Sears Company’s Transaction Processing System

Management information system has gained a lot of relevance in the recent past as an appropriate way of managing information on various transactions that take place within an organization. According to Heijden (2009), management information system refers to, “A general term for the computer systems in an enterprise that provide information about its business operations.” This definition holds that management information system is actually a computer system within an enterprise used to provide information about operations of a firm. Oz (2009) defines management information system as, “An organized approach to the study of information needs of an organization’s management at every level in making operational, tactical, and strategic decisions.”

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This definition also notes that this system entails an organized manner of managing information within a firm. This definition sheds more light into this field by stating that information is managed for guiding the management in the process of making decisions at operational, tactical, and operational levels. Transactional processing system is one of the most common systems that have been used by some firms to solve various issues involving management of information. This research will focus on how Sears can use transactional processing system as a way of enhancing its productivity and reviving its profitability in the market.

Analysis of the business

Sears is one of the largest retail stores in the United States. This firm was once the largest retail store in the world, beating Walmart and other major retailers that currently dominate the market. Started in 1839, this firm experienced massive growth in its early years, especially due to lack of well-established competitors. However, this has changed over the last thirty. According to Katz (1988), Sears started experiencing a serious decline in profitability in early 1980s. This problem could be attributed to lack of clear information management system.

According to the report by Oharenko (2005), Sears has been unable to implement some of the emerging market trends that are customer friendly. This report also indicates that top management unit of this firm has been making decisions that are misplaced, a clear sign that their decisions are not guided by in-depth information collected in the firm’s operational activities. It would be important to understand the processes that are affected by this, and the manner in which this firm has suffered due to lack of clear information management system.

Important business processes

Sears is a giant retail stores with numerous branches in the United States, Canada, and Mexico. There are numerous important business processes that it involves in which needs clear information management approach. One such process is the sales history. This firm has numerous stores in various cities in the countries named above. At each store, the firm would make several sales-related transactions in a day. The firm must have a clear history that would help determine the total sales per given product in a given day. This way, the firm will be able to determine products whose stock turnover is high that those with low stock turnover.

The information will help in making decision on several issues that would improve performance of the firm. Decision support system can be developed based on the information collected from this transaction processing system. Another transaction processing system can be that which registers income and expenditures of the firm per given period. This information would then be sent to the top management. The firm may also need customer-feedback information system that enables it to collect all the relevant information from customers, compile a report, and then send it to the top management for actions to be initiated. These processes have been malfunctioning at this firm.

Culture

The poor performance of this firm may be attributed to its poor organizational culture. As Gupta (2011) observes, organizational culture helps in creating an environment where management can predict possible actions of its employees because there is a clear principle, which they should follow. At Sears, there has been poor organizational culture that permits unpredictable reactions to be taken by the employees. Generally, there has been a culture of laxity when it comes to management of information in this firm. This problem has been witnessed from the top, to middle managers and even junior employees.

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No one seems to be interested in compiling information about various activities in the firm. The financial reports and other conventional reports are made either because they are a common necessity or because the government needs them. However, there is no deliberate attempt by the top management and other middle and junior managers to develop a clear information management system that would be used to collect information to be used in strategic, tactical, and operational decision-making processes.

Structure

It is important to understand the leadership structure of this firm in order to understand where to start solving the problem. The report by Oharenko (2005) noted that the main problem of this firm lies with its management. Edward Lampert is the current chairperson, president, and chief executive officer of this firm. This in itself poses a challenge to this firm. As the chair of this firm by virtue of being the largest shareholder, Lampert should be the chief supervisor of all the activities of Sears. The fact that he is the chief executive of this firm means that he is the final authority in the management strategies without any direct supervisor. As the chair, he would be supervising his own strategies. Under the office of chief executive are various departmental heads. In Canada and Mexico, the firm has regional managers who report directly to the chief executive of the firm.

Environment

The environment of this firm has been very dynamic. A firm’s environment can be analyzed from three perspectives, which include political environment, socio-cultural and economic environment. The socio-cultural environment of this firm has been diversified. This is so because of the diversity of different markets in which it operates. The political environment of Sears has been very favorable. This firm operates in three different countries in North America. These three countries have experienced stable political environment that is conducive for business growth. The economic environment has been dynamic over the past decade. The entire region where this firm operates experienced a massive recession in the year 2008. However, the three countries recovered from this recession in 2010, and there has been a stable economic growth in the past three years.

