Sears Case Study Essay -- essays research papers

Sears Case use upIntroductionThe great advantage of publicly held companies is that they bring together crownwork and managerial expertise, to the benefit of both groups. An investor need non know anything well-nigh making or marketing chairs in order to invest in a chair factory. A gifted producer or seller of chairs need not have capital in order to commencement ceremony a business. When it runs well, both profit, and the capitalist brass achieves its goals. Our system of capitalism has been less(prenominal) successful when the company does not run well. As whatever of Americas nigh visible, powerful, and successful companies began to slide, they demonstrated an all-but fatal weakness in the ability of our system to react in time to prevent disaster. Managers and directors at companies like IBM, common Motors, and Sears took their success--and their customers--for granted. They took their investors for granted, too, until it was almost too late. The problem is that the stre ngth of the system, the separation of ownership and control, is as well as its weakness. A shareholders investment in a chair factory gives him authentic rights, including the right to elect the directors and the right to inspect the books. These rights may have some(prenominal) meaning when the company is small enough that the investors number in the hundreds. notwithstanding in large, complex companies, with investors in the millions, they are likely to exercise a third right, the right to sell. While some economists will argue trade of the stock sends a signficant message to management, I agree with Edward Jay Epstein, who said that " safe the exchange of one powerless shareholder for another in a corporation, while it may lessen the market price of shares, will not dislodge management--or even threaten it. On th... ...illing the vacancies left by the directors " pink-slipped" in the 1991 shrinkage. Ironically, Sears was left with a board with a higher pct of ou tside directors. I believe Brennan found that at least some of the extra accountability I was seeking was the result of the actions he took to debar me.Less than six months after the annual meeting, Sears announced a bulky restructuring. Coldwell Banker would be sold finish up in its entirety, Dean Witter would be spun off to shareholders, as would 20 percent of Allstate. The market reacted to the news by direct Sears stock up 8 percent in a angiotensin-converting enzyme day.Changes at SearsI firmly believe that Sears recent renaissance (STOCK PRICES) is a direct result of the increased accountability of management. I believe that Sears serves as a perfect study for the values to be generated by heterogeneous and informed shareholders.