Sears/Kmart Merger Case Study

Karen Olsson believes that Wal-Mart, the world’s largest retailer company, under pays their employees for the amount of work they do daily. They do not offer good working conditions for their employees or enough medical benefits to support themselves and their families. Sebastian Mallaby says that Wal-Mart is not wrong for the way that they run their business; he feels as though Wal-Mart does their consumers a favor by keeping the wages low and offering “low prices” (620). It’s just business! They have to do what it takes to remain the world’s top retailer and continue to, “enrich shareholders, and put rivals out of business” (620). Karen Olsson and Sebastian Mallaby both address the topic of big

Wal-Mart didn’t just get by with cost-saving methods. They were ahead of their competitor’s technology wise too. Even in the 1970’s, Wal-Mart was able to track inventories in their warehouses and link it with stores. They tracked their sales data for specific items and could increase or decrease their inventory accordingly, achieving a higher efficiency than other retail companies. Another aspect that Wal-Mart felt strongly about was expanding there reaches. In 1978, they introduced a Pharmacy, auto center and jewelry divisions.

Walmart claims that its mission is centered on helping people live better which not only applies to customers and associates, but also to the workers who make their products. Furthermore, all the products that Walmart offers to its customers are supposedly verified whether they are produced with dignity and respect for workers. In order to be accepted as Walmart’s supplier there are standards and obligations expected from suppliers. Following section examines closely what are the key standards that according to Walmart prevail within its global supply chain (Walmart, 2012).

The largest corporation in America with $378,799 million in revenues and employing 2,055,000 employees, Wal-Mart has become one of the greatest success stories in American history, but also one of the most controversial stories since Standard Oil (Fortune). But with all big business comes critics. Today’s critics suggest Wal-Mart unfairly uses it power of size, which is goliath, to exploit employees and impoverish nations, ruin competition, and place undue pressure on the government. However, one item most critics fail to mention is that Wal-Mart creates consumer welfare. Throughout this paper, I will analyze each criticism of Wal-Mart and sufficiently cite evidence proving the greater good that is realized with

Many people may ask the same question. “Is Wal-Mart good for the economy?” or even “What are Wal-Mart’s standards for suppliers?” Wal-Mart currently has over 4,000 stores in the United Stated and about over 3,000 internationally. As many people may know, Wal-Mart is the largest retailer in the world. In the year of 2004 Wal-Mart had accounted for 6.5 percent of the retail sales. The wellbeing and prosperity of specialists over their production network is the Mindful Sourcing bunch 's top need, which may be the reason Wal-Mart suppliers are contractually needed to sign their “Benchmarks for Suppliers” before they can even be endorsed to deliver stock available to be purchased at Wal-Mart. These Norms for Suppliers make clear their essential desires for suppliers and processing plants in regards to the treatment of laborers and effect on nature. Suppliers are as well needed to show the “Norms for Suppliers” in the nearby dialect in all industrial facilities where items have been made for them, so specialists know the desires of suppliers and plant administration. In this case, many citizens may believe that Wal-Mart may be both good and bad for America in many different ways. This store has been the cost of many people losing their jobs, but it has also helped keep the United States inflation down. Although Wal-Mart does help create many jobs for people, it does not pay them at

In 2005, Robert Greenwald released Wal-Mart: The High Cost of Low Price, a motion picture that divulges how Wal-Mart Stores, Inc., a wholesale department store established by Sam Walton in 1962, absconded from its chasten inaugurations, to ultimately progress and develop into a principal vendor of America, and soon afterwards the vastest transnational conglomerate on the planet, once one grounds their statistics on revenue. However, Greenwald undoubtedly affirms that the policies Wal-Mart has emplaced have not solely been detrimental to the already austere American economy, but also to the welfare of their personnel. Furthermore, Wal-Mart: The High Cost of Low Price congregates on various sociopolitical disputes that validate how Wal-Mart

“Up Against Wal-Mart” by Karen Olsson, a senior editor at Texas Monthly and who’s article appeared in Mother Jones, introduces her article through the perspective of a Wal-Mart worker. She focuses on the negatives of Wal-Mart by telling the real life struggles of different Wal-Mart employees. “Progressive Wal-Mart. Really.” by Sebastian Mallaby, a columnist for the Washington Post, focuses his article on what Wal-Mart critics say and attempts to defend Wal-Mart by comparing Wal-Mart to other retailers. Even though Karen Olsson and Sebastian Mallaby both examine the negative effects of Wal-Mart, Olsson berates Wal-Mart’s unfair treatment towards employees and the unlivable wages that the world’s largest retailer provides while Mallaby

This pattern of growth, allowing it to build market share and secure volume advantages quickly, through large expenditures on warehouses, is also evident in the manner in which Wal-Mart built its stores. Wal-Mart stores were initially built of a smaller average size than its direct competitors and only if there was space in the location for future expansion; this increased Wal-Mart’s flexibility and it helped reduce unnecessary costs, as indicated by Wal-Marts lower proportion of rental expense and its significantly higher sales per square foot. Indeed, this is just one manner in which Wal-Mart, unusually for a service industry, was able to create a real competitive advantage. However, because this advantage is clearly imitable Wal-Mart has been aggressive in maintaining its technological lead.

