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Business Simulation with Professional Development

Student

Instructor

Course

Date
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Table of Contents

Abstract............................................................................................................................................2

Introduction......................................................................................................................................4

Business Description.......................................................................................................................5

General Work of Macy’s Inc.....................................................................................................5

Mission........................................................................................................................................5

Vision...........................................................................................................................................6

Simulation Performance Results..............................................................................................6

Human Resource........................................................................................................................8

Culture........................................................................................................................................9

Strategy.......................................................................................................................................9

Evaluation of Macy’s Inc. Performance Review for the Past Years...............................................9

Macy’s Environmental Assessment Using SWOT Analysis.........................................................10

Strengths........................................................................................................................................11

Weaknesses...............................................................................................................................11

Opportunities............................................................................................................................11

Threats......................................................................................................................................12

Competition Analysis Using Porter’s Five Forces Model.............................................................12

Competitive Rivalry or Competition......................................................................................12

Bargaining power of buyers or customers.............................................................................13

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Bargaining power of suppliers................................................................................................13

Threat of substitutes or substitution......................................................................................14

Threat of new entrants.........................................................................................................14

Conclusion and Recommendations................................................................................................15

Key Decisions for the Next 5 Years........................................................................................15

Conclusion.................................................................................................................................16

Recommendations....................................................................................................................16

References......................................................................................................................................18

Abstract

Macy's Inc. is a well-established fashion industry leader that has maintained its position by

adhering to its mission and vision statements. The company's mission focuses on creating an

outstanding shopping experience by providing quality products and exceptional customer

service. Macy's vision emphasizes the company's commitment to innovation and remaining at the

forefront of the industry. To ensure the company's continued success, a SWOT analysis was

conducted, revealing several strengths such as the company's well-known brand and vast product

range, and weaknesses such as declining foot traffic in traditional brick-and-mortar stores.

Opportunities identified included expanding into new markets and increasing the company's

online presence, while threats included intense competition and changes in consumer behavior. A

Porter's Five Forces analysis was also conducted, revealing a high degree of competitive rivalry
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in the industry, with the threat of new entrants and substitutes, and the bargaining power of

suppliers and buyers. Performance analysis revealed that Macy's has been struggling financially

in recent years, with declining sales and profits. Key decisions for the next five years include

expanding the company's online presence and investing in new technologies to enhance the

customer experience. To address the challenges identified, several major recommendations were

made, including implementing a more targeted marketing strategy, developing a more cohesive

omnichannel approach, and focusing on creating unique and differentiated products to stay

competitive.

Introduction

Macy's is an iconic American department store chain with a rich history that dates back to 1858

(Macy’s 2022). The company was founded by Rowland Hussey Macy, who opened his first dry

goods store on the corner of 14th Street and 6th Avenue in New York City. According to WHO,

a dry goods store is a retail company that offers consumers products and goods that are unrelated

to those offered by grocery or hardware stores.

In the last few years, Macy's has continued to grow and expand, opening stores in other major

cities across the United States. The company also introduced new concepts, such as its famous

Thanksgiving Day Parade, which debuted in 1924. This is a day in which Macy’s employees

march through the streets of New York with balloons to celebrate the day the company was

started.

Today, Macy's is one of the largest companies in the retail industry, with more than 500 stores

across the United States (Macy’s 2022). The company continues to evolve and adapt to changing

consumer preferences, providing a diverse group of products and services to meet the needs of its
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customers. These products include fashion such as shoes, clothes, and accessories, beauty

products such as makeup and fragrances, furniture, electronics, jewelry, home goods, and toys.

This essay will discuss Macy’s business operations. This will be divided into six key segments;

the company’s business description and the level of market competition, simulation and

performance analysis of the company; Performance review of each year’s progress. Moreover,

the paper will also discuss Macy’s key decisions for the next five years and recommendations on

how to increase the company’s performance. However, this paper will not discuss how consumer

data is handled by the company. This is because consumer data is private and the report will not

infringe on the data privacy of Macy’s consumers.

Business Description

General Work of Macy’s Inc.

Macy's Inc. is a brand that is committed to assisting its employees to grow both professionally

and personally, offering opportunities to join a forward-thinking organization that is

transforming into an international digital leader.

