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Strategic Operations Management: Macy’s Inc Research Paper

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Updated: Jun 17th, 2022

Introduction

Operations management is an approach to the management practice in which executives of the firm plan, supervise and control all the business processes (Bowman, 2009). The management process is also concerned with redesigning as well as realigning the operations of the firm to attain the specific goals.

The process of designing and realigning involves coming up with various strategies including business strategies, operations strategies as well as corporate strategies that are critical in the attainment of the organizational goals (Chase et al., 2007). In essence, strategic operations management encompasses strategies and procedures that the firm undertakes to achieve its goals.

The paper examines the way organizations apply strategic operations management processes, in particular, the business and operations strategies. Macy’s Inc is one of the companies that have utilized strategic operations in the management processes. The paper critically examines Macy’s operations and business strategies.

In the analysis, the paper will examine the linkages between operations strategy and business strategies in the attainment of the organizational goals through the application of various analytical tools including PESTEL, porter’s five forces, BCG, supply chain and the value chain. In addition, the paper will also examine various technological applications that are critical in the supply and value chain applied in the operations strategies.

The link between operations and business strategies

Operations strategies and business strategies

Operations strategies refer to an organization’s layout detailing the decisions that the business utilizes to achieve the set targets (Cigolini et al., 2004). Operations strategies involve designing, supervising and control of the business processes in order to attain the set goals and objectives.

On the other hand, business strategies entail practices that businesses utilizes to achieve the long-term objectives such as growth, allocation of resources and globalization (De Treville et al., 2004). In addition, business strategies encompass the way a business carries out its accomplishments compared to the rivals. In other words, business strategies involve processes that contribute to competitive advantage.

The company, mission and vision

Macy’s, Inc, a subsidiary of Macy’s company, is one of the leading national retailers dealing in a variety of products including furniture galleries, clothing, jewelry, beauty products, accessories as well as footwear among others. The firm was founded in 1929 and has corporate headquarters in New York and Cincinnati. In addition, the company operates over eight hundred departmental stores as well as furniture arcades in over forty states. The company currently has over 170,000 personnel.

Macy’s Inc. vision is to be an Omni-channel retailer that provides iconic trademarks in its stores as well as through dynamic online websites worldwide. Further, the firm’s familiarity with the needs of clients is critical in maintaining unique identity and focus to the consumers. The mission of the firm is to achieve augmented sales levels of products. Further, the corporation strives to expand profitability, enhance return on capital as well as maximize the returns on equity.

The company strives to maintain and expand its share in the retail chain market by offering merchandise of high value to the consumers through the combination of fashion and quality at economical prices. As such, the firm seeks to undertake a number of strategic issues to maintain its position in the retail chain market.

In addition, in order to offer the customers the best shopping experiences, Macy’s Inc. is developing skills in its retail operations. Actually, the personnel of the company is recruited based on skills and strength. The firm has also increased the focus on the needs of the millennial clients that account for the largest proportion of the nation’s populace. In essence, the company plans to improve sales and profits by offering products to the customers between the ages of 13 and 30 years.

Macy’s Inc. operations focus on the satisfaction of the customer needs. As such, through the talented and the experienced personnel, the company undertakes aggressive execution of customer-centric tactics to the attainment of competitive edge of rivals. In addition, the company’s openness and honesty in conversing with the stakeholders ensure proactive transfer of information between stakeholders updating the personnel, suppliers, company analysts and media on current invaluable operational developments.

The skills, judgment and talents of Macy’s Inc. personnel are significant in the operations of the corporation. In other words, the employees work to enormous extents in ensuring the achievements of the strategic goals of the firm. In fact, the workforce is essential in the attraction and retention of clients, thereby gaining competitive advantage.

Macy’s Inc. business strategy

The firm’s business tactics encompass My Macy’s localization, multi-channel integration and MAGIC selling strategies. The business strategies play significant roles in propelling sales levels. To begin with, through My Macy’s localization strategy, Macy’s molds the merchandise as well as the shopping experiences in specific stores to the customers frequenting such stores.

Through, this strategy, the firm has gained significant competitive advantages over rival firms since Macy’s is capable of providing customers with exact products in the right localities and at the precise moment (Evans & Berman, 2001). In addition, the firm’s “My Macy’s 2.0.” internal initiative has augmented sophistications the company service delivery to the clientele.

