Analysis Of Kmart's Competitive Position And Strategic Issues In An Essay.

Critically analyse an organisation’s existing competitive position, internally and externally, using a range of models and tools.

An introduction of your business including their mission statement, vision, and a recent (last five years) challenge which the firm/organisation has faced.
Identify how the mission statement and the vision statement are linked together and why they exist at all. Is the company’s vision aligned with the mission statement?  Is the company fulfilling the vision?  If so, how?  If not, why not and what should they do to change this?  Is the mission statement still valid in today’s economic environment and is this statement sustainable in the future? 
Discuss the issue(s) from the last five years with relevant justification, analysis and examples. Explain why you consider this issue(s) the most important at this time. 
Explain the strategy options for this issue (make sure you include both a description of the option and the method/s).  Evaluate the strategy options using the RACES framework (Resource, Acceptable, Coherent, Effective, Sustainable).

Mission Statement and Vision

Kmart, a subsidiary company of Wesfarmers since 2007, opened its first store in Henderson in 1988. The company has maintained a profitable venture since 2013 (Wesfarmers.com.au, 2018). Kmart also offers an online shopping facilities to Australian consumers. However, in New Zealand it does not operate as ‘online shopping’ but rather as a brick-and-mortar format. One of the unique selling points that the company enjoys in New Zealand is its strategy to offer products at cheaper price. Clothing, general merchandise and homewares constitute the product line of Kmart (Kmart.co.nz, 2018).

Mission statement: “They are committed to continuous strategy making towards improving lives of their customers with quality products and services and solutions, which could earn customers’ trust on the company and could also build up with them a lifetime relationship (Kmart.co.nz, 2018).”

Vision statement: “Kmart’s vision is to provide customers with products that they need on a daily basis at cheaper prices (Kmart.co.nz, 2018).”

However, the company also faces a number of strategic challenges in New Zealand. One of the strategic issues, which Kmart has faced is to maintain rationality in pricing-and-product strategy. The company kept on offering products at cheaper prices; however, did not extensively bother for adding values to products. The second strategic issue for Kmart is being its inability to lead its management effectively. The company did not go for recruiting skilled and experienced professionals from outside resources. The third strategic issue is related with inventory management and supply chain operations. Inventories were not being appropriately maintained. In addition, the company lacked a forecast capability to be aware of the product requirements. Logistics operations were also very slower leading to delayed arrival of shipments (Price, 2016). Controlling routine front line service workers: an Australian retail supermarket ca).

The main purpose of this assignment is to analyse the mission and vision statement of Kmart. It is also aimed at doing an environmental analysis of the company.

Mission statement: “The company is committed to improving lives of their customers by offering quality products at lower prices. It is also committed to offer solutions that could help company to earn the trust of customers on the company and build-up a long-term relationships with them.”

Vision statement: “Kmart’s has aimed to provide customers with products that are required on a daily basis at cheaper prices.”

The company was initially successful in providing useful products at cheaper prices. The list of its offerings include general merchandise, homewares and clothing. However, the company seems to have lost its ground in long-term in regards to supporting its mission with an effective handling of vision statement. There are ample of reasons, which would make this an evident fact.

 On a broader aspect, product-pricing-strategy of Kmart looks a bit uncontrolled and ineffective as well. It looks uncontrolled because it lacks an assistance of quality leaders and skilled professionals. The company does not emphasis much on recruiting from outside resources. On contrary to this, successful retailers keep their utmost focus on attracting industry’s best talents to promote a creative and skilled workforce. Such a move has caused them badly and affected the overall sales figure. Consequently, profit margin was hard hit from declining sales (Zheng, Singh & Mitchell, 2015). Instead, a brick-and-mortar format should work an extra bit to maintain the competency in an ever-increasing popularity of the online retailing.     

