From time to time, the leadership of a company tends to fail. Factors behind the failure could always be established and analyze. With the realization other company leaders could learn from the failure so that they could do better at their own companies. The write-up below will entail a deep in-look into various aspects of the case of J.C Penney and Ron Johnson, who were both termed as business leaders.
The case briefly described entails the following events. J.C Penney was in charge of a store that was initially a dominant entity in the retail business. It was evident until he brought in a manager that ran things to the ground. As the company was struggling, he sought ways to find a market gap but to no avail. After a discussion with the board of directors on the way forward, they concluded that Ron Johnson would help revive the store.
Ron Johnson was a man with outstanding qualifications; hence after consideration, he was enacted as the new CEO of the company. He came with his vision that was aimed to transform the old concept into a new appealing idea to attract customers. The new concept was not, however befitting to the former customer base; hence most of them would be lost in the change. The strategy the company used to win and maintain its customers also changed. Many employees were let go in the process (Raffaelli et al., 2016)
The management team of the organization also got altered to suite Ron Johnson. The team's first advisory act was to take down the headquarters at Plano. The Logo of the company also got changed to better suit Johnson. The general rule shifted from transparency to plain opacity with every step to progress as a company coming to Penney as a surprise. His rule could be termed as a dictatorship as his word was termed final and would be executed. The aftermath of his leadership was a decline in net sales, loss of money amounting to up to $ 1.38 billion, loss of the workforce and fall in stock value (Raffaelli et al., 2016).
With the flow of events mentioned above, it is possible to pinpoint a few areas where the problems arose from. To be with, the loosing of the initial customer base. J.C Penney initially had a customer base that dwelt mainly on discounts and promotions to purchase large amounts of goods, but Ron Johnson did away with this. The company was already struggling, and losing more customers was not helping it in any way. The new marketing strategy was termed as confusing and edgy to the old customers. At this point, the company should have sought for ways to bring in new customers while maintaining the old ones.
Moreover, under Ron Johnson's leadership, they made significant changes without first simulating the effects of the change. Ron Johnson should have tested his new methods of pricing on a few of the shops before taking it up in all of the shops. It would have allowed him to lower the risk of failure. It would have also helped him to re-strategize and develop a new model that would absorb more customers while maintaining the old ones, the employees and the headquarters.
Lastly, the method of electing the next successor, whose job was to save the company was un-informed (Poage, 2016). The election of the leader got based on his previous achievements, but they did not consider if he was fit for the role at hand. Ron Johnson lacked the spirit of team effort that Penney had cultivated. He also could not master the art of industrial timing as it would aid in knowing when to act and when not to act. It was their thought that since he had worked in successful companies, he could make this one better too. He ended up applying tactics that worked in other companies but were not relevant to J.C Penney co-corporation.
Penney decided to take in a new manager to better the sales of the company. Ron Johnson, on the other hand, can be described to be more concerned about proving to the people that his methods were efficient as compared to making his decisions to safeguard the future of the company.
Leadership Theory and managerial best practice concept dictate that the steps that should have been followed to solve the arising problems include the following. The company should have adopted a more transformational leader (Shaw, 2016). A transformational leadership according to the leadership theory is one where the leader gets considered by their ability to identify the necessity of change then they gain commitment of others, create a vision that guides change and finally actualize the change. The leader should have adopted various characteristics such as the flow of information by communication, setting up realistic goals, transparent leadership and strategic planning.
To solve the problem that was in J.C Penney co-corporation, Johnson should have considered engaging with the already present customers and the staff to give him a gist of how they view the stores and what they would have needed for it to be well suited for them. This would enable him to create a pricing model based on customer needs. Also, during actualization, he would have considered implementing it bit by bit. For full implementation, he should have explored the options and deemed it fit for the consumer.
In conclusion, it is evident that a company’s leadership determines how successful it will be. Poor leadership will be followed by failure in a company whereas good leadership will lead to its success. A good leader should have characteristics such as embracing team effort, be of good communication, be transparent and finally be transformational.
Poage, J, (2016). Inside Practices for Outside Success—Outside Ideas for Inside Success. Design Management Review, 27(3), 8-13.
Raffaelli, R., Margolis, J. D., & Narayandas, D. (2016). Ron Johnson: A Career in Retail.
Shaw, R. B. (2016). The logic and limits of leadership blind spots. Leader to Leader, 2016(80), 12-17.
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