‫المملكة العربية السعودية‬

Kingdom of Saudi 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 Ibrahim Alotaibi
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
a) What is the underlying problem in this case from Edward Lampert’s
perspective? (3 marks)
Edward Lampert claimed that the rise of e-commerce and the subsequent reduction in
traditional forms of advertising were the primary causes for worry. There was no way for
competitors to learn about the hidden worry. The distressed seller on the trading floor
was saved for a considerable time by his ESL endeavours of mutual funds and the sale of
significant land. Sears has not put up much of a fight or adopted any innovative strategies
to deal with Lampert's continued control of the company's customer base. It was difficult
for Sears to become another specialised age for firms like Alibaba in the 1990s. It was
announced by Sears that the firm will be purchasing more opportunities to back a positive
business decision. Experts, though, are still sceptical about the company's resurgence in
the retail sector. Lambert claims that in 2013 he came clean about his lacklustre
performance, especially in retail settings. The company, however, had to perform at peak
efficiency right up to the 1990s. (Chams, N., & García-Blandón, J. 2019)

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

Much research suggests that Edward Lampert's failure to make improvements to the
"squares and concrete" stores of Sears and KMart is to blame for the company's demise.
When you consider that the big-box bookstores have lately tried to compete with Amazon
in Amazon's living room and failed badly, with one quitting the business and the other
forced to investigate a substitute strategy, Lampert's attempt to replicate Amazon seems
more perplexing. One possible cause of the decline is because, in comparison to
competitors like J.C., which spent $4.13 per square foot in 2017, Sears only spent
approximately 90 cents. A sort of agitation or transition occurs periodically in the retail
industry, with Sears e-commerce likely to be uninvolved in this latest iteration of the
process despite the fact that most retailers have invested much in their practises. Sears
failed to adequately stock its stores. Lampert separated the group into 30 subsets of
menswear, footwear, and home goods. Lampert's choice to prioritise innovation above
physical shops is also contributing to Sears' demise. Lampert believed that the value of
the store was low in comparison to the value of the land on which it was built. Therefore,
he made the prudent decision to sell $1.5 billion in property in order to keep Sears afloat
and meet its financial obligations. E-convenience, commerce's variety, and cheap prices
have unnerved Sears and other merchants. (Kinicki, A., & Soignet, D. B. 2022)
Part 2- Application of Chapter Contents
a) What does the Human Relations Movement suggest went wrong at Sears? (3
marks)

Human relations are a subfield of organisational behaviour that emphasises treating

people as people rather than cogs in a machine. According to DuBrin (2013), human
behavioural concerns are ignored by companies that place too much emphasis on
output and return. As a result, the movement digs deeper into what factors boost and
cultivate their success on the job. Therefore, according to the Human Relations
Movement, Sears' demise may be directly attributed to incompetent management. It's
true that Lampert lacked the necessary retail knowledge, which is why he struggled to
lead Sears. Each division was working against and undermining the others, rather
than cooperating for the sake of the company as a whole. But Douglas's theory X
provides an explanation: managers who subscribe to this theory motivate their teams
using a strict "carrot and stick" approach, rewarding exceptional performance and
punishing mediocre output. When Lampert split Sears up into many divisions, each
one started to vie with the others for Lampert's attention and resources. As a result,
Lampert only rewarded the successful divisions and neglected the underperforming
ones. (Malyuga, E., Maksimova, D., & Ivanova, M. 2019)

Use the four parts of a system to diagnose the company’s decline. Provide
support for your conclusions. (3 marks)

