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Strategic Analysis of financial operations

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Strategic Analysis of financial operations

Introduction

Evaluation of a firm’s financial operations requires its financial data to evaluate its

performance and present viable future recommendation that will enhance its competitive

advantage. It constitutes of establishing financial plans and strategies that depict the present and

future financial performance of the business s enterprise. The financial performance of the firm

reveals long-term and short-term objectives the firm sets to achieve in a speculated timeframe

(Sun, 2020). The paper presents a strategic analysis of the current financial operations for

JCPenney LLC.

JCPenney was an American-based midscale enterprise with 698 stores in 49 states of the

US and Puerto Rico. Besides retailing conventional products, the firm also offers large fine

jewelry stores that contributed to its expansion and thriving over its competitors. However, the

firm experienced a steep decline in its financial operations over the years that saw it face

financial constraints in running its operations thus faced a blink of bankruptcy. Due to the level

of competition coming from all angles, JCPenney has a major market disadvantage compared to

the rest while there is a huge task ahead to turn its financial situation (Sun, 2020). The paper will

present strategies for attaining a sustainable competitive advantage in the marketplace and

increasing financial performance.

Evaluation of JCPenney’s Current Financial Plan

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Source: (Sun, 2020).

The firm as observed from its annual sales report since 2004 to 2018 shows a progressive

decline of its sale which translates to low market power thus attracting financial constraints to its

verge of bankruptcy. The firm registered its lowest sales in 2018 amount to almost $11.5 DMR

billion which led to its insolvency. The continuous progressive trend in the decline of its sales

over the years can be attributed to several aspects. However, loosing contact with their customers

is a major attribute that led the firm to financial constraints that led it to insolvency in 2018. This

implies that the firm lost its market share and its customer bases across its stores in all its

locations. With no sales, the firm could not optimize its profits.

Recommendations for improvement.

 The firm should merge with other established firm to strengthen its brand as nit starts to

rebrand and established customer base and acquire market share.

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 establishing a robust advertisement approach through social media platforms to reach

many people will help JCPenney get on tract of its business operations.

Competitive Advantage Strategies

JCPenney will have to keep closing some of its stores in order for the profit to balance

itself out. Penney only has a limited amount of time to reclaim customers and maintain existing

ones coming back to its stores. It's not as if today's buyers don't have lots of options for clothing,

home furnishings, and beauty, especially online. I would strongly advise JCPenney to begin

negotiating with more well-known name-brand products in order to sell a wider range of

products in its stores. Because of the current circumstances, getting some things inside stores will

be costly, but if the firm does not want to go out of business, this is the way to go. Expanding the

company's digital presence is another way to reach out to people of various genders and ages. On

Facebook and Instagram, the firm has roughly 800,000 followers relative to its competitors such

as Macy's with 1.9 million followers in Instagram, Target with 4.2 million, and Inditex's Zara

with a whooping 37.8 million (Thomas, 2019).

Besides, the firm should hire more internet-savvy personnel to keep an eye on the most

popular themes and try to include them into their marketing. While Facebook is the most popular

social media site on the planet, Twitter has increased in popularity over the last decade to

become the fastest-growing social media platform. Establishing a trending twitter hashtag is a

terrific method to get a new audience to notice your business. With the present pandemic, more

individuals are delaying their money since they don't know where it will come from, so finding

new ways to reach consumers is critical.

Cutting the cost of retail products is another strategy to improve strategic and financial

positioning (Thomas, 2019). There is no much of a distinction between each retail establishment
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these days, given the state of the economy. The majority of them sell the same items for the same

price. If a shoe's industry value is $50, JCPenney should sell the same shoe at $40 in their stores.

I understand that products may only be sold for a specific amount owing to various relationships,

but with the threat of all of its storylines being shuttered, something has to give. Penny's

advertisements should emphasize the reduced cost of goods in order to offer potential consumers

a better picture of the company's future ambitions. Penney doesn't have a large debt repayment

due until 2023, and I think that's a good thing.

Implementation of the Strategies

It's one thing to have ideas, however, it's another to put them into action. Penny, like

every other retailer, purchases things from producers or distributors that appeal to their target

demographic, then sets the price and displays them for sale (Nwachukwu & Chladkova, 2019).

JCPenney must determine which things from producers are the greatest sellers in its stores and

not acquire the remainder in order to ensure a usually good profit. Additionally, the firm can

consider teaming with local suppliers who want more people to know about their products to fill

the balance of the inventory. It may be easier to incorporate the social media platform

aspect than it is to reduce producer costs (Nwachukwu & Chladkova, 2019)..

Getting attention on social media can be difficult for the normal person, but it should be

impossible for a corporation. Penny can follow trends and make jokes about current events to

garner engagement on the internet because her company is already well-known. When it comes

to social media, most businesses hope to achieve a certain amount of user involvement, because

the overall purpose of engagement is to get people to notice their business. I would hold

auditions and ask candidates to demonstrate how they'd promote Penny's items by promoting the

best merchandise when a hashtag is trending.

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Conclusion

The strategic financial evaluation of JCPenney LLC presents a sophisticated, value-

creating methodology to assist its senior executives in evaluating strategy, analyzing

performance, and determining the worth of a company. Above all, reviving the firm from its

insolvency state. This gives leaders the authority to make a variety of corporate decisions,

including: In light of the company's strategy, conduct a thorough competition analysis.

Therefore, incorporating these strategies and upholding them will revive the current state of

JCPenney and be actively resume its competitive nature in the market.

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References

Nwachukwu, C., & Chladkova, H. (2019). Firm Resources, Strategic Analysis Capability And

Strategic Performance: Organisational Structure As Moderator. International Journal for

Quality Research, 13(1).

Sun, L. (2020, January 19). 3 Ways J.C. Penney Can Still Reinvent Itself. Retrieved September

28, 2020. Retrieved from https://www.fool.com/investing/2020/01/19/3-ways-jc-penney-

can-stillreinvent-itself.aspx

Thomas, L. (2019, November 15). JC Penney CEO rolls out 'sound' strategies, but there's only so

much time to turn around sales. Retrieved September 28, 2020. Retrieved from

https://www.cnbc.com/2019/11/15/jc-penney-ceo-rolls-out-sound-strategies-but-

theresonly-so-much-time.html