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Conklin, Sanchez & Massey – 222258711JCPenneyAriana Conklin, Michelle Sanchez & Jessica MasseyAMJ PR AgencyJRN 35022225871October 13, 2013

Conklin, Sanchez & Massey – 22225871SITUATION ANALYSIS2

Conklin, Sanchez & Massey – 222258713Description of OrganizationJCPenney is one of the largest apparel and home-furnishing retailers in the nation. Founded in1902 by James Cash Penney, JCPenney has grown to be the second largest department store and thelargest catalog merchant in the United States (“J.C. Penney Corporation,” 2013). The company operatesmore than 1,100 stores in 49 states as well as in Puerto Rico and Mexico (2013). The majority ofJCPenney stores are located in suburban shopping malls, while a small selection of them are standalonestores. During the 1980s, JCPenney reorganized their company from a mass marketer into a fashionoriented national department store (Nolen, 2010). Today, the mid-range retailer is able to provide theircustomers with a mixture of private, national and exclusive brands.Major Products and ServicesJCPenney retail has a variety of different departments. There is the apparel department thatconsists of clothing for women, men, juniors, youth, and infants. There are also products to buy forhomes, which can be for any room: kitchen, family room, bedroom, bathroom, outside, etc. There arealso a variety of appliances and home décor items that can fit anybody’s desires. In some departmentstores there are shoes, accessories, handbags, jewelry, and watches. JCPenney is mostly known for theirclothing department, but since the company has grown there has been more attention on the otherdepartments.MarketJCPenney offers high quality products for a low price to their target market. There areJCPenney’s located all across the country for the target market to enter and purchase many differentkinds of products. While many stores target a young audience, JCPenney has done the oppositethroughout the past years. More than half of the customers who shop at JCPenney are older than 55

Conklin, Sanchez & Massey – 222258714years old and only 20 percent of the customers are younger than 35 years old (Stock, 2013). JCPenney’scompetitors generally target a younger demographic, so this differentiates JCP from other stores.In addition, 29 percent of Penney’s customers make less than 35,000 a year (2013). Thisinformation shows that JCPenney shoppers are concerned about the price of their products. JCPenneyhas low cost products that keep their target market coming back. They are generally used to shopping atplaces that have lower cost products such as discount stores.JCPenney does not target a certain culture because they accept customers of all ethnicities.JCPenney stores are located all around the country for people of any ethnicity or religion to come in andshop.Organizational StructureJCPenney’s organizational structure is composed of three levels, the board, N-1, and N-2. Thefirst level, the board, is made up of JCPenney’s CEO, the chairman of the board and nine directors.The second level in JCPenney’s organizational structure, N-1, is composed of the CFO and theExecutive Vice Presidents (EVPs) of JCPenney stores, design and sourcing, legal and secretary, humanresources, merchant, the square, children’s apparel, intimate apparel, marketing, operational strategy,and planning and allocation. The CFO and all 11 of the EVPs in the N-1 level report to JCPenney’sCEO.The third level in JCPenney’s organizational structure, N-2, is composed of the EVPs ofaccounting and control, merchandising, handbags and shoes, the men’s division, women’s apparel,merchandising and marketing, Sephora inside JCPenney, communication, controller, digital commerce,property development, the salon, the supply chain, and visual presentation. The EVP of accounting andcontrol reports to the CFO and the EVPs of merchandising, handbags and shoes, the men’s division,

Conklin, Sanchez & Massey – 22225871women’s apparel, merchandising and marketing, and Sephora inside JCPenney all report to themerchant.A better representation of JCPenney’s organizational structure is shown in Figure 1.Figure 1. Chart shows the organizational structure of JCPenney. From “JCPenney,” 2013, The OfficialBoard.5

Conklin, Sanchez & Massey – 222258716MissionJCPenney’s mission statement defines how the company expects to work and win together inorder to achieve superior performance. They outline eight “Winning Together Principles” that are themission for their employees. Each principle is associated with a word. These words are Associates,Integrity, Performance, Recognition, Teamwork, Quality, Innovation, and Community. Associates meanthat they value, develop and reward the contributions and talents of all associates. Integrity means thatthey act only with the highest ethical standards. Performance means that they provide coaching andfeedback to perform at the highest level. Recognition means that they celebrate the achievements ofothers. Teamwork means that they can win together through leadership, collaboration, open and honestcommunication, and respect. Quality means that they strive for excellence in their work, products, andservices. Innovation means that they encourage creative thinking and intelligent risk taking. Communitymeans that they care about and are involved in their communities.Organizational PhilosophyIn regards to the company’s organizational philosophy, JCPenney is set towards being moreformal rather than informal. It is seen as formal and corporate because of the way the employers are setup. There is the JCPenney Corporate Headquarters, which is located in Plano, TX. The headquartershelp oversee all of the other JCPenney stores located around the country. JCP has a CEO and board ofdirectors that help oversee the employers beneath them. The organizational structure of the companyshows that JCPenney is more formal and corporate because of the higher-powered people working forJCPenney are at the top of the chart. Every employee below this has less and less power and has amanager who is in charge of them and their work. This organizational structure helps show thecorporation functions of JCPenney.

