Read the attached article entitled “Comparing Success at Kmart and Wal-mart.”
a. What is the key to Wal-Mart’s success to date? Highlight the strategic role of operations in this success story.
b. In March 2005, Kmart and Sears merged to form the Sears Holdings Corporation, the nation’s third largest broadline retailer, with approximately $55 billion in annual revenues, and with approximately 3,800 full-line and specialty retail stores in the United States and Canada. To better compete with Walmart, name two recommendations that the Sears Holding Corporation might consider for its operations strategy.
Lets start with some information on walmart. Wal-mart stores inc. is involved as an American multinational retailer. Some data reveals about the competency of walmart as it operates in 28 countries with 11695 stores employing 2.3 million employees.
Before talking about its competitors first look over the strategic competency of walmart. Walmart operates on philosophy of “everyday low price” or in other terms they believe in capturing the target customer on the cost leadership business strategy. Around 75%of revenue generates from cost effective strategy out look. They offer wide range of products in low cost to increase their sales.
They focus more on customer services for this walmart spends heavily on training and development of their employees and hence brings opportunity for long term career to their employees. They also attempt to bring wide range of products for the different category of customers. We can calculate the strength of walmart just by knowing the fact that it is the world’s largest company by revenue with $480 billion and world’s largest employer. When walmart steps to expand its US based customer they announce “one size-fits all” merchandising strategy. Walmart perform with a strategy to operate in a competitive environment in long term basis. “we operate for less” and “we buy for less” strategy helps to bring cost effective advantage for the company.
Walmart’s management covers 10 areas of operation management. These are made on the basis of everyday concern areas
- Capturing market with everyday low price strategy
- The process of creating destruction.
- Responding competitors strategy
- Cultural adaptation
- Training employees
- Withdrawal strategy
- Strategic characterisation of the products
- Quality management
- Process and capacity design
kmart seems to be the clear winner in its initial 25 year . it had twice many stores as compared to walmart till 1987. Gradually in 1991 sam Walton started bringing its competitive edge and help in succeeding to come forward from 1998. Kmart looses its strength because of many factors in which poor supply chain management comes first.
Supply chain management is the most important factor behind any big retailer. Kmart was late to find out this factor and hence gradually walmart mastering it. Walmart stores rarely run out of stock because they work on powerful tracking data analysis tools to just make sure are things are available on right time .
Kmart fails to bring product-pricing strategy in order to woos their customers as a result they run behind the walmart.
Another reason is kmart is very insular company. They never tries to bring fresh management or new changes with the competitive environment. They remained isolated as a result all the power lies in one hand and management fights continued. As a result company remain at last even in 21st century.
recommendation for sears is to focus on men rather then being on women. expand the section for men.
sears must also strat offering serices to their clients which involve the online sales expansion.