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Competitive Advantages and Disadvantages of Sears
Sears Company has a couple of competitive advantages and disadvantages over other companies like Costco. One of the main advantages is the Sears’ proprietary brands. Their brands are better differentiated and have higher margins making them popular over the years. Some of these brands include Kenmore, Craftsman, and Diehard. Another major advantage is convenience. Sears holdings have an extensive footprint in the region. It has thousands of stores and service centers. There are around 800 auto centers (Tauli, 2012).
It has also integrated this infrastructure with mobile phone technologies and e-commerce platforms. Such initiatives are an effective way to meet all customers’ needs as well as maintaining a good customer relationship. Another major advantage is the great ownership strategy. The members of Sears’ board control about 65% of the stock. Of this stock soar, ESL investments control around 61% stakes. This gives shareholders strong motivation to find ways of increasing their stock value.
Some of the disadvantages of Sears are the major losses made by the company. In 2011 Sears’s holdings had a loss of around $3.14 billion. It has also seen its revenues decline over the past five years. Still now the company is facing financial problems. Another disadvantage is the brutal competition facing the company. Some of the major competitors are Wal-Mart, Best Buy, Costco, and Amazon. Even after restructuring, it has not adopted good strategies to sweep off this stiff competition. It also lacks the ability to deal with the market and economic changes.
The other major disadvantage of Sears Company is the high prices they charge for their products. High pricing has tremendously reduced their sales since many customers opt for cheaper products from the competing stores like Costco. For example, the price of tire services is $15 at Costco but $18.49 at Sears (Lin, 2014). Such pricing disparities have lowered the profit margins of the company.
References
Lin, O. (2014, June 20). Best Cheap Tire Services. Today. Retrieved from <http://www.today.com/money/best-cheap-tire-services-wal-mart-sams-costco-or-sears-1D79823875>
Tauli, T. (2012, February 28). SEARS HOLDING STOCK. Investorplace. Retrieved from, <http://investorplace.com/2012/02/sears-holdings-stock-shld-3-pros-3-cons>