J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future 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 (C): Back to the Future
Rehired in April 2013, Myron E. "Mike" Ullman III was brought back to stabilize the retailer's business. Under Ron Johnson's "Fair and Square" program, sales had declined rapidly and quarterly losses and expensive capital investments had put severe pressure on cash reserves. Ullman decided to combine "Fair and Square" everyday low pricing and high/low pricing to reverse the negative trend. For example, to welcome people back to its stores, J.C. Penney ran deep discount sales for Mother's Day and Veteran's Day. By November 2013 the retail stores posted positive sales comparisons year over year, the first time since December 2011. However, margins remained low and Wall Street was wondering if J.C. Penney was sacrificing margin to drive store traffic. Would 2013 holiday sales be strong enough for J.C. Penney to begin building stronger margins? Would another strategy have been more effective? Did the board dispose of Johnson too quickly? Was it wise to bring back Ullman? Can J.C. Penney get back on its feet?
Swot Analysis of "J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future" 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 J.c Penney facing as an external strategic factors. Some of the topics covered in J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future case study are - Strategic Management Strategies, Business models, 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 (C): Back to the Future casestudy better are - – supply chains are disrupted by pandemic , increasing household debt because of falling income levels, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, increasing commodity prices, geopolitical disruptions,
challanges to central banks by blockchain based private currencies, wage bills are increasing, etc
Introduction to SWOT Analysis of J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future
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 (C): Back to the Future 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 J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future can be done for the following purposes –
1. Strategic planning using facts provided in J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future 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 J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of J.c Penney in J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of J.c Penney in the sector have low bargaining power. J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps J.c Penney to manage not only supply disruptions but also source products at highly competitive prices.
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 J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
Cross disciplinary teams
– Horizontal connected teams at the J.c Penney are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to recruit top talent
– J.c Penney is one of the leading recruiters in the industry. Managers in the J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– J.c Penney is one of the most innovative firm in sector. Manager in J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
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 Elie Ofek, Jill Avery, Jose B. Alvarez 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.
Learning organization
- J.c Penney 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 J.c Penney is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future Harvard Business Review case study emphasize – knowledge, initiative, 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.
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.
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.
Weaknesses J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future | 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 (C): Back to the Future are -
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 - J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future, 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.
Capital Spending Reduction
– Even during the low interest decade, J.c Penney 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.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future, 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 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 (C): Back to the Future 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 J.c Penney has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future 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 (C): Back to the Future can leverage the sales team experience to cultivate customer relationships as J.c Penney is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future HBR case study mentions - J.c Penney 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.
High operating costs
– Compare to the competitors, firm in the HBR case study J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future 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.
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 J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future, 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.
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 J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future | 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 (C): Back to the Future are -
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.
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.
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.
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, J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future 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.
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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, J.c Penney can use these opportunities to build new business models that can help the communities that J.c Penney operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
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.
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 J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future 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.
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.
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.
Threats J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future 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 (C): Back to the Future 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.
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.
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 (C): Back to the Future, 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 .
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.
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.
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 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.
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.
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.
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.
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.
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.
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.
Weighted SWOT Analysis of J.C. Penney's 'Fair and Square' Strategy (C): Back to the Future 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 (C): Back to the Future 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 (C): Back to the Future 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 (C): Back to the Future 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 (C): Back to the Future 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.
