Running head: J.C. PENNY STRATEGIC LEADERSHIP PLAN 1
J .C. Penny Strategic Leadership Plan
Company Overview
J.C. Penny Company Inc. (JCP) operates as a holding company in the U.S. established by James Cash Penny in 1902. Presently the company deals with home furnishings, apparel, cosmetics, jewelry, and cookware. The firm was named J.C. During the early twenty-first century; the organization operated more than 1,000 stores based in the U.S. as well as Puerto Rico. The headquarters of the company JCP are based in Plano, Texas. The company specializes in merchandise and services, which it sells to its customers in its department stores as well as its website, jcpenny.com, which utilizes applications that are optimized for mobile, desktop, and tablet devices (Reuters, 2016). The department stores of the company and its website serve similar customers while the website offers a virtual merchandise mix as in the case of the assortment at the stores in line with a broad range of other categories not found in its stores (Reuters, 2016).
Regarding the company’s mission and vision statements, the statement, “you should do to others what you would wish them to do for you, drives them. This mission played a vital role in guiding Penny as well as his workers when he used to take part in the operations of the business. In the present operations of the business, the mission statement still plays a vital role in guiding the philosophy of JCP, even though the workers of the company have adopted specific principles that guide them regarding how they should work in a collaborative manner to allow them to realize positive performance. As such, the company’s operations are guided by eight principles, which serve as JCP’s mission statement, which the present employees follow. These comprise of associated, integrity, performance, recognition, teamwork, quality, innovation, and community (Farfan, 2016). However, despite the company being in a strong position in the provision of a wide range of products and services, strong liquidity, and efficient supply chain, deteriorating profitability is a major challenge for the company in line with the changing preferences in fashion, increased competition, and rise in the costs of workforce, thus hindering the growth of the company.
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Financial Standing
Regarding financial performance, JCP reported revenues amounting to $12,257 million during the financial year that ended in January 2015, which was a rise by about 3.4 percent compared to the financial year 2014. The company’s operating loss amounted to around $342 million in the financial year 2015 while compared to a $1,534 million witnessed in the financial year 2014. Overall, the company’s net loss was approximate $771 million in 2015 while compared to a $1,388 million net loss it realized in 2015. As such, the figures indicate that the company witnessed a rise in growth in 2015 when compared to 2014 (Global Data, 2015). Based on the challenges that the company is facing, which entail changing preferences in fashion, growing competition, and rise on labor force costs, the profitability, sustainability, and growth of the company have been greatly affected. For instance, the emergence of competitors has resulted in a decline in the market share of JCP, while the changing fashion preferences have led to consumers opting to purchase products from other suppliers, thus leading to deterioration in the sales that the company is making, thus hindering growth. Therefore, a combination of these forces has led the company to witness challenges about remaining sustainable in the marketplace.
Balance Sheet: The table illustrates JP Penny consolidated balance sheet as of 31st December 2015 
Source: (JCPenny, 2015)
Cash Flow Statement: The table illustrates the cash flow statement for JP Penny as of 31 December 2015 from 2011 
Source: (JCPenny, 2015)
From the balance sheet, it reveals that the overall assets of the company declined from around $10,309 million in 2014 to approximately $9,442 million in 2015. Furthermore, from the cash flow statement, the total net sales went down from 3.4 percent in 2014 to around 3.0 percent in 2015 (JCPenny, 2015). This means that the company is witnessing challenges regarding deteriorating sales and profitability, which are negatively affecting the growth as well as sustainability of the business in the industry. As such, the company needs to focus on reinventing its operations to allow it cope with the trends taking place in the market to allow it sustain growth, profitability, and competitiveness in the marketplace.
Industry Trends
Concerning the overall industry, various forces influence the prevailing trends in the retail industry. For instance, considering the recent trends apparent in the U.S. retail industry, JCP may stand to realize benefits. Estimates reveal that retail sales in the U.S. witnessed a growth of about 2.3 percent in 2013 while it is estimated to reach around $3,327.8 billion by 2018 at a 2.4 percent CAGR between 2013 and 2018 (JCPenny, 2015). The value retailer retails sales in the country are anticipated to reach approximately $123.3 billion by 2018 growing at a 2.1 percent GAGR between 2013 and 2018, thus an indication that firms in the retail industry will realize growth and an increase in profitability during the period. Furthermore, private label products are showing increasing demand. After a period of declined economic growth, the sales of private labels have shown signs of increasing mostly because customers are shopping while on a budget. Even though price serves as the key driver of sales in the case of private labels, the improvements that have been witnessed in quality have played a vital role regarding eliminating the stigma associated with purchasing store brands (Global Data, 2015).
