Strategic Management of K-mart

This report discusses the strategic management of K-mart, including Porter's Five Forces analysis and recommendations for improvement. The report also covers the retail industry in Australia and the challenges faced by K-mart. The study material, solved assignments, essays, and dissertations related to this topic are available at Desklib.

Running head: STRATEGIC MANAGEMENT OF K-MART
Strategic Management of K-mart
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1STRATEGIC MANAGEMENT OF K-MART
Executive Summary
The primary purpose of this report is to discuss about the retail company K-mart and its
industry. It elaborates on the porters five forces analysis in relation to the company and states
the recommendations that can help in improving the strategic management of the company.

2STRATEGIC MANAGEMENT OF K-MART
Table of Contents
Introduction................................................................................................................................3
Porter’s Five Forces Analysis....................................................................................................3
Porter’s Value Chain Analysis...................................................................................................6
Key Findings and Recommendations.........................................................................................7
References:...............................................................................................................................10

3STRATEGIC MANAGEMENT OF K-MART
Introduction
Kmart Australia Limited refers to the chain of Australian stores which is owned by
the Wesfarmers. It is instrumental in operating around 214 stores within Australia along with
20 store within New Zealand (Kmart.com.au 2018). The head office of K-mart Australia is
located within Melbourne. With the help of K-mart Australia the customers can shop online
different items like toys, furniture, home décor and home & entertainment appliances. The
latest selection pertaining to products makes shopping at K-mart a pleasurable experience for
the consumers. Retail industry within Australia is facing a great amount of disruption. There
are various overseas business that has entered the market and they have brought a new
approach in relation to retailing. Retail landscape has changed along with the demands of the
customers in the present age. The customers in the modern age have become more tech savvy
which is a major reason for the popularity of online shopping in the present era (Hill, Jones
and Schilling 2014). The expectations of the customers have evolved in the present age and
technology has played a major role in changing the behaviour of the customers. This report
discusses about the porter’s five forces pertaining to K-mart and the recommendations that
can help in increasing the attractiveness of the industry.
Porter’s Five Forces Analysis
Porter’s Five Forces refers to a model that can help in the analysis of the five
competitive forces that can help in the shaping of the industry. It can prove to be useful in the
determination of the strengths along with weakness of the industry (Wheelen et al. 2017). The
five forces framework can help in addressing diverse kinds of problems and it can help a
business in becoming more profitable. The Porter’s model is applicable to segment of
economy that can help in assessing the attractiveness of the company.
Threat of New Entrants

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The new entrants can decrease the profitability of the other firms within the industry.
There are a large number of new entrants of retail firms in Australia that makes the threat
very high for K-mart Australia. There are new entrants like the American retailer TJX
Company Inc which is instrumental in operating 35 stores within Australia. The department
stores of UK John Lewis along with Debenham have joined forces with that of the
established operator. The new entrant is French leisure good retailer called Decathlon that
poses a threat for the business of K-mart (Rothaermel 2015). Australia is one of the 163
member of World Trade Organization that engages itself in international trade with that of
other member nations. Australia has different bilateral along with regional trade agreement
that makes the threat from new entrants to be very high. Australia is one of the open economy
within the world and it has reversed the restrictive trade regime that makes the threat from
new entrants to be very high (Meyer, Neck and Meeks 2017).
Threat of substitutes
Substitute product makes use of different technology for solving same economic need.
K-mart was founded in the year 1969 and it has been able to create loyal followers of their
brand. The retail firm has been able to draw a large number of customers on account of the
different kinds of products that are offered by the retail firm. It has 214 Kmart stores within
Australia that makes it accessible to a large number of consumers. This makes it difficult for
it to be substituted as it has been able to establish a brand name (Lasserre 2017). K-mart
offers different kinds of facilities like the latest products, fitness tech products and items for
party décor that can help it in attracting a large number of customers. K-mart makes use of
new ideas for designing the outfits and toys that makes it stand out from the rest of the retail
firms and makes the threat of substitutes to be low (Bettis et al. 2015).
Bargaining power of customers

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Bargaining power of customers is indicative of market of the outputs. It can help in
putting a firm under immense pressure that can affect the sensitivity of the customer to the
changes in price. The bargaining power of the customers can be said to be high due to the
presence of many retail firms within the Australian market. There are various Australian
retailers in the Australian market like Temple & Webster, Kogan, The Iconic, Booktopia, JB
Hi-fi, Red Balloon and Lorna Jane from where the Australian consumers can buy the items
and apparels (Bettis et al. 2016). The switching cost of the buyer is low and they can easily
look for an alternative company on account of the presence of so many firms within the
Australian market. The customers can easily look for an alternative retail firm that makes the
power of customers to be quite high. The prices of the products are similar in most of the
firms and the consumers have the option of buying the products from the different firms.
Bargaining power of suppliers
Bargaining power of the suppliers is indicative of the market pertaining to inputs. The
suppliers of the raw materials can prove to be powerful for the firm in the event of having
less number of substitutes. The bargaining power of the suppliers can be said to be low on
account of the fact that there are a large number of suppliers of the raw materials of K-mart.
There are different suppliers of raw materials in the Australian market like Amtrade
International Pty Limited, Sanwa Pty Limited, Raw and DIY materials and Redox. They
provide raw material sources for the retail companies of Australia. Amtrade International Pty
Limited acts as the supplier of chemicals, plastics along with raw materials to the Australian
industry. Sanwa Pty Limited acts as the supplier of barley, canola, cotton seeds along with
sorghum wheat to the Australian market (Porter and Heppelmann 2014). Raw and DIY
Materials helps in providing the raw cosmetic material ingredient to the different cosmetic
manufacturers along with retail business. Redox is an ingredients distributor that helps in
providing quality materials to the different business in Australia. The industry experts of

