Restructuring at Sears Roebuck & Co. (1992-03)
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Case Details:
Case Code : BSTR105
Case Length : 27 Pages
Period : 1992 - 2004
Organization : Sears Roebuck & Co.
Pub Date : 2004
Teaching Note : Available
Countries : USA
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Background Note
The history of Sears dates back to late 1880s when Richard Sears (Richard), an agent of the Minneapolis and St. Louis railway station in North Redwood, Minnesota sold lumber in his spare time.
Once he received a shipment of watches - unwanted by a neighborhood Redwood Falls jeweler, which Richard purchased and sold at a good profit to station agents.
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Thus, began the R.W.Sears Watch Company in Minneapolis. In 1887, Richard moved his office to Chicago and appointed a watchmaker, Alvah C. Roebuck. In 1893 the corporate name Sears, Roebuck and Co. was coined. When Sears commenced its operations, farmers in rural America were selling their crops for cash and buying what they needed from general stores located in rural areas.
The retail prices were nearly twice the wholesale prices and that led to deep
resentment among farmers and consequent protests against middlemen. Sears
positioned its mail order operations as a convenient alternative to meet the
requirements of the farmers based in rural areas.
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With its large volumes Sears was also able to offer attractive prices.
Based on his detailed understanding of the needs and desires of farmers, Sears developed a 532 page catalog featuring shoes, women's garments and furniture, in addition to watches and jewelry.
In 1893, sales crossed $400,000. Two years later, they exceeded $750,000. In an effort to streamline its operations the company appointed Julius Rosenwald (Rosenwald)
to develop efficient systems for handling orders.
Following the resignation of Roebuck on account of ill health in 1901, Rosenwald
became treasurer and Vice-president.
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By the turn of the century, Sears had leased many buildings in various areas of Chicago. Construction began on a 40-acre, $5 million mail-order plant and office building on Chicago's West Side. In 1906, the mail-order plant, with more than 3 million square feet of floor space, was the largest business building in the world.
Sears' mail-order executives pioneered the time-scheduling system that enabled the company to handle 10 times the business it had handled before the system was introduced. By early 1905, Sears had succeeded not only in developing accurate catalog descriptions but also in developing quality merchandise... |
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