Business strategy

The business strategy employed by Sears has been described by Oharenko (2005) as very rigid and lethargic. Sears was once the largest retailer in the United States. However, this has changed in the recent past following the emergence of more effectively managed firms such as Walmart. One factor that points out to the sluggish nature of business strategy of this firm is its failure to adopt to the emerging technologies as fast as has been necessary. As Cairns (2010) notes, in the current business environment, a firm cannot afford to ignore the emerging technologies if it expects to remain competitive.

The management of this firm failed to realize this fact. Its rigid management strategy did not allow it to go online when small firms like Amazon.com and Walmart were upgrading their operational activities to the digital world. This firm dismissed this move, probably considering itself too large to fall. Because of this, the previously smaller firms have managed to topple it as the market leaders in the retail industry.

Strategic information systems appropriate for Sears

It is clear that the main reason why this firm has not been able to sustain the current market competition is lack of a clear information management system. In order to solve the current problems that this firm faces, the management must develop a Transactional Processing System (TSS) that will be able to record all transactions carried out between the firm and its customers. The system can be enhanced to capture other operational activities between the firm and suppliers or other relevant stakeholders. However, this research will only focus on how this system will be used to ensure that all transactions between the firm and its employees are efficiently recoded and stored for making informed decisions.

Business problems facing the company

According to Gupta (2011), the main problem that has taken this firm from its gracious position to its current unfortunate state is strategic decision-making process that has constantly ignored the changing environmental factors. Sears, once the world market leader in the retail industry, has been unable to predict possible changes in the external environment. In case this change is predicted, the management would dismiss it as inconsequential.

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Instead, it considered that its market dominance would help it survive forces in the external environment. This proved very disastrous, especially when its competitors were going digital. This firm failed to accept the fact that it was necessary to listen to customers’ feedback as a way of developing policies that are conscious of their needs. The prevailing economic conditions was putting a lot of pressure on the middle class which makes the majority of its customers.

There was a new culture developing where men and women were getting into the corporate world as equals. This meant that women no longer had idle time to go shopping. Their limited schedule did not allow them to travel to shops that were miles away from their offices and homes. They made this clear to the market, and firms such as Walmart and Amazon.com listened and acted. However, Sears, due to lack of proper transactional processing system that would capture the changing trends in the market, ignored this move considering it impractical. As Walmart and other digital retailers increased their market share, the market share of Sears started dropping at a very high rate. When the management came to realize this, it was too late and the firm had lost its lead in the industry. The firm is yet to develop clear system that would help guide its decisions in the market in order to remain competitive.

The relationship between the problems and existing systems

As defined above, the existing system is lethargic and too rigid to be able to succeed in the current competitive market. Currently, the firm lacks management information system that can be used to guide some of the management strategies it uses in its operations. The chief executive officer of this firm has been running it as a small firm that can be managed without any sophisticated management systems. There is a close relationship between the existing problems at this firms and its current poor information management system. According to Cairns (2010), this firm lacks a system that can track customers’ feedback on its products and service delivery. While many firms have developed interactive communication systems with their customers, Sears still applies management strategies it used two decades ago.

The system that is used to record sales at this firm is able to register total sales in a day, and to determine particular products that were sold. However, this system is not able to determine the trends in the sale of a particular product. This means that the management cannot realize the increasing or reducing demand of a particular product. It will therefore, continue overstocking what customers need less and understocking what customers need more. When customers come to the stores and fail to get what they need because it is understocked, they will be forced to visit stores of Sears competitors. This could be the main reason that has made the firm to perform dismally in the recent past. The problem can only be solved if the firm employs appropriate information management system that will make it responsive to the market forces, and proactive in its management strategies.

