JCPenney Company Analysis

Published: 2021-07-06 06:24:42
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Executive SummaryThe purpose of this study is to examine a company named ‘JCPenney” which is known as one of the market leaders in America for its superior services. This report will provide a thorough analysis of the external and internal factors contributing to the success of the firm and will also provide various recommendations on how it can improve its strategy to attract more and more customers and generate more revenue.Company HistoryBackgroundThe company in view was inaugurated in by James Cash Penney as retailer store of goods in 1992. It is now famous all over America for its vast chain of departmental stores all across the country. The company includes a broad range of products including outfits, makeup items, electronics, shoes, furniture, kitchen equipment and all sorts of jewelry items. JCPenney also has a lot of individual departments like Sephora Makeup, optical centers, Seattle’s Best Coffee and various picture studios, along with repair shops for jewelry and registry outlets for wedding ceremonies, etc. The company mainly operates in the USA and Puerto Rico with 1,107 stores.Purpose of the studyThe theme of the report is to find out how the external and internal environmental factors like the company’s competitors, suppliers, and customers along with its employees and senior management shape up its success in the market. The study will provide some recommendations for the industry after analyzing these factors to help make the company more successful in the long run.External AnalysisGeneral Environmental AnalysisDemographic SegmentThe primary target population are women especially mothers in the age group 35 to 45, with a family of 3+ members and belonging to middle-to-low class families.Economic SegmentThe clothing and departmental stores were hurt the most after the recession period. The Bureau of Economic Analysis (BEA) states that the individual proceeds, private consumption payments in the United States were at the improved amount of 0.4% in June 2014. It is a clear evidence of enhanced consumer expenditure patterns which can pose a change towards the procurements of products and triumph of the company.Political/Legal SegmentThe company’s associates are responsible and have an individual liability in case of breaching any laws. The company follows all standards for ensuring a better and safer environment and associated health and well-being concerns for individuals.Socio-Cultural SegmentConsumers all over the world are moving towards online and mobile based shopping owing to ease of use and time-saving. JCPenney in that regard has launched a mobile app for its online store, but it has failed to capture consumer’s interests.Technological SegmentJCPenney tries to capture all the target customers both online and via retail stores. By offering a mobile purchasing policy to its customers, JCPenney can extend its reach to thousands of clients. The also provides discounts and sale promotions on online purchases, thus enabling it to attract new and more buyers.Summary of General Environment AnalysisThe PESTEL forces can help pave the path for JCP stores if incorporated in the main strategies of the business.Industry AnalysisDescription of the IndustryThe company has a vast web of stores spread all across the country. However, the increasing needs of the customers have shaped the narrow range of the retails stores into four different categories like Specialty stores, Department stores, Seasonal retailers and Discount Stores, etc.Market SizeThe main market segments are inner-city and peripheral areas of the Midwest U.S. with an estimated number of around 100,000 people.Market Growth RateThe company has a better ratio of 1.7 concerning its competitors. Having a current increased ratio as compared to its competitor shows that the business has a sturdier financial situation. The current assets are estimated to be around $4,833 million, with an improvement of 31.2%. Its current liabilities are estimated to be around $2,846 million. The company has a robust cash and liquidity spot which proves a strong suit for it when investing in any probable prospects.Industry TrendsThe biggest trends in the retail stores industry in 2010 are known to be:Stinginess and cognizant consuming patternsHeed towards environmental safe products and services, green amenities, and environmental preservation activities are immensely advertised and focused on by the U.S. retailers, attracting more customers.Integrating of latest technology including web-based shopping to cater to the needs of newer demographics.State of the art inventory management