Kmart Corporation. Essay

1525 words - 6 pages

KMART CORPORATION - ANALYSIS ON THE EXTERNAL FACTORS AFFECTING THE FIRM'S COMPETITIVE ADVANTAGE AND THE INTERNAL RESOURCES AND CAPABILITIES CRITICAL TO LONG-TERM SUCCESSINTRODUCTIONKmart Corporation is a discount retailer and general merchandise retailer based in Troy, Michigan. Ranked #36 in the Fortune 500, Kmart is the second largest of such retailer in the United States in terms of sales volume. In this extremely competitive arena of discount retailing, Kmart is constantly adapting its existing strategies to emerging threats and opportunities in response to the challenges in the industry. This essay will attempt to analyse the external factors affecting Kmart's competitive advantage in the industry using Porter's Five Forces Model for the period up until the end of the accounting period for the year 2000. This will be followed by an examination of how its internal resources are structured and utilised to address these competitive external factors.THE NATURE OF BUSINESSAn overview of the nature and conduct of Kmart's main businesses is essential at this point to understand its position in the industry. Kmart serves the domestic consumer market in the US (though used to be an international retailer) with four basic formats (in 1999): the traditional Kmart Discount Departmental stores (202 units), Big Kmart stores for general merchandise and convenience items (1,860 units), and Super Kmart centres for food and general merchandise (105 units) (Pearce and Robinson, 2003). Kmart stores are generally one-floor, freestanding units, ranging in size from 40,000 to 190,000 square feet. The customer base generally consists of low to mid-income families.EXTERNAL FACTOR ANALYSISIndustry Rivalry. Kmart faces an intense domestic rivalry. The main competition are from the following three companies. An industry competitive analysis follows the text:Wal-Mart Stores Inc. This current leader of the industry since 1991 till the present is principally engaged in the operation of mass merchandising stores. Wal-Mart operates 2373 discount stores, 1104 supercentres, 512 SAM's Clubs and 19 Neighbourhood Markets (Pearce and Robinson, 2003) apart from more than 1,000 international outlets (Conrad, Hansen and Hoffman, 2001). Wal-Mart is well known for lower prices. The firm found early strength in cultivating rural markets, merchandise restocking programs and the control of operations through companywide computer programs that linked cash registers to corporate headquarters. Being well in the lead among industry rivals for some time, Wal-Mart enjoys the benefits of economies of scale, loyal customers and to some extent geographical monopoly.Sears, Roebuck & Co. Sears operate 858 Full-Line stores, 267 Hardware stores, 738 Sears Dealer stores, 798 Auto Centres and 310 National Tire & Batter stores (Pearce and Robinson, 2003). The company operates a more diversified retailing business to include Home Services and Direct Response, domestic credit and...

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