Research Paper: J.C. Penney News Is Bigger

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[. . .] It boasts having a transparent supply chain, a commitment to recycling, and refuses to buy ethically tainted 'blood diamonds' for its jewelry lines (Corporate social responsibility, 2013, J.C. Penney).

Legal environment

Legal conflicts with suppliers have brought negative publicity to Penney; there was also a lawsuit regarding the conflict of interest of Martha Stewart when she attempted to launch a new brand at Penney, to which Macy's (which already had a relationship with Stewart) objected (Thau 2013:2).

Technological environment

Technologically, Penney was an early entrant into the online market but has failed to capitalize upon this first-mover status. Also, online retailers such as Amazon offer competition in terms of offering greatly discounted merchandise.

Organization's mission/vision and goals

Mission

J.C. Penney recently rewrote its mission statement to read that the "J. C. Penney Company, Inc. (NYSE: JCP), one of the nation's largest apparel and home furnishing retailers, is undergoing a resurgence to become America's preferred retail destination for unmatched style, quality and value. Across 1,100 stores and at jcp.com, customers will discover an inspiring shopping environment that features the most sought-after collection of private, national and exclusive brands and attractions" (About us, 2013, J.C. Penney).

Its appropriateness and relevance to organizational history and environment

This mission statement is designed to be commensurate with the 'old' company's emphasis on delivering value to consumers while emphasizing the fact that it newly capable of offering style and also adapting to the online environment.

Organization's strategy

Its relationship with organizational goals and mission/vision

Penney is attempting to create new-found brand loyalty in younger consumers, as part of its objective to reinvent itself as a more youth-focused entity that offers shoppers a distinct 'reason' to choose Penney. One of its most recent CEOs, Ron Johnson, who was widely praised for its retailing efforts at Apple "abruptly scrapped JCPenney's dubious pricing policies of marking up prices and then offering discounts, with heavy promotions, and coupons. He proposed to offer more interesting products, from lines like Martha Stewart and Joe Fresh, at reasonable prices all the time" (Denning 2013).

Its relationship with the environment in which organization exists

Johnson's strategy was called a failure because "the change in pricing occurred with merchandise that was already in stores and that customers were used to, rather than on brand-new merchandise. The approach didn't fare well with Penney's customer base of bargain hunters. They rebelled, traffic declined, sales fell and Penney slowly returned to the prior era of pricing, with lots of promotions, lots of price-focused ads, and marked-up prices that would be later marked down" (Denning 2013). However, although the new strategy may have not brought in new revenue initially, overall many outside analysts believe Penney should have continued with Johnson's approach, given that branding is so important to young people today: defining one's self as a brand is a critical component of adolescent and twentysomething self-definition.

Organizational structure

Appropriateness of structure to the environment, objectives, and strategy

Penney is a rather consolidated company: it only encompasses the department stores and the recently-acquired Foundry Big & Tall Supply Co. stores (J.C. Penney, 2013, Yahoo finance). This can be problematic, given the emphasis on a single market niche (clothing and housewares) in a competitive organizational environment although it is compatible with the company's domestic-focused strategy.

Organizational culture

The personality of J.C. Penney is often called rather conservative and attempts to uphold the original, core values and beliefs and values of the founder. "Reportedly Penny's genuine desire to treat customers well and provide them with a valuable service was a personal priority which he also made the jcpenney company mission, and the growth of the jcpenney company was an organic result of that" (Farfan 2013). However, lately there has been an increasingly strong emphasis on profit-making, as noted by Ron Johnson's swift dismissal when his organizational philosophy of emphasizing high-demand brands resulted in losses rather than gains in the short-term.

The rules for behavior and language may be customer-focused and technologically literate, but ultimately J.C. Penney, despite this language, has shown a greater emphasis on the 'rules' of profitability rather than creating a new organization that is 'built to last.' At present, Penney has a paucity of important rituals, symbols, and artifacts to create long-lasting relationships with either employees or customers because of its lack of a clear sense of mission -- it is not sure if it wants to emphasize deep discounts or a unique brand quality and hovers in the deadly 'mid-range' of marketing clothes, neither the cheapest nor the most stylish in relation to its competitors

SWOT Analysis

Strengths

J.C. Penney has a long-standing reputation as a company. Consumers are hungry for deals, and Penney's has a reputation as a cheaper retailer. It is located in many malls across the United States, which gives it a consumer base of automatic foot traffic.