Despite the positive trends apparent in the retail industry, the company is set to witness some challenges, especially because of the rising costs of the labor force. In the U.S., the costs of labor have been rising in the recent years. The tightness in the labor market, as well as the mandate by the government to raise minimum wages as well as the growing number of full-time workers, have led to a rise in the costs of labor. By January 2015, the minimum wage per hour in the U.S. was at $7.3, while more than 29 states have imposed higher rates other than the ones set by the federal government. During the financial year 2015, JCP had an employee base of around 114,000 workers throughout the U.S. The company has embarked on some initiatives to grow its stores, which demand to increase the number of employees. This will mean that the stability, as well as efficiency of the company, will be greatly affected as it encounters fierce rivalry from international and local firms in the retail market regarding services, merchandise, price, and locations (Global Data, 2015).
Despite the growing challenges in the retail market, however, some opportunities are available for the company to utilize. JCP can realize benefits by focusing on the online retailing concept, which offers customers shopping convenience while at home. Based on the rise in limitless content and interactive methods, retail e-commerce is witnessing growth at a rapid pace. For instance, the Census Bureau estimated that during the initial 2015quarter, the approximate e-commerce sales realized in the U.S. amounted to more than $80.3 billion, which reflected a 3.5 percent rise compared to 2014’s fourth quarter. During the same period, the overall retail sales were approximate $1,151.2, which was a decline of 1.5 percent compared to 2014’s fourth quarter. Sales through e-commerce represented around 7 percent of the overall sales. During the initial quarter of 2015, overall retail and e-commerce sales rose by 1.4 percent and 14.3 percent respectively from the initial quarter of 2014. Therefore, since JCP markets its services and products via established websites, including jppenny.net and jcpenny.com, it stands to realize notable benefits through these platforms. For example, in 2015, the JCP invested around $31 million in its technology enterprise, allowing its sales to rise by 13.4 percent to approximately 1,225 million. Therefore, this is an indication that the company stands to witness increased sustainability, growth, and profitability by enhancing its online shops (Global Data, 2015).
While JCP wishes to witness growth in the marketplace, it needs to overcome certain constraints that seem to be hindering its growth. The profitability of the company is reducing. For example, during the financial year 2015, JCP reported operating loss amounting to $342 million compared to the $1,534 million loss it made during the financial year 2014 because of a rise in amortization and depreciation costs by around 5 percent compared to the previous year. In the financial year 2015, the company also witnessed a net loss amounting to $771 million compared to the $1,388 million net loss witnessed in 2014 because of a rise of 15.3 percent in interest expenses compared to the previous year. Here, the deteriorating profitability of JCP may end up reducing the confidence of investors, thus lead to negative effect on its prospects for growth (Global Data, 2015).
Competitive Landscape
The retail industry is becoming highly competitive particularly because of the limited entry barriers. JCP is forced to compete with national, regional, and local retailers for customers, locations, employees, services, merchandise, as well as other vital aspects of its business. The competitors comprise of discounters, department stores, specialty retailers, home furnishing stores, direct-to-consumer enterprises, and wholesale clubs, comprising of those operating on the Internet as well as other kinds of retail commerce. Certain rivals are bigger compared to JC Penny while others have significant financial resources, thus an indication that they are capable of devoting considerable resources to promoting, sourcing, selling products, as well as updating their technology and environment. The rivalry features a myriad of forces, including advertising, merchandise assortment, quality, price, location, reputation, service customer loyalty, and credit availability (JCPenny, 2015).
JCP has encountered as well as believes that it will keep experiencing in the coming future growing rivalry. The competitors performance regarding their promotional policies and pricing, customer loyalty initiatives, marketing practices, store renovations, the opening of new stores, establish mobile, and Internet platforms, operational strategies, brand launches as well as other practices will lead the company to witness declining sales (JCPenny, 2015). Others such as high expenses regarding operations, such as through selling or marketing, the decline in gross margin, administrative and general expenses will then hurt the profitability of the company significantly. The major rivals comprise of Safeway Inc., Ross Stores Inc., Bed Bath & Beyond Inc., L Brands Inc., The Gap Inc., Williams-Sonoma Inc., Staples Inc., and The Gap Inc., among others. Even though the competitors expanded to match the growth rate, it has also witnessed mergers and acquisitions form various companies, which have made increasingly difficult for JCP to remain sustainable in the marketplace (Global Data, 2015).
