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Transcript of J.C. Penney
Strategy Involves Creating a “fit” Among Activities
Johnson’s employees were not ready for this new strategy. His innovations were too radical for the employees to follow and support. Ending discount sales in a department store known for discounts and markdowns was an interesting idea, but he DIDN’T TEST IT adequately. Johnson was not knowledgeable of what would delight customers – particularly women – in the “thrill of the hunt” for finding bargains. People like to feel like they are saving money with sales, regardless of if they are actually saving money.
Strategy Requires Trade-offs in Competing
What strategy to follow and what NOT to follow… When Johnson took over as CEO, he didn’t like the sale/discount nature of the store. Was this strategy not working or was it not what Johnson wanted? He wanted to reposition a low-end bargain department store as a high-end high-style store. This was a very bold strategy and was poor in execution.
Strategy is the Creation of a Unique and Valuable Position
JCPenny focused on the “broad needs, many customers” sector of this category. The store carries many brands and many kinds of items (including: clothing for all ages, shoes, cosmetics, accessories, home and bath, and bedroom items). CEO Johnson’s idea was to restructure the store into a boutique-like “mall inside a mall” to replace overcrowded clothing racks. This appeared to be a unique idea, the timing was just not right. Johnson also had the idea of creating a “town square” in the high-traffic center of the store to rotate attractions and services to stand out and be unique.
J.C. Penney's Strategy
JC Penny’s plans to reduce their number of promotions and to lower the initial prices of items by about 40%. The want to make the stores more inviting, highlight brand names and gain more control over pricing.
Case Study - Group 4
Kendal Fifield, Sarah Clark,
Don Huntley, Cody Russell
"JC Penney is executing a strategic Long Range Plan that consists of four integrated strategies aimed at building a deeper, more enduring relationship with our customers, increasing the engagement and retention of our Associates, and delivering industry leading financial performance to our shareholders.".
The grand strategy was to overhaul the entire department store format to try and “lure” customers/buyers back into JC Penney stores.
Formulate Strategic Plans
• Make stores more inviting
• Highlight brand names
• Have more control on product pricing
• Reduce the number of promotions
• Have less private labels
• Make a “Town-Square” in the middle of every store
Establish Grand Strategy
Carrying Out Strategic Plan
To carry out his plan he was spending eighty million a month on the plan to overhaul the store layouts. He also tried to cut back out all the private brands to try and sell only a few “strong/leading” brands.
Maintain Strategic Control
He did a poor job of maintaining strategic control because as of April the JC Penney board of directors voted him out of the chair.
o Partnered with fashion line MANGO
and the cosmetic line Sephora
o The name of JC Penneys
o High prices
o Store often criticized as dowdy
o New CEO with new ideas
o Getting rid of out-house
o The Market
o Other stores – Kohls, Macy, etc
Four Competitive Strategies
1. Cost-Leadership Strategy:
Keeping Costs & Prices Low for a Wide Market
2. Differentiation Strategy:
Offering a Unique & Superior Value for a Wide Market
3. Cost-Focus Strategy:
Keeping Costs & Prices Low for a Narrow Market
4. Focuses-Differentiation Strategy:
Offering Unique & Superior Value for a Narrow Market
The cost-leadership strategy is to keep the costs, and hence the prices, of a product or service below those of competitors and to target a wide market.
What is the greatest takeaway from this case in terms of strategic management?
The third step of the five steps of the strategic-management process, is formulate strategic plans. Strategy formulation is the process of choosing among different strategies and altering them to best fit the organization’s needs.