Strategic Management and Business Policy

Strategic Management and Business Policy

If you were CEO of K-Mart what strategies would you recommend for the company? Should K-Mart and Sears keep their own identities and have unique competitive strategies or should they be combined in some way with a new overall corporate competitive strategy?

The most strategically important issue for K-Mart today is stabilizing their pricing structure and the ability to drastically reduce the cost per square foot to operate their stores, which are the key determinants to the company nearly going bankrupt prior to their merger in 2004 (Moon, 2005). K-Mart must focus on its operational inefficiencies and focus on bolstering its profit-per-square foot of store space, and this includes a drastic re-definition of its retailing operations. Choosing to concentrate on its core strengths and get its operational weaknesses addressed is far more critical for the viability of both companies than branding. Sears needs to become the flagship brand and create a broader unique value proposition to hold market share relative to low-end mass merchandisers including Wal-Mart and high-end retailers including May Company.

What business competitive strategies were used by each of K-Mart major competitors? Explain these strategies. Which strategies were most effective? Why?

Wal-Mart and the group of stores within that broader brand present the most competitive strategies including the Low Price Everyday (LPED) guarantee and the focus on the Value Shopper, which comprises the majority of Wal-Mart revenue and is responsible for 16% of its profits (Frazier, 2006). Wal-Mart is also the company's most significant competitor when it comes to supply chain performance and the ability to manage tens of thousands of suppliers to predetermined performance objectives as well (Norek, Pohlen, 2001). Target, another significant competitor, is using an up-scale marketing message to position itself away from Wal-Mart and Sears/K-Mart. Target is also challenging Wal-Mart for leadership in consumer electronics including plasma and flat-screen televisions as well (Frazier, 2006). There is also competition from May Company primarily in apparel nationally, and with several smaller regional retailers who concentrate on clothing and furniture to a limited extent. Of these competitors, Wal-Mart has been the most effective as the company's unique value proposition focuses on enhancing and adding buying power to their customer's budgets. In fact it is known that Wal-Mart, for the Value Shopper, is a major means of making ends meet (Frazier, 2006). This translates into a significant competitive advantage and also galvanizes internal effort to deliver exceptional value and shopping experiences for those Value Shoppers who see the savings from Wal-mart allowing them to make ends meet.