Strategic Issue

An incapable management policy is also evident in how Kmart manages the inventories. They are not so effective with their market forecast capability. As a result, they are unable to judge and identify the needs to make the orders. Such situation will either lead to overstocking or under-stocking (Feng, Li, McVay & Skaife, 2014). In addition, logistics operations are ineffective as well. Products are normally delayed that ultimately result in failing to deliver the demands on time. It gives its competitors an opportunity to deliver and capitalise the opportunity. Kmart’s supply chain inefficiencies can well be understood from a model called “A Flexible Supply Chain”. This is best suited to businesses, which face both peak and down times. It encourages to be flexible with market demands, so that, production could be speed up in peak times or else (Disney, Maltz, Wang & Warburton, 2016). Considering the flexible model, this can be said that Kmart is largely unable to deliver on expectations.

As stated earlier, one of the strategic issues is Kmart’s leadership. The company does not fully encourage a bulk recruitment from outside resources. It means they are missing on opportunities such as to attract skilled talents and also the quality managers. According to the “Trait Theory of Leadership”, leaders are either made with exceptional and unique qualities or are born (Wyatt & Silvester, 2018). In the light of the theory, this can be said that acquiring quality leaders can be an important asset for the company. However, on contrary to this theory, Kmart lacks to attain such leaders as they are rarely exposed to wider opportunities. Other retailers do follow the similar strategy as that mentioned in the trait theory to give them opportunities to work with industry’s best people. They believe that leaders lead from the front. Hence, it is important to have effective leaders to create motivation for work in employees.   

The other issue is related with inventory management and the supply chain. Kmart is unable to process orders on time. It means they do not have a sound forecast system, which could communicate market demands in real-time. Such a situation is not so good for an effective management inventories. For a profitable venture, it is important that business is free from both overstocking and understocking (V?tavu, Lobon?, Para & Pelin, 2018). An understocking of inventory will lead to not fulling the market demands. On the other hand, an overstocking will enhance the operational costs and hence, will reduce the actual profitability. In addition, Kmart also does not have the effective logistics operations, which is affecting its ability to deliver products on time. This is creating a real opportunity to its competitors who are comparatively good with their logistics operations.  

Recruiting a highly experienced and skilled manager from outside is an option towards improving the leadership issue at Kmart.

Method:

The method would definitely be a recruitment process. An applicant with proven track record in managerial skills needs to be recruited. They should be hired at a good package as skilled managers would definitely be looking this as an opportunity.

Strategic Options

For the supply chain management

Description:

Using Total Quality Management (TQM) and also implementing a Customer Relationship Management (CRM) system would be the piece of options to improve Kmart’s ability in managing the supply chain operations.

Method:

TQM will require a systematic process to be followed by the management. To avoid any shortcomings, it is advisable to follow the guideline framework especially designed for an effective implementation of the TQM. It comes in the form of a package, which encourages to set objectives at the earliest followed by setting of Key performance Indicators (KPIs). KPIs are required to measure the performance. An evaluation of a TQM enabled system is always required to make further amendments to it if required (Benavides-Velasco, Quintana-García & Marchante-Lara, 2014). CRM, on the other hand, would assist in collecting a large-scale of data. If an employer is able to use such data in real-time with an effective utilisation of ‘Big Data Analytic’, this will create the wonder (Khodakarami & Chan, 2014).

Evaluation

This section evaluates the recommended strategic options with the RACES framework (Bergh et al., 2016).

Resource: To attract good leaders, spending will be needed to make over the recruitment process. Both TQM and CRM will attract significant investments and manpower as well.

Acceptable: The recommended options will ask Kmart to think differently than what they have been doing. This simply means a change in regulatory, legislative and management policies. In addition, a new business model will also be required as the existing model of Kmart is very flat in nature and is not feasible with the suggested options. Kmart rather requires a dynamic business model, which is feasible with TQM, CRM and is able to attract the quality leaders.

Coherent: The recommended options are coherent suggestions as other retailers follow the similar strategies to make a lasting impact.

Effective: Undoubtedly, TQM and CRM if effectively handled can do wonders to a reputed company such as Kmart.  

