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Question & Answer: Operations Strategy. Read the attached article entitled “Comparing…..

Operations Strategy.

Read the attached article entitled “Comparing Success at Kmart and Wal-mart.”

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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.

Case example 1 COMPARING SUCCESS AT KMART AND WAL-MART The year 1962 saw the brth of two letais thhigiy to be widely own gnealaivertising and competitive retail ket intUSA Both were discount stores its prime store locations On the other hand Sam Walto televi alike sold the same products, sought the same contnued to conentrate Investments and developments in customers and bore similai names Kmair and Wa-Mart By operations He invested tens of milions of dollars in a the mid-1980s Kmart was better positioned with twice the company wide computer sstem inking cash registers to head stores, three times the sales revenue and greater visibility offce so enabling stores to auicky rest through its advertisiig and lerge urban presence. In 1987,old This together with ine Joseph Antonin was brought in to head up Kmart and heralded as having get up and go, a an for. cost reducton. By the tine Wa-Marts sales matched those of growth and profit improvement. Sami Walton, co-founder of Kmart un 1991, is eanings before tax were imore than double Wal-Mart and is CEO until his death in 1992 commented in and since then the gap has wid his autobiography that in the mid-1980s s0 much aboutS Kmarts stores was superior that at times it lookcorporate image, reinforce the Kmart brand name ock goods as they were old. his tether with investments in trucks and distribution wascentres not orly Increased contol but also ied to signican cost red Exhibits 2.6 and 2.7) So, Kmart relied heavily on à marketing-based strategy to and cultivate brand loyalty, while Wal Marts strategy was From 1962 10 the late 1980s Wal-Mart had principally located outside small towns and was taking market share from tion to effect ageing Mom & Pop outlets. Kmart, on the other hand had competed against other large discount retailers in competitive oriented to operations as its source of advantage cost red ively support a wide product range and an oper ations inventory allocation and distribution system that kept e shelves tilled with the right products. Before Wal-Marts ensive urban locations. When Wal-Mart decided to invasion of Kmarts urban based territories, Kmart launched à nd nter this arena, t did so on the back of its strategy to develop five year store refurbishment and development initiative, with a opera computer systems to help track and replenish its merchandi quickly and efficenty. To prepare luding extensive investments in sophisticated budget of S3.5 bilion all part of a strategy to smarten the se are for the encounter, Antoninis s on his own strengths: marketing and companys outward appearance.Although relatively few people had seen a Wal-Mart advert let alone a store, the least visible parts of its operations-based strategy were, by the early 199 encounter, Antoni ategic focus wa merchandising. He invested heavily in nationwide television beginning to tell Wal-Marts sophisticated scannet di campaigns featuring glamorous television stars as presenters and in Kmarts renewed emphasis on advertising and brand served to and the price di widen the gap between the two approaches Kinart continued operations, Internal store proce inventory systems meant that shelves had the right stock discount strategy could be supported by low-cost dures such as accurate price labelling meant that delays and customer concerns over the accuracy of the store systems and procedures were rare. Meanwhile, Kmart was filled with distribution horror stories An internal company report highlighted major loopholes in its service delivery system, empty lves, employees without the skills and training to 100-t plan and control inventory and an in-place replenish- ment system incapable of ensuring that the price on the 6Sales revenue Kmart and Wal-Mart Sales evenue Sbn. .0 199 34 509 helf was the same as that stored in the cash registers 686 a problem which led to an out-of-court settlement of some $1 millon relating to 72 instances of overcharg Exhibits 2.6 and 2.7 show the results of the two 34156361463strategies. Probably the most telling statistic is that 332 di 53 118 e 1813 whereas Kmarts share of thetotal market from 1982 1993 867 ing g. to the mid-1990s fell from 34.5 to 22.7 per cent Wal-Marts grew from 20.1 to 41.6 per cent in the same period. The ultimate statement of decline came in May 2003 when Kmart went into bankruptcy Since then 2000370 362161912989 3033721283403Question & Answer: Operations Strategy. Read the attached article entitled “Comparing..... 1

Expert Answer

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.

Operation department:-

Walmart’s management covers 10 areas of operation management. These are made on the basis of everyday concern areas

  1. Capturing market with everyday low price strategy
  2. The process of creating destruction.
  3. Responding competitors strategy
  4. Cultural adaptation
  5. Training employees
  6. Withdrawal strategy
  7. Strategic characterisation of the products
  8. Quality management
  9. Process and capacity design
  10. Maintenance

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.

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