Most of our employees believe that Macy’s is a great place to work especially because of the

positive work environment. The pace of work at Macy’s is excellent and the environment is

dynamic with a focus on delivering excellent customer service and meeting sales targets.

Specific job responsibilities will vary based on the role but may include tasks such as sales,

customer service, merchandising, inventory management, or operations. Our company is

committed to building a positive and supportive work culture and providing professional

development opportunities to help employees build the knowledge and skills they need to be

successful in their roles and build their careers. 

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Mission

Macy’s key mission includes;

 Offering a diverse selection of products that meet the needs and preferences of its

customers, from clothing and accessories to home goods and electronics.

 Creating an engaging and inspiring shopping experience for its customers, with visually

appealing displays and innovative in-store experiences.

 Delivering exceptional customer services, with knowledgeable and friendly associates

who are dedicated to helping customers find what they need.

 Constantly looking for new and innovative ways to enhance the shopping experience,

from implementing new technologies to introducing new products and services.

 Giving back to the communities it serves via charitable giving and volunteerism,

supporting a range of causes that align with its values.

Vision

Macy's

 Omnichannel: Macy's has focused on being a leader in omnichannel retail, providing

customers with a smooth shopping experience in different platforms, including physical

stores, mobile, and online.

 Retailer: Macy's remains committed to being a leading retailer, providing a large variety

of high-quality products to meet the requirements and preferences of its clients.

 Leading: Macy's strives to be a leader in the retail industry, setting trends and driving

innovation through its products and services.

 America: Macy's focuses on serving customers in America, with a strong presence in

communities across the country.

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Simulation Performance Results

To simulate the performance of the company in the next five years, the pecking order theory

was used. This is a theory that analyses the company’s financial strength and its position in

the market, evaluate its financing to simulate its results for the future. Figure 1 indicates the

pecking order theory.

Figure 1: Pecking Order Theory

Source: Corporate Finance (2022). Online at:

https://corporatefinanceinstitute.com/resources/valuation/pecking-order-theory/

From figure 1 above, three factors will determine Macy’s financial performance in the next

five years; the internal financing; its external debt issuance and the equity issuance. Retained

earnings refers to the company’s total balance retained from the previous financial year. On

the other hand, debt issuance is a company’s obligation to pay the government by selling

bonds to external investors (WHO). External financing is the process in which a company

sells stock to investors. The table below represents how the three factors will play for Macy

Company.

Table 1: Macy’s Simulation Performance Results

Internal Financing External Financing Net Profit

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(Retained Earnings) (Debt Issuance)

2018= $ 2.4 billion $0.55 billion $2.345 billion

2019= $ 1.43 billion $ 0.73 billion $0.7 billion

2020= $ 3.67 billion $ 0.6 billion $3.07 billion

2021= $ 3.7 billion $ 0.522 billion $3.178 billion

2023= $4.11 billion $0.87 billion $3.24 billion

$3.27 billion $12.53

(Adapted from Macy’s Financial Statements, 2021)

From Table 1 above, Macy’s net profit to net profit ratio is 4:1 (12.53:3.27) for the last five

years. However, due to covid-19, competition, and other business-related challenges, it is

expected that Macy’s Net Profit to Debt ratio will remain constant at 4:1. In the last three years,

Macy has maintained a net profit of approximately $3 billion. Therefore, in the next financial

year, it is expected that the company will make a total net profit of $ 3 billion. In the next five

years, Macy’s net profit will be $3 billion×5 (assuming that all factors are constant) = $15

billion.

Human Resource

Human resources are defined as the individuals who make up the workforce of a company. The

term can also refer to an organization’s department that is responsible for managing personnel-

related tasks and issues. 

Macy's HR department is focused on building a high-performing, motivated workforce that is

committed to providing great customer service and driving business success. By investing in its
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employees and building a positive and inclusive work environment, Macy's goal is to maintain

its position as a leading retailer and employer of choice.

Culture

Macy's, Inc. has a culture that is centered around providing an exceptional customer experience

and driving innovation in the retail industry. The company values teamwork, collaboration, and

diversity, and is committed to creating a positive and inclusive work environment. Our culture is

molded by the corporate key values: respect, excellence, integrity, innovation, and giving back

(Msa 2021).

