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Business PLAN evaluation: Kmart

Business PLAN evaluation: Kmart. Steve Horbachuk, Karen Huang, Dusan Ivanovic, and Michael Spooner MGT310 4/13/2008. Introduction and History. 1899 – SS Kresge Company founded by Sebastian S. Kresge New Strategy: Kmart stores and Corporation 1990 - Redesigning the identity

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Business PLAN evaluation: Kmart

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  1. Business PLAN evaluation: Kmart Steve Horbachuk, Karen Huang, Dusan Ivanovic, and Michael Spooner MGT310 4/13/2008

  2. Introduction and History • 1899 – SS Kresge Company founded by Sebastian S. Kresge • New Strategy: Kmart stores and Corporation • 1990 - Redesigning the identity • 3-way operation: Traditional Kmart Stores, Kmart Super Centers, Big Kmart

  3. Introduction and History (cont.) • Kmart’s Mission Statement: Kmart will become the discount store of choice for middle-income families with children by satisfying their routine and seasonal shopping needs as well as or better than the competition • Desired Customer Group: women with children at home in households with an annual income of $20,000 to $60,000

  4. Introduction and History (cont.) • 2002 – Kmart filed for reorganization under Chapter 11 of the US Bankruptcy Code • Stock plunged, downgraded credit, removed from top 500 leading stocks • “Cutting down $350 million on annual expenses through reorganization and job cuts” • Result: 600 stores closed, thousands of jobs cut, new management hired, new investors

  5. Introduction and History (cont.) • 2004 – Sears Holdings Corporation emerges as a merger between Sears and Kmart • 3,800 retail stores across US and Canada • $55 billion in annual revenue • Competing: Sears Essentials to become Sears Grand, new store concept • Speculation: Sears Holdings dropping Kmart in the next decade

  6. About this Store • Located in Watertown, CT • Opened August 6, 1976 • Small store (compared to others)

  7. Competition • Obvious Competition • Wal-mart • Target • Local Completion • Grocery Stores • Staples

  8. Management Cycle

  9. Management Cycle (cont.) • Set Goals • Business/functional-level goals articulate company direction and give associates a plan for personal workload • Evaluate Performance • Each associate and his/her manager will complete ratings on Business Results and Organization Values

  10. Management Cycle (cont.) • Assess Potential • Each associate will be evaluated on their potential next assignments and their capability to accept broader scope or accountability • Reward Performance • Based on the rating from their performance, an associate may be rewarded for excellence by an increase in their compensation

  11. Staying Competitive • Aggressive pricing is NOT a top priority • Exclusive, licensed and quality products • Focus on customer service and product knowledge

  12. Store Managers Oversee Operations within Individual Stores • Implement orders from corporate • Assign tasks and follow up • Deal with customers when needed

  13. Chain of Command • Floor employee/associate • Department managers • Operations and Assistant Managers • Store Managers • District Manager

  14. Staying Informed • Manager holds “huddles” to keep employees informed and share sales data

  15. Culture • Corporate code of ethics • Manager as “role model” • Strict dress code • Teamwork, focus on the customer • Community contributions

  16. Technology • Improved communication with corporate and other stores • Faster, more organized systems • Conference calls

  17. How is Performance Measured? • Through measuring their overall sales performance of the store compared to other stores in the district’s overall sales

  18. Type of Control Utilized • Concurrent control: managers monitors the ongoing employee activities to ensure they are consistent with the company’s performance standards

  19. Controlling Through Associates • Gets the right things done with a sense of urgency • Acquire skills that will impact his or her personal performance • Constantly works to improve their knowledge about the business and apply • Identify multiple ways to achieve results

  20. Controlling Through Managers • Understands how the organization’s processes and functions • Uses financial data to accurately diagnose business conditions, identify key issues, develop strategies and plans to achieve the organization’s financial goals • Evaluate overall success by examining the total impact of decisions and actions

  21. Conclusion • Recommendations for improvement • Update mission statement • Conduct more research on products, services and practices • Increase Information Technology resources and the training of personnel • Procedural evaluations by management outside of the local branch

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