Business Sears Kmart InSears and Kmart consummated their merger, bringing together two former retailing powers. The move had been forced by changes in the technological and competitive environment that had resulted in substantial changes in the retail industry. Old-school, mall-based department stores were falling out of favor and both Kmart and Sears were losing market share.
This merger occurred for economical reasons. This merger will benefit both companies in different ways separately and as Sears Holding Company. Moving out off malls means that Sears will sell some of it real estates which will bring money to the company.
According to Edward S. Lampert, former chairman of Kmart and new chairman of SCH, the goal were to seek to leverage the combined strengths of Sears and Kmart to obtain greater long-term value either could have generated on a stand-alone basis. Choosing from previous companies the best human resources, information technology, operations, finance, strategy lead them to a stronger organization.
Higher market shares often result in greater purchasing power over suppliers. Increased orders result in lower purchase prices for materials and services, allowing the company to be more price competitive.
In merger there will be employees from Kmart and Sears which will share different organizational culture.
And according to an AT Kearney research study; in mergers the more powerful partner imposes his culture on the less powerful one.
The key to a strategic merger is to create a new organizational culture for SHC. First they need to see what the organizational culture before merger is.
The other alternative which I think is the best solution is to cross results from both Kmart and Sears and take the best elements from both companies. The advantage here is that the employees will see this as SHC culture and will share these values.
The new SHC culture will encourage individual identification with the organization and its new objectives Dess, Lumpkin, Eisner, Strategic Management, This is important because people should start to cooperate; they are not competitors, not anymore.
Since SHC is a new company there should be applied a new structure. I think the best structure in this case is a Matrix structure. The advantages of this structure are that it: Increases market responsiveness through collaboration and synergies among professional colleagues, allow more efficient utilization of resources, improves flexibility, coordination and communication, increases professional development through a broader range of responsibility.
The disadvantages are that: Even after the merger both companies will continue to operate separately under their respective names. And as I mentioned above this is not the right thing to do, because there should not be anymore Kmart or Sears. The quicker they manage to change their previous identity into Sears Holding Company, the better.
Buyers need to see that this merger brought changes and the reason they were not preferred from them, are being improved into this new company. As longer they continue to act as Kmart as Sears the more difficult will be for them to be seen as SHC. Kmart was placed as a discount store and Sears as a department store.
SHC must be placed as a discount store since department stores are not longer liked from customers. Also as SHC they have to compete against Kmart and Sears as they was and change the way people sees them, and through their past experience try to not make the same mistakes and improve their products.
Now as SHC they have to decide against whom they want to compete. Who is more important? They can take advantage of the good allocation of Kmart stores in key urban and high density suburban markets with high-income customers and far from these 2 competitors.Download "Kmart Sears Case Analysis" Thesis ( Words)!
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