Secondly, the multi-channel strategy has enhanced the company’s sales in a number of ways. For instance, the tactic incorporates the stores to the internet as well as mobile gadgets that allow the delivery of stock to customers in any locality. Additionally, the strategy utilizes online fulfillment centers that deliver merchandise to clients in different regions leading to improved customer shopping experience.

Third, MAGIC selling strategy allows the firm to meet and engage clients through asking questions, giving options and pieces of advice as well as inspiring the clients to purchase the firm’s products. Further, the MAGIC selling process has ensured customer contentment leading to increasing sales (Gunasekaran et al., 2004).

Strategic operations

The company strategic operations revolve around reaching the target clients at the shortest time possible, in the most convenient way and at the least cost possible. As such, the company strives to create a channel of distribution that endeavors to attain the major operational goals.

The strategic operations are based on the company mission of providing value to the customers. The strategic operations of the company include modernized supply chain, customer-oriented management and the corporate strategies that are supported by suitable technological applications. The company is currently focusing on offering satisfying customer shopping experience in all its stores.

As such, the company aims to streamline and harmonize operations in all its retail stores as well as supply chain processes in order to respond speedily to the needs and requests of the customers. The significant program in the retail store’s operations is to discover and disseminate best-in-class practices, procedures and measures to guarantee continuous implementation of novel and innovative standards.

Technology is the major driver to attain the required standards. The company’s regular guide will provide comprehensible and viable course of action for the retail store’s development, illustratable supply of products as well as in-store communication procedures to set up perfect implementation and operational excellence.

In addition, the company has continued to adapt system landscape, supply chain as well as exchange demanding scheduling procedures. The adaptation of the business processes will enable the firm to enhance in-season flexibilities experienced in the fashionable products, attain increased responsiveness to varying trends and to accomplish the economies of scale in all the retail activities.

Essentially, all the company operations are focused on fulfilling the consumer needs. As such, the company has adopted the sell-through oriented perspective or pull model in the strategic operations.

The current strategic operations of the firm can be observed in increased capital investments on the development and improvement of its stores. For instance, the company has developed Herald Square store in New York to combine all the products under one roof, increasing the growth of the company sales.

The diversification processes of the operations require that the firm’s supply chain reflect the customer needs as well as vision and mission of the company. Moreover, the company is also focusing on the supply chain design that mirrors the client needs to enhance the sourcing of distinctive merchandise to the stores. The adaptation of the appropriate supply chain design results in increased competitive advantage.

Environmental analysis

Porter’s five forces

The analysis of the retail chain industry in which Macy’s operates exploits the application of five forces model developed by Porter. The model provides the necessary tools that are critical in the appraisal of the competitiveness of the companies within the retail chain industry (Heikkilä, 2002). Most importantly, the model offers analytical tool on how the external environment has influenced the strategic operations and business strategies.

The buyers bargaining power

The consumers can effortlessly surrogate the products and services offered by Macy’s company in the retail industry through purchasing the products provided by other companies in the industry. As a result, the organization’s share of the market can be abated. Therefore, the buyers have high bargaining power in the industry.

Bargaining power of sellers

Companies within the retail chain trade control higher proportion of the market. As a result, the firm engages large number of suppliers in business. The control of larger segments of the market gives power to the Macy’s since the firm can create scarce strategies to the suppliers by switching to other potential manufactures and wholesalers effortlessly and cheaply. In principle, the suppliers in the retail industry enjoy low purchasing power.

Threats of new market entrants

The ever-increasing competition in the retail chain industry due to the mushrooming of other industries in the trade compels the firms to incur additional expenses. Actually, Macy’s incurs the additional costs in sustaining trademark devotion as well as marketing of products. Most importantly, the presence of outstanding delivery chains, localities, and trademark as well as the financial capital of the companies provide the advantage of warding off potential competitors

Competitive rivalry in the industry

Companies operating in retail industry are very aggressive. However, due to the market leadership capabilities of Macy’s in the industry, establishment of the operations in the industry is uncomplicated. In other words, the company utilizes its technological advancements as well as financial strengths, thereby increasing the competitive edge over the other firms. In addition, the increased competition in the trade reduces the share of market controlled by corporation. In this industry, competition is high.

Threat of substitute products

The players in the retail chain industry offer similar diverse products. The existing firms in the industry offer convenience and low prices, thereby augmenting substitute threats. Moreover, consumers are embracing online shopping due to price benefits gained from the companies by passing savings to buyers. The sprawling of various alternatives presents the Macy’s with frantic operations. As a result, the corporation ventures

Boston Consulting Group (BCG) analysis

The BCG is an invaluable framework utilized in the appraisal of Macy’s trademarks portfolio strategic position (Hansen & Birkinshaw, 2007). Further, the tool is important in comprehending the investment decisions that Macy’s Inc. should undertake.

