Premium Essay

Analysis of Sears, Roebuck & Co, the Auto Center Scandal

In: Business and Management

Submitted By okev14
Words 1357
Pages 6
FACULTY OF ENGINEERING AND COMPUTING SCHOOL OF ENGINEERING

Business Ethics
Case Study

Sears, Roebuck & Co, the Auto Center Scandal

Ethical Issues

1. The first issue that presents itself is the aggressive, Profit seeking approach been taken by Sears in their implementation of an extremely tight incentive system within their Auto centers to increase productivity and reduce cost.

2. Sears was acting very unethical as they disregarded stake holders such as employees, customers and partners in their efforts to reel in profits.

3. Sear president and managers tactically combative approach to criticism from the different interest groups
Discussion of Issues

Sears, Roebuck, and Co, is a well developed and reputable group of companies in the United States of America. Entering the 1980s the market had undergone several changes in demand and customer affection. One of the roles of an effective management is the detection of these before mentioned changes and the appropriate implementation of measures to combat or position one’s self to remain unaffected or benefit from the before said . Did Sears take the right approach in responding to the changes in their market? From a consequentialist view perspective where the moral worth of an action is determined only by its resulting outcome, it can strongly be argued that post the outcome of this approach taken by Sears in the implementation of an incentive system in their extremely task and accuracy focused Auto Centers was an accident waiting to happen. The production background of these centers are such that customers bring Automobile related parts to be inspected or replaced, they are advice by agents at a desk who do inspection and who depend on Auto mechanics to further inspect and carryout necessary repairs. These jobs require the dissemination of accurate information and…...

Similar Documents

Premium Essay

Can Sears Reinvent Itself?

...Can Sears Reinvent Itself? | Sears, Roebuck and Co. used to be the largest retailer in the United States, with sales representing 1 to 2 percent of the United States gross national product for almost 40 years after World War II. Its legendary Big Book catalogue was considered the primary (and sometimes the only) source for everything from wrenches to bathtubs to underwear. During the 1980s, Sears moved into other businesses, hoping to provide middle-class consumers with almost every type of banking, investment, and real estate service in addition to selling appliances, hardware, clothes, and other goods. This diversification tore Sears away from its core business, retail sales. Sears has steadily lost ground in retailing, moving from the Number 1 position to Number 3 behind discounters Wal-Mart Stores, Inc. and Kmart Corporation. Sears had been slow to remodel stores, trim costs, and keep pace with current trends in selling and merchandising. Sears could not keep up with the discounters and with specialty retailers such as Toys R Us, Home Depot, Inc., and Circuit City Stores, Inc. that focus on a wide selection of low-price merchandise in a single category. Nor could Sears compete with trend-setting department stores. Yet Sears has been heavily computerized. At one time it spent more on information technology and networking than other noncomputer firms in the United States except the Boeing Corporation. It was noted its extensive customer databases of 60 million......

Words: 2718 - Pages: 11

Premium Essay

Sears Holdings Business Analysis

...Running head: Sears Holding Business Analysis Sears Holdings Business Analysis Steven G Cole MGT/521 Leo Shelton Sears Holdings is an icon in the retail business since its founding in 1925. It survived the depression and many economic cycles since its founding. With the purchase of Kmart out of bankruptcy in 2005 and the unexpected recession of 2008 Sears has struggled financially. Their strategy of selling niche items of higher quality and brand names has not fared well in this valued based purchasing recession. They have continued to lose large amounts of money and continue sell off assets to raise capital. The CEO has announces new business strategy to implement to change the course of the company. Since the acquisition of Kmart in 2005 sales have declined steadily year after year. Last year alone Sears and Kmart had a total lose of 1.4 billion dollars. This year that amount is down to 421 million through the 3rd quarter. The continued movement of customers to discount stores like WalMart and Target has continued to erode the customer base at Sears and Kmart. Sears reputation of rundown stores and poor customer service is helping lead the way to the slow demise of the once retail giant. Sears is a leader in ecommerce investment, but poor customer experience in the store is translate to apprehension of customers to return to Sears online (Skariachan, 10/17/2011). In February 2012 in a note to shareholders, CEO Edward Lambert issued a lengthy letter to......

