Analyzing the Impact of Macro Environment and Internal Environment in John Lewis Partnership

This report analyzes the impact of macro environment and internal environment on John Lewis Partnership. It includes a PESTEL analysis, SWOT analysis, and VRIO analysis to evaluate the organization's strategies and resources.

Business Strategy
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Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................4
P1 Apply appropriate framework to analyse the impact of macro environment in chosen
organisation and its strategies.....................................................................................................4
TASK 2............................................................................................................................................7
P2 Analyse organisational internal environment in chosen organisation by using framework.. 7
TASK 3..........................................................................................................................................10
P3 Apply Porter' five force model to analyse competitiveness of market in organisation.......10
TASK 4..........................................................................................................................................12
P4 Apply various theories and practices to interpret strategic planning of organisation..........12
CONCLUSION..............................................................................................................................16
REFERENCES .............................................................................................................................17
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INTRODUCTION
Business strategy is the core management function and master plan that used by the
management of organisation to secure the competitive position in the market, carry out
operations, satisfy consumers in order to achieve desirable goals and objectives. In the business
scenario, it is long range sketch of desired image, direction and ultimate destination which is
needed to plan and smoothly designed for achieving effectiveness. Respective report is based on
the John Lewis Partnership Plc which is a British organisation. It operates under the John Lewis
& Partners department stores, Waitrose & partners by providing Banking and financial services
in order to satisfy large no. of consumer’s wants. Respective report is based on analysis and
application of macro environment in chosen organisation and their strategies. Further it includes
internal business environment by using appropriate kind of framework in order to analyse
strength and weakness of respective organisation. It also includes Porter's five force model to
analyse the competitive forces for organisation. At last it includes range of theories, practices to
interpret the strategic planning for a firm in order to gain desirable outcomes.
TASK 1
P1 Apply appropriate framework to analyse the impact of macro environment in chosen
organisation and its strategies.
About organisation:
The John Lewis Partnership is one of UK's largest personnel owned business and parent
organisation of Two very well-known partners as John Lewis & Partners and Waitrose &
Partners (Ansoff and et.al., 2019). They also have two international sourcing offices that are a
soft furnishings factory, kinds of distribution centres, content production hub, various heritage
centres and many more. They liable for producing the products and services innovatively in
order to satisfy consumers needs and wants in proper manner.
Mission:
The mission of Respective organisation is “Provide happiness to employee and best
employment conditions in most successful manner.” The measure of their success rely on the
ability to sustain and enhance the position as an outstanding retailer.
Vision:
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John Lewis partnership has vision to operate all business activities in most successful
manner as per industrial democracy in which personnel share profitability, knowledge and
power. By using respective perspective organisation can be able to motivate their personnel and
positively encourage them in giving one of their best efforts.
Objectives:
The main objective of respective organisation is to reinventing and transform their shops
by develop the products and services by relying greatly on brand, exclusiveness and innovation.
By building Food innovation studio to boost Waitrose & Partner in product development and
healthy eating specialist in order to enhance market share.
PESTEL analysis of John Lewis Partnership:
For an organisation it is very much essential to analyse or evaluate the macro
environmental factors before prepare the strategies and tactics in order to remain competitive in
the marketplace (Auliandri and et.al., 2019). Macro environment is the condition which consider
the economy as a whole, rather than considering particular region or sector.
Here are the PESTEL analysis of John Lewis partnership to analyse the market environment of
UK:
Political factor:
Political factors considers the government interventions in economy specifically major
areas includes tax policies, labour and environmental laws, restrictions, tariffs and many more.
John Lewis partnership Plc. planned to enter in the in rising market of UK which is the part of
European union. The political condition of the UK market place is very moderate as competitors
easily can enter into market without any kind of limit or limitation. In that regards government of
UK decide to lessen down corporate tax from the 30% to 28% which positively impact on
organisational profitability (PESTEL Analysis of John Lewis | Business Teacher, 2019).
Here is the critical evaluation of Political factors of respective organisation:
Positive impact:
Decrease in the corporate taxation is very much important aspect for John Lewis
Partnership in gaining higher level of profitability and sustainability in the marketplace.
Flexibility in taxation policies assist to a firm in selling goods and services to consumers at
reasonable price range.
Negative impact:
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Due to the easy entry and exit in the UK marketplace, gradually enhance the no. of
competitors in the marketplace that enhance bargaining power of consumers on John Lewis
partnership Plc adversely (Why Expand To The UK?, 2020). The competitors of respective
organisation are M&S, House of Fraser, ASOS and Primark. So it is very potential to evaluate
respective factors potentially in order build strategies and tactics.
