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Business Strategy | John Lewis Ltd Case Study

Introduction

Every company needs to analyse its external, internal and competitive environment to keep one step forward in the fiercely competitive business market. Managers work on this analysis continuously to adjust their strategies with reflecting on the environment in which the company is operating. It is a useful exercise to execute an environmental study at the starting of the approach reviewing process. Being appointed as corporate strategy manager, here the prime responsibility is to discuss the external environment analysis of the company John Lewis Ltd. of United Kingdom in this piece of writing. The following assignment will give some information and data after studying of the competitive and environmental analysis of the company. It will help the company in making tactical actions and strategic objectives, directions.

Background of the company

            The company John Lewis Ltd recruited me as a Corporate Strategy Manager, and the following report is going to discuss the external environmental analysis of the company. John Lewis Ltd is a high end chain of departmental stores, which is operated in throughout the United Kingdom (Bloomberg.com2018).The company is owned by the partnership of John Lewis that is created in the late 1800s. Furthermore, a store of the company offers various ranges of products like garden and home, lighting and furniture, sports, electrical, leisure, child and baby and beauty products etc. (Bloomberg.com2018).  

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the company is operating. It is a useful exercise to execute an environmental study at the starting of the approach reviewing process. Being appointed as corporate strategy manager, here the prime responsibility is to discuss the external environment analysis of the company John Lewis Ltd. of United Kingdom in this piece of writing. The following assignment will give some information and data after studying of the competitive and environmental analysis of the company. It will help the company in making tactical actions and strategic objectives, directions.

Background of the company

            The company John Lewis Ltd recruited me as a Corporate Strategy Manager, and the following report is going to discuss the external environmental analysis of the company. John Lewis Ltd is a high end chain of departmental stores, which is operated in throughout the United Kingdom (Bloomberg.com2018).The company is owned by the partnership of John Lewis that is created in the late 1800s. Furthermore, a store of the company offers various ranges of products like garden and home, lighting and furniture, sports, electrical, leisure, child and baby and beauty products etc. (Bloomberg.com2018).  

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Figure 1: John Lewis Ltd

(Source: Johnlewispartnership.co.uk 2018)

The company has 49 stores all across England, among which 12 are “flexible format” stores and “At Home” stores(Johnlewispartnership.co.uk 2018). The central vision of the company is to provide a successful business, will be empowered by its principles and peoples. The company's partnership has near about 85,500 partners, and all the benefits and profits are distributed and shared by all the partners (Johnlewispartnership.co.uk 2018).

LO1 Analysis of the impact and influence which the macro environment has on John LewisLtd

Analyse the impact and influence of the macro environment on a given organisation and its strategies (P1)

Study of the external environment gives a proper description of the outer scenarios that a company can face at the time of operations(Morganet al. 2017). However, sometimes it can be good, and sometimes it can be wrong, both the situations felt an enormous impact on the company's activities. However, a useful analysis of this situation through PESTLE factorswill help the organisation in making a strategic decision through the understanding of the changes.

PESTLE Analysis

PoliticalFactors

John Lewis is one of the most reputed companies in the United Kingdom and its operation mostly affected by the political factors of the country. Competitors from Europe enter the United Kingdom's market without any limitations. As described by Taskin (2017), the company is introducing in the rising market, so the company has to face competitions from different companies. However, decreasing corporate tax of 30% to 28% helps the company in making more profit in future(Morganet al. 2017).

Economic Factors     

The economic condition of the United Kingdom becomes very sensitive and is facing a turbulence period in recent times. Moreover, the changes rate of interest has also impacted the companies, operating in the United Kingdom.

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Figure 2: Recent economy structure of John Lewis

(Source: Salaman and Storey2016)

As justified by Salaman and Storey (2016), intense competition within every market of the retail sector forces the retailers to provide more amounts of incentives to their respective customers. It would influence John Lewis Ltd. as most of the time the prices are needed to drop down to cope up the market.

SocialFactors

The massive boom in the trend of fashion helps the company a lot in earning the profit, as peoples are shopping branded items from their stores. As commented by Cathcart (2014), this can be good news for the company because the trend is persistence for quite an extended period and varies from fashion clothes to kitchen appliances. Shifting preferences of the consumers and correspondence lifestyle become an excellent opportunity for the company. The company needs to introduce the latest fashion and more branded products to take the chance of modern materialistic society.