Words: 1482 - Pages: 6

Premium Essay

Sears Marketing Plan

...SEARS Marketing Plan Executive Summary Sears Holding Corporation is the fourth largest retailer in the United States and Canada. Its subsidiaries include Sears, Roebuck and Co. as well as K-Mart. The closing of the merger between Sears and K-Mart took place on March 24, 2005. Sears has more than 4,000 retail stores across the United States, Canada, Puerto Rico, and Guam. Sears offers products and services through over 2,700 branded and affiliated stores. Sears operates 894 broad-line stores and 1,354 specialty stores. Sears’ broad-line stores are mall-based locations. The specialty stores include Sears Hometown Stores that are mostly independently owned, Sears Home Appliance Showrooms, Sears Hardware Stores, Sears Auto Centers, and The Great Indoor Stores (Community, n.d.). Sears is the leading retailer in home appliance, tools, lawn and garden, electronics, and automotive repair and maintenance. They are also the largest home service provider and answers over 11 million service calls a year (About, n.d.). Sears’ values are built upon customer service and the company is committed to quality service and products. Sears aims to build lifetime relationships and trust with its customers. The Company prides itself on having a diverse customer base and values the customer’s individualities. As stated on the corporate website “Everything we do starts and ends with the customer.” (Diversity, paragraph 3). Sears also holds expectations from their employees. The Company......

Words: 5402 - Pages: 22

Premium Essay

Sears

...and a Marketing Review of Sears 1st submission Date Due in: April 19, 2012 Number of pages: 23 Word count :3,281 Table of Contents sEARS bUSINESS STRATEGY REVIEW i Executive Summary 2-3 introduction brief history and background of sears 4 mission & obJECTIVES II evaluation of sears existing mission and objectives 5-6 External analysis IIi Competitors 7 PEST 8-9 Five forces Analysis 10-11 Opportunities & Threats 11 InternaL aNALYSIS iV Strenghts & Weaknesses 12 Financial ratios analysis 13-14 Past and current strategies 15 Sears current strategic position v Sears current strategy Balance Scorecard 16-17 Porter’s Generic strategies 17 rEcommendations vi Objectives and strategic actions 19-21 Evaluation 22- 23 Conclusion 24-26 Bibliography Executive Summary Sears, once the leader of the retail industry, is now facing financial troubles and is relegated to the 10th position in the market (Store org, 2011). Even after the merger with K-Mart, the retail conditions have not seemed to improved, but in fact, Sears Holding’s financial reports continued to reflect loss. Investor confidence in Sears Holding and its SBUs has been consistently declining over the past few years, due to Sears’ poor performance. ......

Words: 11357 - Pages: 46

Premium Essay

Auto Industry Analysis

...Auto Component Industry in India: Growing Capabilities & Strengths Agenda • India: A Vibrant Economy • Automotive Industry in India • Auto Component Industry in India • Policy Environment • Capabilities & Challenges • The Way Forward • About ACMA 2 India: A Vibrant Economy 3 India: A Vibrant Economy 1. Largest Democracy – 1.2 billion people, Growing Middle Class 2. 4th largest GDP (PPP) and 10th largest GDP (Nominal, USD 1.8 trillion) 3. One of the fastest growing economies • • India’s average GDP growth rate: 8.4% over past 5 years Expected to outpace China in the next decade 4. 3rd Largest Investor base in the World 5. Robust Legal and Banking Infrastructure 6. Demographics Advantage – Youth driven economy 7. Suburbanization & Rural to Urban Migration – 140 million by 2020; 700 million by 2050 8. 2nd largest pool of Certified Professionals and highest number of Qualified Engineers in the world 9. Investment in Infrastructure 4 Automotive Industry in India 5 Automotive Clusters in India Eicher Escorts Hero Moto Corp Honda Motorcycle Honda SIELCars ICML JCB Maruti Suzuki New Holland Mahindra Suzuki Motorcycles Swaraj Mazda Tata Motors Yamaha North *New Hub: Sanand Tata Motors, Maruti, Ford India, Hindustan Motors Tata Motors East West Bajaj Auto Fiat Force Motors GM John Deere Mahindra Mahindra Navistar Man Force Mercedes Benz PSA Skoda Tata Hitachi Tata Motors Volkswagen Volvo Eicher Ashok Leyland BMW Caterpillar South......