Addressing Organizational Challenge
Based on the present challenges that JCP is encountering in the marketplace, including increased competitiveness, changing fashion trends, and increasing costs of labor, the company needs to impose strategies that will allow it remain sustainable in the marketplace. About the issue of growing competitiveness, the company needs to focus on differentiating its products through the provision of unique products to customers as well as diversify its product portfolio to meet the needs of its broad range of clients. This will allow it to attract clients from diverse backgrounds who will facilitate in growing the business and increasing sales (Farfan, 2016). Furthermore, since web-based selling is showing prospects for growth, the company needs to direct notable attention to the platform to ensure that it gains access to the numerous clients base on the Internet. Furthermore, since the company only undertakes its operations in the U.S. and Puerto Rico, it should consider expanding its operations in different parts of the world thereby allow to cope with the pressures imposed by international rivals (Global Data, 2015).
Change Management Plan
When implementing change within JCP, one of the key areas of emphasis to consider is ensuring at all the stakeholders are on board to avoid any difficulties in reaching a consensus concerning any decisions make. For instance, the team responsible for marketing would lay notable emphasis on the acquisition of new technology while the finance team would argue that the move would result in exhaustion of resources. Since these kinds of debates end up consuming energy and time, which hinder the introduction of new strategies, the business unit should intervene to ensure that the changes are effected successfully. It can do this by aligning people with what the proposed change will bring to the organization. Aligning people and processes would facilitate in incorporating the desired changes effectively. A different way of imposing change within the company is through embarking on the evaluation of new ideas via low-cost and low-risks test. The company should not focus on heavy promotional models, but should rather emphasize starting out with small models before spreading to the entire chain to prevent any negative outcomes from spreading to the entire organization. Furthermore, although the change would require the participation of all the affected employees, the senior management should consider spearheading change and innovation process, hence move to a common direction while in agreement (Retail TouchPoints, 2016).
Unique Leadership Approach
As a leader within the organization, particularly the CEO, the ideal leadership approach to adopt would be to welcome the input from stakeholders within the organization as well as create room for consensus about the ideal decisions to implement. It would also be essential to encourage employees to handle certain responsibilities to allow them to feel like part of the organization. This practice would play a major role regarding supporting productivity and creativity, which would then result in increased competitiveness and growth of the company, thus support its sustainability.
90-Day Action Plan
To support the growth of J.C. Penny in the highly competitive marketplace, it is vital to have an action plan. The plan will target addressing the challenges the company is encountering, such as reduced profitability and increased competitiveness, which is resulting in reduced growth and sustainability of the company. Therefore, during the initial 30 days, the emphasis will entail re-inventing the website of the company and hire sales representatives who will be responsible for handling online sales. During the second month, the company will embark on research to understand the fashion trends in the marketplace, which will then be introduced to the company’s product portfolio. In the third month, undertake research on the different needs of its customers to understand their diverse needs, thereby introduce a variety of products, which attract unique needs of clients in the market.
References
Farfan, B. (2016). JC Penney Mission Statement - Winning Together Principles For Superior Service. Retrieved from http://retailindustry.about.com/od/retailbestpractices/ig/Company-Mission-Statements/JC-Penney-Mission-Statement.htm
Global Data. (2015). J.C. Penny Company, Inc. - Financial and Strategic Analysis Review. Retrieved from http://callisto.ggsrv.com/imgsrv/FastFetch/UBER1/304768_GDRT30446FSA
JCPenny. (2015). J.C. Penny Company, Inc. Annual Report. Retrieved from http://ir.jcpenney.com/phoenix.zhtml?c=70528&p=irol-reportsAnnual
Retail TouchPoints. (2016). Delivering Innovation Through Better Change Management. Retrieved from http://www.retailtouchpoints.com/features/special-reports/delivering-innovation-through-better-change-management
Reuters. (2016). J C Penney Company Inc. Retrieved from http://www.reuters.com/finance/stocks/companyProfile?symbol=JCP
