The impact of governmental action or political challenge on the business’s financial situation and operations?
With the changes pertaining to government fiscal policies, interest rates, inflation and deflation and the consumer credit availability and due to unstable government and political factors, these affect the availability and subsequent merchandise cost. This report reflects the key understanding on government actions and political challenges on the business of the Macy’s retail stores.
The impact of the governmental action or political challenge on the business’s financial situation and operations?
The economic and political conditions are globally and in domestic front are unfavorable for retail stores in the US especially affecting Macy’s. This negatively affected the business and the other operational decisions and results. The changes pertaining to government fiscal policies, interest rates, inflation and deflation and the consumer credit availability, customer debt, tax rates and the unemployment rate and low tourism due to unstable government and political factors affect the availability and subsequent merchandise cost. The retail business as compared to others is seasonal. In the US the increase in revenue and operating cash flow can only be seen at a tremendous hike during the second half of the year wherein there is a more holiday season selling of items (Davis, Yue, & Davis, 2017). However, with the increase in sales during November and December the company also faces back drops and increased expenses to be made against the advertisements, employee bonuses and inventory accumulation which also affects the company finances (Cody, 2017). Considerable alteration in the rate of interest and reduction in assets values negatively impacts the company cash flow and thereby affecting the financial condition. In 2016, the company had a loss of $1,451 million for pension plans and $261 million for the supplementary retirement plan (Chowdhury, & Sarkar, 2017). These plans are for the employees who receive the lump sum amount of the benefits, which negatively affected the company’s operations results, as it has been stated that if the annual lump sum amount which is distributed to the employees exceeds a determined threshold, the company would need to recognize a settlement expense of the unrecognized loss.
Based on your analysis of the governmental action or political challenge, how will the governmental action or political challenge impact the sustainability of the business?
Despite the government regulations and political factors negatively impacting Macy’s and led to a forced closure of the outlets, the company still takes it as an opportunity for them. Looking from the merchandise side, the company can now move from pull strategy to push strategy which will help improve their stock turn (Plazibat, & Dadi?, 2017). The push strategy application will also help them with faster reordering of the merchandising. Looking from the operational side the management can now focus more towards their already existing legal right of selling their products through a Kiosk in Pennsylvania Station, New York. The company still has plentiful of opportunities to cater and grab (Walter, 2018).
Based on your analysis of the governmental action or political challenge, how will the governmental action or political challenge impact the sustainability of the business?
The internal resources of the company, including the business project teams that are available to respond to the opportunity or threat.
According to Phibbs, after understanding the threat from the government and political factors, Macy’s is now working towards the customer satisfaction and is now listening to and understanding of what customers need. They no longer are dependent on the discounts and promotions to communicate their business to their end consumers (Guillot, 2015). The major competitors which are selling online such as Amazon and not affected by the government policies as such the retail stores are being affected and therefore their prices remain low and transactions are near frictionless. In order to survive in the market, there has to be a strategic change in the company, from the discounts which lowers the brand value of positioning as a cheap brand image the company needs to offer a distinguish service to the customers to attract them towards the quality of the retail store and the brands the store offers (McConnell, 2018).
For that reason Macy, has now shifted its attention from the discount retail store and discounting cycle that outbreak stores like Victoria’s Secret. It has been seen from other similar retail store experiences and literature review that in order to attract more customers, company need to indulge in more advance activities. According to Macy’s CEO Jeffrey Gennette, Macy’s is not a commodity business; rather they deal with the experience business (Lisa, 2018)
According to Gennette, they assembled a new task force of a dedicated team involving 8 executives, employees, and managers which is called as what’s New, What’s Next. The team works towards re-imagining the retail future (Susan & Lindsey 2017).
How has information about the situation been communicated to various stakeholders? For example, have any public hearings being held?
Macy has always been in a great interaction with its stakeholders, one way in which the company interacts is person to person, but the information regarding the store closure and strategic changes is given to the customers through the big board’s being placed on the storefront as shown in the figure (Pierce, 2015).
Another method they use is broadcasting via articles on Macy’s; the CEO gave an interview to the media to be able to spread the message to the stakeholders. The internal customers are being told in a meeting and are being told about the new store openings elsewhere.
The internal resources of the company, including the business project teams that are available to respond to the opportunity or threat.
How the situation has affected the company’s public image.
Jeff Gennette has been with the Macy’s for over thirty years. He has recently been promoted to the Chief Executive Officer. According to him, he has only heard the complaints regarding the stores with an assumption that they will stop with the complaints. He became cautious, even for offering his opinions. The situation has affected the brand image and sales. Excepting a few stores are in general hurting and closing. Sales have been declining in Macy’s stores, tremendously every quarter; the company reported a 3.6% reduction in same store sales as compared to the previous year for which the Florida and Texas Hurricanes have been blamed though. However, the coming holiday season this year might help achieve the targets proving as amicable the season as they are hoping it to be. The goal is to reduce the reduction in sales first than to achieve profitability. The goal is to reduce the reduction in sakes to less than 3%. The company has also lost its market value by two thirds and the profits have been reduced by almost half.
What are the potential courses of action to respond to the situation in the current macroeconomic and business environment?
