10-K Analysis for Kohl's
1. Bargaining power of Suppliers
“We have Terms of Engagement requirements which set forth the basic minimum requirements all business partners must meet in order to do business with Kohl’s. Our Terms of Engagement include provisions regarding laws and regulations, employment practices, ethical standards, environmental and legal requirements, communication, monitoring/compliance, record keeping, subcontracting and corrective action. None of our vendors individually accounted for more than 5% of our net purchases during 2011. We have no significant long-term purchase commitments or arrangements with any of our suppliers, and believe that we are not dependent on any one supplier”. (Pg. 5)
The bargaining power of Kohl’s suppliers seems substantially low. With 1’127 stores in operation and $18,800,000,000 in net sales for the 2011 fiscal year, Kohl’s becomes not only an attractive account, but a life source for some of the smaller manufactures. This in turn leads to fierce rivalry amongst suppliers, allowing Kohl’s to benefit. For added security, Kohl’s diversifies their supplier relationships and shies away from commitment. This strategy not only gives them more protection from stock outs, it also allows them to be more flexible with future decisions. To be a supplier for Kohl’s, you must strictly comply with their Terms of Engagement and immediately resolve any deficiencies, in order to maintain a business relationship.
2. Political
“Consumer confidence is also affected by the domestic and international political situation. The outbreak or escalation of war, or the occurrence of terrorist acts or other hostilities in or affecting the United States, could lead to a decrease in spending by consumers”. (Pg. 7) Many Americans are concerned with their safety and are truly uncertain where this country is heading. Gun and ammo sales have skyrocketed following recent terrorist events. Much of the extra disposable income is now unavailable for a trip to Kohl’s. I
“We have Terms of Engagement requirements which set forth the basic minimum requirements all business partners must meet in order to do business with Kohl’s. Our Terms of Engagement include provisions regarding laws and regulations, employment practices, ethical standards, environmental and legal requirements, communication, monitoring/compliance, record keeping, subcontracting and corrective action. None of our vendors individually accounted for more than 5% of our net purchases during 2011. We have no significant long-term purchase commitments or arrangements with any of our suppliers, and believe that we are not dependent on any one supplier”. (Pg. 5)
The bargaining power of Kohl’s suppliers seems substantially low. With 1’127 stores in operation and $18,800,000,000 in net sales for the 2011 fiscal year, Kohl’s becomes not only an attractive account, but a life source for some of the smaller manufactures. This in turn leads to fierce rivalry amongst suppliers, allowing Kohl’s to benefit. For added security, Kohl’s diversifies their supplier relationships and shies away from commitment. This strategy not only gives them more protection from stock outs, it also allows them to be more flexible with future decisions. To be a supplier for Kohl’s, you must strictly comply with their Terms of Engagement and immediately resolve any deficiencies, in order to maintain a business relationship.
2. Political
“Consumer confidence is also affected by the domestic and international political situation. The outbreak or escalation of war, or the occurrence of terrorist acts or other hostilities in or affecting the United States, could lead to a decrease in spending by consumers”. (Pg. 7) Many Americans are concerned with their safety and are truly uncertain where this country is heading. Gun and ammo sales have skyrocketed following recent terrorist events. Much of the extra disposable income is now unavailable for a trip to Kohl’s. I