BMGT7010 Strategic Management Report: Kmart's Mission, Vision & Issues

This report provides a strategic analysis of Kmart, a subsidiary of Wesfarmers operating in the retail market in Australia and New Zealand. The assignment examines Kmart's mission and vision statements, evaluating their alignment and effectiveness in the current market. It identifies key strategic issues, including leadership deficiencies, inventory management problems, and supply chain inefficiencies. The report explores potential solutions, such as recruiting skilled managers, implementing Total Quality Management (TQM), and adopting a Customer Relationship Management (CRM) system. It evaluates these strategic options using the RACES framework, recommending the recruitment of quality managers and the implementation of CRM as priority actions. The conclusion emphasizes the need for Kmart to address these issues to achieve operational excellence and fulfill its mission.

Running head: STRATEGIC MANAGEMENT
Strategic Management
[Kmart]
Name of the student:
Name of the university:
Author note:

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Executive summary
The report mainly revolves around Kmart, which is a subsidiary company of Wesfarmers
in Australia. Kmart operates both in Australia and in New Zealand in the retailing segment
of the market. The main purpose of this assignment is to analyse the business of Kmart and
identify a few issues, which are affecting its performance in New Zealand. The report
identifies a piece of issues and also recommends a set of relevant solutions.

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Table of Contents
1. Introduction........................................................................................................................3
2. Mission statement and vision.............................................................................................3
3. Strategic issue....................................................................................................................4
4. Strategic options................................................................................................................5
5. Best strategic option...........................................................................................................7
6. Conclusion.........................................................................................................................7
References..............................................................................................................................8

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1. Introduction
Kmart, a subsidiary company of Wesfarmers since 2007, opened its first store in
Henderson in 1988. The company has maintained a profitable venture since 2013
(Wesfarmers.com.au, 2018). Kmart also offers an online shopping facilities to Australian
consumers. However, in New Zealand it does not operate as ‘online shopping’ but rather
as a brick-and-mortar format. One of the unique selling points that the company enjoys in
New Zealand is its strategy to offer products at cheaper price. Clothing, general
merchandise and homewares constitute the product line of Kmart (Kmart.co.nz, 2018).
Mission statement: “They are committed to continuous strategy making towards improving
lives of their customers with quality products and services and solutions, which could earn
customers’ trust on the company and could also build up with them a lifetime relationship
(Kmart.co.nz, 2018).”
Vision statement: “Kmart’s vision is to provide customers with products that they need on
a daily basis at cheaper prices (Kmart.co.nz, 2018).”
However, the company also faces a number of strategic challenges in New
Zealand. One of the strategic issues, which Kmart has faced is to maintain rationality in
pricing-and-product strategy. The company kept on offering products at cheaper prices;
however, did not extensively bother for adding values to products. The second strategic
issue for Kmart is being its inability to lead its management effectively. The company did
not go for recruiting skilled and experienced professionals from outside resources. The
third strategic issue is related with inventory management and supply chain operations.
Inventories were not being appropriately maintained. In addition, the company lacked a
forecast capability to be aware of the product requirements. Logistics operations were also
very slower leading to delayed arrival of shipments (Price, 2016). Controlling routine front
line service workers: an Australian retail supermarket ca).
The main purpose of this assignment is to analyse the mission and vision statement
of Kmart. It is also aimed at doing an environmental analysis of the company.
2. Mission statement and vision
Mission statement: “The company is committed to improving lives of their customers by
offering quality products at lower prices. It is also committed to offer solutions that could