systems in retail stores for efficient warehouse managementPop-up retailingFive Forces AnalysisThreat of New EntrantsWith technological advancements, the risk is high since many local manufacturers offer similar products at a lower cost online without incurring the costs of warehousing and selling and distribution networks.Power of SuppliersThe company has around 2,700 local and overseas suppliers and aims to control the quality of its products and services by internationally purchasing subsidiary. The company further has various quality assurance offices in 11 different countries.Power of BuyersSome of the consumers enjoy shopping according to seasonal trends while some prefer buying off-season to avail sale lineups. These consumers tend to purchase thing in bulk for added significance. They are also the ones who focus on buying products through different deals and offers.Intensity of rivalryThe main rivals like Kohl and Macy have identical characteristics offering the similar prices and promotional activities to the JCP stores. However, a difference the Kohl stores lack sheer customer facility networks like the JCP stores. Macy’s offers some of the high end commodities as well along with focusing on its famous brand image to appeal to the buyers. Macy’s also has a primary location and access to sponsored programs through which it tries to take up more customers. JCP has a historical base too, but it lacks access to sponsored events.Industry CompetitorsThe primary competitors of the JCPenney include Macy’s Inc. and Kohl’s. Looking at the profitability ratios of the past three years, the toughest opponent was Macy’s when it comes to improved revenues and sale proceedings.Rivals Anticipated Strategic MovesSome of the rivals like Macy’s are launching a Thanksgiving Day Parade in its retail store at the Herald Square. Macy’s lacks the improved customer service like JCP stores but is immensely popular in customers because of such activities. A supplementary force for Macy’s is that it has endorsement and marketing deals with celebs. Many of holiday advertisements of Macy’s will now target a diversity of celebrities increasing the store’s appeal to its consumers. The promotional sales for holidays are also an excellent way to attract more buyers.Summary of Five Forces AnalysisThe company should make use of all these factors to gain more and more buyers and gain an edge over its competitors.Industry Key Success FactorsInternal AnalysisOrganizational AnalysisInternally speaking the company has a combination of in-house circulation and particular dissemination categories. The company mainly operates in the USA but has headquarters at Plano, Texas. It has around 147,000 employees.Corporate MissionProducts and ServicesJCP has a combination of various international and local brands. The company mainly wants to target the power brands which will appeal to more and more customers like Sephora 11, Worthington, Ralph Lauren, Olsenboye by the Olsen twins, A.N.A, Super Girl by Nastia Liukin and I Heart Ronson by Charlotte Ronson.LeadershipThe main leaders of the company include the Chairman of the Board & CEO called Mr. Marvin R. Ellison. While the EVP of the stores is Mr. Joe McFarland, Ms. Pam Mortensen is the SVP and the GMM of Fine Jewelry and Accessories while Katheryn Burchett is the SVP of Visual Environment & Corporate Strategy.Organizational CultureOverall the organization focuses on a Low power distance where employees follow an individualistic approach. JCP has a high uncertainty avoidance at middle management while its remains small at senior management who continually try new things to innovate. The company overall focusses on a long term orientation.StructureThe hierarchy and structure of the main leads of the company are shown in the above table.StrategyThe new CEO of the company highlight working in teams and incorporating better, more emphatic Long Range Plans to pave the path for business growth. It includes changes in the enterprise resources like reformed variations in the supply chains and distribution cores. It also included using a RFID system for the operation. The strategy, in turn, would help the company keep track of all its inventory and attract more consumers.Summary of Organizational AnalysisThe active leadership of the current CEO has carefully integrated all the internal factors like the employees and the upper management to work together seamlessly to attain JCP’s goals. Analysis of Firm ResourcesTangible and Intangible ResourcesJCP’s Tangible assets are fixed assets are its manufacturing plants, the retail stores and inventory houses along with land and current assets like stock. Intangible assets include patents, trademarks, and