Words: 1231 - Pages: 5

Free Essay

Sears Case Analysis

...more stores in 1912. By 1927, the Kresge Company started opening locations that sold items for $1 or less. Ten years later, he opened a store in a shopping center in Kansas City, Missouri (Sears Holdings, History). In 1968, Kmart begin to air television commercials to entice shoppers to the stores. Harry B. Cunningham became president in 1959, and developed a new strategy for the organization. While Cunningham was president, Kmart opened their first discount department store in 1962 in Garden City, Michigan; that same year seventeen more stores were opened. In 1976, Kmart made history by opening 271 stores in one year. In 1977, the company changed its name to Kmart Corporation. In order to fully focus on discount merchandising, Kmart sold the remaining Kresge stores (Sears Holdings, History). In 1990, Kmart took on a new logo and a new plan. As part of the plan, Kmart opened the first Kmart Supercenter in Medina, Ohio in 1991. Kmart was totally redesigned in 1996 and became known as Big Kmart. In 1999, Kmart launched a Internet presence, BlueLight.com; it offered free internet services (Sears Holdings, History). In 2002, the company filed Chapter 11 in the US Bankruptcy Court. Julian Day was promoted to CEO in January of 2003. Under his leadership, the company emerged from the Chapter 11 reorganization process (Sears Holdings, History). Strategic Direction Mission Statement The mission statement is a very important element in the business model of an organization. ...

Words: 7396 - Pages: 30

Free Essay

Sears, Roebuck and Co: the Auto Center Scandal

...SEARS, ROEBUCK, AND CO.: THE AUTO CENTER SCANDAL Sears, Roebuck, and Co. began in the late 1800s as a mail-order company that sold farm supplies and other consumer items. Its first retail store opened in the mid-1920s. Responding to changes in American society, such as the move from farms to factories and the presence of the automobile in many homes, hundreds of retail stores opened over the years. The company expanded rapidly, and eventually it diversified to include other businesses: insurance (Allstate Insurance), real estate (Coldwell Banker), securities (Dean Witter Reynolds), and credit cards (Discover). Each of these other businesses became its own division, in addition to the merchandising group which included retail stores, appliances, and auto service centers. By the early 1990s, the company was reporting revenues and earnings in the billions of dollars. 40 Despite its long history of high earnings and its penetration into the U.S. market, Sears' retail business began to experience serious financial difficulties in the 1980s. Discount retailers such as Wal-Mart were pulling ahead in market share, leaving Sears lagging. Sears responded by adding non-Sears name brands and an "everyday low price" policy. But despite these efforts, in 1990 Sears reported a 40 percent decline in earnings, with the merchandising group dropping a whopping 60 percent! Cost-cutting measures were planned, including the elimination of jobs and a focus on profits at every......

Words: 1186 - Pages: 5

Premium Essay

Sears Business Analysis

...Sears Canada, Inc. (SCC) - Financial and Strategic Analysis Review Reference Code: GDRT32835FSA 290 Yonge Street, Suite 700 Toronto, ON M5B 2B8 Canada Phone Fax Website Exchange +1 416 3621711 +1 416 9414793 www.sears.ca SCC [Toronto Stock Exchange] Revenue Net Profit Employees Industry Publication Date: AUG 2010 5,201 (million CAD) 290.70 (million CAD) 11,240 Retailing Company Overview Sears Canada Inc. (Sears) is a multi-channel retailer. The company engages in providing a variety of merchandise ranging from apparels to electronics to house wares. Its product line includes apparels, footwear, jewellery, home improvements, furniture, appliances, electronics and several others. The company offers its merchandise through specialty stores, including department stores, outlet stores and other store formats; catalog and website. It offers various private label and national brands. Sears is also engaged in real estate business through joint venture interest in shopping centers. The company principally operates in Canada and is headquartered in Toronto, Canada. Key Executives Name William C. Crowley Dene L. Rogers Deidra D. Cheeks Merriwether R. Raja Khanna Jon Lukomnik Chairman Chief Executive Officer Director Director Director Title SWOT Analysis Sears Canada, Inc., SWOT Analysis Strengths Weaknesses Strong Foothold in Canada Specialized Services Declining Market Share Dependency on Leased Properties Source: Annual Report, Company Website, Primary and Secondary......

Words: 9930 - Pages: 40

Free Essay

Caso de Estudio: Sears. Roebuck and Co. vs. Wall-Mart Stores, Inc.

