Critical Risks Assessment and MileStone Schedule
Much has changed since the company started its operations in the country. J C Penny has been noted to be experiencing a decrease in sales and in share prices relative to its competitors. This brings in a need for the business to come up with a new business plan to help the business to increase its market share and retain its clients in the process.
The main reason that led to the decline of the sales and share capital in the stock exchange is the pricing policy which it implemented. This means that there is need for the company to come up with a new business plan that involves a new pricing policy and ways to minimize cost. The main aim of the business plan will be to ensure that sales will increase and the business will regain its market share and be in a position to retain its customers.
The plan will be implemented in the second quarter of the year and will be expected to bear fruits. This will start by closing the outlets and main offices that are not as profitable as required. This will be followed by reducing of the workforce employed by the firm in order to retain only the productive workers. The revenue saved will be used to focus on methods to make their products better through research and development. The pricing policy should ensure stable prices in the market and fit for each market segment.
The Preferred objectives and timings of the project are well detailed out in the table below:
J.C. Penny’s fourth quarter results showed that its balance sheet may be its biggest threat.
Therefore, the company must find new ways to improve its business presence in the market. It has to draw a contingency plan.
The current ratio of the company rose. Meaning, its liabilities per dollar rose. This shows that the company can be liquidated within the specified period. The current ratio is 1:4. This is higher than the one that was reported last financial year. Therefore, what the company needs to do is compare itself with its competitors like Macy and improve on its state. For instance, Macy’s current ratio is 1.52. This means that if liquidated, Macy is more likely to meet its debts than J.C. Penny. Thus, the corporation must look on that.
The company has a very long term debt. This means that it is less solvent than its competitors’. Though it is not a super dangerous situation, the company must reduce its debts. This company’s solvency can be compared to Nordstrom, a company that has been performing very badly for decades. Consequently, the company must see on ways to improve on its solvency level by reducing the debts. When the Debt/Equity ratio is as high as it is now in the company, then they have something to worry about.
J.C. Penny Company has been known to serve clientele that are averagely 50 years old and have a fixed income. This has greatly affected the company’s profitability. This is because they need to refocus their attention in the younger generation. This is what their competitors like Macy have done. The trend in the market is that the older generation is no longer active as clients. The products made need to be in line with the market’s needs. Consequently, J.C penny must produce products that meet the needs of the younger generation.
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Tsung Teng Chen, Benn R. Konsynski, Jay Nunamaker Jr. (2007). Knowledge Management in Organizational Planning.