Economic factors:
Economic factors considers factors which directly influence economy includes rate of
interest, taxation, laws and governance, wages with governmental activities. Respective factors
not have direct relation with business but affects on profitability of organisation. Currently the
economic outlook is very much uncertain due to Brexit and it more likely to affect on retail
industry and their sales, as people not have the spare cash to spend on luxury products and
services. In that regards it directly affect on strategy of organisation to sell goods on high rate.
Positive impact:
In context of John Lewis which is very well known firm in UK marketplace as it is eager
to innovate and potentially gain growth of market (Baumgartner and Mangematin, 2019). Due to
rigid competition in marketplace they can be able to sell more products and services to their
consumers potentially that rise their level of income.
Negative impact:
Due to recession in the economy organisation can not be able to gain higher level of
profitability that hinders their self interest in gaining adequate outcomes.
Social factors:
In social factors consist of the change in taste and preferences of consumers, in that
regards it is the responsibility of organisation to build products and services as per their potential
consumers choice. Available into market created by consumers that caused consumers become
more materialistic. In that regards it is very much potential for John Lewis able to introduce
more branded and latest fashion products to please market base.
Positive impact:
Shifting of consumers taste and preferences that proved opportunities for the organisation
in order to reap important outcomes (Bentley-Goode, Omer and Twedt, 2019). In context of
John Lewis to become more competitive they eager to adopt latest products and services into the
marketplace.
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Negative impact:
Due to change in consumers taste and preferences, for an organisation it is very much
difficult to build products as per consumer demand, as it takes too much cost and time.
Technological factors:
Technological factors consist of the change in trends and technology to handle the works
and activities of organisation (Carp and et.al., 2019). Internet shopping is the main trend in the
retailing industry which directly influence the selling approach of products and services.
Here are the critical evaluation of technological factor for respective organisation:
Positive factor:
In context of the John Lewis partnership by investing lot of money on the technological
advancement in regards of producing products and services that helps to enhance experience
level of their consumers potentially.
Negative factors:
While organisation aimed to opt technological advance tools and techniques that takes
too much time and money that hinders self interest of organisation.
Legal factors:
In legal factors of the organisation consist of the norms and laws, regulations which
directly influence business works and activities (Clemons and et.al., 2019). In context of John
Lewis partnership they follow various regulations such as health and safety, consumer rights and
laws related to renewable resources.
Positive impact:
In context of organisation various kinds of norms and conditions helps to regulate
organisational work in very much smooth manner and bring potential outcomes.
Negative impact:
While an organisation deals in various nations simultaneously, so adaptation of various
laws appear various kinds of problems within the organisation.
Environmental factors:
In respective factor of macro environment consist of change in the climatic conditions,
disposal of wastage and other factors which directly influence organisational works and activities
. In context of John Lewis need to evaluate respective factors and take prompt actions:
Positive impact:
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To work in favour of environment it is very much potential for organisation adopt
regulations related to environment that proved beneficial for organisation to bring loyalty in
heart of employees and consumers.
Negative impact:
Rise in awareness in consumers towards organisation and adaptation of respective
practices charges too much cost and time.
TASK 2
P2 Analyse organisational internal environment in chosen organisation by using framework.
In the competitive world to remain always relevant it is necessary to bring changes in the
present conditions by evaluating the internal environment by using the models and frameworks
that are as follows:
SWOT analysis:
Strength:
 Superb performance in market: The
main strength of respective
organisation that they possess expertise
by entering into the new market and
gaining success from it. Expansion in
market enables to organisation in
gaining new revenue stream and easily
diversify cycle of risk to operate
potentially in market (Cusumano,
Gawer and Yoffie, 2019).
 The another major strength of
respective organisation that they track
record of integrating complimentary
firms by acquisitions and mergers.
They successfully integrated no. of
technology in past few years to operate
their business activities in potential
Weaknesses:
 The major weakness of respective
organisation that they have to invest
more in technology by using scale of
expansion and differ geographical so
they need to put one of their best efforts
in expansion market potentially.
 The another weakness in front of
organisation that financial planning is
not done properly and effectively. The
organisational current asset ratio and
liquid asset ratio shows that
organisation need to use their cash in
most effective manner in order to gain
desirable outcomes (Danso and et.al,
2019).
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manner.
Opportunities:
 The major opportunity for respective
organisation is stable free cash flow
provides respective organisation to
invest in spheres of adjacent. Due to
more cash in the bank helps to invest in
technology as well as in new product
range in order to remain competitive in
marketplace (de Sousa Jabbour, 2019).
 They can decrease cost of
transportation with help of lower down
shipping prices that directly bring down
of John Lewis products that is major
opportunity of respective organisation.
Threats:
 In the market the trend of isolationism
in the world economy lead to similar
kind of reaction from other government
bring negative impact on their
international sales and profitability.