The following pages focus on providing a strategic analysis of Sears Holding Corporation. The introduction reveals the issues that the paper addresses. The Company Presentation section reveals important facts in Sears' evolution. The Strategy Debates Section discusses theoretical issues applied to the situation of Sears. This is followed by the Strategic Decisions section that provides a series of recommendations that can help Sears improve its situation. The Implementation Challenges section provides important issues that can be considered challenges of strategic implementation.

With the exception of ROE, most financial ratios and even absolute values bear testimony to Wal-Mart’s recognition as the leader in the retailing industry. The reason behind Sears’s higher ROE can be explained by a comparison of the 3 ratios that constitute the ratio known as DuPont identity that is profit margin, asset turnover and equity multiplier. While both firms had similar profit margins, Wal-Mart’s asset turnover was 2.8 compared to Sears’ 1.1 due to the firm’s effective utilization of assets and lease agreements to facilitate revenue generation.

Sears grew up to the world’s largest retailer by expanding annual sales through diversifying sale products, such as apparel, cosmetics, jewelry, electronics, household appliances, cookware, bedding and hand-tools. This article shows that Sears suffered from a cost increase in 1997, including lawsuits, credit collectibles and sales in Mexico. Besides, the flexible payment facility that Sears offered is also a reason for cost increase. These problems brought Sears with bad debt and hence decreased the cash flow. The problems of the company came from the liquid market security, so I emphasize the flowing concepts:

In 1897 Sebastian Spering Kresge opened five-dime stores in Memphis and Detroit with John McCrorey as his partner. Two years later the partnership broke up and each person kept one city. Mr. Kresge kept the Detroit store and began expanding from there onward. In 1912 the company became incorporated as S.S. Kresge and was the 2nd largest dime store chain with 85 stores and annual sales of more than $10 million. In 1918 S.S Kresge was listed on the New York Stock Exchange. Throughout the decades, Kresge rapidly expanded eventually opening the first Kmart store in 1962 in Garden City, Michigan. By 1966 there were more 160 Kmart stores in the US and Canada. In 1968 Kmart began airing TV commercials. In the 1970s, Kmart continued to expand

Stores like Wal-Mart are famous for keeping their prices so low. This is one reason why they are able to maintain a grip on the consumers of an area. They accomplish this by keeping the cost to produce and transport the goods low. In January, a study by the Los Angeles County Economic Development Corp. found that, “an individual family could save $589 a year on groceries by shopping at a supercenter. Overall, shoppers could save $3.76 billion in merchandise nationwide.” (Blazier, A, 2004) A major reason they can keep prices lower than mom-and-pop run businesses is their ability to buy merchandise in bulk. Buying in bulk works the same way it does for a consumer. The more of a product that is purchased, the less the cost is per unit. Consumers see this every day when they go to stores like Sam’s Club or Costco. When they buy their merchandise in bulk, they are able to offer it to the consumer at a lower price. (Kale, 2011) This is what could eventually drive the mom-and-pop owned businesses out of the area, and draw a negative criticism from the public. The interesting thing about this criticism is that the public complains about Wal-Mart

They adopted Point Of Sales (POS) machine in 1983. In1985. They built Electronic Data Interchange (EDI), all the information is dealt on the computer instead of using paper. In1986, using Quick Response (QR) to built good partner relationship with suppliers, high frequency distribution with small amount each time, in order to lower risk, stocks and stimulate demand and sales. In 2006, Wal-Mart started using Radio Frequency Identification (RFID), a wireless system used to identify tags and get data in any environment without any workforce. Because this, Wal-Mart can save 8350 billion per year. (MBSlib) Obviously, the primary activities in value chain of Wal-Mart are the strongpoint that can add value to the firms, especially logistics.

As we can see Sears owns different companies/products within its business. Another strength is that this company has many employees because it has so many different locations around the U.S. By having lots of locations you are going to have many employees, which is great. In one article I read I was able to see some of the weaknesses. As stated, “Sears Holdings spent $5.8 billion buying back shares from 2005 to 2010, draining the company 's capital. Now, it has a major cash flow problem” (Rittenhouse, 2017). This shows that this company has to buy back it shares because if it does not they will lose more money than they are even producing. Another weakness that I read was, “From allegedly rude employees to poor customer service, even loyal customers have lost trust in the company” (Rittenhouse, 2017).