J.C. Penny Inc. Strategic Management

Porter’s five forces

The bargaining power of the J. C Penny Suppliers

There is a high-level supplier bargaining power 1. This has a positive impact on the company as the costs of raw materials are subject to reduce. The high-level competition will, in turn, have a long-term positive influence on the J. C Penny Company. The resultant’s effect on the high competition among the suppliers is less bargaining power between the suppliers. The J. C Penny Company is, therefore, at an advantage of determining the cost of raw materials from their suppliers in order to maximize their profits. The overall effect of the less bargaining power of the J.C Penny suppliers is that it works positively for their success in the market.

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The bargaining power of the J. C Penny Customers

The products produced by the company have attracted many customers who cherish a lot the products1. Whenever the customers’ rate high the products, the particular products are subject to be on high demand that they, in turn, pay more for the specific products. This has a positive impact to J. C penny competes with retailers focused on high-end as well as low-end.

The JCP competition amongst its rivals

The J. C Penny Company is a big company that has several departments with many departments. Therefore, the company benefits from its large size1. The rivals are too many making JCP weak to manage competition with companies such as Macy’s, which is a high-end retailer.

Threat of Substitutes

With the introduction of companies that deal in the same products such as Woolworths and Wal-Mart, the company has been set in a stiff competition leading to moderate threat of substitute1. The company’s customers are likely to be faced with the high switch from JCP to other companies due to a wide range of substitutes putting JCP at an enormous threat. The store showrooms also enable customers to compare products and prices. However, it results in a significant impact; hence; the company should put more focus on offering products that will make a choice in substitutes very minimal.

The threat of new competitors

The new main competitors of JCP are Kohl’s, Macy’s and Sears1. The distribution networks of the new companies are high hence tending to affect the operations of JCP. Therefore, the company should build a strong distribution network so as significantly to counter the operations of the new companies that produce similar products. The “mom and pop” stores have been reported to resort in selling products online; otherwise, they become obsolete.

J. C. Penny’s SWOT analysis

The strengths of the company are

  • The existence of more than 1100 locations worldwide
  • Their quality products such as clothing, jewellery, beauty products and even footwear and furniture
  • The company also offers shipment of their goods for customers, which give their customers the best experience, in the end, hence attracts more customers.
  • The company also offers free haircuts for the children.

The weaknesses of JCP

Since its competitors give similar products, the company is faced with limited market share 2. International business operations have also challenged the services of JCP due to the current emerging economies worldwide.

Opportunity for JCP2

The company has an opportunity in tapping the global market in several countries with inadequate substitutes for the products that JCP deals in. The company also has the advantage of acquiring smaller retail chains; hence, expanding store location into the global markets.

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JCP threats

Recently, there has been an expansion in the industry with several companies that offer similar products arising2. This poses a great challenge for JCP as it has to cope with the introduction f similar products in the market. The long-term influence of this is a failure to control the prices of its products as the competitors would offer lower prices for the same products.

The integration of the SWOT analysis and Porter’s five force show that the company is at a situation where it will be able to prosper in the current market. The overall observation of JCP’s Porter’s five forces is that its department store industry is no doubt very competitive. Even though, the competitors offer a great challenge to the business operations of JCP, the strengths and opportunities of JCP combined with the bargaining power of its customers, but the company at the best position to counter its rivalries. Therefore, the development of other companies offering similar products is not subject to affect the operations of JCP adversely.

Corporate level strategy

The company has laid down several strategies to ensure that it fits in the ever-growing industry. These strategies have been aimed at making JCP becoming America’s chosen store. The company’s corporate-level strategy requires putting more focus on its customers, who also include the making of new and proper connections with its potential customers2. The company also plans to make its value judgment since the customers usually expect to get complete satisfaction for their money spent on the company’s products. The management has, therefore, resorted in maintaining a “high-low” pricing policy. The risk towards the implementation of this policy is that the competitors would offer lower prices with better products that would, in turn, hamper the operations of JCP. While looking comprehensively on what the strategy requires, JCP tends to match the current sales. The existing competition offered by its competitors puts the company in a state that it has to implement its corporate-level strategy in order to survive.

Business Strategy

Rebranding its products

This has been strategized in terms of advertisements, pricing policies and the way products will be presented to the customers2. The ability to increase sales and stores in America relies on customers’ preference in buying JCP products; hence; the strategy is subject to dealing with customers’ satisfaction first before addressing their expansion strategy. The ability to introduce more brands to the global market through the re-organization of the departments is seen to be a proper step to achieving the corporate strategy in globalizing the business. However, this would be hampered by stiff competition from the three major competitors.

The creation of shops

The company aims at building shops that offer the customers with relaxed shopping atmosphere2. This will motivate the customers giving the company an advantage over its competitors. This approach is fit to work best for JCP by offering a new selling strategy in the market.

The pricing strategy

The company has planned to counter the stiff competition by offering low everyday prices to the customers will also work for the company2. However, it is subject to reduced profit in the long run. Also, the financial statements show an increase in JCP financial position; hence the strategy can be held as proper hence, can help the company address its weakness and so develop on its strengths.

Conclusively, the company follows its corporate strategies; hence the match between the corporate strategies and business strategies will help the company to thrive in the ever-expanding market with numerous companies growing globally.

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Bibliography

Justin Norkaitis. J. C. Penny Presentation. Prezi. Web.

“United States security exchange Commission: Form 10-K.” Annual Report of J. C Penny Company, Inc. Web.

Footnotes

  1. Justin Norkaitis, J. C. Penny Presentation,” Prezi, Web.
  2. “United States security exchange Commission: Form 10-K,” Annual Report of J. C Penny Company, Inc, Web.
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