 Change in consumer buying behaviour
by using online channel proved threat
for the existing physical infrastructure
driven supply chain model. So it is very
much potential to evaluate respective
factors properly in order to gain
desirable outcomes.
VRIO analysis:
VRIO analysis is an analytical techniques that used for evaluation of organisational
resources in order to gain competitive advantage (Ghauri, Grønhaug and Strange, 2020). VRIO
is acronym by elaborating names as Value, Rareness, imitability and Organized
Resources Value Rare Imitability Organized
Design of
products
Yes - - -
Supply chain
network
Yes Yes - -
Talented
personnel
Yes Yes Yes -
Monetary power Yes Yes Yes Yes
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Valuable:
The first factor state about that if resources adds value by helping firm by exploiting
opportunities or by defend against threats. In context of John Lewis Partnership the most
valuable factors for organisation are as follows:
 Design of products: Design of products and services is one of most valuable assets for
the organisation as it assist in gaining consumer loyalty (Khanmohammadi, Zandieh and
Tayebi, 2019).
 Supply chain network: Supply chain network proved very much beneficial for
organisation in supplying products and services to ultimate consumer base.
 Talented personnel: Talented personnel is one of most valuable assets in front of
organisation, by providing advance level of training to employees organisation can be
able to gain desirable outcomes.
 Monetary power: Monetary power is very potential as it assist them to expand their
business in other spheres that helps in achieving growth and opportunities.
Rare:
Rare resources that can be acquired by only one or few organisation as it provides
temporary competitive advantage (Kingsnorth, 2019). In context of John Lewis Partnership the
rare resources of the organisation are as follows:
 Supply chain network: Respective factor is rare for respective organisation as they
develop their own network to supply products and services.
 Talented personnel: In context of John Lewis Partnership, they by providing the best
working conditions and rewards to their employees so that they can retain them for long
time.
 Monetary power: Monetary power is very much rare for respective organisation as it not
copied by others easily.
Imitability:
A resource is proved costly to imitate if other organisation does not copy it at a
reasonable price range. Here are the factors that organisation consider not easily imitable in
nature.
 Talented personnel: Respective organisation by providing various kinds of engagement
facilities that helps to build loyalty and sustainability in marketplace.
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 Monetary power: They possess the strong monetary power that is very worthful to
enlarge business opportunities potentially.
Organized:
In an organisation resources does not confer any kind of advantage itself but needed to
organized in proper manner in order to reap benefits out of it (Kitsios and Kamariotou, 2019).
 Monetary power: Respective attribute is very important for organisation and they
needed to properly arrange it and spend on potential spheres.
TASK 3
P3 Apply Porter' five force model to analyse competitiveness of market in organisation.
Respective model helps to analyse the competitive edge to build strategies and tactics in a
specified industry (Kunc and O’brien, 2019). Here are the evaluation of retail industry in context
of John Lewis partnership Plc that are as follows:
Intensity of competitive rivalry:
By using respective factor an organisation can be able to understand the level of
competition in a specified industry. In context of John Lewis Partnership Plc they operated in the
highly competitive market as large no. of fierce competitors already existed in market such as
M&S, ASOS, Topshop and Primark.
Bargaining power of supplier power:
Respective factor of competition states the bargaining power of suppliers if it is high in
nature which means suppliers provides low quality material at high price and if it is bargaining
power is low which means they provide best quality products at low prices. In context of John
Lewis Partnership Plc that operates in the UK marketplace, bargaining power of suppliers is low
as there are large no. of suppliers already provide similar kind of products to organisations.
Bargaining power of buyers:
Respective factor of competition analysis states about the bargaining power of the buyers
or consumers (Liao and Tsai, 2019). If consumers possess bargaining power high then they
demand high quality of products at low price and on other hand if it is low in nature then they
forced to purchase products of low quality at high range. In context of respective organisation
bargaining power of buyers is high as there are large no. of competitors already exist in
marketplace that provide best quality products to consumers.
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Threat of New entry:
Respective factor determines how much easy for organisation to enter into the particular
industry, if the industry is enough profitable in nature (Quenum and et.al., 2019). In context of
John Lewis Partnership Plc the threat of enter into the market is high due to in retail sector there
are less barriers by which an organisation can easily enter into the marketplace. Respective
attribute directly impact on the organisational profitability and sustainability in marketplace.
Threat of substitution:
Respective force is majorly threatening while buyers can easily find out substitute
products and services in attractive price and in better quality. By evaluating respective factor
individual can easily switch towards the another product that affect profitability of organisation
adversely. In context of John Lewis Partnership Plc there are large no. of companies operated in
the marketplace and they competitively provide best products at low price that work as threat for
respective organisation.
TASK 4
P4 Apply various theories and practices to interpret strategic planning of organisation.
