V. SWOT ANALYSIS Strengths: People first philosophy Low prices Known for customer responsiveness Aggressive growth strategy has led them to become the worlds largest retailer Sells broad array of affordable merchandise Dedicated and positive employee base Warmer feeling store compared to competitors Good balance between low prices and not too cheap feel Customers perceive value in shopping at K-Mart Socially aware and involved in community functions Dominant bargaining power over suppliers Most sophisticated and effective inventory control system in retailing Weaknesses: Highly influential founder deceased Stores dont have special promotions Economic uncertainty hurts retail sales Rural communities hesitant to K-Mart taking over at expense of local merchants Opportunities: Continued growth potential Competitors are going out of business Online sales may increase with popularity of Internet shopping New store locations in U. S. and abroad People always looking for low prices and good customer service Threats: New management team may lose sight of the K-Mart way Emerging Competition from other discount retailers and supermarkets Competitors ability to easily imitate K-Marts methods Past performance and growth may be difficult to sustain VI.
EXTERNAL EVALUATION ANALYSIS Consolidation in the industry has left the major market share in the hands of three large players: Wal-Mart, Target, and Kmart. These stores, with their value proposition and broad array of affordable apparel, general merchandise and food, continue to take market share from mid-priced department stores and specialty stores. Analysts see no reason for this trend to change in the near term. The merging of general merchandise and food under one roof has been adopted by Wal-Mart, which has made its Super Center format the company’s growth engine, and Target, which is rolling out its Super Targets. Selling food and everyday consumables brings increased traffic, and, despite the low margins of these products, the higher volume has boosted overall profitability. Investments in technology have helped many chains obtain better information about sales trends.
... heard from the hilltops of York Pennsylvania. Let Wal-Mart s low prices be advertised through the mountainous ranges of the Rockies. Let ... a wide array of merchandise and friendly service, and thus he decided to create Wal-Mart the super store. I too have a ... whose financial expansions do not create more jobs, Wal-Mart s exceptional growth has been an engine for making jobs. In 1995 ...
Inventory information lets them keep less merchandise in stock, and inventory costs have been reduced. In turn, this lowers working capital needs and frees up cash flow. In addition, the use of the Internet for consumer purchases, has resulted in retailers setting up websites. Their concern for quality has heightened since many of their products have been recalled in the past 5 years. Kmart has consulted with all of their suppliers regarding the production of their products. Kmart has to be involved with the quality control of their suppliers to ensure that the products they receive are up to standards.
By Kmart participating in the Worldwide Exchange, it enables suppliers and retailers to collaborate on the production and sale of the products. Kmarts marketing strategy positions the company as a department store that sells quality brand name goods for a discounted price. Their target markets are low / middle class households. It has over 2, 171 stores nationwide which makes it a well known department store and very accessible to the customer.
... competitor, Wal-Mart, which had undergone no expensive renovations, preferring instead to continue to provide the best possible service to its customers. Kmart ... an owner that has a very creative idea for marketing products. Not all stores seem to stay in business partly ... most major medical expenses. The company contributes to the cost of health benefits and we offer affordable Associate plans. ...
Kmarts customers are mostly loyal. Once you have paid a fraction of the price for a quality brand name, its not likely that you will go somewhere where the product is more expensive unless the customer defects to Wal-Mart or another competitor. This would be less likely in the big cities like New York and Los Angeles. VII. INTERNAL FACTOR ANALYSIS Since K-mart uses a cost-leadership business-level strategy, this inherently gives K-mart some advantages against its competition. K-mart is somewhat protected from industry competitors by its cost advantage.
If rivalry within the industry increases and companies start to compete on price, K-mart should be able to withstand competition better than the other companies because of its lower costs. This low-cost competitive advantage, or distinctive competency, is K-marts advanced inventory control system. The danger that still exists for K-mart is the competition can easily imitate K-marts methods. This is already apparent with Target and Kmart building new stores resembling the super center format. These competitors are also emulating K-mart ways by introducing people greeters, upgrading interiors, developing new logos and signage, and introducing new inventory response systems.
In order to fight this threat, K-mart needs to exploit its bargaining power over its suppliers and pass the benefits on to its customers in the form of quality brand name items available at lower than competitive prices. This approach will build up customer loyalty and market share and thus, fight off competitors. Another major factor contributing to the success of these companies is the level of customer service. If all competitors carry the same products, offer similar prices, and have the same type of stores, then the critical component will be the customer service. K-mart needs to stress this fact throughout the entire organization in order to continue its dominance in the industry.
Training employees, recognizing achievements, encouraging input, offering incentive programs, and giving employees some decision-making power will help create a dedicated and very productive work force, should give birth to superior customer service.