Analysis of Sears’ market situation Using Porter’s competitive forces model

Porter’s five forces is one of the most popular models used in analyzing competitiveness of a firm in the market. In order to determine the level of competitiveness of Sears, this model will be used to determine its ability to withstand the current market forces. The threat of new entrants into this industry is real, but this firm has failed to develop means through which it can fight it. Walmart was a new entrant and a small firm compared to Sears some five decades ago. The management of Sears failed to develop mechanisms that would help protect its market share. Currently, this firm is ranked fifth in the retail market, a sign that three other new entrants have surpassed it over the last few decades.

The threat of substitutes or this firm has come in the form of Amazon.com and other online stores across the United States, Canada, and Mexico. These digital firms sell their products online. The online stores have eaten into the market share of brick-and-moter firms such as Sears. They offer customers alternative method of making their purchase. The market is increasingly getting digital. The only way that this firm can deal with the threat of the substitutes is by getting into the digital market as soon as possible.

Bargaining power of the buyers also seems to pose a challenge to this firm. Several retail outlets currently exist all over the country. This offers customers a variety of choice when planning to make their purchase. With this variety, customers become very choosy. They are strengthen by the fact that they have several options to choose from when making their purchase. This means that they will always have the power to demand more value. The management of Sears is yet to come up with a way of managing this power.

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Suppliers are also increasingly becoming powerful. Such large suppliers as Samsung and Coca Cola have monopolized their industries. This means that they can dictate what happens when they make their deliveries. For instance, they may demand that this firm must offer down payment for their products before they can release their products. This can strain this firm financially. Given that Sears is losing trust with its suppliers, it may face this unfortunate scenario, and this could hurt its operations further.

The intensity of competitive rivalry in the market is getting worse, especially with the introduction of new market players. Walmart has already toppled this firm as the market leader in this industry. Three other retail stores have also outsmarted Sears. Some online stores such as Amazon.com are also eating into the market share of Sears. The only ways this firm can manage this intense competition is by developing mechanisms that will enable it remain attractive in the market.

Importance of technology in enhancing Sears’ competitiveness in its market

Technology is the solution that would enable Sears comes from its current unfortunate state. Sears has failed to develop strategies that can help it maximize benefits brought about by technology. One of the benefits of technology is in the area of advertisement. As Gupta (2011), the market today values brand. It is rare to hear a customer say that he wants a shaver when he or she visits a shop. He will say that he wants a Gillette. This demonstrates the power of brand in enhancing a firm’s competitiveness. Walmart has used technology to enhance its competitiveness in the market by advising extensively in the social media.

Facebook, Tweeter, and YouTube are some of the recent media used in advertising. Firms are using them to create awareness of their products and brand. Sears should take this advantage in order to become more competitive in the market. Transactional processing system being proposed for this firm is also part of technology that this firm should be using to increase its competitiveness. This technology will help it tract all-important information regarding customers and their purchasing trend so that this firm can be able to change with the changing market forces. Use of such system as decision support system (DSS) can be made possible if there is a clear management of data within the firm.

The concept of a strategic ecosystem at Sears

Cairns (2010) defines business ecosystem as, “A strategic planning model, popular since the development of information technology, whereby a network of suppliers, distributors, competitors and customers all work through competition and cooperation to advance sales of products.” This definition brings out a number of issues that Sears have failed to observe. This ecosystem starts by appreciating that technology is the principal force that holds other members of the ecosystem together. The definition also states that there is need to consider distributers, suppliers, customers, and competitors as part of the ecosystem that will play different roles in enhancing quality delivery of products in the market. At Sears, sluggish adoption of the emerging technologies have forced this firm to consider some components of this system as being destructive in its service delivery process.

Examples of business processes for Sears

As mentioned above, there is need for firm to employ transaction-processing system at various operational levels in order to capture every sing details of the activities taking place at this firm. To do this, the firm should identify some of the areas that need to be worked on as a matter of urgency. One of the areas that have been identified is in the process of making sales to the customers. The current system that this firm uses to tract sales of various products has limited capacity. The process of making sales is very important because this information can be used to guide operations of the firm. The management needs to use data collected from this process in order to determine the best cause of action.

Another business process that needs addressing using the emerging technological systems is on management of customer-feedback. For a long time, this firm has been accused of its inability to act upon the desires of customers. As Katz (1988) notes, Sears Company has been making decisions that do not reflect on the market needs. This is attributed to lack of systems that can help focus the management decisions towards the needs of its customers. The process of getting this feedback should be designed in a way that would ensure that the firm is efficient in its operations, especially in addressing customers’ needs.