Conklin, Sanchez & Massey – 222258717Financial InformationIn the past year, JCPenney has borrowed more than 3 billion dollars to fund their company andtry to get their image back on track (Coleman-Lochner, Jinks, & Xu, 2013). JCPenney received a 2.25billion loan from Goldman Sachs Group Inc. (2013). According to JCPenney’s CFO, Ken Hannah, thisloan was given to JCPenney in order to strengthen the company’s poor financial position (Rooney,2013).Another group that JCPenney has been working with is the CIT group. They have currentlyloaned JCPenney 1.5 billion to fund the shipments that they make. The CIT group is consideringstopping their funding though, unless the company gives them a detailed financial report of theirearnings. Earlier in August, JCPenney denied the rumor and reassured the public that CIT will still befunding their company (Sahagian, 2013).Right now, JCPenney’s financial standing is very poor. Their income is negative 1.61 billionand their sales growth is negative 24.8 percent (“J.C. Penney Co Inc.”, 2013).Board of DirectorsJCPenney’s board of directors is made up of 10 individuals, including the CEO and Chairman of theBoard. The board of directors and their professional affiliations are listed below. Mike Ullman, CEO of JCPenney Thomas Engibous, JCPenney Chairman of the Board, Retired Chairman of the Board for IngramMicro Inc. Colleen Barrett, Director of the Board for JCPenney, President Emertus of Southwest AirlinesCo. Geraldine Laybourne, Director of the Board for JCPenney, Founder and Former Chairman andChief Executive Officer of Oxygen Media

Conklin, Sanchez & Massey – 22225871 8Javier Teruel, Director of the Board for JCPenney, Retired Vice Chairman of Colgate-PalmoliveCompany Partner, Spectron Desarrollo, SC Ronald W. Tysoe, Director of the Board for JCPenney, Former Vice Chairman of FederatedDepartment Stores, Inc. Kent Foster, Director of the Board for JCPenney, Retired Chairman of the Board for IngramMicro Inc. Leonard Roberts, Director of the Board for JCPenney, Retired Chairman and Chief ExecutiveOfficer of RadioShack Corporation R. Gerald Turner, Director of the Board for JCPenney, President of Southern MethodistUniversity Mary Beth West, Director of the Board for JCPenney, Executive Vice President and ChiefCategory and Marketing Officer of Kraft Foods Inc.CompetitionJCPenney has several big competitors including Kohl’s, Target and Macy’s. If JCPenneydissatisfies a customer, they are going to be more likely to shop around at these competitors. Customerswant high quality merchandise for a low price. Target has the “cheap-chic” image and Macy’s rolls outthe price promotions (Wei, 2013). These are ways that keep the customers coming back. Target has beensuccessful with keeping their trends up-to-date with affordable prices. Macy’s holds on to their imagewith affordable price promotions and they decrease in price for customers who are looking to buy higherquality products (2013). Target, Kohl’s, and Macy’s always keep up with what the public is looking forfrom season to season. They have celebrities bring in their fame and launch new clothing lines.JCPenney has to compete with many different retailers who are all trying to do the same thing, which isgetting more customers and keeping them around. The reason JCPenney is unsuccessful at being ahead

Conklin, Sanchez & Massey – 222258719of the competition is because of their merchandise quality. JCPenney also has to work against retailersbelow their rank, such as T.J. Maxx, which are off price retailers. That is why JCPenney needs to focuson their product quality along with its apparel offerings, so that they can prevent their customers fromturning to apparel offered by their cheap competitors. Another foundation of competition is Wal-Mart,who has apparel makers from around the world. They sell comparable quality, with a competitive price(2013). Instead of wasting money on their management team, JCPenney should be thinking of ways torebuild their image and customer base.Media CoverageJCPenney has been without their official marketing leader for over a year now. They have had ahard time keeping a positive brand image in the media ever since their failed transformation plan bytheir former CEO. JCPenney is having a hard time bouncing back from their problems and sales havenot been increasing as much as they would like. The retailer has been accused of alienating customers,resulting in customers bashing JCPenney all over the internet. Recent media coverage shows thatJCPenney has been apologizing to the public about the changes in the company’s approach. Also, recentcoverage shows that the people who are trying to lead JCPenney are all not on the same page.Organization MediaOne of the main tools JCPenney uses to communicate with their external audiences is socialmedia. Although, the company’s social media team has been having a hard time keeping up with attacksfrom customers on their social media sites. One way the company uses social media is by promotingtheir ads on Twitter and Facebook. This has helped get their name out to the public, considering thatthere are so many users on social networking sites today. The retailer has been using commercial ads topromote their “back-to-school” campaign to students. The only problem with this ad is that parentsbelieve that it has promoted bullying (Velez, 2013). JCPenney’s standard website has also been used to