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MGT 101

Assignment-1 Please read the case The Decline of Sears on Page number 73, Chapter 2 Management Theory available in your textbook/e-textbook Management: A Practical Approach 9th edition by Kinicki, A., & Williams, B., and answer the following questions in about 500 words:

Assignment Question(s): (Marks 5)

1. What is the underlying problem in this case from Edward Lamperts perspective? (2marks) 2. What are the key causes of Sears decline? (1.5 marks) 3. To what extent did sears use a total Quality Management perspective in running the business? (1.5 marks)

I need new and unique answers, please. (Use your own words, don't copy and paste)

The Decline of Sears Sears, Roebuck and Company, commonly called Scars, we founded in 1892 to sell ce product-watches. By 1989 the company had grown into the largest retailer in the United States Sears initially focused on elling its products via a mailorder business that relied on a catalog"When the catalog first appeared on doorsteps in the 1890s it funder mentally changed how Americans shopped Back then. much of the population lived in rural areas, and they bought almost everything from little shops at rural june tions. These general stores had limited selection and charged scorbitant prices. They were the only game in town." Sears' mailorder business was a disruptor Over the years Sears evohed along with changing con sumertastes. When people moved from rural areas to it ies, for example, the company opened hundreds of standalone uban stores to meet consumers' desire to shop in attractive department stores rather than via cata log Sears was also one of the first retailers to offer a credit card in the 1980s-the Discover cardthat earned cash rewards for customers based on their purchases. This innovation brought in a consistent source of evene for many years. The next change was to accommodate con sumer preferences for shopping at malk Scars esponded by anchoring its stores in malls across the country The retail corironment started to change in the 1990, and Sears began to fall behind as discount shopping at Walmart and Kmart took off. These companies were nim ble changing prices and imentory to meet customer preferences. Sears was more bureaucratic and was stuck with higher overhead costs and catalog prioes that had been set montecadieNot surprisingly. Walmarts cor- con grew while Sears' did not Eater online shopping The combination of comenience, selection, speed. and low prices available through online shopping has been a disruptive force for all retailers. Like its com petitors Scars has struggled against online selles such as Amazon According to a writer from USA Today however, the venerable retailer faces even dee per chat lenges: Sears "has ako suffered in the wake of its man age meaf's decisions, including the sale of its more than $30 billion credit card portfolio to Citibank in 2003, and a merger with Kmart as the ley, and he has managed the two chains as a value ply ever since, ignoring the fundamentals of running a retail business. Under Lampert the company chroni- cally underimested in store maintenance, peading as little one-fifth of what its rivals spent to keep stores ck an and up to date. The result has been a customer exodus, no one lile sshopping in dilapidated stores. 73 Another writer described Sears Holdings as having all the charm of a dollar stor without the prices, nor even the service, and with even more discegaged employ ces. Bright fluorescent lights highlight the drab floors, peeling paint and sad displys of merchandising that are reminiscent of department stores in the communist Soviet Union Some employees carry iPack, others do not Lampert's affections for technology led to a policy of employees required to use tablets on the shop floor even though most ckrks said they were unnecessary.*** WHAT LED TO SEARS DECLINE? Forbes reported that "the popular opinion is that poor management has led to the demise of both companies (Sears and Kmart). The magazine suggested that Lampert pursued the wrong strategies, assuming the goal was to improve Sears' profitability and long term survival. Consider the organizational structure Lampert installed at Sears Holdings Following a structural model used in the finance industry in which different teams compete for scaroe company resources, Lampert egmented the company into 30 autonomous business units such as men's wear shoes, and home furnishings. Each had its own acecutive staff and board of directors Rather than fostering colla boration, this structural arrangement led to "cutthroat competition and sabotage Incentives were tied to the so- cess of the individual business divisions, which often came at the expense of other parts of the company. A fomer executive told the New York Times that "managers would tell their sales staff not to help customers in adjacent sections, even if someone asked for help. Mc. Lampert would praise polices like them, said the executive Another aspect of Lampert's strategy was to spend on technolog rather than on stores. Lampert thought Scars was competing against Amazon. He thue "plomed investment, new talent and marketing into Sears' web- site and a customer loyalty program called Shop Your Way. The program allows customers to earn points, for purchases not only at Sears but at partnering busi nesses including Burger King. Under Armour, and Uber that can be redeemed for Sears merchandise Store appearance languished under this strategy WHAT'S THE LATEST? Sears cloed more than 350 stores in 2017 and plans to sell an additional 100 in spring 2018. The company THE MERGER OF SEARS AND KMART In 2004. Scans was acquired by Kmart a company that was the coming out of bankruptcy. The new firm was christened Sears Holdings and led by Edward Lampert. He had a background in imestments but no retail ape- rience at that time. 72 Some business writers suggest Lambert purchased Sears for the land on which hundreds of its stores stood. According to one writer, "Lampertsweal estate value conclusion because Lampert is too disengaged from the running of Sears' operations. Former executives say he managed the company from his home in Miami, setting foot in the company headquarters only for its annual meeting. 85 generated much-needed cash by selling off some of its key brands such as Craftsman for about $900 million.79 It also established new sources of revenue by making a deal to sell "its Die Hard-branded products-such as car batteries, jump starters, and tires-on Amazon's web- site. The retailer also started selling its Kenmore- branded appliances on Amazon" in 2017.80 Despite these efforts, Sears is hemorrhaging money" according to Business Insider. Sales are down 45% since early 2013, its debt load has spiked to $4 billion, and the company is losing well over $1 billion annually. "81 Making matters worse, "Sears said in a filing with the Securities and Exchange Commission (in 2017] that it had 'substantial doubt about its ability to stay in business unless it can borrow more and tap cash from assets. "82 The company is definitely pursuing this strat- egy according to CNNMoney. This source reported in 2018 that the company announced it will "cut another $200 million a year (beyond the stores it already planned to close). And it's looking to increase the amount of money it is able to borrow."83 According to the New York Times, Lampert believes the company can turn things around. He told a reporter that "while there is still work to do, we are determined to do wha necessary to remain a competitive retailer in a challenging environment."84 Others doubt this