Ron Johnson leaves and Apple to boost J.C. Penney Sales

A recent New York Times article reports that in the past several years online shopping has become a huge competitor with retail stores. Because of this high level of competition, retailers are trying to find effective ways for shoppers to go to the retail store to make purchases, rather than just buying goods online. J.C. Penney, like many other retailers, has been struggling since the recession with the expanision of online shopping. In order to boost their sales, J.C. Penney has turned to Ron Johnson, head of Apple Retail stores, to lead their business.

On November 1st, Ron Johnson will become the chief executive of J.C. Penney and will be in charge of the marketing, product, and merchandising functions of the business. Johnson has been a huge aid the success of Apple in regards to their retail stores and it is expected that he will gain the same type of success for J.C. Penney. In the NY Times article, Deborah Weinswig, a retial analyst for Citigroup said, "If he can take a little bit of the magic and sprinkle it on to J.C. Penney, you could really create the next generation of retailing." Apple's retail stores across the country are far from boring due to all of the advanced technology. It is the hope of J.C. Penney that Johnson can put this type of "magic" into their retail stores.

If J.C. Penney puts more money into the cost of labor for more employees or spends more money on displays in their stores, more buyers will come to the retail store rather than just shop online. If J.C. Penney has more exciting sales techniques and sales floors, customers will buy more, thus and increase in the deamnd for J.C. Penney retail stores and their products.

Many were puzzled by Johnson's move from Apple to J.C. Penney becasue Apple retail stores are still thriving. Because Johnson did not seem to be in line for the chief executive postion at Apple and he had always wanted to lead a large retail company, the move seemed promising. Johnson's annual salary as chief executive of J.C. Penney is 1.5 million a year plus a 125 percent bonus if he meets certain targets. Ron Johnson's opportunity cost is shown through him leaving one company and going to the other to gain more. Though Apple is thriving in sales in their retail stores, Johnson loses his job at Apple and gains the retail leadership job he always wanted.

Johnson will have to adjust to the difference in businesses and competitiveness of the two companies. Apple has little competition, while J.C. Penney is in a market that has much competition. The idea that J.C. Penney is in a more competitive market refers to industrial organizations. Apple could be considered and Oligopoly because there are few substitutes for their goods and there are only so many companies in the U.S. similar to them, such as Dell or HP. J.C. Penney could be considered more of a monopolistic competition because there are so many substitutes for the products they sell such as apparel, shoes, house ware, and home decor. In addition, J.C. Penney has many competitors whether they are large mall retailers like themself or a small boutique or home store.http://www.nytimes.com/2011/06/15/business/economy/15shop.html?ref=economy