Sustainable: An effective leadership will ensure that TQM and CRM are effectively followed in operations. TQM strives to improve the overall quality of operations whereas CRM provide the insights of customers that are required to offer relevant products to them.

Each of the options are required considering the current market performance of Kmart. However, for the time being, Kmart can afford to delay the implementation of TQM as it is a long process. The implementation is possible only if the management is able to understand the entire elements of a TQM. Since, the recruitment process and the implementation of CRM is comparatively a short-term process. Hence, both of these should be given the preference over TQM for the time being only. It is because TQM will be required to effectively manage quality operations at Kmart to attain a sustainable business.

The recruitment will be one of the suggestions to go with at this point in time because quality operations will only be attained if the business has leaders who is desperate for attaining the operational excellence. Additionally, CRM will help to offer relevant products to customers, which Kmart has largely struggled to. Kmart seems to have a limited focus over offering relevant products to customers.   

Conclusion 

In summary, this can be concluded that Kmart is struggling to fulfil its mission statement with effective visionaries towards it. The company follows an irrational price-product-strategy, which is killing its sales in New Zealand. It does not also have motivation towards attaining quality leaders. Some strategic options have been suggested to Kmart to help the company attain the operational excellence. One of the recommendations is for attracting quality and experienced managers by conducting an organized recruitment process. Another set of recommendations are for implementing TQM and CRM into the system. CRM and the recruitment of an effective manager can be given a preference over TQM at this point in time.

References

Benavides-Velasco, C. A., Quintana-García, C., & Marchante-Lara, M. (2014). Total quality management, corporate social responsibility and performance in the hotel industry. International Journal of Hospitality Management, 41, 77-87. [DOI: 10.1016/j.ijhm.2014.05.003]

Bergh, D. D., Aguinis, H., Heavey, C., Ketchen, D. J., Boyd, B. K., Su, P., ... & Joo, H. (2016). Using meta?analytic structural equation modeling to advance strategic management research: Guidelines and an empirical illustration via the strategic leadership?performance relationship. Strategic Management Journal, 37(3), 477-497. [DOI: 10.1002/smj.2338]

Disney, S. M., Maltz, A., Wang, X., & Warburton, R. D. (2016). Inventory management for stochastic lead times with order crossovers. European Journal of Operational Research, 248(2), 473-486. [DOI: 10.1016/j.ejor.2015.07.047]

Feng, M., Li, C., McVay, S. E., & Skaife, H. (2014). Does ineffective internal control over financial reporting affect a firm's operations? Evidence from firms' inventory management. The Accounting Review, 90(2), 529-557. [DOI: 10.2308/accr-50909]

Khodakarami, F., & Chan, Y. E. (2014). Exploring the role of customer relationship management (CRM) systems in customer knowledge creation. Information & Management, 51(1), 27-42. [DOI: 10.1016/j.im.2013.09.001]

Kmart.co.nz. (2018). Retrieved from https://www.kmart.co.nz/

Price, R. (2016). Controlling routine front line service workers: an Australian retail supermarket case. Work, employment and society, 30(6), 915-931. [DOI: 10.1177/0950017015601778]

V?tavu, S., Lobon?, O. R., Para, I., & Pelin, A. (2018). Addressing oil price changes through business profitability in oil and gas industry in the United Kingdom. PloS one, 13(6), e0199100. [DOI: 10.1371/journal.pone.0199100]

Wesfarmers.com.au. (2018). Retrieved from https://www.wesfarmers.com.au/docs/default-source/default-document-library/2017-annual-report.pdf?sfvrsn=0

Wyatt, M., & Silvester, J. (2018). Do voters get it right? A test of the ascription-actuality trait theory of leadership with political elites. The Leadership Quarterly. [DOI: 10.1016/j.leaqua.2018.02.001]

Zheng, W., Singh, K., & Mitchell, W. (2015). Buffering and enabling: The impact of interlocking political ties on firm survival and sales growth. Strategic Management Journal, 36(11), 1615-1636. [DOI: 10.1002/smj.2301]