Essay on internal and external analysis JC Penney

2) JC Penney's most immediate goal is to maintain its present customer base and to attract new clients. They can do so by introducing higher-scale brands to their stores in order to attract another category of customers, in other words, customers who are drawn to premium brands. Therefore, JC Penney's brand image will be enhanced; its reputation will be improved. Introducing premium products, and attracting customers who have higher purchasing power will bring in higher revenues to the company.

Threat of new entrants is relatively low. There are high barriers to entry in the discount retail market, including high capital costs, limited access to investors, and a largely crowded-out market place.

With 360 warehouses, located in the United States, Canada, Mexico, Japan, Taiwan, Korea, and the United Kingdom, Costco Wholesale Corporation is the largest and most profitable chain of its kind.

The strategic objective of Costco is based on the concept of offering members very low prices on a limited selection of nationally branded and selected private label products in a wide range of merchandise categories while producing high sales volumes and rapid inventory turnover. This rapid inventory turnover, when combined with the operating efficiencies achieved by volume purchasing, efficient distribution and reduced handling of merchandise in no-frills, self service warehouse facilities, enables Costco to operate profitably at significantly lower gross margins than traditional wholesalers, discount retailers and supermarkets. (1)

In this segment, the retailer J.C. Penney will be analyzed against the department store retail industry, with particular emphasis placed upon their competitors, Macy’s and Kohl’s. The major components to be discussed will include the general external environment (i.e. demographics, economics, politics, legal requirements, technologies and global expansion), the industry environment, the competitive environment, the driving forces and the key factors for success within the industry. In terms of the general external environment, the retail industry is a multi-trillion dollar business in the United States alone and maintains operations primarily due to consumer spending. Such purchases rely upon the disposable income of

Sears began as a small retailer but as the years have gone by, they have become

In the past, JCP had, on average, one price campaign every day. The stores were full of sale signs and retail rise was getting out of control. JCP partnered with numerous exclusive collaborations which was hoped to bring about an expansion for the firm. However, due to the economic slump, the oversaturation of the market, and an expected lack of quality in the goods from the consumer perspective, JCPenney’s success was degrading in contrast to its competitors. (Sloan, 2010).

Well while I believe that they provide service to the customers and obviously they strive for excellence on the idea of low prices and high sales. I believe the first and most important of their rhetoric they fall short of especially in the respect for their employees.

As one of the major retailers in the United States, JCPenney has 1,104 department stores in 49 states and Puerto Rico as of February 2, 2013. The key success of its business is tremendously depending on the sales performance. However, the retail business is highly competitive, with low barriers to entry and low profit margin. Due to large sales plunge in 2012, the company is in financial trouble. The thorough analysis of JCPenney’s financial statements is vital to judge the future performance of its business.

The industry does not possess major threat from new entrants due to strong barriers to entry and strong competition for retail space. There is also a strong rivalry between competitors as limited space is being contested by major players alongside

The organization that I have chosen for the purpose of this corporate finance analysis is Wal-Mart. As is well known, Wal-Mart is the global market leader of

New Entrants – The threat of new entrants is moderate. Moderate because of the high cost of entry, but the relatively successful business model Best Buy has outlined.

Threat of new entrants: Retail industry has a higher barrier to entry. First, it is difficult to work out a good value chain as it involves a complex process. Second, it is difficult for new entrants to gain competitive advantage and earn above-average returns in such a highly competitive market. Besides,

Kmart uses a comprehensive website as part of its marketing strategies. Customers can now do online shopping. This strategy enables the company to sell their products outside the US. The company associates their products with celebrities, for example, Nicky Minaj brand. More customers will be attracted to such brands. The firm keeps a well-mannered client service. Customers will be more willing to shop at Kmart shops

Based on J.C.Penney’s current situation, and the above issues, we recommend the following strategic models.