MACY’S Strategic management case study Andrea Baril, Marie-Michele Lachance, Ashley Cleary, Sylvia LaBrie

1. MACY’SStrategic management case study Andrea Baril, Marie-Michele Lachance, Ashley Cleary, Sylvia LaBrie

2. Company Overview History of Macy’s Growth 2009 Events and Issues Existing Mission and Vision statement New Mission and Vision Statement SWOT Analysis External Assessment CPM EFE Positioning Map Internal Assessment Organizational chart Financial ratios IFE Matrix Strategy Formulation SWOT Matrix Grand Strategy Matrix BCG Space Matrix Data Space Matrix IE Matrix Matrix Analysis QSPM Matrix Strategic Plan for the Future Objectives Strategies Implementation Issues EPS/EBIT Projected Financials Evaluation Balanced Scorecard Key Future Ratios Overview

3. History Macy’s Thanksgiving Parade 1932 Rowland Hussey Macy

4. 1859 Macy's first-year sales were approximately $85,000 with an advertising budget of $2,800. • 1902 Macy's moves to Herald Square in New York City. • 1923 May Company acquire a department store company in Los Angeles, adding to its growing regional coverage in Akron and Cleveland, OH, and St. Louis. • 1930 Bloomingdale's joins Federated. First-year sales for Federated were $112 million. • 1996 Bloomingdale's opens its first California stores with four locations - three in the Los Angeles area and one in Palo Alto.www.macys.com is launched. • 2005 • Federated begins operating nationwide under two store nameplates - Macy's and Bloomingdale's - as all regional department store names are converted to the Macy's brand. • Macy's launches a new customer loyalty program, with escalating benefits for its largest customers, as it issues new credit cards for about 14 million accounts. • Federated acquires The May Department Stores Company. The acquisition creates a stronger, more resourceful company with more stores nationwide. • 2008 • Macy's began piloting a new localization initiative called “My Macy's” in 20 local markets as it consolidated three divisions - Macy's North into Macy's East, Macy's Northwest into Macy's West, and Macy's Midwest into Macy's South (creating a new Macy's Central division). • The company celebrated Macy's 150th birthday on October 28. • 2010 • Bloomingdale's opens in Dubai, the company's first international presence. • Macy's ends the year with more than 1.2 million Facebook friends. Growth

5. Macy’s operates 850 Stores in 45 states. • Laid off 7,000 employees, which is roughly 175,000 workers. • Cut their dividends by more than half. • Target customer is “older parents or working older couples who are college educated and earn more than $82,570”. • Has been in business for 151 years 2009

7. Our vision is to operate Macy's and Bloomingdale's as dynamic national brands while focusing on the customer offering in each store location. Existing Vision

8. Our goal is to be a retailer with the ability to see opportunity on the horizon and have a clear path for capitalizing on it. To do so, we are moving faster than ever before, employing more technology and concentrating our resources on those elements most important to our core customers. Existing Mission

9. New Mission and Vision

10. Macy’s brings distinctive national brands to its customers while still offering them an affordable luxury. Proposed Vision

11. At Macy’s we focus on our customers needs by offering a wide range of products from clothing to furniture. We expect our employees to remain professional by following our code of conduct, which in turn demonstrates our strong value as a company. We see our firm as constantly innovating to expand our online market worldwide which will help maintain our growth and profitability to our shareholders. Our purpose as a company is to contribute to charitable organizations and remain socially responsible towards the communities we operate in. Proposed Mission

12. SWOT San Francisco, CA

13. SWOT • Weaknesses • Macy as a declining net profit • Downturn in economy for in store shopping • Lack of diversification in the merchandise • Weak merchandise departments such as mattresses, furniture, and handbags causing firm money loss • Macy’s most profitable brand (Liz Claiborne) even experiencing sale loss. • Not being able to find the middle ground between Wal-Mart’s low prices, and Bloomingdales high prices while maintaining reputation. • Macy’s has to overcome the client’s perception of the impersonality of national brand Strengths • Strong brand equity • Strong advertising • Economies of scale • Ethical, socially responsible, and sustainable company with strong value • Structured Code of conduct for all the company’s vendor • Healthy portfolio • Innovating company • Bloomingdales a subsidiary of Macy’s appeals to upscale customer to upscale customers while Macy’s offers “affordable luxury” items. • Large piece of the market share

14. SWOT • Opportunities • Open new stores to boost revenues in the medium term • There is a growth trough overseas operation • There is a growth of sales in the online retail spending • Many smaller stores are looking to be bought out because of the recession • Merchandise such as apparel, cosmetics, and children’s clothing are experiencing fastest growth • Robotic machines to help sales such as IPods and IPads • Opportunities to buy out smaller brands because of its size • Threats • The economic recession in the United States • The increase of the minimum wages in the United States • Intense competition in the retail stores such as Dillard’s, JC Penney, and Saks • Lower price competition • Numerous employee layoff • A change in customers has occurred over the past year, but Macy’s has not changes to satisfy customers.

