Running head: DIVERSIFICATION STRATEGIES
Week 4 Assignment 2
Dr Hassan Yemer
Contemporary Business/BUS 508
January 24, 2011
1) Compare and contrast the two businesses—core business, their size, financials, global presence, use of e-business (marketing, sales, etc.).
A diversified company is one that has multiple, unrelated businesses. Unrelated businesses are those, which (1) require unique management expertise, (2) have different end customers and (3) produce different products or provide different services. One of the benefits of being a diversified company is that it buffers a company from dramatic fluctuations in any one-industry sector. ...view middle of the document...
1 million associates worldwide. A leader in sustainability, corporate philanthropy and employment opportunity, Wal-Mart ranked in the top ten among retailers in Fortune Magazine’s 2010 Most Admired Companies survey. Today, there are 670 stores offering a pleasant and convenient shopping experience across the United States. The size of an average store is 108,000 square feet. Each store employs about 225 associates. Their stores feature wide, clean, brightly lit aisles and shelves stocked with a variety of quality, value-priced general merchandise. Wal-Mart Supercenters were developed in 1988 to meet the growing demand for convenient, one-stop family shopping featuring our famous Every Day Low Prices. Their save you time and money by combining a full grocery line (meats, produce, dairy products, seafood and specialty deli) and their general merchandise under one roof. There are 2,967 Supercenters nationwide, and most are open 24 hours. Supercenters average 185,000 square feet and employ about 350 or more associates. There are also Specialty Shops such as the Vision Center, Tire & Lube Express, hair salons, fast food (Mc Donald’s, banks and pharmacies.” (www.walmart.com)
Kmart; on the other hand is now a wholly owned subsidiary of Sears Holdings Corporation after emerging from Chapter 11 Bankruptcy in 2003. The Company achieved several important objectives during its fast-track reorganization. The Company's accomplishments included strengthening its balance sheet and significantly reducing debt; securing $2 billion in exit financing; focusing its store portfolio on the most productive locations and terminating leases for closed stores; and developing a more disciplined, efficient organization and lowering its overall operating costs. It is now a is a mass merchandising company that offers customers quality products through a portfolio of exclusive brands that include Jaclyn Smith, Joe Boxer, County Living, Route 66 and Smart Sense. Attention Kmart shoppers: Kmart is the #3-discount retailer in the US, behind Wal-Mart and Target. It sells name brand and private-label goods (including its Joe Boxer and Jaclyn Smith labels), mostly to low- and mid-income families. It runs about 1,300 off-mall stores (including 35 Supercenters) in 49 US states, Puerto Rico, Guam, and the US Virgin Islands. About 275 Kmart stores sell home appliances (including Sears' Kenmore brand) and more than 1,020 locations house in-store pharmacies. The company also operates the kmart.com website, which includes merchandise from sister company Sears. As stated previously; Kmart is a subsidiary of Sears Holdings Corp., formed by the 2005 combination of ailing Sears, Roebuck and Kmart. (www.searsholdings.com)
2) Compare and contrast their outcomes (one successful, one unsuccessful).
Wal-Mart’s diversification strategy resulted in a successful outcome. According to Wal-Mart Diversification (2002), “Wal-Mart’s diversification into new retail formats during...