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help company to earn the trust of customers on the company and build-up a long-term
relationships with them.”
Vision statement: “Kmart’s has aimed to provide customers with products that are
required on a daily basis at cheaper prices.”
The company was initially successful in providing useful products at cheaper
prices. The list of its offerings include general merchandise, homewares and clothing.
However, the company seems to have lost its ground in long-term in regards to supporting
its mission with an effective handling of vision statement. There are ample of reasons,
which would make this an evident fact.
On a broader aspect, product-pricing-strategy of Kmart looks a bit uncontrolled
and ineffective as well. It looks uncontrolled because it lacks an assistance of quality
leaders and skilled professionals. The company does not emphasis much on recruiting
from outside resources. On contrary to this, successful retailers keep their utmost focus on
attracting industry’s best talents to promote a creative and skilled workforce. Such a move
has caused them badly and affected the overall sales figure. Consequently, profit margin
was hard hit from declining sales (Zheng, Singh & Mitchell, 2015). Instead, a brick-and-
mortar format should work an extra bit to maintain the competency in an ever-increasing
popularity of the online retailing.
An incapable management policy is also evident in how Kmart manages the
inventories. They are not so effective with their market forecast capability. As a result,
they are unable to judge and identify the needs to make the orders. Such situation will
either lead to overstocking or under-stocking (Feng, Li, McVay & Skaife, 2014). In
addition, logistics operations are ineffective as well. Products are normally delayed that
ultimately result in failing to deliver the demands on time. It gives its competitors an
opportunity to deliver and capitalise the opportunity. Kmart’s supply chain inefficiencies
can well be understood from a model called “A Flexible Supply Chain”. This is best suited
to businesses, which face both peak and down times. It encourages to be flexible with
market demands, so that, production could be speed up in peak times or else (Disney,
Maltz, Wang & Warburton, 2016). Considering the flexible model, this can be said that
Kmart is largely unable to deliver on expectations.
3. Strategic issue

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As stated earlier, one of the strategic issues is Kmart’s leadership. The company
does not fully encourage a bulk recruitment from outside resources. It means they are
missing on opportunities such as to attract skilled talents and also the quality managers.
According to the “Trait Theory of Leadership”, leaders are either made with exceptional
and unique qualities or are born (Wyatt & Silvester, 2018). In the light of the theory, this
can be said that acquiring quality leaders can be an important asset for the company.
However, on contrary to this theory, Kmart lacks to attain such leaders as they are rarely
exposed to wider opportunities. Other retailers do follow the similar strategy as that
mentioned in the trait theory to give them opportunities to work with industry’s best
people. They believe that leaders lead from the front. Hence, it is important to have
effective leaders to create motivation for work in employees.
The other issue is related with inventory management and the supply chain. Kmart
is unable to process orders on time. It means they do not have a sound forecast system,
which could communicate market demands in real-time. Such a situation is not so good for
an effective management inventories. For a profitable venture, it is important that business
is free from both overstocking and understocking (Vătavu, Lobonț, Para & Pelin, 2018).
An understocking of inventory will lead to not fulling the market demands. On the other
hand, an overstocking will enhance the operational costs and hence, will reduce the actual
profitability. In addition, Kmart also does not have the effective logistics operations, which
is affecting its ability to deliver products on time. This is creating a real opportunity to its
competitors who are comparatively good with their logistics operations.
4. Strategic options
For leadership
Description:
Recruiting a highly experienced and skilled manager from outside is an option
towards improving the leadership issue at Kmart.
Method:
The method would definitely be a recruitment process. An applicant with proven
track record in managerial skills needs to be recruited. They should be hired at a good
package as skilled managers would definitely be looking this as an opportunity.

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For the supply chain management
Description:
Using Total Quality Management (TQM) and also implementing a Customer
Relationship Management (CRM) system would be the piece of options to improve
Kmart’s ability in managing the supply chain operations.
Method:
TQM will require a systematic process to be followed by the management. To
avoid any shortcomings, it is advisable to follow the guideline framework especially
designed for an effective implementation of the TQM. It comes in the form of a package,
which encourages to set objectives at the earliest followed by setting of Key performance
Indicators (KPIs). KPIs are required to measure the performance. An evaluation of a TQM
enabled system is always required to make further amendments to it if required
(Benavides-Velasco, Quintana-García & Marchante-Lara, 2014). CRM, on the other hand,
would assist in collecting a large-scale of data. If an employer is able to use such data in
real-time with an effective utilisation of ‘Big Data Analytic’, this will create the wonder
(Khodakarami & Chan, 2014).
Evaluation
This section evaluates the recommended strategic options with the RACES framework
(Bergh et al., 2016).
Resource: To attract good leaders, spending will be needed to make over the recruitment
process. Both TQM and CRM will attract significant investments and manpower as well.
Acceptable: The recommended options will ask Kmart to think differently than what they
have been doing. This simply means a change in regulatory, legislative and management
policies. In addition, a new business model will also be required as the existing model of
Kmart is very flat in nature and is not feasible with the suggested options. Kmart rather
requires a dynamic business model, which is feasible with TQM, CRM and is able to
attract the quality leaders.
Coherent: The recommended options are coherent suggestions as other retailers follow the
similar strategies to make a lasting impact.

