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BUSINESS PLAN EVALUATION: KMART Steve Horbachuk, Karen Huang, Dusan Ivanovic, and Michael Spooner MGT310 4/13/2008 Introduction and History 1899 – SS Kresge Company founded by Sebastian S. Kresge New Strategy: Kmart stores and Corporation 1990 - Redesigning the identity 3-way operation: Traditional Kmart Stores, Kmart Super Centers, Big Kmart Introduction and History (cont.) Kmart’s Mission Statement: Kmart will become the discount store of choice for middle-income families with children by satisfying their routine and seasonal shopping needs as well as or better than the competition Desired Customer Group: women with children at home in households with an annual income of $20,000 to $60,000 Introduction and History (cont.) 2002 – Kmart filed for reorganization under Chapter 11 of the US Bankruptcy Code Stock plunged, downgraded credit, removed from top 500 leading stocks “Cutting down $350 million on annual expenses through reorganization and job cuts” Result: 600 stores closed, thousands of jobs cut, new management hired, new investors Introduction and History (cont.) 2004 – Sears Holdings Corporation emerges as a merger between Sears and Kmart 3,800 retail stores across US and Canada $55 billion in annual revenue Competing: Sears Essentials to become Sears Grand, new store concept Speculation: Sears Holdings dropping Kmart in the next decade About this Store Located in Watertown, CT Opened August 6, 1976 Small store (compared to others) Competition Obvious Competition Wal-mart Target Local Completion Grocery Staples Stores Management Cycle Management Cycle (cont.) Set Goals Business/functional-level goals articulate company direction and give associates a plan for personal workload Evaluate Performance Each associate and his/her manager will complete ratings on Business Results and Organization Values Management Cycle (cont.) Assess Potential Each associate will be evaluated on their potential next assignments and their capability to accept broader scope or accountability Reward Performance Based on the rating from their performance, an associate may be rewarded for excellence by an increase in their compensation Staying Competitive Aggressive pricing is NOT a top priority Exclusive, licensed and quality products Focus on customer service and product knowledge Store Managers Oversee Operations within Individual Stores Implement orders from corporate Assign tasks and follow up Deal with customers when needed Chain of Command Floor employee/associate Department managers Operations and Assistant Managers Store Managers District Manager Staying Informed Manager holds “huddles” to keep employees informed and share sales data Culture Corporate code of ethics Manager as “role model” Strict dress code Teamwork, focus on the customer Community contributions Technology Improved communication with corporate and other stores Faster, more organized systems Conference calls How is Performance Measured? Through measuring their overall sales performance of the store compared to other stores in the district’s overall sales Type of Control Utilized Concurrent control: managers monitors the ongoing employee activities to ensure they are consistent with the company’s performance standards Controlling Through Associates Gets the right things done with a sense of urgency Acquire skills that will impact his or her personal performance Constantly works to improve their knowledge about the business and apply Identify multiple ways to achieve results Controlling Through Managers Understands how the organization’s processes and functions Uses financial data to accurately diagnose business conditions, identify key issues, develop strategies and plans to achieve the organization’s financial goals Evaluate overall success by examining the total impact of decisions and actions Conclusion Recommendations for improvement Update mission statement Conduct more research on products, services and practices Increase Information Technology resources and the training of personnel Procedural evaluations by management outside of the local branch