Ron Johnson: Retail at Target, Apple, and J.C. Penney SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Ron Johnson: Retail at Target, Apple, and J.C. Penney
To maximize their effectiveness, color cases should be printed in color.In April 2013, Ron Johnson (HBS '84) stepped down after just 18 months as CEO of J.C. Penney. In his brief tenure, Johnson, an acclaimed retailer respected for his innovation and success in shaping the retail image at Target and Apple, introduced dramatic departures from J.C. Penney's traditional retail approach, and enacted changes quickly and simultaneously, with little market testing. Over Johnson's final 12 months as CEO, J.C. Penney shares dropped more than 50%. The case describes the environments at Target, Apple, and J.C. Penney during Johnson's tenure and how his experiences may have shaped the strategies that he implemented while CEO at J.C. Penney.
Authors :: Das Narayandas, Kerry Herman, Lisa Mazzanti
Swot Analysis of "Ron Johnson: Retail at Target, Apple, and J.C. Penney" written by Das Narayandas, Kerry Herman, Lisa Mazzanti includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that J.c Penney facing as an external strategic factors. Some of the topics covered in Ron Johnson: Retail at Target, Apple, and J.C. Penney case study are - Strategic Management Strategies, Change management, Financial management, Innovation, Leadership, Leading teams and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Ron Johnson: Retail at Target, Apple, and J.C. Penney casestudy better are - – technology disruption, wage bills are increasing, talent flight as more people leaving formal jobs, increasing commodity prices, supply chains are disrupted by pandemic , there is backlash against globalization, geopolitical disruptions,
digital marketing is dominated by two big players Facebook and Google, increasing energy prices, etc
Introduction to SWOT Analysis of Ron Johnson: Retail at Target, Apple, and J.C. Penney
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Ron Johnson: Retail at Target, Apple, and J.C. Penney case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the J.c Penney, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which J.c Penney 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 Ron Johnson: Retail at Target, Apple, and J.C. Penney can be done for the following purposes –
1. Strategic planning using facts provided in Ron Johnson: Retail at Target, Apple, and J.C. Penney case study
2. Improving business portfolio management of J.c Penney
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 J.c Penney
Strengths Ron Johnson: Retail at Target, Apple, and J.C. Penney | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of J.c Penney in Ron Johnson: Retail at Target, Apple, and J.C. Penney Harvard Business Review case study are -
Effective Research and Development (R&D)
– J.c Penney has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Ron Johnson: Retail at Target, Apple, and J.C. Penney - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– J.c Penney is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Sales & Marketing industry
– Ron Johnson: Retail at Target, Apple, and J.C. Penney firm has clearly differentiated products in the market place. This has enabled J.c Penney to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped J.c Penney to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of J.c Penney in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For J.c Penney digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. J.c Penney 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.
High brand equity
– J.c Penney has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled J.c Penney to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Sales & Marketing field
– J.c Penney is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled J.c Penney in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– J.c Penney is present in almost all the verticals within the industry. This has provided firm in Ron Johnson: Retail at Target, Apple, and J.C. Penney 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.
Successful track record of launching new products
– J.c Penney has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. J.c Penney 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.
Highly skilled collaborators
– J.c Penney 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 Ron Johnson: Retail at Target, Apple, and J.C. Penney HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– J.c Penney 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 Das Narayandas, Kerry Herman, Lisa Mazzanti 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
– J.c Penney has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Ron Johnson: Retail at Target, Apple, and J.C. Penney 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.
Weaknesses Ron Johnson: Retail at Target, Apple, and J.C. Penney | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ron Johnson: Retail at Target, Apple, and J.C. Penney are -
Slow decision making process
– As mentioned earlier in the report, J.c Penney 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. J.c Penney 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
– J.c Penney 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Ron Johnson: Retail at Target, Apple, and J.C. Penney, it seems that the employees of J.c Penney don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Aligning sales with marketing
– It come across in the case study Ron Johnson: Retail at Target, Apple, and J.C. Penney 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 Ron Johnson: Retail at Target, Apple, and J.C. Penney can leverage the sales team experience to cultivate customer relationships as J.c Penney is planning to shift buying processes online.
High cash cycle compare to competitors
J.c Penney has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
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 J.c Penney supply chain. Even after few cautionary changes mentioned in the HBR case study - Ron Johnson: Retail at Target, Apple, and J.C. Penney, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left J.c Penney vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Das Narayandas, Kerry Herman, Lisa Mazzanti suggests that, J.c Penney is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Workers concerns about automation
– As automation is fast increasing in the segment, J.c Penney needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Interest costs
– Compare to the competition, J.c Penney 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 J.c Penney is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. J.c Penney needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help J.c Penney to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of J.c Penney products
– To increase the profitability and margins on the products, J.c Penney needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Ron Johnson: Retail at Target, Apple, and J.C. Penney | 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 Ron Johnson: Retail at Target, Apple, and J.C. Penney are -
Learning at scale
– Online learning technologies has now opened space for J.c Penney 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.
Developing new processes and practices
– J.c Penney 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, J.c Penney can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Ron Johnson: Retail at Target, Apple, and J.C. Penney, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of J.c Penney has opened avenues for new revenue streams for the organization in the industry. This can help J.c Penney to build a more holistic ecosystem as suggested in the Ron Johnson: Retail at Target, Apple, and J.C. Penney case study. J.c Penney can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at J.c Penney can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Leveraging digital technologies
– J.c Penney can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects J.c Penney can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. J.c Penney can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, J.c Penney 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, J.c Penney is facing challenges because of the dominance of functional experts in the organization. Ron Johnson: Retail at Target, Apple, and J.C. Penney 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. J.c Penney can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. J.c Penney can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
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. J.c Penney can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– J.c Penney 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.
Threats Ron Johnson: Retail at Target, Apple, and J.C. Penney External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Ron Johnson: Retail at Target, Apple, and J.C. Penney are -
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. J.c Penney can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– J.c Penney high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Ron Johnson: Retail at Target, Apple, and J.C. Penney, J.c Penney 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 .
Technology acceleration in Forth Industrial Revolution
– J.c Penney has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, J.c Penney 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.
Increasing wage structure of J.c Penney
– 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 J.c Penney.
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 J.c Penney.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for J.c Penney 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.
Shortening product life cycle
– it is one of the major threat that J.c Penney is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. J.c Penney will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Stagnating economy with rate increase
– J.c Penney 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents J.c Penney with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on J.c Penney demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for J.c Penney in the Sales & Marketing sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Ron Johnson: Retail at Target, Apple, and J.C. Penney 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 Ron Johnson: Retail at Target, Apple, and J.C. Penney 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 Ron Johnson: Retail at Target, Apple, and J.C. Penney 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 Ron Johnson: Retail at Target, Apple, and J.C. Penney 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 Ron Johnson: Retail at Target, Apple, and J.C. Penney 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 J.c Penney needs to make to build a sustainable competitive advantage.