Summaries the following in youre own words : Executive Summary : What is Kmart’s

Question

Summaries the following in youre own words :

Executive Summary : What is Kmart’s Current Situation?

The primary rivals for this organization are Walmart, Target, Dollar General, and other various regional stores that are similar to the aforementioned companies in terms of the variety of products offered and pricing. Dollar General and Target are experiencing moderate sustained success despite some PR mishaps (i.e. the Target data breach that occurred in 2013). Walmart has continued to enjoy vast success in terms of increasing market share revenue, and by continually expanding operations both in the U.S. and overseas.

Kmart is at a critical stage in terms of remaining viable and competitive. The organization was bought out in 2004 due to decreasing sales revenue and struggles to remain economically viable by another company that was beginning to fail, Sears. Year after year, Sears and Kmart have had to close down stores in various locations nationwide. Last year, 98 stores were closed due to the inability to generate enough revenue to continue operations in those locations (as well as the competition dominating the market share in some of the locations that have been closed). In January 2018, Sears and Kmart plan to close another 60-plus stores leaving just over 800 stores open nationwide. The competitive position of this organization in comparison to the competition is weak, to say the least.

The decreasing market share as Walmart and Target’s share of the market continues to expand further and even internationally (Walmart) are one of the major deficiencies of the organization. Dwindling sales that continue to grow smaller each quarter as these and other companies move in to continue to push out Kmart in the industry. Outdated methods of sale sticking to the traditional brick and mortar way of offering products to customers for so long has led to a reputation of being an old-school place to purchase a variety of items is a significant and ongoing issue that facilitated the fall of Kmart and Sears from the success they once enjoyed.

Where is Kmart Going?

Per Sears Holding Corporation’s (SHLD) most recent press release, they are in the process of restructuring their current capital to try and generate liquidity (Sears Holding, 2017). SHC started 2017 with 735 Kmart stores; however, as of October 28, 2017 there are only 510 stores currently operating. By generating more liquidity, the hope is to increase financial flexibility and continue to be a viable competitor in the retail market. Kmart’s primary goal doing this is to get to a certain threshold where the current stores can be profitable.

Kmart strives to improve the lives of their customers by offering quality services, products, and solutions that earn their respect and builds lifetime relationship. With 510 stores across 47 U.S. states, Puerto Rico, Virgin Islands, and Guam, Kmart offers a wide array of products in their stores that range from electronics, outdoor equipment, seasonal merchandise, as well as many well-known brands. Kmart has the reputation of being an all-in-one department store similar to that of Walmart or its sister company, Sears.

In the third quarter of 2017, Kmart individually reported total cost and expenses of $1.24 million with revenue of $1.17 million. Sears Holding Corporation as whole was estimated to have -4.46 earnings per share in the fourth quarter of 2017, while their actual eps are -2.64. Looking at historical data, this is their worst quarter of 2017. According to Yahoo! Finance, the estimated earnings per share for 2018’s first quarter at -2.90, a -1.56 difference (Yahoo, 2018). With closing 225 of their stores, Kmart took a big hit in their stock price along with their merchandise and service sales compared to 2016. These stores were probably not generating the amount of revenue and traffic needed be a viable option and ultimately costing them money.

Kmart and its parent company Sears, have a plan in place to reduce expenses by $1 billion. They have sold the Craftsman tool brand and select real estate assets. The company is striving to minimize its financial risks and boost its liquidity. By reducing expenses Kmart may be able to survive in what has become a very volatile market for brick and mortar retail companies.

An increase in profits and an end to a vast number of stores closing will signify that Kmart’s administrators are using the correct strategy to manage Kmart and make the company successful. Kmart’s has not turned a profit since 2010 and has had to close more than 400 stores in the past year. Reducing costs and using the money saved to invest in restructuring could allow the company to begin experiencing financial success again.

How Will Kmart Get There?

