RSM100H1 Lecture Notes - Lecture 7: Competitive Advantage

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Sears case study
What happened? bankruptcy, closing thousands of stores
Used to be a super strong company
Retails stores (especially those in the mall) are having a bad time due to e-commerce. Meanwhile, many retail stores
opened. Only-med priced retail stores are doing worse
What was likely the cause of their financial difficulties:
They were in the middle class, higher than Walmart, lower than LV. Middle class is shirking.
They didn’t adapt online-shopping (not the main reason)
They were running out of cash, they choose have debt, BUT MOST IMPORTANTLY! They sold craftsman. they sold
their best long-term revenue generating department
Who are the key stakeholders and how do they stand to benefit or risk being harmed?
Employees, lost their job
Competitors, positive news for them
Customers, harmed because they lost a place to buy things
Landlords, Good news. They are paying little rents because they signed the contract many decades ago.
Do you think Sears will recover?
Yes:
No: We don’t know where they are (not low/high end), sold their money generating department, people don’t like
shopping in a closed store
What do they have to do
What challenges will they likely face
Their branding needs to change, they want to do high-end things, they used to be middle. That’s how people used to recognize
them and hard to change
Target:
Hard to compete with Walmart, they have the same product
You might feel Target store are cleaner and more upscale, but after all its low-end store and Walmart is cheaper
Competitive advantage
operating with an attribute or set of attributes
that allows an organization to outperform its rivals.
Sustainable competitive advantage
one that is difficult for competitors to
imitate.
(A competitive advantage that is
valuable and rare)
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Document Summary

Sears case study: what happened? bankruptcy, closing thousands of stores, used to be a super strong company, retails stores (especially those in the mall) are having a bad time due to e-commerce. Only-med priced retail stores are doing worse: what was likely the cause of their financial difficulties, they were in the middle class, higher than walmart, lower than lv. Middle class is shirking: they didn"t adapt online-shopping (not the main reason, they were running out of cash, they choose have debt, but most importantly! They sold craftsman. they sold their best long-term revenue generating department. Employees, lost their job: competitors, positive news for them, customers, harmed because they lost a place to buy things. They are paying little rents because they signed the contract many decades ago. Do you think sears will recover: yes, no: we don"t know where they are (not low/high end), sold their money generating department, people don"t like shopping in a closed store.

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