Week 7 Homework

-A much higher overhead could lead to losses at the beginning because they have to hire many new employees with each opening of a new store: therefore, this could

In the past, JCP had, on average, one price campaign every day. The stores were full of sale signs and retail rise was getting out of control. JCP partnered with numerous exclusive collaborations which was hoped to bring about an expansion for the firm. However, due to the economic slump, the oversaturation of the market, and an expected lack of quality in the goods from the consumer perspective, JCPenney’s success was degrading in contrast to its competitors. (Sloan, 2010).

J.C. Penney is a retail outlet that operates in many locations globally. It deals with product lines such as clothing, footwear, beauty products, electronics, and jewelry. There are several changes that have taken place in the macro environment that promises to increase the fortunes of the company. The advertisement in technology is one single important factor that has increased the performance of the business (Ali, 2007). The company has an elaborate website through which it uses to tap the online market. In fact, thirty percent of the company’s revenue comes from the website.

How much would you pay for a security that pays you $500 every 4 months for the next 10 years if you require a return of 8% per year compounded monthly?

The industry we have chosen is the department store-retail industry. Within this industry, we have chosen the department stores of JCPenney and Macy’s. We find this industry, as well as these two companies, interesting from a strategic perspective. JCPenney has recently undergone a massive strategic restructuring in regards to its pricing, brand offerings, and store layout, pushing it away from the typical department store strategy of discounts and coupons. Its new strategy has become much closer to Wal-Mart’s strategy of every day low prices. Macy’s, on the other hand, has restructured with a push from the economic

Given that the total profit over 8 years is $1.2375B (or $155M per year for 8 years), we will now compute the Present Value of this amount using the following formula:

* 1 million usd in bank and expenditure at the rate of 600,000 usd per month.

c) The present value of $500 to be received in one year when the opportunity cost rate is 8 percent (discounting):

This report presents data describing the differences amongst the two department stores, their fundamental visions, and comparative statistics. Macy’s or Dillard’s: Differences amongst these competitors There are several aspects you can analyze from each department store. Major pieces do set each one apart from the other. Brand names carried by Macy’s and Dillard’s from an average shoppers point of view can go completely unnoticed unless price is involved. For trend shoppers brand names can either make or break a retail store. It can easily determine if he or she will walk to Macy’s or Dillard’s because they already know the store does or does not carry that brand. This is consistent with each department throughout both stores and

2. If you had a payment that was due you in 5 years for $50,000 and you could earn a 5% rate of return, how much

c. How might you adjust the assortments in your department to “pounce” on the misfortunes at Thomas & Blake? Be very specific.

As one of the major retailers in the United States, JCPenney has 1,104 department stores in 49 states and Puerto Rico as of February 2, 2013. The key success of its business is tremendously depending on the sales performance. However, the retail business is highly competitive, with low barriers to entry and low profit margin. Due to large sales plunge in 2012, the company is in financial trouble. The thorough analysis of JCPenney’s financial statements is vital to judge the future performance of its business.

Threat of New Entrant: As a result of the crisis going on at J.C. Penny, many new retailers’ stores have found their way to the market.

* Let us assume that the MXN/EUR experience huge depreciation in 2009 at 18 in 2009, with a growth at 3% for the following years.  The NPV would be €42,655. [7]

6. In this situation, you borrow the $1,000,000, convert it into 1,500,000 Swiss francs. This money would be invested in Switzerland, earning 22,500 francs. After three months, the total of 1,522,500 francs will be converted back to dollars at 1.48, so $1,028,716.