For the direction of this organization, the ideal strategic approach for Kmart is to use the best cost provider strategy which will allow Kmart to be the most cost-effective provider of an upscale brand. Kmart offers Jaclyn Smith’s brand and they should partner with other celebrities or designers to offer even more attractive products. Consumers want to buy upscale products at a discount. Kmart needs to follow Target’s example, offer more products exclusively and offer them at a competitive rate to boost sales and attract consumers to the store and to the website. Once a consumer is on the website, Kmart can advertise other complementary products and make suggestive sales.

With this in mind, Kmart is definitely struggling to keep the few remaining stores they have open for business. However, it is still trying to uphold its original competitive advantage. Also, when Kmart was at its peak, people did not shop there for the savings or convenience. Instead, Kmart focused on the exclusiveness of their private labels. The quality of the Kmart brand items was extremely high in comparison to the relatively cheap pricing. Even in current times, there are still brands and lines carried by Kmart that are hard to find in other retailers.

Kmart adapted the business model of Sears after it was acquired by the company. That being said, the company’s business model is all about selling “better brand” items. Since Kmart does not have multiple streams of revenue, it tries its best to get hard to find brands or high-quality brands at an affordable price.

Kmart will need to continue to negotiate exclusive deals with brands and focus on gaining their customers’ loyalty again. They will need to focus on marketing the exclusive brands that they carry in a way that compels shoppers to come back to Kmart.

Kmart’s Strategic Mission, Vision, and Core Values

Vision Statement

Kmart’s vision falls under “Four Key Results” that they aim to achieve:

Deliver a “Wow” experience to customers and members

Build a team of engaged associates who embrace change & technology

Achieve operational excellence to drive profitable sales

Become the world’s greatest retailer

I believe that Kmart’s vision is short and to the point. However, the company could use less generic language; this would allow their vision to be more fitting for the industry that Kmart is in.

Mission Statement

Kmart’s mission can be identified using the below graphic. The mission is to “Serve, delight, and engage our members while they shop their way”. I believe that the use of the graphic and the concise sentence is more than perfect for a company’s mission statement.

Core Values

Think members first; Own it; Embrace Feedback; Show Pride; Learn and innovate; Earn Trust; Be Authentic

The above-mentioned values are all things we have seen Kmart display over recent years as it has battled closing stores and financial woes. In spite of troubling times for Kmart, its owners are still providing exclusive brands and allowing customers to shop at the best prices that Kmart can provide. They have also been very authentic with customers, which has allowed them to gain the trust of consumers.

Setting Objectives for Measuring Performance and Progress

Financial Objective

In a quest to re-establish the credibility the brands of Sears and K-mart to a level that was once enjoyed in past decades, Sears Holdings will need to be meticulous in how it handles it finances. As more stores close, the market share of the Sears footprint continues to shrink, resulting in less opportunities to increase profits through day-to-day business operations.

Strategic Objective

In the short and intermediate-term, Sears Holdings’ has some specific, key objectives that the organization will pursue to help facilitate the re-growth of the company. Currently, Sears Holdings’ has intentions of improving operational sales revenue in increments from quarter-to-quarter. The potential for more profit to be generated via operational sales will be vital, in my opinion, in attempting to stabilize the company from a financial standpoint which will lead to more pathways of improving the viability of the organization. Sears also plans to undergo an overhaul in streamline operations, with intentions of reducing costs by at least $1.0 billion. While this goal is measurable via the accounting statements at the end of the year, it seems like a goal that may be tough to meet based on the recent, past performance of the organization, they have been able to create savings via closing more stores and, to reach this goal, further store closings in 2018 seems inevitable to make this task more attainable.

Critique

Part of the strategic and financial objectives will be targeted via the implementation of a restructuring program. To meet the goal of reaching that $1.0 billion in cost savings mentioned earlier, Sears Holdings’ plans on closing another 108 K-mart stores, as well as, another 42 Sears stores. These rolling closings will likely continue over the course of at least the next five years. The organization will also further consolidate Sears and K-mart functions as levels beyond the retail stores. The consolidation will include corporate and support functions, likely meaning downsizing corporate management, and remaining employees having increased job roles. This task seems sustainable for the short-term only due to the potential decrease in management job satisfaction as well as those in support roles. The program also intends to implement data analytics in attempts to optimize product assortment at retail stores. This will facilitate having items that are most relevant with current Sears and K-mart customers while also, helping management to identify specific products that are not fairing so well and identifying which products are more sought-out, with real-time trend updates. I would recommend further a further push to the use of IT related tools, such as data analytics, to help increase financial viability. Another option to coincide with this move could be to invest in more warehouses and distribution centers to increase the assortment of products that can be offered from both K-mart and Sears. Marketing a rejuvenated website with a product assortment that could compete with Walmart and Target could attract a wider base of online customers are retail sales trend further towards buying items online, and Sears Holdings’ can try to take advantage of this market, which seems more volatile than the market share for brick-and-mortar stores.

