J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old
In his August 2012 earnings call, CEO Ron Johnson urged investors to be patient and stay the course with the revised JC Penney marketing strategy despite mounting negative financial indicators. The heart of the strategy was the "Fair and Square" approach to pricing. This was a switch from J.C. Penney's previous high-low pricing program to a new everyday low pricing policy that aimed to fit with a radical repositioning of the JC Penney business model and brand. However, with sales continuing to decline the Board fired Johnson in April 2013 and appointed Johnson's predecessor Myron E. "Mike" Ullman III as his successor. What would Ullman do to stop JC Penney's losses? Would he push forward with Johnson's "Fair and Square" vision; would he return to the former strategy; could he manage a hybrid strategy; or would he define a new path for the retailer to follow?
Swot Analysis of "J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old" written by Elie Ofek, Jill Avery, Jose B. Alvarez includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Jc Penney's facing as an external strategic factors. Some of the topics covered in J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old case study are - Strategic Management Strategies, Change management, Customers, Decision making, Pricing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old casestudy better are - – geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, increasing transportation and logistics costs, technology disruption, competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices,
challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Jc Penney's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Jc Penney'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's 'Fair and Square' Strategy (B): Out with the New, In with the Old can be done for the following purposes –
1. Strategic planning using facts provided in J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old case study
2. Improving business portfolio management of Jc Penney'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 Jc Penney's
Strengths J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Jc Penney's in J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old Harvard Business Review case study are -
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Jc Penney's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Jc Penney'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
– Jc Penney's is one of the most innovative firm in sector. Manager in J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Jc Penney's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Jc Penney's 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 Jc Penney's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Jc Penney's has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Ability to recruit top talent
– Jc Penney's is one of the leading recruiters in the industry. Managers in the J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Sales & Marketing field
– Jc Penney's 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 Jc Penney's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Jc Penney's is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Jc Penney's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Jc Penney's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Jc Penney'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.
Sustainable margins compare to other players in Sales & Marketing industry
– J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old firm has clearly differentiated products in the market place. This has enabled Jc Penney's to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Jc Penney's to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Jc Penney's 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 J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Jc Penney's is present in almost all the verticals within the industry. This has provided firm in J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old 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.
Weaknesses J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old are -
Interest costs
– Compare to the competition, Jc Penney'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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old 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 Jc Penney's has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old HBR case study mentions - Jc Penney's takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old, is just above the industry average. Jc Penney's needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow decision making process
– As mentioned earlier in the report, Jc Penney'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. Jc Penney'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.
Skills based hiring
– The stress on hiring functional specialists at Jc Penney's has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Jc Penney's 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.
Aligning sales with marketing
– It come across in the case study J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old 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's 'Fair and Square' Strategy (B): Out with the New, In with the Old can leverage the sales team experience to cultivate customer relationships as Jc Penney's is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Jc Penney's, firm in the HBR case study J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Jc Penney'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 operating costs
– Compare to the competitors, firm in the HBR case study J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old 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 Jc Penney's 's lucrative customers.
Opportunities J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old | 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's 'Fair and Square' Strategy (B): Out with the New, In with the Old are -
Better consumer reach
– The expansion of the 5G network will help Jc Penney's to increase its market reach. Jc Penney'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.
Using analytics as competitive advantage
– Jc Penney's has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Jc Penney's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Jc Penney'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.
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. Jc Penney's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Jc Penney'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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Jc Penney's can use these opportunities to build new business models that can help the communities that Jc Penney's operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Developing new processes and practices
– Jc Penney'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.
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 Jc Penney's in the consumer business. Now Jc Penney's can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Jc Penney's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Jc Penney's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Jc Penney'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.
Building a culture of innovation
– managers at Jc Penney's 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Jc Penney's 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.
Threats J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old 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's 'Fair and Square' Strategy (B): Out with the New, In with the Old 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 J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old, Jc Penney'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 .
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. Jc Penney's 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.
Consumer confidence and its impact on Jc Penney's 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.
Increasing wage structure of Jc Penney'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 Jc Penney's.
Shortening product life cycle
– it is one of the major threat that Jc Penney's is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Jc Penney's needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
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.
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 Jc Penney's in the Sales & Marketing sector and impact the bottomline of the organization.
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
– Jc Penney'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.
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 Jc Penney's.
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 Jc Penney's business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Jc Penney's has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Jc Penney'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.
Weighted SWOT Analysis of J.C. Penney's 'Fair and Square' Strategy (B): Out with the New, In with the Old 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's 'Fair and Square' Strategy (B): Out with the New, In with the Old 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's 'Fair and Square' Strategy (B): Out with the New, In with the Old 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's 'Fair and Square' Strategy (B): Out with the New, In with the Old 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's 'Fair and Square' Strategy (B): Out with the New, In with the Old 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 Jc Penney's needs to make to build a sustainable competitive advantage.