Question

Determine where JC Penney has particularly strong and/or weak capabilities and what the specific mechanisms are that help them achieve any strong capabilities. As well, determine if any of the strong capabilities meet (or come close to meeting) VRIN (Valuable, Rare, Inimitable and Non-substitutable) criteria. In examining the capabilities, be specific in addressing the three broad areas of capabilities that we discussed – Operational, Customer, and Innovation. In addition, you might think in terms of functional areas (e.g., marketing, logistics, etc.) or the value chain.

Answer 1

J.C.Penney has strong capabilities of experience, retail operations and market presence across several locations since a long time. It has strong brand presence and wide customer base. The departmental store chain focuses on providing a range of fashion products including apparels, footwear, accessories at competitive rates with marketing promotions like everyday low pricing. The strength of the firm is in its customer focus strategy, developing quality products at lower prices than competition, expanding its categories to make it a wholesome retail experience with addition of appliances section, cosmetics brands, designer brands to offer wide range of products to the customers.

The weak capabilities lies in evolving its strategy with change in the customer demography and not expanding its global operations opening stores in locations for growth like its competitors. The weakness also lies in lack of a stability in management and strength of its strategy. The firm is dealing with closure of its non performance stores and reducing its staff. This has created a weak brand image and reputation in the market which may affect its market share, customer visits and sales.

The specific mechanisms that can help the firm achieve any strong capabilities are having efficient planning and operations, a competitive strategy, implementation of its marketing and promotional strategies by monitoring their effectiveness, building communication with customers and targeting the market segments that can provide the growth to its business. The company can implement its omni channel strategy and leverage its supply chain benefits to offer differentiated products in quality, fashion and prices.

The strong capabilities of the company that meet VRIN criteria are its product strategy including its range of exclusive private labels in various categories at competitive prices, supply chain network and customer focus through marketing and promotion of schemes like everyday low pricing, offering a wholesome retail experience.

IThe above factors are value creating for the firm. The supplier chain network and focus on lower prices for quality fashion product is rare whereas rest of the factors can be developed by competition. This factor of private label strategy and competitive prices is not imitable in departmental store experience with the additional categories like cosmetics and appliances. The brand heritage and its vast presence in home country is non substitutable though with changing strategy of omnichannel presence and reducing stores may become substitutable.