The Kmart/Sear Merger of Faltering Firms

|1. Do you think this merger will fly? Why or why not. |

Yes, we believe that the merger between Kmart and Sears would fly. We believe that the merger would enhance Sear Holding’s competitiveness in the US retail market. We believe the merger would create a synergy that would eliminate or reduce the problems plaguing each firm individually, and as a whole promote a more effective and efficient firm.

We have based our conclusion on the use of the following model analysis: 1. Porter’s Five Force Analysis 2. SWOT 3. Contingency Corporate Strategy

The first step of our analysis was to analyze the retail industry’s potential and challenges, as we wanted to know whether Edward Lampert’s decision to enter the retail market was a wise investment.

Porter’s Five Force Analysis

| |Potential Entrants | |
| |High Leverage | |
|Suppliers |Industry Competitors |Buyers and Customers |
|High Leverage |Medium Leverage |Low Leverage |
| |Substitutes | |
| |Low Leverage | |

Figure A.

In depth Analysis of Porter’s Five Force Analysis

Based on the assumption of the merger between Kmart and Sears, we believe that Sears Holding has a relatively attractive potential to maintain its business in the broad retail industry.

1. Potential Entrants – There is a