detailed explanation of What are the key causes of Sears' decline?from the case "The Decline of Sears" on Chapter 2 "Management Theory" available in "Management: A Practical Approach" 9th edition by Kinicki, A., & Williams, B.,
Book 2020 - Google Driv X X C D A Secure | https://drive.google.com/drive/folders/1h4VJ5H7f6Zw51GfEFNYes9sP1MRQgNHI LI QI Drive Management in Action Sign in The Decline of Sears as the key, and he has managed the two chains as a value Book 2020 Sears, Roebuck and Company, commonly called Sears, was play ever since, ignoring the fundamentals of running a founded in 1892 to sell one product-watches. By 1989 the retail business. Under Lampert, the company chroni- DOWNLOAD ALL company had grown into the largest retailer in the United cally underinvested in store maintenance, spending as States. Sears initially focused on selling its products via a little as one-fifth of what its rivals spent to keep stores Files mail-order business that relied on a catalog. "When the clean and up to date. The result has been a customer exodus, as no one likes shopping in dilapidated stores."73 Name catalog first appeared on doorsteps in the 1890s, it funda- mentally changed how Americans shopped. Back then, Another writer described Sears Holdings as having much of the population lived in rural areas, and they all the charm of a dollar store without the prices, nor bought almost everything from little shops at rural junc- even the service, and with even more disengaged employ- tions. These general stores had limited selection and ees. Bright fluorescent lights highlight the drab floors, W charged exorbitant prices. They were the only game in peeling paint and sad displays of merchandising that are PDF town." Sears' mail-order business was a disruptor. reminiscent of department stores in the communist Over the years Sears evolved along with changing con- Soviet Union. Some employees carry iPads, others do sumer tastes. When people moved from rural areas to cit- not: Lampert's affections for technology led to a policy ies, for example, the company opened hundreds of of employees required to use tablets on the shop floor, standalone urban stores to meet consumers' desire to even though most clerks said they were unnecessary."74 shop in attractive department stores rather than via cata- log. Sears was also one of the first retailers to offer a WHAT LED TO SEARS' DECLINE? POF Management_A_Pra credit card in the 1980s-the Discover card-that earned Forbes reported that "the popular opinion is that poor cash rewards for customers based on their purchases. This management has led to the demise of both companies' innovation brought in a consistent source of revenue for Sears and Kmart). The magazine suggested that many years. The next change was to accommodate con- Lampert pursued the wrong strategies, assuming the sumer preferences for shopping at malls. Sears responded goal was to improve Sears' profitability and long-term by anchoring its stores in malls across the country. survival.75 Consider the organizational structure The retail environment started to change in the 1990s, Lampert installed at Sears Holdings. and Sears began to fall behind as discount shopping at Following a structural model used in the finance Walmart and Kmart took off. These companies were nim- industry in which different teams compete for scarce bler, changing prices and inventory to meet customer company resources, Lampert segmented the company preferences. Sears was more bureaucratic and was stuck into 30 autonomous business units such as men's wear, with higher overhead costs and catalog prices that had shoes, and home furnishings. Each had its own executive been set months earlier. Not surprisingly, Walmart's rev- staff and board of directors. Rather than fostering colla- enue grew while Sears' did not. Enter online shopping. boration, this structural arrangement led to "cutthroat The combination of convenience, selection, speed, competition and sabotage. Incentives were tied to the suc- and low prices available through online shopping has cess of the individual business divisions, which often came been a disruptive force for all retailers. Like its com- at the expense of other parts of the company." A former petitors, Sears has struggled against online sellers such executive told the New York Times that "managers would as Amazon. " According to a writer from USA Today, tell their sales staff not to help customers in adjacent cactione avan if camanna asked for hale Mr Lammart 4:36 PM Management_A_Pr...pdf Management_A_Pr....pdf Management_A_Pr....pdf Show all X 10/7/2020 Canceled Failed - Server problem Failed - Server problemA Book 2020 - Google Driv X X C D A Secure | https://drive.google.com/drive/folders/1h4VJ5H7f6Zw51GfEFNYes9sP1MRQgNHI I enue grew while Sears did not. Enter online shopping. The combination of convenience, selection, speed, competition and sabotage. Incentives were tied to the suc- PDF Management_A_Practical_Introduction_9e_by A "and low prices available through online shopping has cess of the individual business divisions, which often came at the expense of other parts of the company." A former Lnin been a disruptive force for all retailers. Like its com- petitors, Sears has struggled against online sellers such executive told the New York Times that "managers would Book 2020 as Amazon." According to a writer from USA Today, tell their sales staff not to help customers in adjacent however, the venerable retailer faces even deeper chal- sections, even if someone asked for help. Mr. Lampert DOWNLOAD ALL lenges: Sears "has also suffered in the wake of its man- would praise polices like these, said the executive."" Another aspect of Lampert's strategy was to spend Files agement's decisions, including the sale of its more than $30 billion credit card portfolio to Citibank in 2003, on technology rather than on stores. Lampert thought Name and a merger with Kmart."