KMART: STRIVING FOR A COMEBACK
Kmart Corporation is facing a serious problem with regards to the problem of bankruptcy protection that had allowed it to continue its operation even though it had been delinquent on obligations of more than $4.7 billion owed to creditors, vendors and leaseholders. The bankruptcy< which was filed in January 2002 was the largest bankruptcy in U.S. retailing history and was the culmination of decades of poor strategy execution that resulted in an overall deterioration of Kmart's competitive position in the discount retail industry and a roller-coaster earning history.
Strengths and Weaknesses:
The concern of the company with regards to the attitude and performance of Kmart store managers and associates were adversely impacting shopper visits and loyalty. Hall brought all Kmart store managers meeting. The executive team made it clear that they intended to end Kmart's historically insular, turf-wary organizational culture and adopt a more team oriented atmosphere at both corporate headquarters and in the stores. The company announced its new management development program to help the company develop future store-level and corporate level managers from within its ranks.
The company is criticized for lack of concern in promoting sound management to ensure productivity and efficiency in the process.
It is sad to note that Kmart is unresponsive to customer service. A 1994 Forbes article cited customer complaints of indifferent Kmart employees who, when asked for a specific item in the store, would wave their hand in a general direction. One disgruntled shopper complained "At the superstores in Farmington Hills or Southfield, the help is surly and uncooperative and they can never find the product that they need and have to have.
Floyd Hall and his new management team developed a combination of new strategies and improved implementation techniques to better compete with low-cost leader Wal-Mart and rapidly growing target. It is with this respect hat there is a need to take into consideration about the impact of these strategies in order to ensure customer satisfaction since the employees are the lifeblood of the business. It is important to deal with their problems through assessing their preferences and choices. It is important for the company to be customer oriented rather than competitor oriented.
C. Product Service
The management needed to correct its long-running inability to maintain proper inventory levels in its store. Kmart had been confronted with this problem for years. Most Kmart stores either frequently stocked out of popular items and/or were burdened with excess stocks of slow-moving items that eventually had to be marked down significantly. It is believed that Kmart's decentralized buying and merchandising process was the root of the company's poor inventory management practices. Kmart buyer's negotiated purchases with manufacturer's distribution people shipped products to stores, advertising specialists coordinated the company's advertising and a separate marketing staff was responsible for promotions. Surveys of U.S. discount store shoppers commissioned by Chain Store Age Executive found three consistent negative images that customers attributed to Kmart: out-of-stock merchandise, poor housekeeping and indifferent service. Consumers surveyed around Wal-Mart locations more convenient and believed that Wal-Mart offered better pricing and product selection than Kmart.
D. Financial Capacities
The company is delinquent of more than $4.7 billion owned to creditors, vendors and leaseholders. The bankruptcy, which was filed in January 2002 was the largest bankruptcy in U.S. retailing history and was the culmination of decades of poor strategy execution that resulted in an overall deterioration of Kmart's competitive position in the discount retail industry and a roller coaster earni8ng history....
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