BCG MATRIX

Relative market share

Relative market share

Stars

The stars entail the products that do better than the rivals in the market operations do (Shanahan, 2002). In Macy’s Inc., online sales are classified under stars since they provide greater prospects for increasing the company’s proceeds. Therefore, the firm should increase investments and development of online sales. In fact, over 40% increase was realized in online vending in 2011. Therefore, online sales are invaluable in the lasting achievement of Macy’s.

Cash Cows

The cash flows represent the goods that enable the company to attain leadership position in the market. However, the goods bear minimal growth prospects in the future. The over 800 departmental stores continue to provide constant flow of returns that can be ventured in Stars.

Question Marks

The products with low proportion of the market but have high prospects for growth in the market is accounted for by the Question marks (Langabeer, 2000). Private labels brands such as clothing designs have the potential of capturing the market share through the provision of funds for innovation to make the brands attractive to the consumers.

Dogs

Dogs refer to the goods with a low proportion of the market and are not attractive as well as have low growth prospects (Porter, 2000). Macy’s warehouse stores fall under the Dogs category since the company does not sell products in bulk compared to competitors such as BJ’s and Costco wholesale clubs. In essence, the company should not invest further in warehouses.

PESTEL analysis

Political aspects

Macy’s Inc. recognizes the significant role played by the political environment in ensuring trust and success in the operations. For instance, the friendly and stable political environmental enables smooth operations of the firm.

Economic aspects

The firm continues to experience growth in the operations as well as sales in America through the utilization of multi-channel stores. Additionally, the firm’s returns on invested capital and cash flows have increased over the years leading to enhanced shareholder value.

Socio-cultural aspects

Culture influences the performance and productivity of Macy’s in a number of ways. First, the corporation recognizes the worth of its personnel’s ideas and beliefs without prejudice. The company also satisfies its client social assurance by the provision of high-quality goods and services

Technological aspects

The utilization of contemporary technology enables efficiency and competitiveness of Macy’s. For instance, the company’s online shopping experience has increased the company’s sales as well as proceeds. Further, the utilization of computer tablets and hand-held gadgets has increased competitiveness and efficiency.

Environmental aspects

The company recognizes the significance of environmental sustainability. As such, the firm improves the environment through the elimination of wasteful undertakings as well as utilizing the scarce resources efficiently.

Legal aspects

The flexible legal requirements in the US provide an environment that is conducive for Macy’s operations. Further, the company adheres to the legal regulations concerning quality, safety and job conditions of the employees.

Supply chain management and service delivery

The delivery of products at Macy’s focuses on the improvement of its transportation channels such as cubes and containers (Yu, 2012). The firm also supplies products through online sources, mobile as well as stores. Further, through the company’s multi-channel delivery approach, the products of the firm are provided to the consumers in incorporated and holistic channels.

The link of operational strategy to business strategy

The achievement of the company’s optimal targets depends on the relationship between the strategic operations and the business strategies (Smith, 2002). For instance, the multi-channel integration, MAGIC selling and localization operation strategies of the firm must adhere to the conditions dictating the business environment such as political, economic, socio-cultural, technological, environmental and legal aspects.

In addition, the firms operations including the delivery series and service delivery to customers must de designed in such a way that counter the threats that may jeopardize the operations of the firm in the market such new competitive rivalry in the market, ease of product substitution as well as new market entrants (Irwin, 2003).

Moreover, the layout of business choices that are critical in the attainment of objectives must consider the performance of the firm’s products in the market to aid in the development of framework for appraising brand portfolio in trade.

Strategic appraisal of strategic operations

Supply chain and value chain analysis

Macy’s Inc. has managed to create efficient distribution channels for its products as well as increased worth of operations through the utilization of technology leading to increased sales and precise inventory (Lakshminarasimha & Vijayan, 2008). For instance, through the utilization of Electronic data interchange (EDI) and bar code scanning, the company is capable of effectively tracking stocks in delivery locations.

Further, the utilization of the departmental stores for brick-and-mortar sales and fulfillment centers have increased the efficiency in the delivery of orders made through the web. Moreover, with the adoption of the Radio frequency identification (RFID) technology, the firm can read the various inventory tags delivered at a distance. Actually, the use of RFID has led to augmented levels of sales and delivery of inventory as well as efficiencies.

