Kingdom of Saudi

‫المملكة العربية السعودية‬

Arabia
‫وزارة التعليم‬
Ministry of Education
‫الجامعة السعودية اإللكترونية‬
Saudi Electronic
University

College of Administrative and Financial Sciences

Assignment 1
(Critical Thinking)
Principles of Management (MGT 490)
Due Date: 22/07/2023 @ 23:59

Course Name: Principles of Management Student’s Name:

Course Code: MGT490 Student’s ID Number:
Semester: Summer Term CRN:
Academic Year:2022-23

For Instructor’s Use only

Instructor’s Name: Dr XXXXXXXXXXX
Students’ Grade: 00 /30 Level of Marks: High/Middle/Low

General Instructions – PLEASE READ THEM CAREFULLY

 The Assignment must be submitted on Blackboard (WORD format only) via
allocated folder.
 Assignments submitted through email will not be accepted.
 Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation. This includes filling your information on the cover
page.
 Students must mention question number clearly in their answer.
 Late submission will NOT be accepted.
 Avoid plagiarism, the work should be in your own words, copying from students
or other resources without proper referencing will result in ZERO marks. No
exceptions.
 All answered must be typed using Times New Roman (size 12, double-spaced)
font. No pictures containing text will be accepted and will be considered
plagiarism).
 Submissions without this cover page will NOT be accepted.
 An overview about Assignment submission Time & grades:

Type of Assignment Posting date Due date Grades Grace

period*

Critical thinking Start of week 2 End of Week 3 30 3 days

By tomorrow 22/7/2023

* Grace Period: with accepted excuse (accepted by instructor) with a deduction of 10%

for late submission.

Learning Outcomes:

CLO1.1. State the concept of management functions, roles, skills of a manager,

and the different theories of management. (CLO1)

CLO 2.2: Employ knowledge and techniques of strategic planning, problem-

solving, decision-making, and change management.

CLO 3.1: Use management function effectively on teamwork activities, and

skills to create a developmental plan.

Section 1: A case study

Please read the following case “The Decline of Sears” This case is derived from the

textbook/e-textbook “Management: A Practical Introduction” by Angelo Kinicki.

Answer the related questions:

The Decline of Sears

Sears, Roebuck, and Company, commonly called Sears, was founded in 1892 to sell one

product—watches. By 1989 the company had grown into the largest retailer in the United

States. Sears initially focused on selling its products via a mail-order business that relied

on a catalogue. “When the catalogue first appeared on doorsteps in the 1890s, it

fundamentally changed how Americans shopped. Back then, much of the population

lived in rural areas, and they bought almost everything from little shops at rural junctions.

These general stores had limited selection and charged exorbitant prices. They were the

only game in town.” Sears’ mail-order business was a disruptor.

Over the years Sears evolved along with changing consumer tastes. When people moved

from rural areas to cities, for example, the company opened hundreds of standalone urban

stores to meet consumers’ desire to shop in attractive department stores rather than via

cata- log. Sears was also one of the first retailers to offer a credit card in the 1980s—the

Discover card—that earned cash rewards for customers based on their purchases. This

innovation brought in a consistent source of revenue for many years. The next change

was to accommodate consumer preferences for shopping at malls. Sears responded by

anchoring its stores in malls across the country.

The retail environment started to change in the 1990s, and Sears began to fall behind as

discount shopping at Walmart and Kmart took off. These companies were nimbler,

changing prices and inventory to meet customer preferences. Sears was more

bureaucratic and was stuck with higher overhead costs and catalogue prices that had been

set months earlier. Not surprisingly, Walmart’s revenue grew while Sears’ did not. Enter

online shopping.

The combination of convenience, selection, speed, and low prices available through

online shopping has been a disruptive force for all retailers. Like its competitors, Sears

has struggled against online sellers such as Amazon. According to a writer from USA

Today, however, the venerable retailer faces even deeper challenges: Sears “has also

suffered in the wake of its management’s decisions, including the sale of its more than

$30 billion credit card portfolio to Citibank in 2003, and a merger with Kmart.”