Weakness

Penney currently has a very weak brand definition. It is not a 'hip' and cool brand like Target. Nor does it have a reputation as 'the' cheapest place to purchase items like Wal-Mart. Unless a business can operate on a vast economy of scale like Wal-Mart, it can be extremely challenging to emphasize price above quality and find a niche demographic, given that Wal-Mart and other discount retailers can always place downward pressure on prices.

Opportunities

Given that the economy is still shaky, more consumers may be open to shopping at Penney. In the popular media and in style, there is also a certain degree of nostalgia for vintage and retro looks and Penney could capitalize upon this.

Threats

Wal-Mart's pricing and Target's fun image continue to threaten Penney's from a brick-and-mortar perspective. Online, there is a great deal of downward price pressure from all retailers because of consumer's ability to price-shop. Amazon in particular has cultivated a strong relationship with its customer base through services such as Amazon Prime. Malls, where many Penney stores are located, are also under increasing threat as 'anchor stores. "In the old days, mall economics were so simple: Plunk down two big department stores as anchors and sandwich smaller shops in between. Open doors. But the past 20 years, the draw of the major department store has begun to erode, with many sold or shuttered as aging malls struggled to modernize" (Moore 2012).

Recommendations Based on the SWOT Analysis

Although Deming's strategy was problematic in its execution, ultimately his higher aim seems to be in the right place: "Make J.C. Penney a leader in style with good products and honest business practices" (Denning 2013). Delight customers and offer something unique. This uniqueness can be low-priced, but Penney is not equipped to compete with Wal-Mart on price alone on an economy of scale. The company must define 'who it is' for the future beyond price.

References

About us. (2013). J.C. Penney. Retrieved:

http://ir.jcpenney.com/phoenix.zhtml?c=70528&p=irol-homeprofile

Corporate social responsibility. (2013). J.C. Penney. Retrieved:

http://ir.jcpenney.com/phoenix.zhtml?c=70528&p=irol-govCSR

Denning, S. (2013). Was Ron Johnson's strategy wrong? Forbes. Retrieved:

http://www.forbes.com/sites/stevedenning/2013/04/09/j-c-penney-was-ron-johnsons-strategy-wrong/

Farfan, B. (2013). Good J.C. Penny news. About.com. Retrieved:

http://retailindustry.about.com/b/2013/09/16/good-j-c-penney-news-is-bigger-than-lawsuit-decisions-revenue-losses-and-resignations-mark-cubans-stock-purchase-is-better-than-money-for-j-c-penneys-recovery-jcp-mso.htm

History timeline JCP. (2013). J.C. Penney website. Retrieved:

http://jcp.tcgdevbox.com/jcpenney-Media-Room/jcp-Facts/History-Timeline

J.C. Penney. (2013). Yahoo finance. Retrieved: http://biz.yahoo.com/ic/105/105457.html

Moore, J. (2012). Department stores past their prime as retail anchors. Star Tribune. Retrieved:

http://www.startribune.com/housing/commercial/136917203.html

Petro, G. (2013). J.C. Penney: Are you listening? Forbes. Retrieved:

http://www.forbes.com/sites/gregpetro/2013/06/19/jc-penney-are-you-listening/

Stock, K. (2013) J.C. Penney's customers are older, poorer, than you once thought.

BusinessWeek. Retrieved: http://www.businessweek.com/articles/2013-04-10/j-dot-c-dot-penneys-shoppers-are-older-poorer-than-you-thought

Thau, B. (2013). Amid J.C. Penney's ongoing drama, retailer manages to alienate suppliers too.

Forbes. Retrieved: http://www.forbes.com/sites/barbarathau/2013/09/27/amid-j-c-penneys-ongoing-drama-retailer-manages-to-alienate-suppliers-too/ [END OF PREVIEW]

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