Sears, Roebuck & Co.ABDALRAHIM ABUDAYYA

Outlines

History Of Sears

Fast Facts

Vision, mission, and core value

Board of Directors, and Senior Management Team

Business and Industry Analysis

Sears Mistakes

Current Situation

Corporate governance, executive compensation, and agency conflicts at Sears

SWOT analysis

History Of Sears

1886: Richard Sears – sells watches

1893: Sears officially forms; corporate

name is Sears, Roebuck, and Co.

1896: First general catalog

1925: First Sears retail store opens in Chicago

1945: Sales exceed $1 billion

1953: Sears opens in Canada

2009: Sears purchased the social search engine Delver. Sears Tower

Fast Facts:

Headquarters: Hoffman Estates, Illinois

Employees: Approximately 250,000

Full-line Store Locations: Nearly 900

Sears' 2004 Fortune 500 Ranking: No. 32

Areas of Operations: United States, Puerto Rico and Canada

Employs: Approximately 201,000 associates in the U.S. and 48,000 in Canada

Serves: More than 48 million active Sears customer

The Foundation of Sears

Sears' MissionTo grow our business by providing quality products and services at great value when and where our customers want them, and by building positive, lasting relationships with our customers.

Sears' VisionTo be the preferred and most trusted resource for the products and services that enhance home and family life.

Sears' Core ValuesWe must· earn our customers' trust and business every day;· act with integrity in everything we do;· treat everyone fairly and value diversity;· be accountable for our actions; and· win as a team.

Board of Directors

Edward S. Lampert

Cesar L. Alvarez

Paul G. DePodesta

Kunal S. Kamlani

William C. Kunkler III

Steven T. Mnuchin

Ann N. Reese

Thomas J. Tisch

Senior Management Team

Edward S. Lampert, Chairman of the Board, Chief Executive Officer

Jeffrey A. Balagna, Executive Vice President, Chief Information Officer

Robert A. Schriesheim, Executive Vice President and Chief Financial Officer

Arun D. Arora, Senior Vice President and President, Home Appliances and Home Services

Kristin M. Coleman, Senior Vice President, General Counsel and Corporate Secretary

Alasdair James, President and Chief Member Officer, Kmart

Leena Munjal, Senior Vice President, Customer Experience and Integrated Retail

Robert A. Riecker, Vice President, Controller and Chief Accounting Officer

Business and Industry Analysis

Business Analysis

Sears Roebuck & Co., founded by R. W. Sears in 1886

In 2003, the company was divided into three domestic segments: Retail and

Related Services, Credit and Financial Products, and Corporate and Other. In

addition the company has one international segment, Sears Canada. The

Retail and Related Services segment focuses principally on merchandise sales

and supporting activities, such as: service contracts, product installation, and

product repair. The Credit and Financial Products segment manages the

domestic portfolio of MasterCard and Sears Card receivables. This segment

was sold in November of 2003. The Corporate and Other Segment includes the

operations of Sears Home Improvement Services

Industry Analysis

Health & Beauty, 8.90%

Electricals, 5.30%

Clothing & Footwear, 54.60%

Homewares, 11.70%

Furniture, 10.00%

Other (including food), 9.50%

Global Department Stores Market Segmentation: 2008

Industry Analysis

Sears Mistakes

In the 1990s the company began divesting itself of many non-retail entities, which were detrimental to the company's bottom line.

The merger of Sears with K-Mart, two Companies in trouble don’t make one good company.

In 2004, Kmart announced its intentions to purchase Sears. As a part of the purchase, the Kmart Holdings Corporation would change its name to Sears Holdings Corporation. The new corporation announced that it would continue to operate stores under both the Sears and Kmart brands. (Two Losers).

The fact of Sears having had 42 brands in their lineup, and have given most of them away.

Sears Brand Central was an electronics store. The appliances departments in Sears are now known and referred to internally as Brand Central, although they are not marketed to consumers as such, except for a few locations in Puerto Rico (What for?).

In March 2009, Sears purchased the social search engine Delver. (completely off strategy).

Current Situation

Sears’ stock has dropped from $193 a share in 2007 to about $37 today.

Sears Chairman Edward S. Lampert has come under increasing scrutiny for

raising prices, cutting costs, mismanaging merger with Kmart, and alienating

customers.

Critics: Sears is dumping high end products in older Kmart stores that

haven’t been modernized.

Marketing budgets have been cut.

Continuous drop in same store sales since 2008.

Sears Grand, a strategy to compete with smaller strip malls, has

failed.

Corporate governance, executive

compensation, and agency conflicts at Sears

the analysis of Sears' governance structure and executive

compensation portrays a firm lacking management accountability.

Management insiders chaired keyboard committees, and managerial

compensation bore little relation to the firm's operating performance.

This contention is further supported by the board's 1988 adoption of a

comprehensive set of anti takeover amendments in response to

rumors that Sears was a possible takeover target. These findings

suggest that Sears' governance structure and compensation plans did

not encourage its management to act expeditiously in response to the

firm's deteriorating performance.

SWOT analysis

Strengths

117 years of experience in the market place.

Number of stores across the market place is high.

Brand loyalty built over the years.

Strong market share in home appliances.

Being a “follower” in implementing an effective Supply Chain

strategy will allow Sear’s a higher chance of implementing the

strategy correctly because they will have access to better

technology and access to “what not to do” when implementing

the strategy.

Weaknesses

Previous attempts to penetrate market share have failed.

Previous attempts to increase sales in their clothing line have

failed.

Store floor plans are out of date and consumers have a

negative perception of shopping because they feel lost and

cramped while shopping.

Mall based stores becoming a thing of the past

Competing for Low Prices

Opportunities

The acquisition of Land’s End shows hopes for increase sales

volume in Sear’s clothing line.

Trends in the growth of the home furnishing market suggest

that Sear’s brand name loyalty with Craftsman can potentially

increase sales

Threats

Lack of growth in all product lines, including their number one

brand name product, Craftsman. This trend must be a top

concern for Sear’s executives

Lack of recognition in the market place in regards to their

clothing line.

Sear’s is behind in the industry strategy of Supply Chain

Management.

Consumer’s negative perceptions of hassles with shopping at

malls.

Recommendations

Sears must refocus their business around their expertise and their clients. So many years have gone by, that it is a difficult change proposal. People by now do not know what Sears is all about.

Sears has to dispose all unnecessary business and stores, collect cash, reduce their size of business and launch a new model coherent with their brand equity and capabilities, which is different to competition and attractive to consumers.

We are going to propose Sears Mega Stores only, using Sears Grand stores and developing a business setup around Home, Car and Outdoor Life.

Retain Traditional Reputation

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