Restructuring at Sears Roebuck & Co. (1992-03)
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Case Code: BSTR105 Case Length: 27 Pages Period: 1992 - 2004 Pub Date: 2004 Teaching Note: Available |
Price: Rs.500 Organization: Sears Roebuck & Co. Industry: Retailing Countries : USA Themes: Corporate Restructuring |
Abstract Case Intro 1 Case Intro 2 Excerpts
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. 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.
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. 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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