Question

Based on Sear's annual report and determine which kinds of goals, standards, or targets the organization is using to evaluate performance. How well is the organization doing when judged by the criteria of control, innovation, and efficiency?

Answer 1

The standards or the targets that Sears is using to evaluate its performance are the number of stores and growth in different business segments. In its 2017 annual report the company stated that it had 1,002 full line and specialty retail stores in USA. The reportable segments for Sears are Kmart and Sears Domestic. The company also uses square feet coverage of its retail stores as a standard while evaluating its performance. The company had 431 Kmart discount stores at the end of 2017 and this averaged 94,000 square feet in coverage. Its Sears Domestic segment reported 547 full line stores averaging 159,000 square feet in coverage.

The company is not doing exceptionally well when judged by the criteria of control, innovation and efficiency. Lack of innovation and efficiency has resulted in drop in top-line for the last two years. The company had reported a revenue of 25,146 (in $ millions) in 2015 and this dropped to 22,138 (in $ millions) in 2016. It dropped further to 16,702 (in $ millions) in 2017. While the company has demonstrated good control by reducing its operating loss and net loss over the years it still needs to better control its costs so as to start reporting positive margins and net income.