Week 7 Homework

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:

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

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

-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

With the instability of the political and economic climates, future trade policies may negatively impact the industry. Potential barriers to trade could result in an increase in costs for department stores. Typically, this increase will be passed on to the consumer in the form of higher prices for the same products.

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

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

In this segment, the retailer J.C. Penney will be analyzed against the department store retail industry, with particular emphasis placed upon their competitors, Macy’s and Kohl’s. The major components to be discussed will include the general external environment (i.e. demographics, economics, politics, legal requirements, technologies and global expansion), the industry environment, the competitive environment, the driving forces and the key factors for success within the industry. In terms of the general external environment, the retail industry is a multi-trillion dollar business in the United States alone and maintains operations primarily due to consumer spending. Such purchases rely upon the disposable income of

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.

At an interest rate of 15% per year (3.75% for three months, the amount to borrow equals

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).

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.