...Caso de estudio: Sears. Roebuck and Co. vs. Wall-Mart Stores, Inc. Por Daniel Escobillana, Christl Hepner y Caterina Ojeda 1- ¿Cómo difieren las estrategias de ventas al por menor de Sears y Wal-Mart? A pesar de ser dos compañías que comparten el mismo rubro, y compiten de manera similar en cuanto a sus modelos de negocios y estrategias, existen dos diferencias principales en el approach que tienen ambas en la forma de implementar su estrategia. La primera, en términos de valor agregado y diferenciación, y la segunda es en términos del modo de pago. En cuanto a qué ofrece cada tienda en cuanto a valor agregado a sus clientes, vemos que la estrategia de Walmart es mantener los costos de producción lo más bajos posibles, para de la misma manera, mantener los precios de ventas menos elevados que la competencia. Esto se ve reflejado en su lema “Precios bajos todos los días”. Por otra parte, Sears optó por una reorientación de su mezcla de productos, para aumentar las ventas apelando a una clientela objetivo de clase media, es decir, busca diferenciarse en términos de exclusividad. Esto se ve reflejado en el lema: “Venga y vea el lado más elegante de Sears”. La segunda diferencia tiene que ver con las facilidades de pago, específicamente, el crédito. Por una parte Sears administra su propia tarjeta de crédito, en cambio la tarjeta de Wal-Mart era emitida por el Chase Manhattan Bank y el riesgo de no pago era asumido por el mismo. Esto afecta los resultados de ambas empresas...

Words: 1676 - Pages: 7

Premium Essay

Annual Report 2000 of Sears

...Destination: Sears SEARS 2000 ANNUAL REPORT Financial Highlights millions, except per share data 2000 1999 1998 Revenues Income before extraordinary loss Net income PER COMMON SHARE $40,937 1,343 1,343 $39,484 1,453 1,453 $39,953 1,072 1,048 Income before extraordinary loss Net income EXCLUDING IMPACT OF NONCOMPARABLE ITEMS 3.88 3.88 3.81 3.81 2.74 2.68 Income excluding noncomparable items Per common share Total assets Debt Shareholders’ equity 1,540 4.45 36,899 17,860 6,769 1,482 3.89 36,954 18,038 6,839 1,300 3.32 37,675 19,669 6,066 This annual report, including the chairman’s comments, contains forward-looking statements, which should be read in the context of the cautionary language found in the financial statements section of this report. 2 Dear Shareholders: Six years ago, I came to Sears to help revitalize one of America’s great institutions. At the time, a reinvigorated Sears was winning back customers and emerging once again as a healthy, financially sound enterprise. Since then, we’ve had some clear successes and weathered a few storms. In the process, we’ve learned many valuable lessons. Through challenging assignments in our credit and services businesses and as chief financial officer, I also learned and witnessed firsthand this company’s resiliency and its tremendous potential for growth. Now, it’s time for Sears to achieve this potential, leverage it to become even more relevant to our......

Words: 24414 - Pages: 98

Free Essay

Sears Holding

... Byanca Christopher Business 4/20/2015 Sears Holdings Corporation There have been many large chain retailers to grace the United States, but Sears (or Sears, Roebuck and Co.) has been a staple for as long as many people can remember. Sears was once the largest retailer in the United States and is still one of the largest today. In recent years the retail giant has seen a major decline in revenue and stores have been closing across the country. However, Sears is not completely out of options or business and has a formula to continue its longevity. Sears, Roebuck and Co. is still one of the most recognized names in retail and has shown to be adaptable to the changing business environment. The Sears, Roebuck and Co. was founded in 1886 by Alvah Curtis Roebuck and Richard Warren Sears. Sears started his career as a railway agent. He began selling watches after a shipment of watches were unwanted by the receiver (Weil 20). After selling watches for a while Sears moved to Chicago and hired Roebuck who was working as a watchmaker at the time. The company became known as Sears, Roebuck and Co. In 1888 the first catalog was produced offering watches and jewelry (A Brief Chronology of Sears ln.1) There catalog enabled the duo to offer fixed prices to farmers for a larger variety of items rather than base the prices on the creditworthiness of the customer. The business’ growth was stratospheric and they quickly became a household name (Weil 22). This was not the end; the catalogs......

Words: 2688 - Pages: 11

Free Essay

Case Study I: Sears, Roebuck and Co. vs. Wal-Mart Stores, Inc.

...Case Study I: Sears, Roebuck and Co. vs. Wal-Mart Stores, Inc. Chao Han Junliang Shi Zhongyi Hu 2/25/2015 Azusa Pacific University Case Study I: Sears, Roebuck and Co. vs. Wal-Mart Stores, Inc. Sears, Roebuck and Co. and Wal-Mart Stores, Inc. are the two big retail companies in U.S. Although Wal-Mart was acknowledged powerhouse of the U.S. retailing industry, Sears’ ROE exceeded Wal-Mart’s 2%, which can show that this firm was the true powerhouse. Therefore, Don Edwards, an analyst with a prestigious investment bank. He compared two financial performances of these two companies and he wanted to figure out which company performed better in different areas. Sears, Roebuck and Co. was founded in 1891. It started originally with a sole catalog business and then expanded into retail stores in 1924. Its stores were primarily located in shopping malls, including a large variety of merchandise. Sears has become the world’s largest retailer in terms of annual sales. By the early 1980s, Sears faced increased competition and declining market share. In 1992, The CEO of Sears, Arther C. Martinez has carried out three methods to improve profitability. The first was to cut costs. The second was to re-oriented the product mix in which the target audience was set to be middle-class female shoppers. The third was to offer customers more flexibility through the use of the company’s proprietary......