The Macy’s business is dependent upon the employees’ quality and their retention in the company, especially in the scenario when the stores in large numbers are closing. A large number of employees work at Macy’s as entry level workers and some are working in part time positions having high turnover rates. However, the companies need to attract the employees and train them enough to attract the right customers in the store is dependent upon the external factors such as the level of unemployment in the market, the cross industry and competitive wage rates, the laws pertaining to minimum wages and the employee demographics (Lee, & Lee, 2015). The company is also dependent on the managers while working in a highly competitive and challenging environment. It is the duty of the managers and in the development and execution of the business strategies and policies to curb the challenges and situations. If the managers are incompetent and there are circumstances that affects the company negatively in attracting, training and developing the employees also affects the business, finances and business operations negatively (Sarofim, Chatterjee, & Rose, 2018). According to Jeff Gennette, who is the current CEO and Macy’s President, Macy’s provides the customers great product choices and assortments to select from. Macy has ready to wear women dresses, jewelry, perfumes and fragrances, luggage, men and kid’s section, also, watches and shoes. At present, the focus of the company is moving into the technology. As the world is moving towards selling and buying online along with having retail stores such as, Clarks, JC Penny, and Shoppers Stop, the Macy’s also planning to go online and sell products to the customers at home, while looking for products as they experience in retail stores of Macy’s the company is also planning to keep the brick and mortar store alive, though closing a few more stores as a strong strategic move. Thereby stating the governments impact to the stores and opportunity for the brand to develop technologically, calling this strategy as a North Star Strategy (Tokosh, 2018).
How has information about the situation been communicated to various stakeholders?
How will these courses of action impact the business? Make sure to consider both short- and long-term impacts, including operational, financial, and ethical implications.
The course of action will positively impact the business, because as the customers are growing technologically, and considering the work pressure and work life balancing them no longer wish to visit the brick and mortar stores for small purchases. In case the company moves online yet keeping a few stores off line, the customers will be in a position to stay loyal to the company. This will also allow the company to earn more profit and help reduce the cost of hiring and retaining employees. The overall cost will be reduced and finances will be improved significantly. Ethically, it is imperative for the business to move online and care for the customer need, however, the employees will have to part ways with the stores, who are working since long. Although, there are certain strategic changes being taking place, wherein some new stores are opening up, with the new stores coming up the company can rehire the existing employees. The employees can join the company as delivery boys and also through training and development the employees can manage the online business. The company needs to have the right stores at the right places where the customer footfall is high. The company has a short term plan to close over 100 stores, by closing the unproductive locations (Macy’s, 2017).
The role and functions of the third parties and external sources will depend upon the work undertaken in organization. All the government officials and legislators will be indulged in making the business policies and government traits which will be imposed on the organization. in addition to this, the rule of independence in the board of the directors will also be set accordingly by the government in the best interest of the people at large. These external factors will restrict the business policies and strategies framed by the board of directors. For instance, marketing activities and promotional of company in market will be based on the external resources. In addition to this, strategic alliance with other parties will also strengthen the business values of organization. The main role of third parties is to promote the organization to strengthen its business in market. Lobbyists would also be used to influence the decision made by government against the company by creating lobby groups.it will be attempts to influence the legislators and other official groups. There will be public legislators and government officials who will argue on the behalf of the government or the business.
Conclusion
It is analyzed that the course of action taken by the company will positively impact the business, because as all the business challenges and government policies are in the favour of the strategies formulated by the Macy’s Retail store. Now in the end, it could be inferred all the strategic plan of the Macy’s Retail store should be adapted with the changes in the business policies and strategic plans.
References
Chowdhury, J., & Sarkar, S. (2017). The financial impact of retail store closure announcements. International Journal of Physical Distribution & Logistics Management, 47(6), 536-556.
Cody, K. A. (2017). Critical Audit Matters: Improving Disclosure through Auditor Insight. UC Davis Bus. LJ, 18, 259.
Davis, L., Yue, H., & Davis, D. (2017). Shopping orientation, store attributes, and apparel retail format preference. 47(6), 536-556.
Guillot, C. (2015). Issue: Omnichannel Retail Omnichannel Retail.
Lee, I., & Lee, K. (2015). The Internet of Things (IoT): Applications, investments, and challenges for enterprises. Business Horizons, 58(4), 431-440.
Lisa Fu 2018 Macy’s has figured out the formula to survive the retail apocalypse (M) [Online] Retrieved from https://markets.businessinsider.com/news/stocks/macys-formula-to-survive-retail-apocalypse-2018-5-1024738837
Macy’s (2017) macy’s, inc. Announces actions to streamline store portfolio, intensify cost efficiency efforts and execute real estate strategy retrieved from https://phx.corporate-ir.net/External.File?t=2&item=g7rqBLVLuv81UAmrh20Mp55v+jGibw1L7JgzDHFA4NN3hPybrQN5q1DUvHd9XRSehdshMQ9z97WPo7BH9kkaWA==&cb=636382767159070243
McConnell, A. (2018). Hidden agendas: shining a light on the dark side of public policy. Journal of European Public Policy, 25(12), 1739-1758.
Pierce, A. (2015). SeaWorld and the Blackfish: The Lack of Two-Way Symmetrical Communication and Finding the Correct Message.7(6), 56-66.
Plazibat, I., & Dadi?, M. (2017, April). Contemporary Issues in Retail Industry. In International OFEL Conference on Governance, Management and Entrepreneurship (p. 525). Centar za istrazivanje i razvoj upravljanja doo.
Sarofim, S., Chatterjee, P., & Rose, R. (2018). When store credit cards hurt retailers: The differential effect of paying credit card dues on consumers’ purchasing behavior. Journal of Business Research.
Susan Berfield & Lindsey Rupp 2017 Macy’s Has a Plan to Survive the Retail Apocalypse [Online] Retrieved from https://www.bloomberg.com/news/features/2017-11-21/macy-s-plan-to-survive-the-retail-apocalypse
Tokosh, J. (2018). Is the Macy’s in my mall going to close? Uncovering the factors associated with the closures of Macy’s, Sears, and JC Penney stores. Growth and Change.
Walter. L., (2018) Why The New Challenges Of Macy’s Create New Questions [Online] Retrieved from https://www.forbes.com/sites/walterloeb/2017/06/12/why-macys-new-challenges-create-new-questions/#697f55c43f94
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