability to buy in high volumes and sell for less.

With this in mind, the power of suppliers is a similar story within Sears’ industry environment. It varies from supplier to supplier due to Sears’ product variety and differentiation. In the retail industry, suppliers tend to have very little power. Sears has a high standard for quality, especially in its line of household appliances, so suppliers that don’t meet these standards are of no interest. Additionally, Sears has been working with its suppliers for a very long time, so they have gained the right amount of bargaining power to ensure low prices and good quality products and services.