Crafting a Strategy to Achieve Those Objectives

Strategic Plan

Kmart which operates under the parent company Sears Holdings, strategic plan is to restructure its streamline operations, improve operating performance, and target cost reductions of at least $1 billion on an annualized basis. They will reduce corporate overhead and improve merchandising. They will also implement an integrated model to drive efficiencies in pricing, sourcing, supply chain and inventory management. Sears Holdings Corporation will optimize product assortment, close underperforming stores and identify additional real estate opportunities for reconfiguration and reduction of capital obligations.

Strategic Intent

Sears Holdings strategic intent is to not only return to profitability in 2018, but also deliver convenience and value to their customers with the Shop Your Way Rewards program (a program that allows members to earn points to buy other products), enhance the integrated store and online experience, improve efficiencies, innovate, broaden the reach of their brands and services, and once again be a top competitor with stores such as Wal-Mart and Target.

Executing the Chosen Strategy Efficiently and Effectively

Some of the tactics used to manage the execution process are:

Training employees on the vision and mission of the company

Launching a new MasterCard in partnership with Citi Retail Services

Staffing the organization with the right people to execute the strategic plan

Ensuring that the needed resources are available to make the strategic plan a success

Taking advantage of all real estate opportunities that result in a profit for the company

Reinvesting profits from the sale of real estate

Becoming a more nimble and efficient retailer.

Using data analytics to better align with the preferences of the customers

Optimizing their footprint by right-sizing and opening innovative smaller-format stores

Strategic Developments, Executing Strategy, and Adjustments

Board of Advisors

Board of advisors is the board of non- binding body which gives expert advice on the strategies of the organization, company or management. It provides expert advice from outside.

There are quite different from board of directors, they have the right to vote whereas board of advisors aren't allowed to vote. They just to give advice on the strategies of the company, management, and organization  

Examples: technical advisory board, medical advisors board etc.

The composition of the advisory board should be taken with proper care. Whole company's life would be depending on the decision made on the advice of advisory board. They need to have a complete knowledge of different aspects of business like marketing, sale techniques etc. If the advice of the advisor isn’t the best, it can lead to huge loss to the company. All the members of the board should have a common goal. If the advisor has their own goal they won't be any good to the company.

Role of Advisors

The effectiveness of advisor’s board can only be shown if they can decide in less time and effectively. So, for the effective working the size of the board should also be kept in mind. Usually the maximum number is eight, but the smaller size is the more manageable it will be. With a larger number of members, it would be lot difficult to manage it as well will take to decide what best. With size tenure should also be decided. It should he manageable.

Finally, let’s not forget compensation, they will be loyal to the company if they get a good share of money for the world done by them even if it was just an advice. A good incentive will allow them to be committed to the company and will also provide quality of service.

Dominant Economic Characteristics and Macroenvironmental Analysis

Dominant Economic Characteristics

A business is totally bound by the different economic forces and these are also essential. These are called dominant economic characteristics:

1) Size of market: Size of the market always consider.

2) Channels of distribution.

3) Details of previous profitability.

4) Information about the competition.

5) Differentiation of the product.

6) Economies of scale.

7) Scope of revelry.

8) Growth rate of business / industry.

9) Customers:

How many customers to buy the products?

After writing these points it has been made clear that these are very important for the industry and business.

Context of the Macroenvironment

The macroenvironmental Analysis consists of many factors. We should check these factors in

the starting of the business otherwise these can destroy the business. These macroenvironment

affects the whole business.

