Managing Corporate Turnarounds Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Managing Corporate Turnarounds Case Study Help

No compromises on product quality

The management of the company promised to not compromise on the quality of the products, something many customers question when the firm tends to reinvent itself and the key element of rebrandingrevolves around lower priced products. A number of operations were simplified by the company’s management to save millions on annual basis.(HOWELL, 2012). The company intended to depend on its ability to respond and predict changes in the customer preferences and the fashion trend, in the timely and an efficient manner to improvise the operationsas well as results and sales through offering high quality merchandise assortment at lower prices. In addition to the promotion strategy’s simplification; the company’s management focused on reducing the excessive inventory, redesigning of the store’s processes, strengthening of the company’s Omni channel capabilities and making considerable amount of investment in more tech tools, in order to improve inventor shrink, better serve customers and lead the market.(HENSEL, 2019 ).

Successful or unsuccessful turnaround strategy

Johnson proposedthe risky turnaround strategy to the company,which backfired and led towards the steep sales drop and massive loss incurrences. The key facet of Johnson’s turnaround plan involved a total overhaul of the company’s pricing strategy. A fair and square pricing strategy was outlined by Johnson, which included cutting down the promotional efforts as well as hosting only 12 themed promotions, within a year. He instead focused on replacing all-year-round discounting culture with 40 percent lower price and “Best Price Fridays” sales on every 1^st and 3^rd Fridays of each month, which would have helped the company in clearing the stagnant merchandises. Additionally, he made the decision to roll the fair and square pricing strategy nationwide, all at once rather than choosing one or two stores, to test the new pricing strategy and to assess and evaluate its impact. He argued that the testing of the new pricing policy would not be possible due to the reason that the company wanted quick outcomes, and if he had not taken the stance against the discounting; he would have been unable to get new, stylish and high quality brands on board.(Record, 2013)

Furthermore,, under Johnson the company ditched the coupons as well as most of the sale events, in favor of the low pricing strategy. Even though, the ultimate objective and goal of Johnson was to reinvest in the company and increase its sales; the decisions taken by Johnson proved to be fatal as he drove away the aging core customer base of the company,with seemingly steeper prices that turned into a failure in attracting the new customers with all-inclusive experience at departmental store he envisioned, consequently resulting in slow traffic as well as similar store tacking 31.8 percent in the last quarter of the year 2012. During the full year of Johnson at the company; it posted the 985 million dollars net loss in total.(Lindsey, 2016).

The time of Ron Johnson at the company, is universally seen as an unmitigated disaster, which posited new challenges to the growth and sustainability of the company. One of the considerable reasons of the risky turnaround strategyproposed and implemented by Johnson,was the cultural clash. While the time of Johnson at JC Penney was unilaterally deemed a failure on account of the reason that he spent his time in the always-innovating tech world, such as:Apple, which contributed to this no-holds-barred and brazen attitude, and the lesson he learned when he was working at Apple, was go with the gut-feelings and you don’t need any extensive research to bring the change within the organizational policies.

Conclusion

JC Penney is one of the valuable and US Based Retail Company, which was established by James Cash Penney in 1902.Penney was using private-label brands.With high debt to pay off and declining sales; it is pertinent to note that the company struggled to establish an effective and consistent pricing strategy over the last 5 years.Along with this, the company switched its target market and focus from older shoppers to trendier and younger ones, due to which the company lacked direction and unsure of the brands types it needed to offer, with core consideration over winning its valuable customer base.

The management of the company decided to eliminate the clearance sale and introduce the 3-tier pricing system for the products offered to the customers, streamline promotion strategy, reduction of the excessive inventory, redesigning of the store’s processes and strengthening the Omni channel capabilities of the company and make considerable amount of investment in more tech tools, in order to improve the inventor shrink, better serve the customers and lead the market..............................

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