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

2. Overview 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

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

4. Growth
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. 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.

5. 2009 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

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

8. Existing Mission
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.

9. New Mission and Vision

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

11. Proposed Mission
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.

12. SWOT
San Francisco, CA

13. SWOT Strengths Strong brand equity Strong advertising
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 Threats
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. Critical Success factors
CPM
Macy's
Dillard's
Nordstorm
Critical Success factors
Weights
Rating
Weighted Score
0.0 to 1.0
1 to 4
1. Advertising
0.12 4
0.48 3
0.36
2. Financial Position
0.1
0.3 2
0.2
3. Store locations
0.4
4. Market Share
5. Price Competitiveness
0.24
6. Product Quality
0.11
0.44
7. Technology
0.08
8. Customer loyalty
9. Merchandise Variety
0.09
0.27
10. Customer Service
Totals 1
3.42
2.79
2.69

17. EFE

18. Positioning Map

19. Internal Audit

20. Organizational Chart

21. My Macy’s

22. Financial Trends

23. IFE Key Internal Factors Weights Rating Weighted Score 0.0 to 1.0
0.0 to 1.0
1, 2, 3 or 4
Internal Strengths
3 or 4
Strong brand equity
0.09 4
0.36
Strong advertising
0.08
0.32
Economies of scale
0.06
0.24
Ethical, socially responsible, and sustainable company with strong value
0.07
0.28
Structured Code of conduct for all the company's vendor
Healthy portfolio
0.05 3
0.15
Innovating company
0.2
Bloomingdales a subsidiary of Macy's appeals to upscale customers while Macy's offers "affordable luxury" items.
0.03
0.12
Large piece of the market share
0.04
Internal Weaknesses
1 or 2
Macy's has a declining net profit
0.1 1
Downturn in economy for in store shopping
Lack of diversification in the merchandise 2
Weak merchandise departments such as mattresses, furniture, and handbags causing the firm's monetary loss
Macy's most profitable brand (Liz Claiborne) is even experiencing some sale loss
Macy's has not been able to find a middle ground between Wal-Mart's low prices, and Bloomingdales high prices while maintaining a reputation
Macy's has to overcome the client's perception of impersonality of national brand. (it is not true that one size fits all)
Totals
2.76

24. Strategic Formulation

25. SWOT Matrix
(S1,O1) Open stores in new locations not already near. (O2,S1) Open stores internationally (O3, S8) Combine different stores websites to each other so they are easier to go between
(W2, O3) Develop online programs that offer incentives when you shop online. (O5, W4) Cut out the departments that are not performing to focus on those that are growing
(S2, T6) Advertise to different groups to expand customer basis (S1, T3) Use the strong Macy's brand to target the same group of customers as other retail stores (S7, T1) Use company innovations to expand into worldwide markets to boost revenues
(T4, W4) Cut out more high priced goods to promote the lower priced goods in stores (W6, T4) Instead of carrying all high end brands, bring in more reasonably priced goods for all consumers

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

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

28. Space Matrix

29. The IFE Total Weighted scores
IE Matrix
Hold and maintain market penetration
The IFE Total Weighted scores
And product development
Strong 3.0 to 4.0
Average 2.0 to 2.99
Weak 1.0 to 1.99
High 3.0 to 4.0
The EFE Total Weighted Scores
MACY'S
Medium 2.0 to 2.99
Low 1.0 to 1.99

30. Matrix Analysis Summary
Alternative Strategies IE
SPACE
GRAND
Count
Forward Integration x 2
Backward Integration
Horizontal Integration
Market Penetration 3
Market Development
Product Development
Related Diversification
Unrelated Diversification 1
Horizontal Diversification
Joint Venture
Retrenchment
Divesture
Liquidation

31. QSPM

32. Recommendations
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.

33. Implementation

34. EPS/EBIT 16.76 stock price on 12/31/2009 need 1909308 stocks to sell
Macy's EPS/EBIT
(In millions with 25% difference for sales)
Common Stock Financing
Debt Financing
Combination(70% debt 30% stock)
Recession
Normal
Boom
EBIT
$ ,010.00
$ 2,680.00
$ 3,350.00
$ ,010.00
$ ,350.00
$ 2,010.00
Interest $ $ $ $ $ $ $
EBT
$ ,008.72
$ 2,678.72
$ ,348.72
$ 2,009.10
$ 2,679.10
$ 3,349.10
Taxes $
$ 1,179.20
$ 1,474.00 $
$ 1,178.64
$ ,473.44 $
$ 1,178.81
$ 1,473.61
EAT
$ ,125.60
$ 1,500.80
$ 1,876.00
$ ,124.88
$ 1,500.08
$ ,875.28
$ 1,125.10
$ 1,500.30
$ 1,875.50
# of Shares $ $ $ $ $ $ $
EPS $ $ $ $ $ $ $
Tax Rate
0.44
16.76 stock price on 12/31/2009
need stocks to sell
954,654.00
outstanding shares 420.1
421,054,654.00
$ ,009,308.00

