Wrong CEO, Crazy Damages!

Wrong CEO, Crazy Damages!

Someone might think that a big company might have all the resources and very intelligent people working because they can afford to do so. In addition, those people will make the right decisions to improve the quality of work and increase the profit in the long run. J.C. Penny is one of the big companies that with one critical decision they lost almost a billion dollar. The hired the wrong person, which lead to critical changes that did not work out in the favor of J.C. Penny and increasing their profits. When Ron Johnson was announced as the new CEO of J.C. Penny the stock prices was $34 and within 2 years, the current stock price is at $14. The reason behind such a dramatic change is the structure of J.C. Penny. The CEO made changes to update the entire store and eliminate the coupons. Johnson did not pivot the idea that start off small and once people accepted the change and wanted that change increase though out the nation. Johnson took a big leap and caused J.C.Penny’s regular customers to look elsewhere for their purchasing needs.

Myron Ullman who was the CEO before Johnson had agreed to go back to and reverse the changes implemented by Johnon. He has agreed to stay until J.C. Penny has the right CEO. The changes made by Johnson eliminated the middle-market customers, which where their target market. Even though someone might think that updating the store and keeping a low price while eliminating coupon will cause more people to come is not necessarily true. Ideally, any idea sounds good but pivoting the idea is to make changes without losing a lot of money. Ulllman’s plan is to change things back and bring back the lost customers what where their target market but getting someone to come back after they have lost the trust is somewhat hard. Ullman has the niche to fix things, which he has done before and J.C. Penny is counting on him to bring back the people and profit into the stores again. His biggest challenge will be to remind the customers that what J.C. Penny was before and nothing has changed.

Quality of management makes a huge difference in the success of any company. Being in this state and losing a lot of money is very critical for J.C. Penny. If they continue to do so they will soon have to declare bankruptcy and that is a whole other situation. Being in economic crises right now and extreme competition from places like Macy’s and Kohl’s’ it will be hard to J.C. Penny to gain the customers because the rivals are trying to take up as much market has they can of lost customers. J.C. Penny is at a critical position right now; the question now remains whether they will be able to reverse the damage.

Do you think the J.C. Penny will gain its customers back and be able to create profit that they use to?

http://www.businessweek.com/articles/2013-04-11/j-dot-c-dot-penney-rehires-myron-ullman-to-clean-up-ron-johnsons-mess#p1

2 thoughts on “Wrong CEO, Crazy Damages!

  1. I really liked this blog post because the JC Penny situation is particularly interesting to me. Johnson not only implemented changes without testing them, he also changed the store logo which can confuse customers. I agree that trying to get their old customer’s back is going to be extremely difficult and, without it, might cause the business to fail. My only issue with this is why they decided to rehire Myron Ullman as CEO again, when the store was struggling under his leadership too? I think to try and get a fresh start for JC Penny and try to get their stock price up, they should hire someone new with fresh ideas. Not someone who will probably do the exact same thing as before. I hope that JC Penny pulls through this because it would be a shame to see another big name not survive during this recession. To answer your question, I don’t think they will be able to gain its customers back and recreate the same profit. I think that they really tested their limits and customers just were not satisfied. In the end it is what the customer wants not want the company wants.

  2. If JC Penny if able to reverse the damage, I think it will take a long time. Because it cost a lot more to gain new customers, then to retain them. JC Penny’s competitors know the problem which they are going through and will take the necessary actions to keep them. For instance, Kohl’s and Sears have partnered with celebrities to increase sales. The only way JC Penny can survive is if they play their right cards.

    I think Ron Johnson would’ve been a more effective CEO if he would’ve taken a different approach to re-brand JCP. The reason I say this is because he’s helped turn around major corporations such as Apple and Target (which is the reason he was asked to become the CEO of JCP). I think it’s kind of in his mindset that he can make any company into this high scale/high performing company. In my opinion, he should have taken a different approach then what he did with Target or Apple.

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