Strategy

An organizational strategy is defined as a plan of action that is used to accomplish goals and

objectives. It is a detailed and integrated plan that outlines ways in which a company will

allocate its resources, make decisions, and take action to achieve its mission and vision. Macy’s

Inc. ESG strategy is focused on several areas:

Environmental Sustainability: Macy’s is committed to mitigating its greenhouse gas emissions

and enhancing energy efficiency across its operations. 

Social Responsibility: Macy’s also focuses on sustainable sourcing and mitigating water.

Besides, Macy’s has a strong commitment to social responsibility, inclusive of encouraging

diversity and inclusion, showing support to local communities, and adhering to ethical labor

practices throughout its supply chain. 

Governance: Macy’s has a strong corporate governance structure that focuses on accountability,

transparency, and ethical business practices (Macy’s Inc. 2023).   

Evaluation of Macy’s Inc. Performance Review for the Past Years

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In terms of financial performance, Macy's revenue has been taking steps to reduce costs and

improve profitability, including streamlining operations and closing underperforming stores. In

2021, the company reported improved financial results, with strong growth in its digital sales and

a return to profitability (Macy’s Inc. 2022). Regarding operating profit margins, Macy's has also

faced challenges in this area in recent years. The company's operating profit margins have

declined in recent years due to increased competition and the impact of the pandemic. Macy's has

also been focused on enhancing its customer experience through investments in technology, such

as its virtual beauty try-on feature and the expansion of its curbside pickup and same-day

delivery services. The company has also been working to improve its product offerings and

increase its focus on sustainable and ethical practices. 

Macy’s Environmental Assessment Using SWOT Analysis

Environmental assessment using SWOT analysis is a powerful tool for organizations to identify

the potential impacts of environmental factors on their operations, both positive and negative.

(Benzaghta et al., 2021). 

Strengths

The company has highly invested in omnichannel capabilities, such as pick-up in-store, buying

online, and same-day delivery, which can provide a seamless customer experience and improve

sales. Macy's also provides a wide range of products, inclusive of apparel, beauty products, and

home goods, which can attract a diverse range of customers. The company has also formed

partnerships with other retailers and brands such as Sephora which can help increase traffic to its

stores and boost its product offerings.

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Weaknesses 

Macy's has experienced declining revenue in recent years, which can be attributed to changing

consumer behavior and increased competition from online retailers. In addition, Macy's has been

heavily dependent on its physical stores which can cripple its ability to adapt to changing

consumer behavior and compete with other online retailers. Furthermore, Macy's has struggled

with the underperformance of some of its stores, which can negatively its overall financial

performance.

Opportunities

Currently, the e-commerce market is tremendously growing, providing Macy’s with

opportunities to expand its digital capabilities and improve sales online. Macy’s also has the

potential to expand into global markets, which can create better opportunities for growth and

diversification. The company can also focus on improving its sustainability practices, which can

attract customers who are increasingly concerned about environmental issues, and support its

long-term viability. 

Threats

Macy’s continues to face huge competition from other e-commerce retailers such as Walmart,

and Amazon, which can affect its revenue and market share. Additionally, the significant

economic downturns have hurt consumer spending which may impact Macy’s financial

performance. Moreover, supply chain disruptions such as the ones caused by the Covid-19

pandemic can interfere with the company's ability to operate and meet customer demand. 

Competition Analysis Using Porter’s Five Forces Model

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Competitive Rivalry or Competition

This refers to the extent to which existing players in the industry compete with each other

(Martinez-Contreras et al. 2022). This force is affected by different factors such as the amount of

differentiation, and the number of rivals.

The competitive rivalry in the retail industry is high due to the presence of numerous established

players and the increasing competition from online retail giants like Amazon. Macy's faces

competition from both traditional brick-and-mortar retailers and online retailers, which can affect

its market share and profitability (Department 2022). Macy's must differentiate its offerings and

provide superior customer experiences to remain competitive in the market.

