Question 1

The firm's understanding of the external environment is matched with knowledge about its internal environment to form its vision, to develop its mission, and to take strategic actions that result in strategic competitiveness and above-average returns.

Although firms cannot directly control the elements of the external environment, they may be able to influence, and will be influenced by, these factors.

Given the importance of understanding the external environment, why do some firms fail to do so? Provide examples of firms that did not understand their external environment. What were the implications of the firm's failure to understand that environment?

Question 2

The greatest strength of Sears Holdings Company is their reputation for reliable products and customer service. Another strength is their supply chain/distribution strategy, which is based around their customers to ensure they get what they are looking for. The distribution strategy can also be seen as a weakness because competitors are doing the same thing, if not better.

For example, Amazon can provide the same service and delivery methods as Sears Holdings Company. I don't think the combined companies have the right strategy to compete with their competitors such as Kohls, Target, Jc Penney and Home Depot because they were pushed into this "make over" because things had gotten so bad; these changes should have been made long before they were pretty much forced into it.

The attached article "10 brands that won't be around in 2012" made an interesting point regarding the combined companies, which was to stop supporting two brands that compete against one another and larger rivals. Instead, they should focus on the company that is doing better. Instead of spending time, money and resources on two failing companies, they should be spending their efforts on improving the one that has a chance of survival in the long run, which looks to be Kmart from the articles statistics.

This change would work because they can focus solely on one business strategy, and one target market/customer base. With having both Kmart and Sears, they have to analyze competitors, market trends, consumer demand, and everything else for the business twice and they are getting much in return.