Running head: Organizational Shifts 1

Organizational Shifts

Dan O'Brien

AET 560

March 20, 2017

Dr. Randy Howell
ORGANIZATIONAL SHIFTS 2

Introduction

The JC Penney Company is a long recognized retailer of clothing and apparel. The

company is currently in the midst of continued change, fighting for its survival in the market

place. Change efforts have returned JC Penney to profitable operations but continued change

efforts will be required for the sustainability of the company. Just as recent as this last week the

company made an announcement that 138 stores nationwide will be closing to meet JC Penney’s

business model for the future (Peterson, 2017).

The popular electronic retailer Best Buy has gone through its own challenges that have

resulted in an urgent need for organizational change. An online retailing giant has entered as a

fierce competitor that has created new shopping options for just about every retail market

including electronics. This online giant offers every product that Best Buy sells and in many

cases at reduced prices. Best Buys former largest competitor, Circuit City, ceased operations in

2009 due the inability to change and compete with such external organizations (Associated Press,

2009).
ORGANIZATIONAL SHIFTS 3

Reasons for Change

Changes in consumers shopping preferences and habits have forced changes in the way

products are purchased by consumers and offered by retailer organizations.

Effect on Global Presence

Online retailers from several competing companies have changed consumer shopping

behavior offering more convenient and economical pricing models.

Effect on Economic Trends

Consumers have fully accepted online apparel purchases from Amazon and other retailers

who have an online presence. JC Penney, with a large network of store locations, is out of sync

with successful strategies of competing companies and consumer trends.

Effect on Market Presence

In response to diminishing sales JC Penney’s board of directors hires a CEO who has led

successful change campaigns at Target and Apple. New change efforts such as a no sale policy

and store reconfigurations were not aligned with customer expectations and proved ineffective.

Continued loses resulted in the removal the CEO (Tuttle, 2013).

Effect on Employees

The continued reorganization efforts and the actions of the current CEO have left the

employees with a positive outlook on the future of JC Penney. Stock values rose 36% in 2016,

although still half of its former value investors and employees are optimistic about the future

(Garcia, 2016). Reorganization efforts and change visions are apparent across the organization

as employees are confident in the CEO and the company’s direction (Garcia, 2016).
ORGANIZATIONAL SHIFTS 4

Reasons for Change

Corporate executive scandals and affairs, poor executive spending practices, improper

maintenance of stores, low employee morale and financial loses had caught up with the lone

surviving national electronics retail chain (Wieczner, 2015).

Effect on Global Presence

Best Buy had managed to outlast other electronic retailers such as Circuit City and Comp

USA but was under pressure from Amazon who sold the same products for less which much

better delivery times. Amazon had captured many of Best Buys customers with their customer

first service model (Wieczner, 2015).

Effect on Economic Trends

Best Buys inability to deliver products led to consumers choosing an online retailing

competitor with better delivery, prices and customer service.

Effect on Market Presence

Best Buys infrastructure proved to be an advantage when multiple distribution centers

were utilized to deliver products in a timely manner, sometimes faster than their online

competitor (Green, 2015). Best Buy store locations where reconfigured to appeal to a broader

range of customers that included women (Wieczner, 2015).

Effect on Employees

The hiring of a new CEO brought in cost savings and training programs that improved

customer service (Green, 2015). Employee morale would be greatly improved seeing positive

change and sustainable business practices.
ORGANIZATIONAL SHIFTS 5

References

Associated Press, (2009) Circuit City Closes its doors for good. Retrieved from

http://www.nydailynews.com/news/money/circuit-city-closes-doors-good-article-

1.368854

Cawsey, T. F., Deszca, G., & Ingols, C. (2016). Organizational change: An action-oriented

toolkit (3rd ed.). Thousand Oaks, CA: Sage.

Garcia, D. (2016). JC Penney CEO: This is our comeback strategy. CNBC.com. Retrieved from

http://www.cnbc.com/2016/02/29/jc-penney-ceothis-is-our-comeback-strategy.html

Green, T. (2015). Best Buy’s Turnaround Is One for the Ages. The Motley Fool. Retrieved from

https://www.fool.com/investing/general/2015/08/31/best-buys-turnaround-is-one-for-the-ages.aspx

Peterson, H. (2017). JC Penney is closing 138 stores – see if your store is one of them. Business

Insider. Retrieved from http://www.businessinsider.com/jcpenney-stores-closing-2017-3

Spector, B. (2013). Implementing organizational change: Theory into practice (3rd ed.). Upper

Saddle River, NJ:Pearson.

Tuttle, B. (2013). The 5 Big Mistakes That Led to Ron Johnsons Ouster at JC Penney. Time

Business. Retrieved from http://business.time.com/2013/04/09/the-5-big-mistakes-that-led-to-

ron-johnsons-ouster-at-jc-penney/

Wieczner, J. (2015). Meet the women who saved best buy. Fortune.com. Retrieved from

http://fortune.com/2015/10/25/best-buy-turnaround/