Sears was once a major retail powerhouse, known for its wide variety of products and its iconic catalogues. However, in recent years, the company has struggled to keep up with changes in the retail industry and has faced significant financial difficulties. In this essay, we will evaluate Sears using the competitive forces model and the value chain model to understand the challenges that the company has faced and how it has tried to respond to them.
First, let's look at the competitive forces model. This model, developed by Michael Porter, identifies five forces that shape the competitive landscape of an industry: the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitute products or services, and the intensity of rivalry among existing competitors.
For Sears, the threat of new entrants has been a significant challenge. With the rise of e-commerce, it has become much easier for new companies to enter the retail market, and Sears has struggled to compete with the convenience and low prices offered by online retailers such as Amazon.
The bargaining power of suppliers has also been a problem for Sears. As the company's financial struggles have continued, suppliers have become increasingly hesitant to do business with Sears, which has limited the company's ability to obtain the products it needs to keep its stores stocked.
The bargaining power of buyers has also been a challenge for Sears. With so many options available to consumers, both online and in brick-and-mortar stores, buyers have been able to be selective about where they shop and have been less loyal to Sears.
The threat of substitute products or services has also been a concern for Sears. As consumers have become more price-sensitive, they have been more willing to look for alternative options, such as shopping at discount stores or purchasing used or refurbished items, rather than paying full price at Sears.
Finally, the intensity of rivalry among existing competitors has been fierce in the retail industry, and Sears has struggled to keep up. The company has faced tough competition from both traditional retailers and e-commerce companies, and it has been difficult for Sears to differentiate itself and stand out in a crowded market.
Now, let's turn to the value chain model. This model, also developed by Michael Porter, identifies the various activities that a company engages in as it transforms raw materials into finished products and services. These activities can be divided into two categories: primary activities and support activities.
For Sears, primary activities include purchasing raw materials, manufacturing or assembling products, marketing and sales, and customer service. The company has struggled to effectively carry out these activities in recent years, particularly in terms of marketing and sales. With the rise of e-commerce, Sears has struggled to attract and retain customers, and it has been unable to keep up with the pace of change in the retail industry.
Support activities at Sears include infrastructure (such as logistics and distribution), technology development, and human resources management. The company has struggled to invest in these areas, and this has contributed to its overall decline.
In conclusion, Sears has faced significant challenges in recent years, both in terms of the competitive forces at play in the retail industry and the various activities that it engages in as part of its value chain. The company has struggled to adapt to the rise of e-commerce and has been unable to effectively compete with newer, more agile retailers. To turn things around, Sears will need to find a way to differentiate itself and offer value to customers in a crowded and competitive market.