The technology has also ensured reduced expenses. In principle, the RFID expertise has enabled Macy’s to achieve value through improving the accuracy of the firm’s inventory.

In other words, the expertise enables the incorporation of warehouse management structure and bar code scanning processes as well as standard cycle inventory calculations in the supply centers, thereby increasing stock accuracy by over ninety percent. Moreover, the technology is invaluable in increasing sales and reducing costs through pushing the tagging of inventory to the vendors.

Exploitation of value chain and quality

Macy’s Inc. has undertaken various steps to organize its operations through the integration and cooperation of communication as well as production chambers to ensure increased value and satisfaction for clients (De Treville et al., 2004).

The firm also utilizes the value chain to increase efficiency in the distribution of inventory. Macy’s Inc. majorly utilizes technology in its activities to operate efficiently as well as offer quality products to the consumers. For instance, the use of RFID technology has enabled augmented sales through stimulating the multi-channel strategy.

In fact, the technology has led to increased online sales by over forty percent. The expertise also increases consumer satisfaction through provision of assistance in the selection of products. In addition, the denim fit finder and beauty shop have enabled the selection of perfect brands across multiple brands.

Moreover, the use of RFID expertise has enabled precise placement of inventory according to insignia, magnitude and fashion accelerating delivery and efficiency. Essentially, values in operations are undertaken to add more value to the products the company offer to the consumers.

Conclusion

In conclusion, the strategic operations of Macy’s Inc depend on its operations tactics and business strategies. The firm employs multi-channel, localization and MGIC selling strategies in the operations. The operations strategies depend on the macro-environment forces such as competitors, technological, political, socio-cultural, and economic aspects as well as well as customer needs in industry that Macy’s operates.

In addition, the provision of high-quality products to the customers is paramount the firm. Moreover, the utilization of innovative expertise is critical in ensuring the attainment of effective value and effective inventory delivery channels. In fact, the exploitation of RFID expertise has led to augmented levels of efficiency and sales at Macy’s Inc.

References

Bowman, C 2009, “What are dynamic capabilities and are they a useful construct in strategic management?” International Journal Management Review, vo.11 no.1, pp.29-49.

Chase, RB, Jacobs, FR & Aquilano, NJ 2007, Operations management for competitive advantage, McGraw-Hill, New York.

Cigolini, R, Cozzi, M & Perona, M 2004, “A new framework for supply chain management: conceptual model and empirical test,” International Journal of Production Economics, vol.24 no.1, pp.7-41.

De Treville, S, Shapiro, RD & Hameri, AP 2004, “From supply chain to demand chain: the role of lead time reduction in improving demand chain performance,” Journal of Operations Management, vol.21 no.3, pp.613-627.

Evans, JR & Berman, B 2001, “Conceptualizing and operationalizing the business-to-business value chain,” Industrial Marketing Management, vol.30 no.2, pp.135-148.

Gunasekaran, A, Patel, C & McGaughey, RE 2004, “A framework for supply chain performance measurement,” International Journal of Production Economics, vol.87 no.12, pp.333-347.

Hansen, T M & Birkinshaw, J 2007, The innovation value chain,” Harvard Business Review, vol.16 no.4, pp.121-130.

Heikkilä, J 2002, “From supply to demand chain management: efficiency and customer satisfaction,” Journal of Operations Management, vol.20 no.4, pp.747-767.

Irwin, R 2003, “Strategic cost management: the value chain perspective.” Journal of Management Accounting Research, vol.37 no.16, pp.179-197.

Lakshminarasimha, A & Vijayan, A 2008, “Value Chain Analysis: Social Networking Communities,” Journal of Marketing Management, vol.3 no.3, pp.34-42.

Langabeer, JR 2000, “Aligning demand management with business strategy,” Supply Chain Management Review, vol.4 no.2, pp.10-22.

Porter, M 2000, “Location, competition, and economic development: local clusters in a global economy,” Economic Development Quarterly, vol.14 no.1, pp.15–35.

Shanahan, YP 2002, “A contingent examination of strategy-cost system alignment: customer retention and customer profitability analysis,” Managerial Auditing Journal, vol.13 no.7, pp.411 –18.

Smith, M 2002, “Derrick’s Ice-Cream Company: applying the BCG matrix in customer profitability analysis,” Accounting Education, vol.11 no.4, pp.365 –375.

Yu, W 2012, “Business environment, employee competencies and operations strategy: an empirical study of retail firms,” Journal of Management and Mathematics, vol.6 no.1, pp.321-327.

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