As an organization KMART has its internal strengths and weaknesses. Moreover, this corporation is affected by a variety of external forces. Thus, it is necessary to examine how these internal and external factors will influence this company. The following table summarizes the STOW analysis of Kmart.
These are the main issues that the management of the company should take into account. One of the weaknesses that have been identified is the necessity to reorganize the supply chain. The problem is Kmart began to invest in technologies and information system relatively late, namely in 2002 (Sehgal, 2007, p. 202). This is why they have long been unable to estimate the demand for products more accurately (Sehgal, 2007, p. 202). Moreover, its suppliers often did not know when new goods had to be delivered. In many cases, the goods that buyers needed were stored in the warehouses, but they were not available on the shelves (Sehgal, 2007, p. 202). Thus, many of the buyers were dissatisfied with the quality of their services.
In contrast, one of their major competitors, Wal-Mart realized the importance of supply chain management and began to use information technologies long before Kmart. This is one of the reasons why Kmart was unable to achieve growth and compete with the prices set by Wal-Mart. The management did try to change the situation; however, at this point, the organizational performance of this corporation cannot match the capabilities of Wal-Mart. This weakness is the main reason why even now many stores of Kmart are closed in the United States. Without addressing this issue, this corporation can hardly strengthen its positions in the market.
However, one should not assume that Kmart has no strengths. It should be borne in mind that this organization was one of the first chain-retailers to introduce online shops which enables customers to make purchases at home (Epstein, 2004, p. 121). The growing number of customers prefer this way of buying goods and products. The company can benefit from this trend. The thing is that the brand of this organization is still recognized by many customers in the United States, and they can choose their website over their competitors. However, the success of online stores is strongly dependent on supply chain management in the organization. Provided that the company does improve their aspect of their performance, their online stores will not increase the profitability of the corporation.
There is another important trend which the management of Kmart should consider. More customers prefer to buy private brands because they are less expensive (Onkvisit & Shaw, 2008, p. 387). These are the goods that are produced or owned by a retail chain. The increasing popularity of these store brands can be explained by economic downturn and the willingness of clients to save costs. Kmart can make use of this trend as this company also has some store brands, for instance, Homemaker which is the producer of kitchen appliances. Hence, this is the opportunity that the company should explore. This trend may not last very long and the management of Kmart should find ways of differentiating its store brands among others.
Nevertheless, there are significant threats that are also important. As it has been noted the table, Kmart needs to focus more on diversification. The presence of this company in other countries is very limited. Its stores in Europe or Australia were sold to other companies. Thus, one can say that Kmart strongly depends on the purchasing power of American consumers. The limited geographic presence can make them less competitive, especially in comparison with other companies such as Wal-Mart or Target. Therefore, the company may consider entering foreign markets. This strategy has been adopted by many of Kmart’s competitors, and it has been rather effective. Yet, the retailer’s ability to enter foreign markets is determined by the supply chain operations. This example also demonstrates that lack of attention toward supply chain management can decrease the competitive stress of a company. Currently, Kmart has to find ways of overcoming this difficulty.
Furthermore, this management of this company should pay attention to legal and environmental factors. The thing is that legislators in the United States and other countries set higher standards for the management of waste. This issue is important because Kmart was penalized in 2007 for not meeting the standards (Clifford & Edwards, 2011, p. 322). This is the problem that the management of Kmart should resolve in order to be a responsible corporate citizen. A company can hardly gain this reputation, if it has a poor environmental record. Apart from that, a good environment record is a way of gaining the trust of clients.
These are the main issues that one can identify in this case. Overall, the competitive strength of this company should be based on the excellent functioning of the supply chain. The company has several opportunities to explore, in particular, the growing importance of online commerce and increasing popularity of private brands. However, Kmart can benefit from these trends, if they adopt the best practices and approaches to supply chain management. This strategy will be the most important success factor.
Reference List
Clifford, M. & Edwards, T. (2011). Environmental Crime. Berkeley : Jones & Bartlett Publishers.
Epstein, M. (2004). Implementing Ecommerce Strategies. New York: Greenwood Publishing Group.
Onkvisit, S. & Shaw, J. (2008). International Marketing: Strategy and Theory. London: Taylor & Francis.
Sehgal, V. (2011). Supply Chain as Strategic Asset: The Key to Reaching Business Goals. New York: John Wiley & Sons.