MKT1600 Marketing Principles & Practices
CASE STUDY—What Happened to Kmart?
On January 22, 2002, Kmart filed for Chapter 11 bankruptcy protection. It was the largest retailer ever to do so and shocked many people. Kmart had made retail history when its founder, the Kresge “five and dime store” chain, invented the concept of the discount store. The first Kmart was established in Detroit in 1962, the same year WalMart opened its first store in Rogers, Arkansas. By the end of 1963 Kmart had 63 stores converted from Kresge’s.
In the following years, however, WaI-Mart expanded quickly by following a strategy of everyday low prices. Wal-Mart used information technology (IT) to track sales in all its stores and to replenish its fastest selling products. Wal-Mart demonstrated its willingness to spend needed funds on IT by installing registers with bar-code scanners in each store during the late 1 970s and early 1 980s, which fed the sales data into the back-end store computers. The result was Wal-Mart sales data were always current and store managers knew what was selling well and what was not. In time many orders were routed straight from the Wal-Mart store to the appropriate supplier, and the delivery went from that supplier directly to the store. Wal-Mart recently developed an extranet to work closely with key suppliers on problems such as how to increase sales on specific products. Many analysts believe Wal-Mart has the most sophisticated supply chain systems in the industry….End of Case Overview….
CASE STUDY QUESTIONS:
- Evaluate Kmart using the value chain and competitive forces models. What was Kmart’s business model and business strategy?
- What was the relationship of information systems to Kmart’s business processes and business strategy? How well did its systems support its strategy
- What management, organization, and technology factors contributed to Kmart’s problems?
- How important was supply chain management in contributing to Kmart’s problems? Evaluate Conaway’s decision to use i2 software to improve Kmart’s supply chain management.
- Were those blaming software for the collapse of Kmart correct? Explain your answer.
- It has been said that “Wal-Mart uses their IT strategically, and they fully integrate it into their operating model.” Does this statement apply to Kmart: Explain your response.
- List the problems Conaway faced when he took over Kmart, and then describe the short-and long-range policies you would have followed had you been in his place.