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 - – talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, cloud computing is disrupting traditional business models,
digital marketing is dominated by two big players Facebook and Google, technology disruption, 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 -
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.
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.
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.
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.
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.
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.
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.
Innovation driven organization
– J.c Penney is one of the most innovative firm in sector. Manager in Ron Johnson: Retail at Target, Apple, and J.C. Penney Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
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.
Organizational Resilience of J.c Penney
– The covid-19 pandemic has put organizational resilience at the centre of everthing that J.c Penney does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
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 -
Low market penetration in new markets
– Outside its home market of J.c Penney, firm in the HBR case study Ron Johnson: Retail at Target, Apple, and J.C. Penney needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Ron Johnson: Retail at Target, Apple, and J.C. Penney, in the dynamic environment J.c Penney has struggled to respond to the nimble upstart competition. J.c Penney has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study Ron Johnson: Retail at Target, Apple, and J.C. Penney 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 J.c Penney '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 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, J.c Penney is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Ron Johnson: Retail at Target, Apple, and J.C. Penney can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
No frontier risks strategy
– After analyzing the HBR case study Ron Johnson: Retail at Target, Apple, and J.C. Penney, 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.
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.
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.
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.
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 -
Better consumer reach
– The expansion of the 5G network will help J.c Penney to increase its market reach. J.c Penney 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 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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for J.c Penney in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
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.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for J.c Penney to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for J.c Penney to hire the very best people irrespective of their geographical location.
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.
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.
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.
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.
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.
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 -
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 .
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 J.c Penney business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
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.
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.
Regulatory challenges
– J.c Penney 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, J.c Penney can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Ron Johnson: Retail at Target, Apple, and J.C. Penney .
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.
Environmental challenges
– J.c Penney needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. J.c Penney can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. J.c Penney needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
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.
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.
