Course Portfolio Project: KMART



Course Portfolio Project: KMART

Introduction

Kmart, sometimes styled as "K-Mart," is a chain of discount stores headquartered in the United States. The chain acquired Sears in 2005, forming a new corporation under the name Sears Holdings Corporation. The company was founded in 1962 and is the third largest discount store chain in the world, behind Wal-mart and Target, with stores in the United States, Puerto Rico, the U.S. Virgin Islands, and Guam (which houses the world's largest Kmart). As of January 29, 2011, Kmart operated a total of 1,307 (6 closing by early 2011) Kmart stores across 49 states, Guam, Puerto Rico, and the U.S. Virgin Islands (Narver & Slater, 1990).

Kmart once was the leader in the discount store industry, has found itself surpassed by Wal-Mart and Target in recent years and is now facing the possibility of closing its doors. The differences among the companies' successes can be seen in their business models and strategies. Wal-Mart focused on decreasing expenses and Target established its market placement as a high-quality low-cost discount store. In contrast, Kmart used a promotions-driven business model. Because of this, Kmart focused on trying to generate sales from promotions, rather than trying to cut expenses to increase their profits. Kmart is, on the other hand, offers higher prices, which means they attract wealthier, more educated, and more fashionable people. They do pay attention to design and interior which supports their customers' need to feel comfortable. 

Balanced Scorecard Evaluation of KMART

An example of balanced scorecard leveraging near real time decision making, enabled by information technology, is the semi-conductor division of Agilent which has to manage its sprawling supply chain across the world. The frequent changes in its design create problems for the management of its inventory. With the use of the - five score card - feature of its business intelligence software, Agilent is able to keep track in real time of the performance parameters related to its inventory (Pitts & Pitts, 2009). In addition, the company uses the MRP simulation options to decide on how it is going to manage its inventory based on alternative scenarios. The business intelligence software also allowed it to disaggregate the bill-of-materials information for standard and customized inputs. This information allowed it to contract out the standardized materials while retaining the customized materials for in-house production.

A much more significant advantage of real time reporting is the ability to react to events as they happen and to respond to every turn in the consumer mood. Another balanced scorecard example is KMART which decided to use its point-of-sale performance data in order to make its inventory decisions (Roethlisberger & Dickson, 1939). Typically, retail stores have to cope with unexpected changes in the mood of the consumer, demand patterns are affected by the location of their stores or the delivery patterns and currency fluctuations on the supply end change the profitability equation for the chain. In the past, retail chains had no option but to react after the ...