According to McFillen et al. (2013), organisational diagnosis is defined as a "operational

approach" to evaluate the performance of an organisation as well as the mechanisms via
which it could accomplish its objectives. There is no question that the quality of service
that Sears offered to its potential customers was a factor that contributed to the decline of
the corporation. One of the key issues that led to the downfall of Sears was the fact that
the company did not provide the kind of service that was needed and anticipated by its
customers and lived up to their expectations. Second, the incapacity of the company's
leadership to effectively monitor day-to-day operations hampered the development of the
business and prevented it from reaching its full potential. The leaders of a business are
the ones who are ultimately accountable for determining the path that the firm will take
and making the decisions that will determine its fate. Third, the level of motivation that
employees have has a substantial influence on the amount of production they produce.
The "carrot and stick" method should not be used by management anymore. The
employees at Sears, with the support of their leadership, disregarded their customers,
which resulted in a reduction in store traffic. It is essential to appreciate your customers,
which is not the least important thing to do.( Chams, N., & García-Blandón, J. 2019)

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)

Hersheys was selected because of their crystal-clear goal statement. It expresses the
organization's goal clearly and concisely. The mission statement elaborates on several
aspects of the organisation, including its objectives, its intended beneficiaries, and the
kind of social change it seeks to effect. It serves as a guidepost to keep the business on
track and a basis for decision-making.

A firm's mission statement lays the groundwork for what the organisation does and why
it exists. They must serve a function, and their justification must make sense. The mission
statement, which articulates the company's raison d'etre, is developed by the highest
levels of management and the board of directors. It makes no difference whether the
entity in question is a non-profit, a tiny company, a multinational conglomerate, or a solo
proprietorship. What the organisation offers, why it offers it, and what it hopes to provide
in the future might all be detailed in a mission statement. The central inquiry is, "What is
our primary justification for existing?" Hershey's purpose statement is as follows: "We
deliver high-quality HERSHEY'S products while doing business in a socially responsible
and ecologically sustainable way, continuing Milton Hershey's heritage of devotion to
customers, community, and children." (Malyuga, E., Maksimova, D., & Ivanova, M.
2019)

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

A proclamation of goals and aspirations the goal of the firm is to create a Hershey bar. It
provides a comprehensive explanation of its long-term goals. Traditionally, companies
have described their procedures with terminology that is easy to understand.

A company's purpose needs to be summed up in the mission statement that the company
has. It simplifies your reason for being and communicates it to the outside world in a way
that makes sense. The following are some examples to illustrate: Who do you provide
your services to, and what do you have available for purchase? How exactly do you add
to the ultimate result or value of these items or services, and how exactly do you achieve
this?

Therefore, based on the statement that was just presented, the company identifies the
scope of its activities, which is attractive since it condenses its raison d'être into a handful
of components that can be easily managed. (Taouab, O., & Issor, Z. 2019)

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

(02 Marks) (Max words 100-150)

That organization's responsibility to its constituents is spelled out in its stated mission.
Stakeholders' value and significance to the company's success are recognised. The
mission statement might include the company's pledge to serve all of its stakeholders,
including consumers, workers, investors, suppliers, and community members.
An organisation that cares about more than simply its bottom line can emphasise its
commitment to ethical business practises, sustainability, or social responsibility in its
mission statement. It may highlight the value the business delivers, the connections it
cultivates, or the social good it performs to demonstrate the organization's dedication to
its stakeholders.

The organization's dedication to openness, accountability, and the development of

mutually beneficial partnerships are all emphasised in the mission statement that serves
as the basis for stakeholder management. It's a standard by which the company judges its
activities, making it more likely that stakeholder needs will be met. (Kinicki, A., &
Soignet, D. B. 2022)

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

It is possible for the mission statement of a firm to place emphasis on the organization's
dedication to its employees, as well as diversity, personal advancement, and job
happiness. It may also serve as a representation of the culture that the business aspires to
have by placing a focus on the importance of integrity, ethics, and corporate social
responsibility.

