Kmart: Striving For A Comeback

A. EXECUTIVE SUMMARY

Purpose Statement:

The objective of this case is to discover solutions on how to bring Kmart back on track again and how to solve its bankruptcy.

Problem Statement:

1. Inadequate customer service

2. Poor competitive position

3. Too much turnover among top management

4. Inventory problems

Alternative Courses of Action:

1. Reconstruction of strategy

2. Improve image and appearance

3. Improve customer service

4. Increase frequency of customer visits

5. Improve store operations

Methods:

The method used in examining Kmart's problems is the Porter's Five Forces Model and SWOT analysis.

Recommendations:

I would recommend all the alternatives listed above.

Conclusion:

In reconstruction of strategy, Kmart will be able to survive its problem. By reconstructing its strategy, this will help improve its image, appearance and customer service.

B. METHODS OF ANALYSIS

Porter's Five Forces Model

Threat of New Entrants

The power of new market entrants is weak. The market is extremely easy to enter into, but it is hard to compete at the levels of economies of scale that the larger chains possess.

Bargaining Power of Buyers

The power of the buyers is strong. Retailers are at the mercy of the consumer's demand and preferences. Currently consumers find shopping to be a chore. The convenience of the general merchandise store allows customers, to buy more items in fewer trips. The trick is getting them to come to your store--a pleasant and entertaining atmosphere is the push today.

Bargaining Power of Suppliers

The power of the suppliers is strong. Retailers must maintain good relations with their vendors. If their reputation is soiled with the suppliers, then they risk losing their source of merchandise and will be driven out of business.

The Nature of Rivalry in the Industry

The rivalry of the competition is incredibly fierce. We currently our "over stored" as a whole. We have 22-sq. ft. of store space per person in our country. The only real way to gain any significant share of the market is by under cutting the price of the competition.

Threat of Substitutes

The power of substitutes