copyrights along with the brand name. One of the best intangible resources regarded for the company is its chairman and CEO, Ron Johnson.Summary of Firms ResourcesCapabilitiesCore Competencies and Sustainable AdvantagesJCPenney’s central theme is to capture the interest of mothers especially homemakers to purchase their family items at reasonable prices. The primary skill of the company is its customer first strategy where it incorporates the use of sale promotions to attract more customers. Sale promotions enable buyers to gain the opportunity of an incentive along with motivating them to make a purchase decision they didn’t intend for.Summary of Firms capabilitiesThe company is perfectly able to design newer strategies and attract more buyers with the increasing rates of proceeds and better strategic implications by its senior management in the long run.Valuation AnalysisGrowth AnalysisProfitability AnalysisFinancial PerformanceThe past five years to the fiscal year 2015, JCPenney’s revenue reduced from 6.4% to $12.6 billion. It happened due to the recession which led to a decrease in consumer spending and buying behaviors. Along with a little revenue, the operating income also reduced. Speaking in financial terms, operating income decreased from $663 million in 2010 to $1.1 billion in fiscal 2015. It meant a 30% drop in revenue along with a direct forfeiture of $1.8 billion in past half decade.Summary of Financial AnalysisThe financial analysis shows that company can benefit by offering more value to its customers by providing various offers and discount promotions. The company can also attract more customers by providing the convenience of online shopping at the time anywhere from the web stores.Strategic Issues AnalysisCritical ChallengesThe company is known to have immensely increased rates of employee dissatisfaction and morale were found to be quite small with a very high turnover rate. The top rate of turnover is alarming since they charge the company with around one thousand dollars for every worker that leaves immediately after employee training. The cost adds up to more when the experienced workers leave. Additionally, the company only focusses on long term planning making no room for short-term planning skills.Resources and CapabilitiesJCPenney Company’s biggest attribute is how the customers are orientated. The customer first strategy of the company gives a company a significant competitive edge over its rivals since the primary focus of JCP is the needs of the client. Since, the company is following a long term approach it always welcomes new and innovative abilities with arms wide open, rendering it with a better position in the minds of the customers.Strengths or Weaknesses AnalysisThe key advantages of JCP include a state of the art supply chain, a unique selling and manufacturing approach, robust proceeds, and variety of product and services. However, the weak economic performance in the recession period and a deficiency in merchandise recall present challenges to the company. Reduced recall show product inferiority, leading to a weak brand’s image and greater operation overheads.Opportunities or Threats AnalysisThe company faces an imminent threat in the form of counterfeit products from local manufacturers along with an upsurge in workforce expenses, and continued rates of growth by its competitors. However, the rates of consumer spending in the U.S. have improved after the recession period opening up avenues of strategic investments for JCPenney.ReferencesOstlund, A. (2012). JC Penney Strategic Marketing Plan 2012: Product Strategy. Library.ndsu.edu. Retrieved 21 March 2017, from http://library.ndsu.edu/tools/dspace/load/?file=/repository/bitstream/handle/10365/19627/Alisha%20Liane%20Ostlund.pdf?sequence=1Thongkham, S. (2015). JC Penney Consumer Analysis -. Portfolios.journalism.ku.edu. Retrieved 21 March 2017, from https://portfolios.journalism.ku.edu/sookie-thongkham/2015/07/31/jc-penney/Growth, Profitability, and Financial Ratios for JC Penney Co Inc (JCP) from Morningstar.com. (2017). Financials.morningstar.com. Retrieved 21 March 2017, from http://financials.morningstar.com/ratios/r.html?t=JCPjcp investors. Ir.jcpenney.com. Retrieved 21 March 2017, from http://ir.jcpenney.com/phoenix.zhtml?c=70528&p=irol-govconduct_pfPenney, J. Org Chart JC Penney. TheOfficialBoard. Retrieved 21 March 2017, from https://www.theofficialboard.com/org-chart/jc-penneyJCPenney: What Are Its Key Strategic Priorities for Fiscal 2016? – Market Realist. (2017). Marketrealist.com. Retrieved 21 March 2017, from http://marketrealist.com/2016/03/jcpenney-key-strategic-priorities-fiscal-2016/

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