 

Technological Factors          

Booming of the technology and recent craze in the online shopping are giving companies an opportunity to reach towards the consumers of any region at the point of time. Internet shopping, which becomes the primary trend of the retail industry, directly influences the sales approach. As described by Juddet al. (2016), in this company the administration, management and paperless operations are conducted through the information technology system.

Legal Factors

As described by Storeyet al. (2014), there are important laws like Sales of good Act, 1979, Trade description Act, 1968 and Data Protection Act, 1998, which impacted hugely on the operations of this company. The above laws make sure the production of the goods of satisfying standards with the consent of the seller. Moreover, these laws also assure the customers that the products are appropriately defined. The Data Protection Act discusses not exchanging the customer's data to gain profit from the lists of the niche market.

Environmental Factors

After the Copenhagen rise, environment becomes a fast growing and new factor of the companies. Eco-friendly activities and cutting of emissions, carbon footprints now become a serious issue among the companies as they felt the impact on the environment, most precisely in climate change. As described by Morganet al. (2017), the company John Lewis made small changes like energy-saving cars and recyclable papers over the years. The environment is not anymore a backburner issue, and the company needs to enhance its environment-friendly features like using of solar panels more efficiently.

SWOT Analysis

SWOT analysis is a useful procedure that comprehends the weakness and strengths and distinguishes the threats and opportunities of any company. It helps in utilising the business connection by cutting the business sector. SWOT Analysis helps in uncover the opportunities, which can act as the advantages for the company. Moreover, the proper understandings of the weaknesses help in overseeing and wiping out of the threats that the companies are unaware of.

 

 

 

 

Strengths

Weaknesses

  • Being a reputable company, the company has significant numbers of upmarket retail stores in the United Kingdom.
  • The company offers various fashion brands besides its own brand in its products and services.
  • The company has near about 35,000 employees, and the chain is known as “Never knowingly undersold”.
  • John Lewis enjoys a significant brand of embodying value for money of practical qualities to promote the customer’s loyalty.
  • As criticised by Ramanathanet al. (2014), the company has limited amounts of items compared to the supermarkets which provide maximum options available to the customers.
  • As criticised by Tidyet al. (2016), after 2010, the performance of this company slipped over for a while, and it lost near about 50% of the company's value during that year.
  • Moreover, the company recently started to decrease their product’s prices to cope up the competition that may devalue their brand.

Opportunities

Threats

  • There are many young professionals, who are living away from home and image and brand conscious, it increases the target group of this company.
  • As commented by Chkanikova (2016), increased purchasing power parity leads to the improved lifestyle that increases business for all retailing companies.
  • Enlargements of the market in Asia will also play a crucial role in the company's success in near future.
  • Moreover, the intense competition from the supermarkets, grocery stores, host of different convenient stores and corners stores make the business problematic for the company (Hearn 2014).
  • The competition law ensures the merger of various convenience stores to develop the large-scale space that also causes a problem for the company.
  • The target group of this company comprises of the old people that may cause a severe threat to the company. As presently, people tend to look younger than their ages, they may be reluctant to shop from the store.

            The primary purpose of this competitive analysis is to analyse the weaknesses and strengths of the competitors present in the market. It helps in making the strategies and taking of decisions, which will give some significant advantages to the company. The framework of Porter’s Five Forces will help in analysing the business that determines the competitive intensity, effectiveness and profitability of the industry.

Interpretation of information and data applying environmental and competitive analysis (M1, D1)

 

Porter’s Five Forces Model

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Figure 3: Porter’s Five Forces Model

(Source: Poutsma and Kaarsemaker 2015)

 

Level of competition

Retailing industry has a considerable amount of competitions, and the situations are getting worse day by day after diversifications of the products from the noncore turf. As justified by Poutsma and Kaarsemaker(2015), the company John Lewis is facing more competition from companies like Tesco, Asda, Next, Marks & Spencer because of, it not only sales the drinks and foods but also household and apparel goods. The company tried its best to stay at the top level by providing high quality products and services, but through this process, the company may face the devaluation of the brand.     