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Effective: Undoubtedly, TQM and CRM if effectively handled can do wonders to a
reputed company such as Kmart.
Sustainable: An effective leadership will ensure that TQM and CRM are effectively
followed in operations. TQM strives to improve the overall quality of operations whereas
CRM provide the insights of customers that are required to offer relevant products to them.
5. Best strategic option
Each of the options are required considering the current market performance of
Kmart. However, for the time being, Kmart can afford to delay the implementation of
TQM as it is a long process. The implementation is possible only if the management is
able to understand the entire elements of a TQM. Since, the recruitment process and the
implementation of CRM is comparatively a short-term process. Hence, both of these
should be given the preference over TQM for the time being only. It is because TQM will
be required to effectively manage quality operations at Kmart to attain a sustainable
business.
The recruitment will be one of the suggestions to go with at this point in time
because quality operations will only be attained if the business has leaders who is
desperate for attaining the operational excellence. Additionally, CRM will help to offer
relevant products to customers, which Kmart has largely struggled to. Kmart seems to have
a limited focus over offering relevant products to customers.
6. Conclusion
In summary, this can be concluded that Kmart is struggling to fulfil its mission
statement with effective visionaries towards it. The company follows an irrational price-
product-strategy, which is killing its sales in New Zealand. It does not also have
motivation towards attaining quality leaders. Some strategic options have been suggested
to Kmart to help the company attain the operational excellence. One of the
recommendations is for attracting quality and experienced managers by conducting an
organized recruitment process. Another set of recommendations are for implementing
TQM and CRM into the system. CRM and the recruitment of an effective manager can be
given a preference over TQM at this point in time.

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References
Benavides-Velasco, C. A., Quintana-García, C., & Marchante-Lara, M. (2014). Total
quality management, corporate social responsibility and performance in the hotel
industry. International Journal of Hospitality Management, 41, 77-87. [DOI:
10.1016/j.ijhm.2014.05.003]
Bergh, D. D., Aguinis, H., Heavey, C., Ketchen, D. J., Boyd, B. K., Su, P., ... & Joo, H.
(2016). Using meta‐analytic structural equation modeling to advance strategic
management research: Guidelines and an empirical illustration via the strategic
leadership‐performance relationship. Strategic Management Journal, 37(3), 477-
497. [DOI: 10.1002/smj.2338]
Disney, S. M., Maltz, A., Wang, X., & Warburton, R. D. (2016). Inventory management
for stochastic lead times with order crossovers. European Journal of Operational
Research, 248(2), 473-486. [DOI: 10.1016/j.ejor.2015.07.047]
Feng, M., Li, C., McVay, S. E., & Skaife, H. (2014). Does ineffective internal control over
financial reporting affect a firm's operations? Evidence from firms' inventory
management. The Accounting Review, 90(2), 529-557. [DOI: 10.2308/accr-50909]
Khodakarami, F., & Chan, Y. E. (2014). Exploring the role of customer relationship
management (CRM) systems in customer knowledge creation. Information &
Management, 51(1), 27-42. [DOI: 10.1016/j.im.2013.09.001]
Kmart.co.nz. (2018). Retrieved from https://www.kmart.co.nz/
Price, R. (2016). Controlling routine front line service workers: an Australian retail
supermarket case. Work, employment and society, 30(6), 915-931. [DOI:
10.1177/0950017015601778]
Vătavu, S., Lobonț, O. R., Para, I., & Pelin, A. (2018). Addressing oil price changes
through business profitability in oil and gas industry in the United Kingdom. PloS
one, 13(6), e0199100. [DOI: 10.1371/journal.pone.0199100]
Wesfarmers.com.au. (2018). Retrieved from https://www.wesfarmers.com.au/docs/default-
source/default-document-library/2017-annual-report.pdf?sfvrsn=0

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Wyatt, M., & Silvester, J. (2018). Do voters get it right? A test of the ascription-actuality
trait theory of leadership with political elites. The Leadership Quarterly. [DOI:
10.1016/j.leaqua.2018.02.001]
Zheng, W., Singh, K., & Mitchell, W. (2015). Buffering and enabling: The impact of
interlocking political ties on firm survival and sales growth. Strategic Management
Journal, 36(11), 1615-1636. [DOI: 10.1002/smj.2301]