Kmart Is Back in the Game

In: Business and Management

Submitted By Ashlee2468
Words 780
Pages 4
The Sources or source which published the news item
Get basics right, do the maths. Kmart is back in the game. The West Australian, West Business, March 16-17, p. 11.
A brief summary of the event
In 2008 Kmart was “cluttered with products” and had “dirty, cluttered” stores. The pricing of products were way too expensive and they were struggling to make a sale. They were selling $4000 BBQ’s and Guy Russo believed that if they are going to sell high market priced items then they have to offer the expertise to go with it.
Wesfarmers Chief Executive, Richard Goyder, brought Guy Russo into the organisation to make a change within the company. Guy Russo was the managing director for McDonalds and had retired for two years before starting his new opportunity at Kmart. Russo implemented a volumes-driven strategy from which the company had a 24.9 percent earnings growth. Their profits grew to $246 million compared to $75 million back in 2008. Kmart also had a capital increase from 8.3% to 22.5%, under Russo’s management.
How does the news item illustrate the topic assigned for your presentation?
The topic is based on business-level strategy. The selected article is based on cost advantage which gives the company overall competitive advantage. Guy Russo promotes a volume-driven strategy to emphasis economies of scale. He did this through lowering prices and therefore high volume of products were sold. They worked on the value chain, in particular the supply network. They have affected the process technology and process design. Instead of getting products through three of four different hands they purchased it directly through Asian manufactures in big volumes. These big orders resulted in cost savings which translated in to lower prices.
The company refocused their target market on mums and families, as research shows, that they spend more than any other customer group.…...

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