|Type of paper:||Case study|
|Categories:||Human resources Strategic marketing Leadership style Leadership management|
Macy's department store is a leading North American retailer. It was founded by Rowland Macy Hussey in the mid-1800s. In 1994, it became part of the Federated Department Stores based in Cincinnati, Ohio, its current headquarters. As of 2015, it is the largest retailer in the USA, with 584 full-line stores stretching as far as Guam and Puerto Rico. Reports in 2019 show that it had a population of over 130,000 employees and annual revenue of $ 24.9 Billion in 2017. Its flagship store is located at Macy's Herald Square in Manhattan.
Mission and Vision Statement
A mission statement is a short summary of the goals and objectives of a company. In this case, Macy's Mission statement is about 'seeing opportunities arising from afar and coming up with the relevant strategic paths to capitalize on them, and this is by embracing technology to meet the needs of the target customers.' No doubt, Macy's have the necessary components to fulfill its mission statement. For example, they have made use of technology by offering online shopping and tracking of shipping in real-time by customers.
The vision statement is about 'operating as a nation-wide brand for both Macy and Bloomingdale while being customer-focused at every outlet.' The company is focused on building a strong brand image in the market. The key features entailing its vision statement are; a dynamic brand at the national level and customer-focus. The question thus arises, do they have what it takes to fulfill their vision statement?
The answer is yes. In-fact the store has surpassed the national status or level stretching its territories as far as Puerto Rico. Not only that, it has been able to create a strong brand image and is now a household name. This is through its various initiatives on 'Going Green' and community service, which has earned it a positive image to the public.
The annual report for the financial year ending on 2nd February 2019 from Macy's features many things. Unsurprisingly, the company has made a staggering $24.9 billion in revenue. This is attributed to the overall growth in sales by 1.7% on the basis of ownership and by 2.0 % on an ownership and licensed basis. It has a record 130,000+ employees led by CEO and chairman, Jeff Genette. The report also features online sales platforms like; store pickup, Macy's Systems and Technology (MST), and Blue mercury, subsidiaries that deal with the companies' electronic and online data processing needs.
So far, so good, the report has all the vital elements that constitute a good report, and the statements, both financial and non-monetary, are quite impressive. This is taking into consideration the high rate of competition from other brands like Walmart. What the company can do is play by the rules of 'consistency' which is about aiming to deliver quality offerings every time. They should strive to avoid shocks or surprises, e.g., a sudden drop in the quality of products or even customer service.
The main focus under this will be about studying the financial health of the company. This will include variables like; looking at the previous financial periods (years), bad and good ratios, figures in Dollars ($) and Percentages (%), and current status compared with past conditions.
The financial health of Macy's is quite commendable. There has been a 0.38% increase in revenue to $ 25.739 billion from 2018 to 2019. The main thing to note is that the revenue streams have been fluctuating from one financial year to the next. For example, in the last decade, the best year was in 2015, when the company had a revenue of over $ 28 billion. That's a 12% drop to the current year's figures. This shows that the company could well be underperforming and has a bigger potential than where it is currently at.
One of the most important ratios that can be used to see the financial health of the company is the Current Ratio. This shows the ability of the company to pay off its short-term liabilities. For example, in the last decade, this ratio has ranged from a high of 1.53 to the current 1.28. In figures, the score stands at $ 8.30 to 6.48 billion in the asset to liability ratio. This shows there is still a healthy margin for the company to comfortably handle its liabilities and still have something left to sustain them in case things go south.
Macy's closing stock price at the New York Securities Exchange is at $15.43, which is 127.2 % lower than the annual high of $35.06. This shows that it is less attractive for the potential stock investors, i.e., most people invest when stock prices are crazily going high. There have been better times even so. On 16th July 2015, the stock prices were at a record price of $ 72.80 per share. Generally, the prices have not gone past that figure again. The closest was 65.75, 17.3% shy of the highest record.
Internal Factor Evaluation Matrix (IFE)
The Internal Factor Evaluation Matrix is a method or technique that analyses or evaluates strategies used by an organization in terms of the strengths and weaknesses of the internal processes or factors (Matrix, I. F. E.,2012).The processes or factors that are of great importance include; leadership, employee satisfaction, customer service, and financial management, just to mention a few.
The leadership at Macy's is obviously doing a good job. The figures speak loudest. They have prevented the company from going into bankruptcy by maintaining a healthy margin between asset and liability. Jeff Genet, the CEO, and chairman has steered the retail juggernaut in the right direction. Leadership has always remained an important aspect of the corporate world. With good leadership, the success of a company is assured.