THE MERGER OF SEARS AND KMART

In 2004, Sears was acquired by Kmart, a company that was then coming out of

bankruptcy. The new firm was christened Sears Holdings and led by Edward Lampert.

He had a background in investments but no retail experience at that time.

Some business writers suggest Lambert purchased Sears for the land on which hundreds

of its stores stood. According to one writer, “Lampert saw real estate value as the key,

and he has managed the two chains as a value play ever since, ignoring the fundamentals

of running a retail business. Under Lampert, the company chronically underinvested in

store maintenance, spending as little as one-fifth of what its rivals spent to keep stores

clean and up to date. The result has been a customer exodus, as no one likes shopping in

dilapidated stores.”
Another writer described Sears Holdings as having “all the charm of a dollar store

without the prices, nor even the service, and with even more disengaged employees.

Bright fluorescent lights highlight the drab floors, peeling paint and sad displays of

merchandising that are reminiscent of department stores in the communist Soviet Union.

Some employees carry iPads, others do not: Lampert’s affections for technology led to a

policy of employees required to use tablets on the shop floor, even though most clerks

said they were unnecessary.”

WHAT LED TO SEARS’ DECLINE?

Forbes reported that “the popular opinion is that poor management has led to the demise

of both companies” (Sears and Kmart). The magazine suggested that Lampert pursued

the wrong strategies, assuming the goal was to improve Sears’ profitability and long-term

survival. Consider the organizational structure Lampert installed at Sears Holdings.

Following a structural model used in the finance industry in which different teams

compete for scarce company resources, Lampert segmented the company into 30

autonomous business units such as men’s wear, shoes, and home furnishings. Each had

its own executive staff and board of directors. Rather than fostering collaboration, this

structural arrangement led to “cutthroat competition and sabotage. Incentives were tied to

the success of the individual business divisions, which often came at the expense of other

parts of the company.” A former executive told the New York Times that “managers

would tell their sales staff not to help customers in adjacent sections, even if someone

asked for help. Mr. Lampert would praise polices like these, said the executive.”
Another aspect of Lampert’s strategy was to spend on technology rather than on stores.

Lampert thought Sears was competing against Amazon. He thus “ploughed investment,

new talent, and marketing into Sears’ website and a customer loyalty program called

Shop Your Way. The program allows customers to earn points, for purchases not only at

Sears but at partnering businesses including Burger King, Under Armour, and Uber, that

can be redeemed for Sears merchandise.” Store appearance languished under this

strategy.

WHAT’S THE LATEST?

Sears closed more than 350 stores in 2017 and plans to sell an additional 100 in spring

2018. The company generated much-needed cash by selling off some of its key brands

such as Craftsman for about $900 million. It also established new sources of revenue by

making a deal to sell “its Diehard-branded products—such as car batteries, jump starters,

and tires—on Amazon’s web- site. The retailer also started selling its Kenmore- branded

appliances on Amazon” in 2017.

Despite these efforts, Sears is “haemorrhaging money” according to Business Insider.

“Sales are down 45% since early 2013, its debt load has spiked to $4 billion, and the

company is losing well over $1 billion annually.”

Making matters worse, “Sears said in a filing with the Securities and Exchange

Commission [in 2017] that it had ‘substantial doubt’ about its ability to stay in business

unless it can borrow more and tap cash from assets.” The company is definitely pursuing

this strategy according to CNNMoney. This source reported in 2018 that the company
announced it will “cut another $200 million a year (beyond the stores it already planned

to close). And it’s looking to increase the amount of money it is able to borrow.”

According to the New York Times, Lampert believes the company can turn things around.

He told a reporter that “while there is still work to do, we are determined to do what is

necessary to remain a competitive retailer in a challenging environment.” Others doubt

this conclusion because Lampert is too disengaged from the running of Sears’ operations.

Former executives say he managed the company from his home in Miami, setting foot in

the company headquarters only for its annual meeting.

