Merger of Sears and Kmart Case Study

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This would leave the company with the option to choose the supplier with the best-priced, best-quality products.

The threat of substitute products and services is high, particularly from major competitors such as Wal-Mart. Wal-Mart is a major player in the industry, and the merged companies will need to be significantly creative to maintain their competitive advantage in terms of products. Furthermore, the rivalry among competitors in the industry is quite high, particularly among the major rivals. Indeed, the reason for the merger was precisely to increase the collective size of the company to make it more competitive within the market.

STRATEGY USED:

The strategy in terms of the merger was for two relatively insignificant companies to join forces to enable a global-scale retail entity in order to better compete with market leaders such as Wal-Mart (Rahman and Eisner, 2007). Part of the strategy is to improve the reputation of Kmart by merging the entity with Sears and discarding the name. Brand identity and customer loyalty are important considerations in this regard. Opinion polls and analysts revealed that the connotation with the Sears name is more positive than the Kmart name.

Whether the merger succeeded is still a question that has not been answered adequately. However, a merger is something that companies often consider if the advantages of doing so are more than the advantages connected to remaining apart.

WHAT ARE THE ISSUES AND CHALLENGES FACING THIS COMPANY?

Sears Holdings can gain a competitive advantage by retaining the brand names that have been customer favorites, such as Kenmore, Die Hard and Craftsman.

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After the merger, a significant challenge will also be culture, as two corporations must now arrange a platform from which to now operate as single entity. One problem is the time it will take to stabilize the company to such an extent that it can in fact sustain competition in the market.

COURSE OF ACTION RECOMMENDED:

I would recommend that the company consider carefully which of the existing brands to retain to optimize their competitive advantage. This could be done by means of market polls. The culture of the company can be optimized by providing training involving all employees. OPINION:

I enjoyed the case study, and particularly the lessons that can be learned regarding mergers. Two companies that merge must do so only because their collective strength is greater than their individual prowess in the market. I believe that Sears and Kmart have the potential to achieve the advantages they envisioned.

REFERENCES:

Schuman, E. (2004, Nov. 17). Sears, Kmart Merger to Create Huge Retail IT Operation. eWeek. Retrieved from http://www.eweek.com/c/a/Enterprise-Applications/Sears-Kmart-Merger-to-Create-Huge-Retail-IT-Operation/

Sears Holdings Corporation. (2010). About Kmart. Retrieved from http://www.searsholdings.com/about/kmart/

Sears Holdings Corporation (2010). Corporate Governance. Retrieved from http://www.searsholdings.com

Rahman, N. And Eisner, A.B. (2007). Kmart-Sears Merger of 2005. Journal of the International Academy for Case Studies. Retrieved from http://findarticles.com/p/articles/mi_qa5452/is_200707/ai_n21290752/.....

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