IKEA and JC Penney Strategies - Case Study Example

The other way in which IKEA was very involved in furniture manufacture is through IKEA’s engineers determining the kind of materials to use ensuring high quality yet at the lowest cost.
            Selection and manufacture of the best furniture were achieved through the internal competition of IKEA’s ten designers and freelancers allowing IKEA to have the best designs in the market. Flat Packaging is the other important point for IKEA in several aspects including reduced costs in shipping and labor and allowing IKEA to meet consumer needs for low-cost furniture augmenting its market share and providing more success in both domestic and international markets. Another important factor for IKEA’s success is bright and inviting large (15000-35000 square feet) showrooms with huge price tags on the furniture and model rooms for the consumer's increasing visibility.
            Listening to customer complaints allowed IKEA to overcome challenges in the American market through the incorporation of designs and product specifications including measurement in inches and augmenting product size to fit American tastes and preferences. Having a self-service ethos through self-assembling of furniture, well-explained pricing and specification in stores and self-service strollers are well envisaged in IKEA’s business allowing for low-cost production and supply.
J.C. Penney’s Fair and Square Strategy
            Johnson developed original ideas for the success of J.C. Penny but demonstrated a lack of foresight and thinking in terms of operations, finance, and logistics which could have been the cause of his failures. He brought new designs and strategies that could have been more successful through the “Fair and Square” strategy if he envisioned its development with a better thinking on operationalizing the plans without much impact and changes to the loyal customer base of the company. Johnson aimed at attracting new customers at the expense of old loyal customers expediting his failure at J.C. Penny.
            It is important that Johnson took personal responsibility for the losses suffered by J.C. Penny in the wake of his Fair and Square strategy that disrupted consumer confidence, reduced market share, declined share value, and resulted in losses. Learning from the mistakes and taking corrective action including new price signage in stores saving amounts on purchases and retail prices and offering ‘gifts’ to consumers is important. Johnson's firing was quite late since the decision by the board to fire Johnson was taken after the company had lost $4.3 billion in sales, decreased market capitalization by 48%, and $5 billion loss in market value for the shareholders. A decision on the inability of the “Fair and Square” strategy by Johnson to result in better sales and profitability should have been taken earlier since it did not stay in tune with the needs of the consumers, especially the loyal J.C. Penny customer base.
            The appointment of Myron Ullman III, as Johnson’s successor, is surprising but was the right decision for the company because of the lack of confidence in Johnson and high losses (Ofek et al., 6). The board, consumers, and investors required reassurance, which could be achieved through Ullman III having been at J.C. Penny before despite causing some of the problems Johnson aimed at correcting. A better understanding of the company’s operations and the need for instant results and tough decision-making within a short time was required of him to have the necessary experience and understanding instead of naming a new person who would require time to understand the business and experiment that could result in more losses for the company.