Threat of Substitutes

                There is no substitute for clothes and foods so; the warnings from the alternatives are relatively low for the company. Here, the risks mainly come from the rival retailing houses like Marks and Spencer, Peter Jones, as they also offer the high quality and branded products with a marginal difference in costs (Cathcart 2014). Moreover, the company Tesco and Asda introduced more affordable alternatives like dinner jackets, which increases the threats of the substitutes.

The threat of New Entrants

                Due to the massive investments of capitals in this sector, the risks of new entrants are relatively low. Being a mature industry, the new entrant in the retailing industry often fails to deliver something significantly new to the markets. Moreover, substantial brand value and loyal customer base, which is essential for any homogeneous market, help the reputed company (Paranque and Willmott 2014). Furthermore, the lack of knowledge of the market makes it difficult for the foreign investors to make a successful entry into a new market. 

Bargaining Power of Buyers

                This type of competition is relatively high, and the concentration of the buyers gives an advantage in choosing from various rules and tastes. Moreover, the costs of switching from one to other brands are relatively low, and there are significant numbers of alternatives. Also, after 2013, the economy of the United Kingdom is facing a downwards movements, which forced the retailers to cut down their prices and focus on the needs of the customers (Salaman and Storey 2016). 

Bargaining Power of Suppliers

                Threats from this sector are relatively low and being a listed company; John Lewis shows an attractive turnover which attracted the suppliers. As commented by Paranque and Willmott (2014), the suppliers always want to showcase their products on renowned retailer's shelves to reach the maximum numbers of customers. Like other companies, John Lewis is not entirely dependent on the suppliers as, it mainly sells its own brands, which means despite furnished goods, it buys raw materials that are good for margins.

LO2 Assess organisation’s internal environment and capabilities

Analyse the internal environment and capabilities ofJohn Lewis LTD (P2, D1)

Value chain analysis is one of the most used frameworks of internal analysis, which added value to the customers of the concerned organisation. Value chain analysis sums up the activities, which create value and cover four areas like operations, productions, marketing and sales (Paranque and Willmott 2014). It deals with organisational operations like accounting, payroll and training and in this case, the internal management like recruiting, human resources of John Lewis Ltd. comes under this segment.

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Figure 4: Value Chain Analysis

(Source: Paranque and Willmott 2014)

            Production sector comprises of the products and services like child, baby, beauty, leisure products of this company, which are already existed in the market. Both the productions and operations of this company are upstream activities that help in creation of the value for the company. Mhough marketing and sales are other two criteria, which also creates the value for the company but mainly they are revenue driven and down stratum activities. The marketing of this company describes the process of reaching of the products and services to the consumers whereas, the sales procedures comprise of the delivery of the products and services to the customers. 

Internal environment to assess strengths and weaknesses of John Lewis LTD (M2)

Internal analysis of strengths and weaknesses (SWOT)

Strengths

Weaknesses

  • As commented by Hughes (2015), the company also provides option for the online shopping besides its international delivery.
  • The efficient management team of this company was highly praised in previous years for its reverse John Lewis fortunes.
  • The product's prices are higher than that of the supermarkets, which limited the targeted groups.
  • The absence of the experiences of the international business, lack of sufficient marketing strategy and competitive advantages are act as the weaknesses for the company.

Opportunities

Threats

  • Online stores and designing of the new and trendier clothes make the company favourite among the youth stars.
  • Useful product selections, expanded networks can enable the company’s business by reaching towards the peoples by opening more subway brands and flagship stores through the recent pursued growth strategy.
  • Recently, this company faces different issues regarding the robbery, property loss, safety of the night workers due to its inadequate security systems.

 

 

 

           

 

Conclusion

            Being a report of Corporate Strategy Managementof John Lewis Ltd of United Kingdom, the above writing discussed the external environment analysis with the help of some significant tools in above writing. It is a famous retailing company in the United Kingdom and offers a various range of products and services like clothes to kitchen appliances. From the above writing, this can be said that being a famous company the company has good brand loyalty and customer base, but lack of strategic decisions and international experiences in business can act as a threat for the company. Moreover, reasonable substitutes from the market houses like Tesco, Asda causes problems for the company beside having a significant own brand level of this company.