Questions

Part 1- Problem-Solving Perspective

a) What is the underlying problem in this case from Edward Lampert’s perspective?

(3 marks)

b) What are the key causes of Sears’ decline? (3 marks)

Part 2- Application of Chapter Contents

a) What does the Human Relations Movement suggest went wrong at Sears? (3

marks)

b) Use the four parts of a system to diagnose the company’s decline. Provide support

for your conclusions. (3 marks)

Section 2:

Select an organization of your choice (from the domestic or international market, for-

profit or not-for-profit) and study its mission statement by answering the following

questions:
 a) Is the mission statement of your selected organization easy to read? Mention the

scope of the mission statement. (02 Marks) (Max words 100-150)

b) Does this statement define a business domain of the organization and explain

why it is attractive? (02 Marks) (Max words 100-150)

c) Does the statement describe the company’s responsibility to its stakeholders?

(02 Marks) (Max words 100-150)

d) Does the statement give a portrait of the company, capturing the culture of the

organization? (02 Marks) (Max words 100-150)

Section 3.

Using your course materials, kindly briefly answer the following questions:

a) Mintzberg’s study in the 1960s came up with three important findings about a

manager’s routine. What are they, and are they probably still the same today? (3.5

Marks) (Max words 150-200)

b) What is the potential importance of studying how managers like to spend their work

time as well as how they actually allocate their work time between different

activities? (3 Marks) (Max words 200)

c) Explain how it is possible that there might be a difference between successful and

effective managers in terms of how each type of manager tends to spend their time. (3.5

Marks) (Max words 150-200)

Notes.
1. The answer should not be limited to Yes/No. There must be a proper explanation

and reason/s for your answer.

2. Support your submission with course material concepts, principles, and theories

from the textbook and at least FIVE scholarly, peer-reviewed journal articles.

3. References required in the assignment. Use APA style for writing references
Answers:

Section 1

Part 1- Problem-Solving Perspective

a) What is the underlying problem in this case from Edward Lampert’s perspective?
(3 marks)
According to Edward Lampert, the root of the problem here is an obsession with real
estate value and financial engineering rather than the fundamentals of managing a retail
establishment. It's possible that the situation got worse because of Lampert's emphasis on
technology over retail and the company's disjointed organisational structure, which
encouraged fierce competition and sabotage within business divisions.

b) What are the key causes of Sears’ decline? (3 marks)

Selling off its credit card business and merging with Kmart may have diverted
management's attention from the core retail company. When discount retailers like
Walmart and Kmart entered the market, along with the rise of online shopping, Sears was
unable to respond quickly enough, and the company eventually went bankrupt. Lack of
investment in store maintenance, resulting in crumbling storefronts and subpar customer
service, may also have discouraged customers from making purchases (HORTON, 2022).

Part 2- Application of Chapter Contents

a) What does the Human Relations Movement suggest went wrong at Sears? (3
marks)
The Human Relations Movement claims that Sears' failure can be attributed to an
unhealthy emphasis on individual incentives at the expense of teamwork and employee
satisfaction. Employee morale and productivity may have taken a hit as a result of the
organization's dysfunctional structure, which fostered unhealthy competition and
sabotage from inside.
 b) Use the four parts of a system to diagnose the company’s decline. Provide support
for your conclusions. (3 marks)
The inputs, the processes, the outputs, and the feedback are the four parts of a system.
Real estate, employees, and technology are all examples of inputs for Sears. Lampert's
management processes include organisational design, policy formulation, and strategic
planning. One of the repercussions is how Sears' products and services, as well as the
company's relationship with customers, fare. Customer comments, financial results, and
general market tendencies are all examples of input. The demise of Sears was tied to
flaws in all four of these underlying systems.
A lack of teamwork and a concentration on individual incentives above teamwork and
employee pleasure may have reduced morale and productivity due to poor managerial
decisions and a disengaged organisational structure. The inability to invest in shop
maintenance and adapt to shifting retail conditions may also contribute to poor financial
performance. Consumer opinions and market shifts point to Sears' inability to compete
with bargain retailers and online marketplaces like Amazon.(Gordgi et al, 2021).