The importance of macroenvironmental analysis:

1) The macroenvironmental is uncontrollable but with the help of macroenvironmental analysis

we can refuse the threat of any business.

2) This analysis helps us to understand the taste of the people in the environment and after

knowing that we can make products accordingly.

3) Macroenvironmental analysis helps us to face the situations of inflation in the economy.

4) It informs us about the changes in the environment.

5) This analysis helps us to determine whether the business will expand.

Finally, after reading these two concepts for analyze external environments we can sum our

business smoothly.

Five Forces Model of Competition and a Dynamic Industry Analysis

Five Forces Model of Competition

The five forces model of competition is a tool that attempts to place the pressures of a firm’s competition within its industry into 5 distinct categories. This model is a great tool for a firm that is just starting to get into an industry, a firm that is looking to expand in a new location, or even for a firm to update its SWOT analysis. Without having the five forces model, firms could underestimate the competition and set itself up for failure in the long run. The five forces of competition model can be completed in three (3) steps. First, the firm needs to be sure to list five of the forces and identify what parties or issues will be apart of each force. Next, the firm needs to evaluate how much of a threat each competitor is in each category. This can be a relatively mild threat all the way up to a strong threat. Finally, the firm needs to analyze the results it gathered from steps 1 and 2 to see if the competitions yields an attractive or unattractive opportunity.

Analysis of a Changing Industry

A dynamic industry analysis is another tool that is specifically used to determine how the drivers of change are affecting industry and competitive conditions. This analysis should be completed when a firm wants to be sure that it is utilizing the best strategy for itself, especially in an ever changing industry like technology. The analysis looks at factors that drive the industry and what is going on with each factor. Without it, a firm would not be able to keep up with its competition. First, a firm would need to identify the drivers of change, which are the factors that impact the industry the most. Next, the firm needs to see how each individual factor/driver of change is impacting the industry. It could be a positive or a negative outcome. Finally, the firm needs to revamp its strategies in order to combat and handle the drivers of change.

Strategic Group Mapping and the Competitive Intelligence

Strategic Group Mapping

Strategic group mapping is a technique for businesses to look at their position in their sector, field, or market. Strategic group mapping’s purpose is to make sure that businesses take the needs and wants of the customers or clients into account. It encourages a business to ask different questions about their future strategy, relationships with other businesses and understanding of the people who benefit from their products or services.

Strategists involved in the revitalization of a depressed commercial district can benefit from strategic group mapping, because it can help them identify future opportunities, understand the demands of the market, and contend with their competitors. It can help a business gain insight into the wants and needs of their target market. Not using strategic mapping can hinder a business, because they may not recognize a need to revamp their strategy. A lack of strategic group mapping can also hinder a company from connecting with the needs of their customers.

A business or firm can use the tool to create a visual of their standing among their competitors. To do this the business needs to make a list of its competitors, list the services and products that each offers, the customer groups they work with, what their plans may be and the relationship with them. Next choose the two most important aspects of each company. Now draw a 2x2 table or matrix plotting the competitors that have been identified as well as their own business. Once the map has been completed, the business should study the gaps between themselves and competitors and create a strategic plan to close or overcome those gaps.

In the strategic group map below, I used Kmart’s brick and mortar competitors, Target and Walmart. Looking at the map it is easy to understand that Wal-Mart has the most locations and the lowest prices. As of 2017 Walmart had 4,672 stores in the United States. Target had 1,800 stores and Kmart had about 510 stores. Walmart has the lowest prices of the 3 stores and is therefore the most competitive with the most locations and the lowest prices.

Competitive intelligence

Competitive intelligence is the act of collecting and analyzing actionable information about competitors to form a business strategy. It helps a business or firm learn everything about the competitive environment outside of their own to make the best possible decision. It is performed quickly and ethically, utilizing published and unpublished sources. Done successfully, it will provide a detailed portrait of the marketplace so a business can anticipate and respond to challenges and problems that may arise.