Improve Sears’ business processes using information systems

The above-identified processes can be enhanced using information system. The process making sales can be used as a way of collecting important decisions that will be used in defining strategic policies of this firm. This proposed system will be able to capture all the sales made per day on each of the products that this firm stocks and store this information. At the request of the management unit, this system will be able to give trend of sales per product in the form of linear graph. The management will then be able to determine the rising or falling demand of a particular product. The management would make appropriate decision of decreasing or increasing the stock based on the prevailing market forces. Below is a diagrammatic representation of this system.

Transaction Processing System

The second business process can also be improved using transaction processing system. This system would be designed to capture and categorize customer feedback. The feedback will be coded in a programmable format. Data generated from this program will help determine a trend in the market based on the opinion of the customers.

Definition of IT infrastructure for this company from both a technical and a services perspective

Cairns (2010) defines IT infrastructure as, “A set of physical devices and software applications that are required to operate the entire enterprise.” This technical definition of IT infrastructure points out to the fact that this infrastructure involves various components of information management system. They include hardware such as computers and data storage systems and any other physical object that can be used to capture retrieve or process data, the software relevant in storage and management of data, and any other application that may be needed to make the process of managing information efficient. From the services perspective, IT infrastructure refers to an information management system that allows users to collect, process, store, and retrieve data whenever there is need.

Components of IT infrastructure that this company needs to manage

Sears need an IT infrastructure that will enhance understanding of sales in individual products, and improve communication between the firm and its customers. The management must understand some of the IT components that will be needed to make this possible. The firm will need the following

  • Computer hardware
  • Operating system platform
  • Enterprise software application
  • Database management software
  • Telecommunication and networking platform

The above components will be needed to make this system successful in managing relevant information for this firm.

Use of data warehouse to improve its marketing strategies

Data warehouse can help Sears improve its marketing strategies. Data that will be stored in the database will be coming from the firm’s operational activities, customers’ feedback, and research conducted in specific areas of interest. This means that strategies developed based on the information in this database will be relevant to the prevailing forces in the market. The strategies will be guided by the market needs, and this will enable the firm be sensitive to emerging market trends. This will improve its efficiency.

Corporate ethics code on privacy

One of the ethical concerns that have been raised when dealing with online or offline data management is the way in which privacy of various stakeholders can be protected. All the stakeholders of Seers who will use the new system should have their privacy protected from any form of infringement. The management should ensure that the privacy of the following stakeholders is protected.

Employees’ privacy

Employees of Sears will be involved in handling information at various levels. There is need to ensure that privacy of employees are well protected in this new system to avoid cases where their data is accessed by unauthorized persons. To achieve this, every employee should be assigned a workstation complete with a computer system. The workstations should be password protected to avoid any instances where unauthorized persons get access to the workstation computers. Each employee will be responsible for protecting his or her password.

Customers’ privacy

Customers’ privacy should always be protected by this system. To achieve this privacy, it would be necessary to identify customers with specific codes other than names. Any personal information that is captured by the system, including personal information disclosing their financial details should be protected and deleted from the system as soon as the transaction is complete.

Privacy of users of the corporate website

Users of the firm’s corporate website should also be protected from cybercriminals. The website should be stable, and each of the users should be assigned a user identity and a password they shall use when making any transactions with the firm through their accounts. To enhance security of the users, the system should be designed in a way when a user tries to access the website, a code will be sent to his or her phone. He or she will use the code as the final key to access his or her account.

References

Cairns, J. I. (2010). A good book, in theory: Making sense through inquiry. Toronto: University of Toronto Press.

Gupta, H. (2011). Management information system: an insight. New Delhi: International Book House.

Heijden, J. G. M. (2009). Designing management information systems. Oxford: Oxford University Press.

Katz, D. R. (1988). The big store: Inside the crisis and revolution at Sears. New York: Penguin Books.

Oharenko, J. M. (2005). Historic Sears, Roebuck and Co. catalog plant. Charleston: Arcadia.

Oz, E. (2009). Management information systems. Boston: Course Technology.

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