6STRATEGIC MANAGEMENT OF K-MART
Redox helps in providing quality materials to the different customers in Australia, New
Zealand and Malaysia.
Industry Rivalry
The intensity pertaining to competitive rivalry acts as the major indicator of
competitiveness prevailing within the industry. It is important that the industry rivals are
understood that can help in the successful marketing of a product. K-mart is able to gain
competitive advantage on account of its innovative products. The varying product lines
offered by K-mart helps in catering to the needs of many customers and the diverse products
makes the customers satisfied. K-mart also have outfits that are designed for that of holiday
fun that can serve the young Australian population. K-mart also have different kinds of
innovative toys that helps their business in rising above the competitors. One can also get fun
furniture in K-mart that sets it apart from the rest of the retail companies. The featured
categories of K-mart like home office and kids and toys makes it popular among the
Australian retail industry. Industry rivalry can be said to be high however the innovations of
the products of K-mart helps it to gain competitive advantage over the other retail companies.
Porter’s Value Chain Analysis
Primary Activities
Inbound Logistics- K-mart has their own transportation system that helps them in delivering
products in a convenient manner.
Operations- K –mart carries out the quality insurance assessment that can help them in
removing the defective products (Porter and Heppelmann 2014)

7STRATEGIC MANAGEMENT OF K-MART
Outbound Logistics- K-mart has very strict product delivery standard. In the event of a
supplier failing to provide the reliable service to the customers the suppliers have to suffer
financial penalties and the products of the suppliers are de-listed (Rothaermel 2015).
Marketing and Sales- K-mart advertises their broad range of products by taking recourse to
advertising that helps in the promotion of their products. They send e-mails to the customers
so that the customers get to know about their products.
Services- Different kinds of facilities are provided to the consumers like warranties along
with guarantees that attracts the customers towards K-mart.
Support Activities
Firm infrastructure- K-mart is equipped with the necessary infrastructure that can help
them in providing satisfaction to consumers along with employees.
Human Resource management- K-mart motivates the employees and provides them with a
happy environment that helps the employees in staying longer with the company.
Technology Development- K-mart opens self-checks so that it can help in improving the
customer service and reduce the cost. K-mart makes use of technology so that it can connect
with the customers.
Procurement- The procurement process of K-mart company can be said to be quite good. K-
mart takes the help of Big Data Analytics that helps in providing unprecedented visibility into
that of the consumer behaviour (Lasserre 2017).
Key Findings and Recommendations
The entry of overseas business has helped in bringing a new approach to the concept of
retailing. Retail landscape along with demands of customers have undergone changes in the
current age. Modern age customers are tech-savvy which makes online shopping extremely

8STRATEGIC MANAGEMENT OF K-MART
popular in the current age. New entrants in Australian market like TJX Company, John Lewis
& Debenham and Decathlon proves to be a threat pertaining to the business of K-mart. K-
mart has been able to attract consumers owing to the variety of products that are offered by
this retail firm. The 214 K-mart stores that it has makes it possible for it to serve the needs of
customers spread over a vast geographic area. The bargaining power of the consumers is high
as there are many firms in that of the Australian market. The suppliers bargaining power can
be said to be low on account of the fact that there are many suppliers of raw materials of that
of K-mart. There are various kinds of products that helps in satisfying the need of different
kinds of customers. The different kinds of outfits that are there in K-mart can cater to the
diverse population within Australia. The key findings are:
 Threat of new entrants is high
 Threat of substitutes is low
 Bargaining power of customers is high
 Bargaining power of suppliers is low
 Industry rivalry is high
Recommendations
 K-mart can take recourse to greatest-assortment strategy that involves the dominating
of a product like office supplies or that of furniture
 A new strategy should be implemented by K-mart that shall empower that of the
junior employees so that they can run a store in the profitable manner (Sölvell 2015).
 The company management of K-mart should instruct regarding new strategy to the
section managers that can communicate about the practical changes made to that of
the junior employees

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References:
Bettis, R.A., Ethiraj, S., Gambardella, A., Helfat, C. and Mitchell, W., 2016. Creating
repeatable cumulative knowledge in strategic management. Strategic Management
Journal, 37(2), pp.257-261.
Bettis, R.A., Gambardella, A., Helfat, C. and Mitchell, W., 2015. Qualitative empirical
research in strategic management. Strategic Management Journal, 36(5), pp.637-639.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an
integrated approach. Cengage Learning.
Kmart.com.au (2018). [online] Kmart.com.au. Available at: https://www.kmart.com.au/
[Accessed 27 Jun. 2018].
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Meyer, G.D., Neck, H.M. and Meeks, M.D., 2017. The entrepreneurship‐strategic
management interface. Strategic entrepreneurship: Creating a new mindset, pp.17-44.
Porter, M.E. and Heppelmann, J.E., 2014. How smart, connected products are transforming
competition. Harvard Business Review, 92(11), pp.64-88.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Sölvell, Ö., 2015. The Competitive Advantage of Nations 25 years–opening up new
perspectives on competitiveness. Competitiveness Review, 25(5), pp.471-481.
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic
management and business policy. pearson.