Management Study Cases

Management Study Cases

3-13 Analyze Sears using the competitive forces and value chain models. What are Sears’s strengths? What are its weaknesses?

Efforts to invest more heavily in information technology have not translated into a competitive advantage for Sears over the years because its cost structure has been one of the highest in its industry. Even though early on it installed new point-of-sale terminals that allowed sales staff to issue new credit cards, accept charge card payments, issue gift certificates, and report account information to card holders, it hasn’t helped.

Sears moved its suppliers to an electronic ordering system which it hoped would eliminate paper throughout the order process and expedite the flow of goods into its stores. It also was among the first major retailers to change the way it sold based on shifting consumer habits. It started letting shoppers buy online and pick up their goods in stores well ahead of competitors Walmart and Target. It’s been out front with a new service that let shoppers reserve goods online and pay cash for them in stores. It even launched an online layaway program for its customers.

It has tried to improve its value chain by improving its sourcing and procurement systems with suppliers and its customer relationship management systems. Sears’ main problem is that it has one of the highest cost structures in its industry. Experts believe that all of Sears’ experiments are a diversion for the company’s overarching problems: a deteriorating store network and a brand image that doesn’t resonate with today’s consumers. (Learning Objective 3-3: How do Porter’s competitive forces model, the value chain model, synergies, core competencies, and network economics help companies use information systems for competitive advantage? AACSB: Analytical thinking, Reflective thinking, Application of knowledge.)

3-14 What was the problem facing Sears? What management, organization, and technology factors contributed to this problem?

Management: When Sears opened a test store in 2009 called Mygofer it did not stock items for sale. Instead, shoppers would place their orders at computers in the front of the store and then pick up their goods at a delivery bay out back. However, some days, more people returned goods than bought them. Shoppers didn’t like the fact that they couldn’t see and touch things. Annual sales struggled to top $1 million at the new store when Sears predicted $8 million in annual sales.

Organization: Sears still struggles to find a viable business strategy that will pull it out of its rut. Expectations were that deeper knowledge of customer preferences and buying patterns would make promotions, merchandising, and selling much more effective.

Technology: It continues to use technology strategies to revive flagging sales: online shopping, mobile apps, and an Amazon.com-like marketplace with other vendors, along with heavy in-store promotions. It continues to pin its hopes on technology, aiming for even more intensive use of technology and mining of customer data. Sears legacy systems were incapable of supporting personalized marketing campaigns coupons, and offers down to the individual customer.

So far these efforts have not paid off and sales have continued to decline since the 2005 merger with Kmart. (Learning Objective 3-3: How do Porter’s competitive forces model, the value chain model, synergies, core competencies, and network economics help companies use information systems for competitive advantage? AACSB: Analytical thinking, Reflective thinking, Application of knowledge.)

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