Section 2

a) Is the mission statement of your selected organization easy to read? Mention

the scope of the mission statement. (02 Marks) (Max words 100-150)

Amazon

The Amazon.com statement of purpose can be read and understood by anybody.

Amazon's declared mission is to "be the most customer-centric company on Earth,"

providing "a marketplace where customers can search and discover anything they would
want to buy online at the lowest possible prices." The mission statement encompasses a
wide range of goals, including but not limited to: prioritising customer pleasure;
providing a wide range of items; and keeping prices as cheap as possible (Amazon ,
2023).
Stress on Putting Customers First: According to the company's mission statement,
Amazon is committed to doing all it takes to ensure that each and every one of its
customers is completely satisfied. This is shown in the company's dedication to providing
a wide variety of products and high-quality service to its clientele.

b) Does this statement define a business domain of the organization and explain
why it is attractive? (02 Marks) (Max words 100-150)

Yes, the mission statement defines the business domain of the organization by
emphasizing the importance of being customer-centric and providing an
extensive selection of products. It is attractive because it positions Amazon as a
company that prioritizes customer satisfaction and is committed to offering a
wide range of products at competitive prices (Huberman, 2021).

Wide Range of Products: In addition to being customer-centric, Amazon's

mission statement also emphasizes the importance of offering a wide range of
products. This reflects the company's commitment to being a one-stop-shop for
customers, where they can find everything they need in one place. The mission
statement also highlights Amazon's commitment to offering the lowest possible
prices to its customers. This is achieved through the company's focus on
operational efficiency and its ability to leverage economies of scale to reduce
costs.

c) Does the statement describe the company’s responsibility to its stakeholders?

(02 Marks) (Max words 100-150)

By placing a premium on customer happiness and providing them with a wide selection
of items at reasonable costs, as suggested by the mission statement, the company accepts
responsibility for its stakeholders.
Attractiveness: Amazon's mission statement makes the corporation seem like it cares
about its customers and is dedicated to offering a large selection of products at reasonable
costs. Because of this, the business has been able to attract and keep a dedicated
consumer base in the e-commerce market.

Accountability to Stakeholders: While the mission statement does not call for
accountability to shareholders or employees, it does imply accountability to consumers
by placing a premium on their happiness and providing them with a wide selection of
items at competitive costs. And it's no secret that Amazon cares deeply about its staff
members and actively works to enhance their well-being and compensation.

d) Does the statement give a portrait of the company, capturing the culture of the
organization? (02 Marks) (Max words 100-150)

Amazon's mission statement does serve as a depiction of the corporation and a

summation of its culture. Amazon's dedication to its customers, product variety, and
competitive pricing are all highlighted in the company's guiding document, the "mission
statement." These principles are institutionalised at Amazon and have contributed to the
company's unique culture and stellar reputation.

The mission statement paints a picture of the organisation by outlining its values and
priorities, such as its dedication to providing a diverse selection of high-quality items at
reasonable costs. It's a sign that Amazon cares about its customers and actively works to
enhance its products and service.

Section 3
 a) Mintzberg’s study in the 1960s came up with three important findings about a
manager’s routine. What are they, and are they probably still the same today? (3.5
Marks) (Max words 150-200)

In the 1960s, Henry Mintzberg published a seminal study on the nature of management.
The study includes observing and assessing the performance of five chief executive
officers and their staff members from various sectors, including manufacturing, retail,
and government. The primary goals of Mintzberg's research are (1) to improve our
knowledge of management jobs and (2) to give managers a more complete and accurate
picture of the responsibilities that fall under their purview (Lenfle et al, 2021).

According to Mintzberg's 1960s research, managers' days are frequently disrupted by a

variety of fast assignments and meetings; supervisors perform a wide range of
assignments that can be classified as social, informative, or decisional; and managers'
responsibilities rely primarily on verbal communication.

