BUSINESS PLAN EVALUATION: KMARTSteve Horbachuk, Karen Huang, Dusan Ivanovic, and Michael SpoonerMGT310 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 3-way operation: Traditional Kmart Stores, Kmart

Super Centers, Big Kmart

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

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

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

About this Store

Located in Watertown, CT Opened August 6, 1976 Small store (compared to others)

Competition

Obvious Competition Wal-mart Target

Local Completion Grocery Stores Staples

Management Cycle

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

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

Staying Competitive

Aggressive pricing is NOT a top priority Exclusive, licensed and quality products

Focus on customer service and product knowledge

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

Chain of Command

Floor employee/associate Department managers Operations and Assistant Managers Store Managers District Manager

Staying Informed

Manager holds “huddles” to keep employees informed and share sales data

Culture

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

Technology

Improved communication with corporate and other stores

Faster, more organized systems Conference calls

How is Performance Measured?

Through measuring their overall sales performance of the store compared to other stores in the district’s overall sales

Type of Control Utilized

Concurrent control: managers monitors the ongoing employee activities to ensure they are consistent with the company’s performance standards

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

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

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