Bargaining power of buyers or customers

This is the degree to which buyers can influence the price and quality of the industry's products

or services (Martinez-Contreras et al. 2022). Factors that affect this force include the number of

buyers, their concentration, and their ability to integrate backward.

The bargaining power of buyers for Macy's is high due to the availability of alternative retail

options and the increasing shift toward online shopping. Customers have a wide range of options

when it comes to buying products, and Macy's must work hard to differentiate its offerings and

provide value to its customers. Online retail giants like Amazon have created more competition

and increased buyer bargaining power. Therefore, Macy's must offer competitive pricing and a

superior customer experience to remain relevant in the market (Department 2022).

Bargaining power of suppliers

This is defined as the extent to which suppliers can affect the price and quality of inputs they

supply to the industry (Martinez-Contreras et al. 2022). Factors that affect this force include the
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number of suppliers, the uniqueness of their products or services, and their ability to integrate

forward.

The bargaining power of suppliers for Macy's is moderate due to the large number of suppliers

available for the retail industry. While Macy's has a wide range of suppliers, it is still reliant on a

few key suppliers for some of its product lines. The suppliers’ bargaining power is also

influenced by the scale and market position of the retailers like Macy's. As a large and

established retailer, Macy's has significant bargaining power over suppliers, allowing it to

negotiate better prices and terms (Department 2022).

The threat of substitutes or substitution

This is defined as the degree to which substitutes can compete with the industry's products or

services (Martinez-Contreras et al. 2022). Factors that affect this force include the availability of

substitutes, their price-performance trade-off, and the switching costs associated with using

them.

The threat of substitutes for Macy's is high due to the growing popularity of online retail and the

availability of alternative retail options. Customers can choose to purchase products from a wide

range of online retailers, and some may choose to purchase products from alternative retailers

that offer lower prices, a better customer experience, or more ethical/sustainable practices

(Department 2022).

The threat of new entrants 

This refers to the level at which new competitors can enter the market and compete with the

players already in the industry (Martinez-Contreras et al. 2022). Various factors that may affect

this force include economies of scale, high capital requirements, government regulation, etc.
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This force in the retail industry is moderate to low because of the significant challenges to entry.

These barriers include the need for high capital for establishing and maintaining a retail store

network, high fixed costs associated with inventory management and store operations, and the

need for extensive marketing and advertising campaigns to establish brand recognition.

Additionally, established retailers like Macy's have economies of scale, access to established

supply chains and supplier relationships, and significant bargaining power over suppliers

(Department 2022). Therefore, new entrants would find it difficult to compete with established

retailers like Macy's.

Conclusion and Recommendations

Key Decisions for the Next 5 Years

Making strategic decisions is critical for the success and survival of any organization. Based on

the SWOT analysis and Porter's five forces, Macy's may need to make some key decisions to be

able to achieve its long-term goals and competitiveness. Macy’s may need to continue to highly

invest in its e-commerce platform and digital capabilities to compete with other online retailers

like Amazon and Walmart (Paić 2018). The company should evaluate its store footprint and take

into consideration closing its underperforming physical stores to mitigate costs and optimize its

store network. It should also concentrate on building a unique and personalized shopping

experience for customers via targeted marketing campaigns, loyalty programs, and collaborations

with celebrities, and influencers. Macy's may need to boost its supply chain to mitigate lead

times, drive efficiency, and improve its ability to respond to consumer demand. It may need to

re-evaluate its product mix and adjust it to meet the changing consumer trends and preferences,
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inclusive of sustainable and socially responsible products. There may be a need to continue

investing in technology to boost operations and customer experience inclusive of the

implementation of advanced analytics, automation, and artificial intelligence solutions (Paić

2018). Moreover, Macy’s should focus on talent management, and training programs to attract

and retain skilled employees who can help increase innovation and growth. Finally, the company

may need to concentrate on improving its financial performance by mitigating costs, increasing

sales, and improving margins. This may require cost control, strategic pricing, and inventory

management.

Conclusion

Macy's Inc. is a well-known American department store chain that operates across the United

States because of implementing a proper business strategy. While Macy's has been a major

player in the fashion industry, it has faced several challenges in recent years, including declining

sales, store closures, and increased competition from e-commerce retailers.