These findings hold true even now, but technology advancements and shifts in
organisational structure have brought about substantial changes. For instance, managers
can rely less on solitary effort and more on electronic communication and teamwork..

b) What is the potential importance of studying how managers like to spend their work
time as well as how they actually allocate their work time between different
activities? (3 Marks) (Max words 200)

The benefits of investigating the factors that influence managers' time allocation
decisions and the ways in which they divide their working hours could include:

Job Satisfaction Managers' levels of contentment on the

work could be gleaned from an analysis of
their daily activities. Managers are more
likely to leave their positions if they spend
a great deal of time on tasks they dislike.
Companies may try to figure out what

Understanding Managerial Priorities
Leadership Development
motivates its managers so that they can
give them more of those kinds of tasks.
(Tamimi et al, 2022).
It is possible to learn about managers'
priorities and the things they value most
by observing how they use their free time.
As a result, companies and their managers
can have a more in sync set of goals and
objectives, which in turn can boost
production and morale.
Managerial leadership can be gleaned
from studying how they spend their time.
By analysing their time usage, managers
might find places where they can make
changes, such as in their delegating and
prioritisation techniques (Reni, 2018).

c) Explain how it is possible that there might be a difference between successful and
effective managers in terms of how each type of manager tends to spend their time. (3.5
Marks) (Max words 150-200)

Successful and effective managers approach time management differently, despite their
importance. Successful managers plan and scheme more than successful ones, yet both
communicate with their staff. Several hypotheses can explain this. First, great managers
focus on results. This shows they plan and think through their goals more. Good
managers may have personal ambitions, but they may prioritise creating a great work
atmosphere and motivating their direct subordinates. This means they spend more time
communicating with and boosting team morale.
It's possible that successful managers spend more time planning and strategizing because
they have more experience than ineffective managers. They also typically have a better
capacity for foreseeing problems and coming up with solutions. On the other hand, good
managers may spend more time talking and interacting with their employees in order to
build rapport and lasting bonds with them.
Effective managers prioritise people over tasks. This shows that productive managers
prioritise acts that excite and engage their staff, whereas efficient leaders prioritise those
that assist them achieve their goals. Managers' time usage can reveal their priorities.
Effective managers focus on personnel, while successful managers focus on duties.

References
Amazon . (2023). Amazon, Who We Are? 1-14. Retrieved 2023, from
https://www.aboutamazon.com/about-us
Gordgi et al. (2021). Calculation of Performance in Teamwork. 5(2), 2-8. Retrieved 2021,
from https://www.mdpi.com/2227-7390/8/10/1804
HORTON, M. (2022). Most Common Reasons a Small Business Fails. Investopedia, 2-4.
Retrieved 2022, from
https://www.investopedia.com/articles/personal-finance/120815/4-most-common-
reasons-small-business-fails.asp
Huberman, J. (2021). Amazon Go, surveillance capitalism, and the ideology of
convenience. Economic Anthropology, 8(2), 337-349. Retrieved 2021, from
https://anthrosource.onlinelibrary.wiley.com/doi/full/10.1002/sea2.12211
Lenfle et al. (2021). Three Streams of Project Studies as Applied to Exploratory Projects.
3-9. Retrieved 2021, from
https://journals.sagepub.com/doi/full/10.1177/8756972819871781?
casa_token=Z2fD06cLa_EAAAAA
%3A6kSfygdDstyCV46UxWbd_mvPCEgsqf1PIXeb_fe9NXuPArPShXnd_nQW
RWdx-FkGLKUjyhLzZgTM
Reni. (2018). Leadership definitions and leadership development. 3(1), 4-12. Retrieved
2018, from https://journal.ugm.ac.id/leadership/article/view/42965
Tamimi et al. (2022). job satisfaction. 4(3), 1-8. Retrieved 2022, from
https://link.springer.com/article/10.1186/s12889-021-10897-4