?! Sears was competing against Amazon. He thus "plowed investment, new talent and marketing into Sears' web- THE MERGER OF SEARS AND KMART site and a customer loyalty program called Shop Your Way. The program allows customers to earn points, for In 2004, Sears was acquired by Kmart, a company that purchases not only at Sears but at partnering busi- w was then coming out of bankruptcy. The new firm was nesses including Burger King, Under Armour, and PDF christened Sears Holdings and led by Edward Lampert. Uber, that can be redeemed for Sears merchandise."78 He had a background in investments but no retail expe Store appearance languished under this strategy. rience at that time." Some business writers suggest Lambert purchased WHAT'S THE LATEST? Sears for the land on which hundreds of its stores stood. Sears closed more than 350 stores in 2017 and plans According to one writer, "Lampert saw real estate value to sell an additional 100 in spring 2018. The company Management Theory CHAPTER 2 73 Management_A_Pra generated much-needed cash by selling off some of its key brands such as Craftsman for about $900 million.79 conclusion because Lampert is too disengaged from It also established new sources of revenue by making a the running of Sears' operations. Former executives say he managed the company from his home in Miami, deal to sell "its DieHard-branded products-such as car setting foot in the company headquarters only for its batteries, jump starters, and tires-on Amazon's web- annual meeting. site. The retailer also started selling its Kenmore- branded appliances on Amazon" in 2017 80 FOR DISCUSSION Despite these efforts. Sears is "hem according to Business Insider. "Sales are Page 112 1 846 Problem Sol Pers early 2013, its debt load has spiked to $4 billion, and the ying problem in this case from Edward Lampert's perspective? Management_A_Pr..pdf 4:37 PM Management_A_Pr....pdf Canceled A Management_A_Pr....pdf X Failed - Server problem Failed - Server problem Show all 10/7/2020A Book 2020 - Google Driv X X C D A Secure | https://drive.google.com/drive/folders/1h4VJ5H7f6Zw51GfEFNYes9sP1MRQgNHI I batteries, jump starters, and tires-on Amazon's web- annual meeting. OF Management_A_Practical_Introduction site. The retailer also started selling its Kenmore- "brainded appliances on Amazon"in 2017.60 FOR DISCUSSION Lnin Despite these efforts. Sears is "hemorrhaging money" Problem Solving Perspective according to Business Insider. "Sales are down 45% since Book 2020 early 2013, its debt load has spiked to $4 billion, and the 1. What is the underlying problem in this case from company is losing well over $1 billion annually." Edward Lampert's perspective? DOWNLOAD ALL Making matters worse, "Sears said in a filing with 2. What are the key causes of Sears' decline? 3. Do you think Lampert can turn the company around? Files the Securities and Exchange Commission [in 2017] that it had 'substantial doubt' about its ability to stay in Why or why not? Name business unless it can borrow more and tap cash from assets." The company is definitely pursuing this strat- Application of Chapter Content So egy according to CNNMoney. This source reported in 1. What does the Human Relations Movement suggest 2018 that the company announced it will "cut another went wrong at Sears? $200 million a year (beyond the stores it already W planned to close). And it's looking to increase the 2. Use the four parts of a system to diagnose the com- PDF amount of money it is able to borrow." pany's decline. Provide support for your conclusions. According to the New York Times, Lampert believes 3. To what extent did Sears use a total quality manage- the company can turn things around. He told a reporter ment perspective in running its business? Explain. o that "while there is still work to do, we are determined 4. What key lessons from this chapter could Lampert to do what is necessary to remain a competitive retailer have used to improve Sears' performance following in a challenging environment."84 Others doubt this the merger with Kmart? Explain. FOF Management_A_Pra Legal/Ethical Challenge What Should You Do about an Insubordinate session with his group in another state. Not only did Employee? this require significant travel expenses, but the consul- You are a vice president for a company in the insur- tant's fees were well outside of your budgeted expenses. ance industry, and you supervise five managers. These Further, your other employees were expressing feelings managers in turn supervise a host of employees work- of unfairness because Jim was taking his team on a ing in their departments. Your company is having trou- teambuilding trip and they were being forced to cut ble achieving its sales growth goals and your boss, the costs. It also was a bit inconsistent to spend money on president of a division, called a meeting with you and teambuilding when impending layoffs were just around your peers to create a plan of action. the corner. The meeting was a bit volatile because layoffs were In terms of layoffs, all your reporting managers sub- proposed and it was agreed that all vi mitted a list of potential employees to let go except for to decrease their budgets. This mea Paget )113 an/ 846 by he avoided this task. your peers were not allowed to hit violates the agreement that send employees to training. You also have to reduce ing, and you are upset that he amsalouses to los off Vows 4:37 PM Management_A_Pr..pdf Management_A_Pr....pdf Management_A_Pr....pdf Show all X Canceled 10/7/2020 Failed - Server problem Failed - Server