The mission statement paints a picture of the organisation and the culture it upholds,
bringing together all of the stakeholders, workers, and partners to work toward a common
objective. It does this by acting as a continual reminder of the organization's basic
principles, which helps to guide the activities and operations of the company. The
capacity of the organisation to bring on board people who believe and work for the same
things has contributed to its continued prosperity and longevity. (Malyuga, E.,
Maksimova, D., & Ivanova, M. 2019)
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)

Mintzberg concluded three key points about a manager's daily routine in his 1960
research. To begin, great managers rely more on face-to-face and verbal exchanges than
on written ones. Second, in order to get the most done and increase their odds of success,
great managers should work at a faster and more intense pace for longer periods of time.
Thirdly, great managers should make sure their routines are marked by fragmentation,
brevity, and variation. According to Mintzberg's extensive research and investigation of
the managers in the 1960s, the three discoveries presented themselves. All three
conclusions may be seen and felt in today's management teams. Malyuga et al. (2019)
state that great managers promote open and honest dialogue in the workplace, which
allows for the free flow of ideas and information. In the twenty-first century, managers
who value oratory and verbal communication abilities are better equipped to manage and
influence their stakeholders, the authors argue. In addition, modern managers who put in
long hours in their routines have an impact on their staff and subordinates since they
serve as role models. Finally, successful business leaders today recognise that they have
routines that are fragmented, brief, and varied. (Myszak, J. M. 2018)

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)

Managers may discover which responsibilities are more essential to their employees and
which are less significant by observing how their employees spend their time at work and
determining how they divide their time among the numerous activities available to them.
Aspiring managers are aware of the significance of channelling all of their available time,
energy, and resources toward the achievement of certain objectives. Analyzing the gap
that exists between actual performance and the managers' intended output is one way for
aspiring managers to have a better understanding of the organization's primary objectives
and objectives. In practise, managers give more priority to activities that bring the
company closer to achieving its primary goals (Chams & Garcia-Blandon, 2019).
According to the authors, managers who spend more time analysing and providing
feedback on product designs are more likely to make innovation and invention their top
goals. This was one of the findings of the study. On the other hand, the efficiency of
managing human resources may be improved if managers spent more time speaking and
working with their personnel and colleagues. Aspiring managers should study the
differences between the time that was actually spent on various tasks and the time that
was intended to be spent on those jobs in order to evaluate how different activities will
contribute to the desired business objectives. (Malyuga, E., Maksimova, D., & Ivanova,
M. 2019)

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)

It is possible to discriminate between managers who are successful and those who are
inefficient based on the way in which they prioritise their tasks and spend their time. To
get things rolling, good managers often begin by providing in-depth explanations of how
each firm policy and practise will assist the organisation in achieving its goals. However,
effective leaders concentrate only on the results, rather than adhering to the strategies that
were originally outlined. According to the findings of Taouab and Issor (2019), highly
effective managers commit a greater proportion of their time to strategic planning and
analysis than less successful managers do on average. Second, effective managers
dedicate more effort to cultivating meaningful relationships with prospective
stakeholders, growing their professional networks, and interacting with those
stakeholders. It's possible that successful leaders are not as active in the day-to-day
operations of their teams as effective managers are. More time is spent on networking by
effective managers than is spent preparing by their similarly successful competitors.
Successful managers spend a greater proportion of their time doing data analysis and
making decisions than do effective leaders. Finally, successful leaders commit a bigger
portion of their time to delegating work to others, while effective leaders spend a greater
portion of their time dealing with subordinates and teams and providing direction to those
groups. (Kinicki, A., & Soignet, D. B. 2022)

References:

1) Chams, N., & García-Blandón, J. (2019). On the importance of sustainable human

resource management for the adoption of sustainable development goals.

Resources, Conservation and Recycling, 141, 109-122.

2) Kinicki, A., & Soignet, D. B. (2022). Management: A practical introduction.

McGraw-Hill Education.

3) Malyuga, E., Maksimova, D., & Ivanova, M. (2019). Cognitive and discoursive

features of speech etiquette in corporate communication. International Journal of

English Linguistics, 9(3), 310-318.

4) Myszak, J. M. (2018). Management of the personnel function in a changing

environment. European Journal of Service Management, 27(3/1), 165-171.

5) Taouab, O., & Issor, Z. (2019). Firm performance: Definition and measurement

models. European Scientific Journal, 15(1), 93-106.