15. External Audit Arlington, VA

16. CPM

17. EFE

18. Positioning Map

19. Internal Audit

20. Organizational Chart

21. My Macy’s

22. Financial Trends

23. IFE

24. Strategic Formulation

25. SWOT Matrix

26. Rapid Market Growth Quadrant I Quadrant II StrongCompetitivePosition Weak Competitive Position Quadrant IV Quadrant III Slow Market Growth • Related Diversification • Unrelated Diversification • Joint Ventures Grand Strategy Matrix

27. Financial Strength <FS> Liquidity 4.0 Cash Flow 4.0 Inventory Turnover 3.0 Earnings per Share 1.0 Price earnings ratio 2.0 Environmental Stability <ES> Technological Changes -3.0 Rate of inflation -4.0 Price range of competing products -4.0 Barriers of entry into market -1.0 Risk involved with business -5.0 Y Coordinate = -.6 Industry Strength <IS> Profit Potential 4.0 Growth Potential 3.0 Financial Stability 2.0 Ease of entry into market 4.0 Productivity 3.0 Competitive Advantage <CA> Market Share -1.0 Product Quality -2.0 Customer Loyalty -3.0 Product Lifecycle -2.0 Control over suppliers and distributors -3.0 X Coordinate =.8 Space Matrix Data

28. Space Matrix

29. IE Matrix

30. Matrix Analysis Summary

31. QSPM

32. Reconsider inventory-unsuccessful departments such as furniture, mattresses, and handbags would be the first to cut out. • Focus on growth of the successful merchandise to meet customers needs. • Connect Macys.com with Bloomingdales.com to give customers the accessibility to visit both sites easily. • Advertise online shopping more intensely to help potential growth. Recommendations

33. Implementation

34. EPS/EBIT

35. Assumptions -Borrow 32 million over 8 years at 4% interest -Cut out 60% of inventory -Generate 600 million additional income. Projected Financials

36. Projected Income statement

37. Projected Balance Sheet

38. Projected Balance Sheet

39. Evaluation

40. Balanced Scorecard

41. Projected Ratio

42. M Update

43. Stock Price History

44. Macy’s Video http://video.foxbusiness.com/v/1113195521001/keeping-the-macys-brand-fresh-in-a-tough-economy/

45. Questions

46. "Macy's Inc. History." Macy's Inc.. Sanger and Eby, Web. 7 Apr 2012. <http://www.macysinc.com/AboutUs/History/default.asp&xgt;. • "Organizational Chart, Macy’s." The Official Board. March 6, 2012. Web. 7 Apr 2012. <http://www.theofficialboard.com/org-chart/macy-s>. • "Macy’s." Company-Statements-Slogans. Web. 7 Apr 2012. <http://www.company-statements-slogans.info/list-of-companies-m/macys.htm>. • Hart, Carly. "Macy’s 2009 Reorganization Means 7,000 Layoffs." Yahoo Voices. Web. 7 Apr 2012. <http://voices.yahoo.com/macys-2009-reorganization-means-7000-layoffs-2604039.html>. • "Macy." Yahoo Finance. April 5, 2012. Web. 7 Apr 2012. <"Macy." Yahoo Finance. April 5, 2012. Web. 7 Apr 2012. http://finance.yahoo.com/echarts?s=M Interactive • "FDO: Munich Stock Chart- Macy’s." Bloomberg. April 5, 2012. Web. 7 Apr 2012. <http://www.bloomberg.com/quote/FDO:GR/chart>. • "Financial Ratios for Macy’s." Barchart. April 5, 2012. Web. 7 Apr 2012. <http://www-04.aws.barchart.com/profile.php?sym=M&view=ratios>. • "Social Responsibility." Macy’s Inc. 2012. Web. 7 Apr 2012. <http://www.macysinc.com/aboutus/sustainability/>. • “Maps." Macy’s Inc. 2012. Web. 7 Apr 2012. <http://www.macysinc.com/Macys/maps.asp&xgt;. • "Macy’s Fact Book 2011." Macy’s Inc. April 2, 2011. Web. 7 Apr 2012. <http://www.macysinc.com/Investors/vote/2011_fact_book.pdf>. • David, Fred. Strategic Management Concepts and Cases. 13th ed.,. Upper Saddle River: Prentice Hall, 2007. Print. • Supman, Jacqueline. "Case Study: Macy’s Private Label." Merchandise Strategies. Web. 4 Apr. 2012. <jacquelinesupman.com/downloads/jsupman Sources