Strategists involved in the revitalization of depressed commercial districts need to use competitive intelligence to be able to assess the competitive landscape. When revitalization is the goal, it is imperative that businesses and goods are included that will meet the needs of the customers in the area and how the business can be disrupted by various factors. Knowing the market, the competition and how to deal with opposition will help those involved in revitalization make sound decisions on what market and business strategies will be the most profitable. Not using competitive intelligence can cause revitalization to be a failed venture without a solid foundation of concrete information about the market.

Competitive Intelligence can be used in many ways. It can be used by the CFO to make better financial decisions, a sales rep to bid on a deal, or an online retailer to offer the best web experience and product pricing. It gives businesses a complete, clear picture of the competition’s strengths and weaknesses, which allows them to improve and innovate

Explanation / Answer

Executive Summary of Kmart:

The main competitors of this organization are Wall mart, Target, Dollar General and other regional retail stores which products variety of products. The main competitors of this retail stores like Target ,Dollar General and Wall-mart are continuously increasing their business and especially wall-mart expending its business in other countries.

This organization is in bad position, there is a another company which struggle with same problem, that is Sears, these two companies are failing down from 2004 and they closed many branches in many locations and last year they closed nearly 98 stores and this year they ready to close another 60 plus stores because they competitive position is very weak.

Another reason for this failure is decreasing of market share of this organization and its competitors (Wall-mart and Target) continuously increase their market share by expanding their business. Other reasons are decreasing of sales and following old methods to sale products. These are separating Kmart and Sears from their success they enjoyed once.

Where is Kmart Going?

This company handover by Sears Holding Corporations in 2017 and started with 735 branches but as of October 2017 they operated only 510 store, but they try to improve competiveness, the main purpose to handover k mart branches to this SHC to save remaining branches. Now K mart improve its customer service by providing best products and earn their respect again. With these 510 stores it target 47 US states and other places like Puerto Rico, Virgin Islands and Guam, like Wall-mart this Kmart maintain all departments and offers wide range of products.

By doing business like this, K mart increase its revenues, as per first quarter of 2018, it share value has increased, by closing its 225 stores, it increased its stock value and market share with comparing to 2016, its position is better now. Kmart and its parent company sears used correct strategy and sold huge branches and concentrate on limited branches and get success again.

How will Kmart Get there?

The reason for this success is strategy which followed by this company, this company mainly concentrate on best cost provider strategy, previously people did not buy products from this organization because price is very high and products also not branded but now this company provides branded companies which are not available with other companies and prices also very reasonable, so people are very attracted. For doing this, the organization make partnership with designer or celebrities. After combining with its Parent Company it adapted best business model that is selling better brand products. It useful to get healthy profits

Kmart’s strategic Mission, Vision and core values

Vision statement

This company vision statement based on four key results

Deliver better experience

Build relationship with new technology

Become world best retailer

Improve operational excellence to improve sales

Mission statement

Serve, delight and engage our members while they shopping

Core values

The main core values for this success, importance to its members, showing pride, learn and Innovative, Earn Trust

Setting Objectives for Measuring Performance and Progress financial Objective

To re establish the brand image K mart and Sears has to do business very carefully and as many store has closed opportunities are very less, so it has to use the available opportunities carefully

Strategic Objective

By following best strategies only the organization can re-growth and it should concentrate on saving and its operational activities and it should not repeat the bad situation again.

Crafting a strategy to Achieve those objective

Strategic plan

Kmart which operated by support of Sears has to concentrate on its operational expenses and they has to plan for everything like pricing, supply chain carefully

Strategic Developments, Executive Strategy and Adjustment

Board of Advisors

These people are provides valuable support to company from different fields

Example technical advisor body

Dominant Economic Characteristics

Size of the market, growth rate of business, customers, economies of scale

Context of macroenvironment

It is useful to understand the situations of economy

Five force models of the competition

This model is useful to understand the pressure of the competition in the industry and also understand the swot analysis

Analysis of changing industry

This is also very important to get the continues profits, the company has to move based on market changes and should understand the present market changes

Strategic group mapping

This is a technique to understand the position of a company in the market and useful to understand the needs and wants of its clients and customers

Competitive Intelligence

It is technique to beat the competition by gathering the information of its competitors, this is very helpful to make correct decisions

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