Words: 3654 - Pages: 15

Premium Essay

Sears

...Sears, Roebuck & Co G5 Investment Group Matt Nutsch Renis Kacani Melody Seely Ashley Green Wiley Eagle . G5 Investment Group December 4, 2004 Retail – Broadline Buy Stock Data Price (52 weeks) Symbol/Exchange Beta Fully Diluted Shrs Average Daily Vol Current market cap Book Value / Share Current ratio $31.21 - $55.90 S / NYSE 1.3 230.4 million 5,028,000 shrs 10.82B $28.3 1.32 Valuation (per share) Current Price Comparables DCF Analysis Residual Income DD Analysis Abnormal Earnings $34.78 $36.60 $36.94 $38.38 $27.97 $46.49 Summary Financials (in millions) for 2004 Revenue Earnings $36.6 billion $550 million 1 Executive Summary Sears is following a differentiated approach in a competitive industry. Consequently, Sears has lagged behind other broadline retailers such as K-Mart, Target, and Wal-Mart. Should Sears adjust its marketing approach, it would have great potential for success. Growth prospects for Sears include continuation and growth of sales and expansion. The development of subsidiary brands such as Lands’ End and the acquiring of 61 of-mall stores from K-Mart and Wal-Mart. of new stores abroad will fuel this growth. Financing the acquisitions should not be overly burdensome for Sears, given the company’s large cash. Also, the company’s Z-Score of 5.9 will provide easy access to financing if needed Sears has began to shift to an off-mall emphasis for its stores as it acquired stores...

Words: 17411 - Pages: 70

Premium Essay

Sears, Roebuck and C.

...Sears, Roebuck and Co. Overview Sears, Roebuck and Co. is the leading retailer of home appliances in the United States. Sears, Roebuck and Co. is an ideal retailer compared to its competitors, because of the consolidated approach that the company has established over the years. They are not only leaders in home appliances, but they reach consumers with different needs, such as: tools, fitness equipment, home and garden, automotive repair and maintenance, and apparel. Sears, Roebuck and Co. also provides different homes services to customers, which consist of home repair, maintenance, installation, cleaning, and home improvement. Richard W. Sears made his way into the retail industry by receiving a shipment of watches that was unwanted by a neighboring jeweler. He purchased and sold the watches Culture in business or corporate America is described as a blend of the values, beliefs, taboos, symbols, rituals and myths companies develop over time (http://www.entrepreneur.com/encyclopedia/term/82104.html). My definition of culture for organizations in business is what makes the business operate the way that it does and what strategies they use to reach their goals. Before Best Buy implemented the new plan called ROWE, the culture at Best Buy was like any other organization, come to work on a daily basis and repeat the same task over and over again. This caused a great deal of turnover within the company that needed a workable......

Words: 1532 - Pages: 7

Free Essay

Sears

...CASE STUDY III FAIRHOLME Ignore the crowd. Fairholme Ignore the crowd. This presentation uses Sears Holdings Corporation (“Sears” or the “Company”) as a case study to illustrate Fairholme Capital Management’s investment strategy for the Fairholme Fund. In the pages that follow, we show Fairholme Fund shareholders why we “Ignore the crowd” with regard to our portfolio positions that are currently out of favor in the market. However, nothing in this presentation should be taken as a recommendation to anyone to buy, hold, or sell certain securities or any other investment mentioned herein. Our opinion of a company’s prospects should not be considered a guarantee of future events. Investors are reminded that there can be no assurance that past performance will continue, and that a mutual fund’s current and future portfolio holdings always are subject to risk. As with all mutual funds, investing in the Fairholme Fund involves risk including potential loss of principal. Opinions expressed are those of the author and/or Fairholme Capital Management, L.L.C. and should not be considered a forecast of future events, a guarantee of future results, nor investment advice. The Fairholme Fund’s holdings and sector weightings are subject to change. As of May 31, 2012, Sears securities comprised 10% of the Fairholme Fund’s total net assets. The Fairholme Fund’s portfolio holdings are generally disclosed as required by law or regulation on a quarterly basis through reports to......

Words: 2450 - Pages: 10