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The Key Reasons of Sears Holding Decline Case Study

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Updated: Feb 24th, 2022

Edward Lampert, who was an executive at Sears Holding, saw no real problems in the company but found other reasons for its decline. From Lampert’s perspective, the underlying cause was that with the arrival of new technologies and participants in the market, Sears could not stand up to competitors. For example, Amazon had significant advantages in technology and delivery speed, as well as the variety of products on the site. For this reason, Lampert focused on investing in technology such as a website or tablet for all store employees, although they were often unnecessary (Kinicki & Williams, 2020). Consequently, according to Lampert, Sears Holding’s main issue was not internal problems in the organization but the broad opportunities of competitors that the company could not overcome with limited resources.

The key reasons for Sears’ decline were the wrong organizational strategy and the investment in a failed loyalty program. The first problem was that Lampert changed the division of personnel by creating many autonomous departments that had their leaders (Kinicki & Williams, 2020). However, this approach led to unhealthy competition and even aggression, which significantly deteriorated the quality of staff service. Relative autonomy can be appropriate approaches in large-scale companies divided by departments with almost no joint operations and can only compete by performance indicators. However, Sears’s employees were expected to communicate and serve customers together, but they refused assistance if the product was not in their department (Kinicki & Williams, 2020). Consequently, this feud worsened the working conditions of employees, and probably increased their turnover, and also pushed away clients.

Moreover, investing in loyalty and technology instead of stores was the second mistake. Lampert invested in a loyalty program that didn’t benefit the company because it lowered the purchase price but didn’t generate loyal customers due to Sears’s disadvantages. Physical stores had an unattractive time-worn interior that required updates (Kinicki & Williams, 2020). Thus, the unpleasant store’s looks and staff unwilling to help customers were key reasons for Sears’ decline.

Lampert did not almost use Total Quality Management, which could help save the company, although one might note some of its traits. For example, one of the principles of Total Quality Management is strategic thinking, and the introduction of technologies and loyalty programs could be an attempt to manifest it (“Concepts and principles,” 2019). For example, a loyalty program could be useful if Sears had no other problems, and technology was focused on improving employee performance. However, Lamper did not accurately assess the priority of these tasks, and he lacked the strategic thinking to correct the existing problems before introducing new technologies.

The rest of the Total Quality Management principles were also not followed. For example, the organization of the work of employees, which led to hostility and high competition, made effective communication, the responsibility of employees, and their continuous improvement impossible (“Concepts and principles,” 2019). In other words, instead of doing their job well and suggesting enhancements, employees interfered with each other and sabotaged their duties. Due to the lack of communication, it was also impossible to make decisions based on facts and build an integrated system that would help see and fix the most severe problems. All of these shortcomings led to inefficient management of money and human resources, degraded customer satisfaction, and led to Sears’s failure. Consequently, Lampert used almost no Total Quality Management to save the company from ruination and neglect the main rules of the customer-oriented approach and involvement of employees in the process of suggesting improvements.

References

Concepts and principles of Total Quality Management (2019). Web.

Kinicki, A., & Williams, B. K. (2020). Management: A practical introduction. McGraw-Hill Education.

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