The human resource is the most important part of any organization, profit, or non-profit. Sure there is automation in today's world, but some things just can't be automated. So far, no company is perfect, and people working at Macy's have varying opinions about the working conditions. Overall, the approach used in Human Resource Management is a mixture of hard and soft approaches. For example, Accounts executives make over $66,000 per year. This is a clear indicator that Macy is a good employer.
Financial management is central to the success of a company. This is because it provides and manages the funds needed to run the organization. In the case of Macy's, financial management seems to be going on strong. The company has not even come close to bankruptcy and other financial problems in the last decade. Its financial managers have been able to optimize operations and use of assets to keep sound financial health. For example, its profit margin ratios between 2008 and 2010 grew by 3.4, i.e., from 1.4 to 4.8.
Marketing Mix/ Strategies (4 ps)
The marketing function is of great importance to any company looking to get its product out there to its target consumer. A marketing mix is a set of tools or techniques that a company can control or manipulate so as to ensure that the product is purchased by the customer. We will draw from the Boston Growth share matrix (Product Portfolio matrix).
The matrix is about several functions. They include Brand marketing, product management, portfolio management, and strategic management. Borrowing from this concept, Macy's have gone the extra mile to employ them. For example, to market their brand, they have stretched their area of operation from over 45 states in the United States to as far as Colombia, Guam, and Puerto Rico. The company has thus created a competitive brand image that has been able to withstand competition.
Product management has also become a major concern. The most obvious include a toll-free communication channel that customers can communicate their feedback concerning the products. The company has made use of online platforms to ensure their products can be purchased and shipped remotely by the buyer. The company has also placed its outlets in strategic positions. Like in New York, a place where their products are in high demand.
The 4Ps feature; the Products are of high-end brands (Louis Vuitton, Nike, Adidas, etc.) and feature all sorts of goods, from household items, sports items even personal stylists. There is a balance of quality with quantity. Pricing is by looking at costs of supplies, age of buyers, and volume of purchases and loyalty of customers. For example, the price of goods from India is pricier due to the shipping costs incurred by the company so as to acquire them. Youngsters also get a discount on products like fashion and accessory items.
The place aspect at Macy's entails strategic positioning of outlets to ensure that the products have the best chance of getting to the target market. They have over 800 outlets in 45 states of the United States. As mentioned earlier, the idea is to expand the horizons and take advantage of new or unexplored opportunities. This is in harmony with the company's mission statement, which is mainly about capitalizing on opportunities.
Promotion is aimed at creating public knowledge of the presence of your product. Macy's relies on television, radio, and magazines for advertising. It also relies on social media, e.g., YouTube, and also has a website to display its offers. It has a catalog to make it easier for customers to see what is available. It also makes use of online purchases with shipping provisions. Macy also holds an annual parade for the Thanksgiving celebration. All these efforts have attracted a huge customer base.
The other 3Ps are; People, Processes, and Physical evidence. This creates a 7Ps matrix. Respectively they entail; recognition of the over 150,000 workers as the unseen force behind Macy's success, direct interaction with customers in the purchase processes, e.g., by improving product offerings as per the feedback from customers and the company is accessible both online and offline. This makes it possible to carry out purchases without the inconvenience of being there physically.
In conclusion, as we can see, the marketing mix for Macy's is not approached with a 'business as usual' attitude. This has enabled them to carve out a niche for themselves in a very competitive industry. The Company is working tirelessly to become the best retailer of its class in the world. It won't be a surprise if they turn this ideal into a reality.
This will be about looking at the major contrast with the closest competitors. We will do this by looking at market share and include some factors in the competitive profile matrix (CPM) and compare the findings to those of another major competitor. The examples of the competition are from Wal-Mart, Kohl, and JC Penney. The major comparison factor we will look at is the amount in revenue made by each.
Wal-Mart is a North American retailer founded in 1962 by Sam Walton. It is currently headquartered in Bentonville, Arkansas. Today, it is a retail juggernaut with 11,000+ outlets in over 27 countries in the world. Revenue as of 2019 stands at $514.4 billion. Kohl is a retail chain founded in 1962 by Maxwell Kohl and has over 1,100 outlets in the US. Its revenue is $20.229billion in 2019. JC Penney is a department store chain that is in at least 49 states of the US. It is headquartered in Plano, Texas. Its revenue of 2019 stands at $12.02 Billion.
Walmart is clearly the market leader in this case. The combined revenue of the three other companies does not even come close to Walmart's gigantic returns. It has a wider resource backing, which enables it to expand its operations across national borders to as afar as India and Spain. It is also the largest company in the world by revenue size (Roberts & Berg, 2012). From these facts, we can easily conclude that Macy's is a long way from achieving competitive advantage or market leadership status.
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