J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson
The case study is set in 2012 and 2013. J.C. Penney is a venerable American institution, one of the last surviving department store chains. But it has suffered from "profitless prosperity"--good "top line" (revenue) but great difficulty in bringing much to the "bottom line" (net income). Additionally, competition from specialty retailers has led Penney's to abandon certain lines of business (such as automotive repair) and face intense competition in other categories (wear-to-work clothing and household goods). The case study discusses the hiring of Ron Johnson from Apple in 2011 and the aftermath of Johnson's new strategy of a "curated collection of 100 brands" and change in pricing strategy from frequent sales to everyday low pricing. The case study also shows the aftermath of Johnson's strategy which was not positive.
Swot Analysis of "J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson" written by David Robinson includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Penney Johnson's facing as an external strategic factors. Some of the topics covered in J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson case study are - Strategic Management Strategies, Leadership, Pricing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson casestudy better are - – supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation,
increasing transportation and logistics costs, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Penney Johnson's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Penney Johnson's operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson can be done for the following purposes –
1. Strategic planning using facts provided in J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson case study
2. Improving business portfolio management of Penney Johnson's
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Penney Johnson's
Strengths J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Penney Johnson's in J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson Harvard Business Review case study are -
Highly skilled collaborators
– Penney Johnson's has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Penney Johnson's is present in almost all the verticals within the industry. This has provided firm in J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Penney Johnson's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Penney Johnson's has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Innovation driven organization
– Penney Johnson's is one of the most innovative firm in sector. Manager in J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Penney Johnson's is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by David Robinson can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Training and development
– Penney Johnson's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Sustainable margins compare to other players in Sales & Marketing industry
– J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson firm has clearly differentiated products in the market place. This has enabled Penney Johnson's to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Penney Johnson's to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Penney Johnson's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Penney Johnson's has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Superior customer experience
– The customer experience strategy of Penney Johnson's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Penney Johnson's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Penney Johnson's in the sector have low bargaining power. J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Penney Johnson's to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Penney Johnson's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Penney Johnson's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson are -
No frontier risks strategy
– After analyzing the HBR case study J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Capital Spending Reduction
– Even during the low interest decade, Penney Johnson's has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow decision making process
– As mentioned earlier in the report, Penney Johnson's has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Penney Johnson's even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Need for greater diversity
– Penney Johnson's has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Penney Johnson's has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Penney Johnson's has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Increasing silos among functional specialists
– The organizational structure of Penney Johnson's is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Penney Johnson's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Penney Johnson's to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Penney Johnson's has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– It come across in the case study J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson can leverage the sales team experience to cultivate customer relationships as Penney Johnson's is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Penney Johnson's 's lucrative customers.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Penney Johnson's supply chain. Even after few cautionary changes mentioned in the HBR case study - J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Penney Johnson's vulnerable to further global disruptions in South East Asia.
Opportunities J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson are -
Loyalty marketing
– Penney Johnson's has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Penney Johnson's in the consumer business. Now Penney Johnson's can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Penney Johnson's can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Penney Johnson's can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Penney Johnson's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Penney Johnson's can use these opportunities to build new business models that can help the communities that Penney Johnson's operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Better consumer reach
– The expansion of the 5G network will help Penney Johnson's to increase its market reach. Penney Johnson's will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Learning at scale
– Online learning technologies has now opened space for Penney Johnson's to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Penney Johnson's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Penney Johnson's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Penney Johnson's is facing challenges because of the dominance of functional experts in the organization. J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Creating value in data economy
– The success of analytics program of Penney Johnson's has opened avenues for new revenue streams for the organization in the industry. This can help Penney Johnson's to build a more holistic ecosystem as suggested in the J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson case study. Penney Johnson's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Penney Johnson's to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Threats J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson are -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Penney Johnson's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Penney Johnson's has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Penney Johnson's needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Stagnating economy with rate increase
– Penney Johnson's can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Penney Johnson's business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Penney Johnson's needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Penney Johnson's in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Penney Johnson's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson, Penney Johnson's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Increasing wage structure of Penney Johnson's
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Penney Johnson's.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Penney Johnson's.
Shortening product life cycle
– it is one of the major threat that Penney Johnson's is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of J. C. Penney: Activist Investors and the Rise and Fall of Ron Johnson is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Penney Johnson's needs to make to build a sustainable competitive advantage.
