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Strategic Leadership Plan JC Penney Case Solution & Answer

Strategic Leadership Plan JC Penney Case Solution

Share price

The share price of the company has faced significant fluctuation in its overall tenure. The stock price has not generated significant returns for the investors in the whole year. It can be analyzed from the below mentioned graph.

Liquidity position

The liquidity position of the company is acceptable however,the sudden decline from previous year is threatening for the company. The liquidity position identifies the company’s ability to meets short-term obligations. The current ratio is used to measure the liquidity position.Here it is declined from 2.0 (2015) to 1.66 (2016). It shows that the management of the company remained ineffective in terms of managing its liquidity position.

The current ratio of the company increased from 1.69 to 2.0 from 2013 to 2014 and it again declined in 2015 (at 1.67). This indicates the inefficiency of the management in terms managing short term obligations.

Profitability position: The profitability position of the company was consistently negative since last three years. The return on equity of the company is at -25.9% due to the high cost structure of the company. The interest expense and other operating costs amount have brought the profitability to negative.

Poor sales on retail stores: The sales ratio of retail stores has fluctuated as well as it shows inefficiency among other stores. The stores of the company are not generating enough sales and their cost structure is increasing on a yearly basis.

Industry analysis

Porter’s five forces

Threat of new entrants: The threat of new entrants in this industry is low because of less regulations and lower capital requirements. This threat could lead to lower profitability of the company due to the increase in competition. Thus, the company should focus on the cost reduction techniques.

Threat of substitute goods: The threat of substitutes is low because of the nature of the products offered. Moreover, there are not many alternatives are available for these products therefore, the threat is low.

Bargaining power of supplier: The bargaining power of suppliers is low because of abundant availability of raw material and supplies required to manufacture this industry’s products. Leather is required to make footwear whereas, jewelry is made up of metals, other clothes are made from cotton etc. Every required material could be available domestically and internationally in huge quantity; therefore it leads to lower power in hands of suppliers.

Bargaining power of customers: The bargaining power of the customers is high in this industry due to the greater choice available and existence of many players. The customers’ bargaining power is high in terms of price, quality, and convenience.

Rivalry among competitors: The rivalry among competitors is high in this industry in terms of customer service primarily. Moreover, competition is also based on price, quality, and customer convenience. The players that are operating in this industry are Target Corporation, Macy’s, Dillard, Bon-Ton Stores, and Kohl’s corporation.

SWOT analysis

 Competitive landscape and its assessment

JC penny is lagging behind its competitors in terms of profitability, market share, and management efficiency.

m the above table, the existing position of JC penny can be compared with its peer groups. The ROE and ROI of the industry players are positive but JC penny’s ROI and ROE are negative.The current ratio of the company is better than Macy’s Inc. but poor than Kohl’s corporation.  Moreover, further information about the competitive position can be viewed from the porter’s five forces analysis (in rivalry among competitors section)………………………

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