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

36. Projected Income statement

37. Projected Balance Sheet
Macy's Balance Sheet
in millions
ASSETS
2009
2010 projected
Comments
Current assets
Cash and equivalents
$1,385.0
$1,567.0
Increase in cash from decrease in inventory
Accounts and notes receivable
$360.0
$450.0
More accounts receivable
Merchandise inventories
$4,769.0
$1,907.6
Decrease by 60%
Supplies and prepaid expense
$226.0
Total current assets
$6,740.0
$4,150.6
Other assets
Other intangible assets - net
$719.0
Goodwill
$3,743.0
$501.0
Total other assets
$4,963.0
Property and equipment
Property and equipment, at cost
$10,442.0
$13,063.4
Property valuation increase
Total assets
$22,145.0
$22,177.0

38. Projected Balance Sheet
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term debt
$966.0
Merchandise accounts payable
$1,282.0
Account payable and accrued liabilities
$2,628.0
Income taxes
$28.0
Deferred income taxes
$222.0
Total current liabilities
$5,126.0
Long-term debt
$8,733.0
$8,765.0
$32 million loan
Other long-term liabilities
$2,521.0
$1,119.0
Shareholders’ equity
Common stock, and shares outstanding
$5.0
Additional paid-in capital
$5,663.0
Accumulated equity
$2,008.0
Treasury stock
($2,544.0)
Accumulated other comprehensive income
($486.0)
Total shareholders’ equity
$4,646.0
Total liabilities and shareholders’ equity
$22,145.0
$22,177.0

39. Evaluation

40. Balanced Scorecard Area of Objectives Measure of Target
Time Expectation
Primary Responsibility
Customers
1. Improve Brand Identity
Company Report
Yearly
Marketing Department
2. Respond to costumer demand for change
Costumer survey results and Company report
Managers/Employees
1. Employee Satisfaction
Employee survey
Human Resources
2. Quality training
Store inspection and web costumer survey
Chief Operating Officer
Community/ Social Responsibility
1. Eco-Friendly company
New products made with organic materials. Volume of recyclable materials improvement
Quarterly
2. Ethical Employees
Volunteerism
Charitable giving
Biannually
Operations/Processes
1. Innovation
Number of new merchandise, products
COO
Product development team
2. Store image
Numbers of Macy’s store who have remodeled
Store Planning, Construction and Design
3. Worldwide expansion
Numbers of store opened in different country
Financial
1. Company Growth
Increase Profit
Chief Financial Officer
2. Reduce Debt
Decrease of expenses

41. Projected Ratio Macy's 2009 Projected 2010 1.31 0.81 0.38 0.44 0.79
1.31
0.81
0.38
0.44
0.79
3.77
1.88
1.89
1.91
2.35
2.25
1.84
1.06
1.09
4.93
12.68
0.41
0.045
0.054
0.015
0.025
0.016
0.027
0.075
0.13
20.19
17.94
0.83
1.41
-5.97% 3%
14.72%
41%
14.73%
41.13%
Liquidity ratios
Current
Quick
Leverage ratios
Debt to total assets
Debt to equity
Long-term debt to equity
Times-interest-earned ratio
Activity ratios
Fixed Assets Turnover
Total Assets Turnover
Inventory Turnover
Profitability ratios
Gross profit margin
Operating profit margin
Net profit margin
Return on assets
Return on equity
Price-earnings ratio
EPS
Growth ratios
Sales Growth %
Net Income Growth %
Earnings per share Growth %

42. M Update

43. Stock Price History

44. Macy’s Video

45. Questions

46. Sources
"Macy's Inc. History." Macy's Inc.. Sanger and Eby, Web. 7 Apr <
"Organizational Chart, Macy’s." The Official Board. March 6, Web. 7 Apr <
"Macy’s." Company-Statements-Slogans. Web. 7 Apr <
Hart, Carly. "Macy’s 2009 Reorganization Means 7,000 Layoffs." Yahoo Voices. Web. 7 Apr <
"Macy." Yahoo Finance. April 5, Web. 7 Apr <"Macy." Yahoo Finance. April 5, Web. 7 Apr Interactive
"FDO: Munich Stock Chart- Macy’s." Bloomberg. April 5, Web. 7 Apr <
"Financial Ratios for Macy’s." Barchart. April 5, Web. 7 Apr <
"Social Responsibility." Macy’s Inc Web. 7 Apr <
“Maps." Macy’s Inc Web. 7 Apr <
"Macy’s Fact Book 2011." Macy’s Inc. April 2, Web. 7 Apr <
David, Fred. Strategic Management Concepts and Cases. 13th ed.,. Upper Saddle River: Prentice Hall, Print.
Supman, Jacqueline. "Case Study: Macy’s Private Label." Merchandise Strategies. Web. 4 Apr <jacquelinesupman.com/downloads/jsupman