Sears Holding Company|
Gregory A. Squires|
General Environmental Forces28
Porter’s Five-Forces Model35
Competitive Profile Matrix43
General Discussion on Stakeholders46
Top 70 Stakeholders47
Finn stakeholder Model55
Sears was started by Richard W. Sears in 1886. While working as a North Redwood, Minnesota freight agent, a local jeweler gave him an unwanted shipment of pocket watches. He sold the watches to store owners who then sold them at retail prices. Sears then ordered and sold more watches and by his sixth month, had made $5,000. He subsequently quit his railroad job and founded R.W. Sears Watch Company in Minneapolis (Sears History, 2009).
Within a year’s time, Sears had moved into Chicago in 1887 be in a more convenient location for shipping and communications. At this time, Sears was just in the business of selling watches, but as time went on, people were coming in for watch repairs which he knew nothing about. Instead of turning potential business away he adapted and hired Alva Roebuck, a watch repairman from Indiana. Sears’ competitive advantage was the fact that he could sell his watches at a lower cost. He did this by buying up discontinued lines from manufacturers and passing on the discounts to customers (Sears History, 2009).
In 1888 the company published its first mail-order catalog. It was eighty pages long and contained both watches and jewelry. The catalog then grew to over three hundred pages by 1890. By this time the catalogue added clothing, durable goods, bicycles, sewing machines, firearms, sporting goods, and buggies. In an effort to establish his company as the low cost leader in the eyes of the consumers, in the 1894 catalog, the cover proclaimed “Book of Bargains: A Money Saver for Everyone,” and “The Cheapest Supply House on Earth” In the catalog, Sears included testimonials of his satisfied customers (Sears History, 2009).
Sears strength was in selling advertising and merchandising, not in organizing the company so that it could handle orders on an economical and efficient basis. This is when Julius Rosenwald comes into play. Rosenwald bought into the company in 1895 and soon after became vice president and in 1901 he became treasurer as well. Five years later, needing more capital, Sears and Rosenwald sold common and preferred stock for the first time on the open market. The company has been publicly owned ever since (Sears History, 2009).
Sears soon began to expand throughout Chicago and even into Texas by 1906. With all this expansion, efficiency became a major issue. With all the orders coming in it wasn’t uncommon for a customer to receive an item several times. Sears executives recognized this problem and after much experimenting, they introduced a time schedule. Under it, each order, as it arrived, was given a time to be shipped. Then the order had to be in the appropriate bin in the merchandise-assembly room at the assigned time. It traveled to the room by a series of belts and chutes. This method brought order to the mail order system and resulted in Sears being able to handle ten times the business it handled before the system was introduced. They also introduced the referral system which rewarded customers for spreading the word to family and friends. The original customer received premiums for their work such as stoves, bicycles sewing machines etc.
Sears primary buyers were farmers in rural areas. Sears looked to expand his Business into the cities as well. “We do comparatively very little business in cities, and we assume the cities are not at all our field- maybe they are not- but I think it is our duty to prove they are not.”