Macy's has made efforts to adapt to changing market conditions and consumer preferences by

implementing new business strategies, such as enhancing its omnichannel capabilities and

investing in new technologies like augmented reality to improve the customer experience.

Additionally, the company has remained committed to its mission of delivering a compelling

shopping experience and providing high-quality products to its customers. Macy’s also

comprehends its strengths, weaknesses, opportunities, and threats and has constantly been

working on tracking their threats and weaknesses via different control techniques.

However, it is important to note that Macy's has also faced criticism for its lack of diversity and

inclusion in its marketing and advertising campaigns, as well as its treatment of employees. I am

concluding that while Macy’s has had a robust presence in the fashion industry and has
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implemented some effective business strategies, it continues to face challenges in a rapidly

changing retail landscape.

Recommendations

Macy’s Inc. should continue to leverage the strength of its brand to improve customer loyalty

and increase market share. It should build on its established presence in the brick-and-mortar

retail space to expand its online offerings and omnichannel capabilities and also continue to

optimize inventory management to mitigate costs and enhance profitability. Based on Macy's

weaknesses, it should address issues associated with in-store customer experiences, such as

outdated store layouts or long checkout lines, to boost customer satisfaction and retention.

Macy's should look into forming partnerships and collaborating with popular designers or brands

to build exclusive collections or limited-edition products. It should also focus on improving eco-

friendliness and sustainability by providing more environmentally-friendly products and

packaging. It should think about expanding globally to reach new markets and diversify its

revenue streams. Lastly, based on the company threats, it is important to address the threat of

increased competition from online retailers and e-commerce giants such as Walmart by

optimizing Macy's digital capabilities and enhancing the customer experience across all

channels. 
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References

Benzaghta, M.A., Elwalda, A., Mousa, M.M., Erkan, I. and Rahman, M., 2021. SWOT analysis

applications: An integrative literature review. Journal of Global Business Insights, 6(1),

pp.55-73.

Department, S.M. 2022. Macy's, Inc. porter's five forces analysis, Porter's 5 forces analysis,

Fern Fort University. Fern Fort University. Available at:

http://fernfortuniversity.com/term-papers/porter5/analysis/2960-macy-s--inc-.php

(Accessed: April 5, 2023).

Macy’s Inc. 2022. Macy's, Inc. reports fourth-quarter and full-year 2022 results. Available at:

https://www.macysinc.com/newsroom/news/news-details/2023/Macys-Inc.-Reports-

Fourth-Quarter-and-Full-Year-2022-Results/default.aspx (Accessed: April 5, 2023).

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Macy’s Inc., 2023. We Are Embedding Sustainability Into Our Business. Available at:

https://www.macysinc.com/purpose/sustainability/default.aspx (Accessed: April 5, 2023).

Macy’s, 2022. Macy's brand heritage - Macy's through the years. Available at:

https://www.macys.com/s/brand-heritage/history/#:~:text=In%201858%2C%20a%20small

%20dry,goes%20beyond%20just%20everyday%20shopping. (Accessed: April 5, 2023).

Macy’s financial statements (2021). Online at:

https://www.sec.gov/Archives/edgar/data/794367/000162828023005942/m-

20230302xexx991.htm#:~:text=Net%20sales%20of%20%2424.4%20billion,%3B%20down

%200.5%25%20versus%202019

Macy’s Financial Leverage (2021). Online at:

https://www.macroaxis.com/invest/bond/M#:~:text=Macys%20Total%20Debt%20is

%20very,grow%20to%20(113.2%20M).

Martínez-Vázquez, R.M., de Pablo Valenciano, J. and Milán-García, J., 2022. Impact Analysis of

Marinas on Nautical Tourism in Andalusia. Journal of Marine Science and

Engineering, 10(6), p.780.

Msa, 2021. Macy's mission statement 2023: Macy's Mission & Vision Analysis, Biggest Mission

Statements Collection - Mission Statement Academy. Available at: https://mission-

statement.com/macys/ (Accessed: April 5, 2023).

Paić, M., 2018. Digital transformation of E-Commerce business, on the example of Macy's retail

chain (Doctoral dissertation, University of Rijeka. Faculty of Economics and Business).

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