J. C. Penney: The "Think Big" Strategy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of J. C. Penney: The "Think Big" Strategy
This case is used in Darden's required EMBA first-year Marketing course. It can also be used in course modules covering Pricing or Brand Management. In the case. a financial analyst considers a presentation by an investor in J. C. Penney and the implications of the company's turnaround strategy. This case provides an alternative approach to the market positioning discussion in the two-part case, "J. C. Penney: Reinventing Fair and Square Deals (A and B)" (UVA-M-0835 and UVA-M-0836). It includes the views of the CEO of Pershing Square Capital Management, who holds more than 18% of the company's stock and believes the company is poised for a major turnaround.
Authors :: Sylvie Thompson, Paul W. Farris, Ronald T Wilcox
Swot Analysis of "J. C. Penney: The "Think Big" Strategy" written by Sylvie Thompson, Paul W. Farris, Ronald T Wilcox includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Penney Uva facing as an external strategic factors. Some of the topics covered in J. C. Penney: The "Think Big" Strategy case study are - Strategic Management Strategies, and Sales & Marketing.
Some of the macro environment factors that can be used to understand the J. C. Penney: The "Think Big" Strategy casestudy better are - – increasing government debt because of Covid-19 spendings, wage bills are increasing, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion,
increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of J. C. Penney: The "Think Big" Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in J. C. Penney: The "Think Big" Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Penney Uva, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Penney Uva 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: The "Think Big" Strategy can be done for the following purposes –
1. Strategic planning using facts provided in J. C. Penney: The "Think Big" Strategy case study
2. Improving business portfolio management of Penney Uva
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Penney Uva
Strengths J. C. Penney: The "Think Big" Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Penney Uva in J. C. Penney: The "Think Big" Strategy Harvard Business Review case study are -
Training and development
– Penney Uva has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in J. C. Penney: The "Think Big" Strategy 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)
– Penney Uva 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: The "Think Big" Strategy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Penney Uva in the sector have low bargaining power. J. C. Penney: The "Think Big" Strategy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Penney Uva to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Penney Uva has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Penney Uva 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.
High brand equity
– Penney Uva has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Penney Uva to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Sales & Marketing field
– Penney Uva 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 Penney Uva in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Penney Uva 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 Sylvie Thompson, Paul W. Farris, Ronald T Wilcox 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.
Organizational Resilience of Penney Uva
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Penney Uva does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Penney Uva is one of the leading recruiters in the industry. Managers in the J. C. Penney: The "Think Big" Strategy are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Penney Uva has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in J. C. Penney: The "Think Big" Strategy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Penney Uva is one of the most innovative firm in sector. Manager in J. C. Penney: The "Think Big" Strategy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Penney Uva is present in almost all the verticals within the industry. This has provided firm in J. C. Penney: The "Think Big" Strategy 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: The "Think Big" Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of J. C. Penney: The "Think Big" Strategy are -
Capital Spending Reduction
– Even during the low interest decade, Penney Uva 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study J. C. Penney: The "Think Big" Strategy, is just above the industry average. Penney Uva 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.
Need for greater diversity
– Penney Uva 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.
Slow decision making process
– As mentioned earlier in the report, Penney Uva has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Penney Uva 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.
Low market penetration in new markets
– Outside its home market of Penney Uva, firm in the HBR case study J. C. Penney: The "Think Big" Strategy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study J. C. Penney: The "Think Big" Strategy, in the dynamic environment Penney Uva has struggled to respond to the nimble upstart competition. Penney Uva has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Penney Uva is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Penney Uva needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Penney Uva to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Penney Uva is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study J. C. Penney: The "Think Big" Strategy can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study J. C. Penney: The "Think Big" Strategy, it seems that the employees of Penney Uva 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 cash cycle compare to competitors
Penney Uva 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 Penney Uva supply chain. Even after few cautionary changes mentioned in the HBR case study - J. C. Penney: The "Think Big" Strategy, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Penney Uva vulnerable to further global disruptions in South East Asia.
Opportunities J. C. Penney: The "Think Big" Strategy | 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: The "Think Big" Strategy are -
Manufacturing automation
– Penney Uva can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Loyalty marketing
– Penney Uva 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Penney Uva 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Penney Uva can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Penney Uva can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Penney Uva 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Penney Uva 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 Penney Uva to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Penney Uva 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.
Using analytics as competitive advantage
– Penney Uva 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: The "Think Big" Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Penney Uva to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Penney Uva has opened avenues for new revenue streams for the organization in the industry. This can help Penney Uva to build a more holistic ecosystem as suggested in the J. C. Penney: The "Think Big" Strategy case study. Penney Uva can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Penney Uva can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. J. C. Penney: The "Think Big" Strategy 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Penney Uva 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.
Leveraging digital technologies
– Penney Uva 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.
Threats J. C. Penney: The "Think Big" Strategy 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: The "Think Big" Strategy 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. Penney Uva 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
– Penney Uva 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.
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. Penney Uva 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.
Technology acceleration in Forth Industrial Revolution
– Penney Uva has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Penney Uva 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.
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: The "Think Big" Strategy, Penney Uva 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 .
Regulatory challenges
– Penney Uva 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.
Consumer confidence and its impact on Penney Uva 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.
Stagnating economy with rate increase
– Penney Uva 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.
Increasing wage structure of Penney Uva
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Penney Uva.
Environmental challenges
– Penney Uva 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. Penney Uva can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Penney Uva.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Penney Uva business can come under increasing regulations regarding data privacy, data security, etc.
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.
Weighted SWOT Analysis of J. C. Penney: The "Think Big" Strategy 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: The "Think Big" Strategy 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: The "Think Big" Strategy 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: The "Think Big" Strategy 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: The "Think Big" Strategy is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Penney Uva needs to make to build a sustainable competitive advantage.