To evaluate the competitive strength of the organisation it is very much potential to
examine it by using various kinds of tools, devices and strategies that are as follows:
Porter's Generic strategy:
In porter's Generic strategy includes the various factors that depicts the organisational
strategy in order to gain desirable outcomes.
Cost leadership:
In respective strategy, an organisation sets outs to become the one of low cost producer of
products and services in the market (Rachinger and et.al., 2019). The source of cost advantage
rely on the structure of industry in order to attract large no. of consumer base. In context of John
Lewis Partnership Plc by purchasing products in bulk they can reduce the cost of their final
products and services. Respective attribute contribute in gaining higher level of profitability and
sustainability in marketplace.
Differentiation:
In respective strategy a firm seeks to be capture market by positioned oneself uniquely in
market that possess valuable position in market. In context of John Lewis as they always focus
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on providing the unique products and services by conducting research and development on
regular basis to provide one of best one to their consumers.
Focus:
The generic strategy of focus on relies on the choice of narrow competitive strength of
organisation. They by relying on the segment or group of segments in the industry in order to
build products accordingly (Sanders and Wood, 2019). In context of John Lewis Partnership Plc
they build products for youngsters and people who always want innovation in their products and
services.
In context of John Lewis Partnership Plc by using the differentiation strategy that can
attract the large no. of potential consumers towards them.
Strategic Plan:
Executive Summary
A strategic plan helps an organisation to establish and document its business effectively
to gain a competitive advantage against competitors in the market. John Lewis has decided to
launch a retail outlet in the Vatican city in order to boost its existing sales.
Organisational Structure
John Lewis follows a public sector organisational structure in which the board of
directors as well as the top management are considered the highest authority. The management
makes all the important decisions. The company also has a decentralised structure as the
employees of the company have a stake in the same.
Mission
The mission statement of John Lewis is that its members should be happy as well as
satisfied with the products as well as services.
Vision
The company visions to be a sustainable brand and aims to gain the position of an
outstanding retailer in the market.
Objectives To open a new retail outlet in Vatican city by 2022 in order to enhance its overall
business as well as sales by 20%.
Macro environmental analysis
PEST analysis
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 Political – In order to expand its business in Vatican city, the management of the
company will need to conduct a research in order to understand the political conditions of
the city and if its idea of opening a retail outlet will be successful and adopted by the
customers successfully or not (Wadström, 2019). The city is politically stable, thus it will
not be a tough task for the company to open its retail outlet.
 Economical – The city has an economy that is supported by Roman Catholics from
around the world. Thus, the respective company should develop and formulate
appropriate plans that are in accordance with the economic conditions of the Vatican
City.
 Social – People living in different locations have specific and distinct needs which is the
reason why John Lewis should manufacture and produce products according to the
needs, wants and requirements of the local people. Technological – Appropriate technologies should be adopted in order to attract the
customers and encourage them to purchase the products of the same. This will boost the
productivity of the company in the market and also help it gain an edge against
competitors.
Situation
SWOT Analysis
Strengths
John Lewis is one of the most popular retail
stores in the UK and also offers a wide range
of fashion brands to the customers to choose
from. Thus, it can use this strength to attract
citizens of the Vatican city and encourage them
to buy its products.
Weaknesses
The range of products that is offered by the
brand is comparatively less as compared to
other super markets which can limit its overall
sales. Also, the company will have a limited
staff at the location to cater to the needs of
customers.
Opportunities
Increasing purchasing power of the people can
act as an opportunity for the organisation to
grow its business as well as expand in the
Vatican city.
Threats
Intense competition from local brands can pose
a serious competition to the organisation from
carrying out its operations effectively in a new
market (Zucchella and Previtali, 2019).
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Competitors analysis:
Factors Range Explanation
Bargaining power of
suppliers
It is low. As there are large no. of
suppliers already existed in the
market at Vatican city where
they can bring the raw
material.
Bargaining power of buyer It is high. In context of Vatican city there
are large no. of consumers and
they have various options to
purchase the products and
services from the other
companies.
Threat of substitute It is high in nature. Due to large no. of competitors
already existed in the market
which render relatively same
products as John Lewis
Partnership Plc provides to
their consumers in order to
compete with them.
Threat of new entrants It is high. In respective market the entry
of firms is relatively easy so it
proved hazardous to operate in
such kind of environment.
Market analysis:
For an organisation it is very much potential to analyse market before entering into the
new market place with the help of setting objective, potential actions to achieve them, allocation
of resources and defined criteria to gain success and individuals who are responsible for gaining
success potentially in order to gain desirable outcomes (Rachinger and et.al., 2019).
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SMART
objectives
Potential
activities for
achieving
defined objective
Allocation of
resources
Criteria for
attaining success
Person who is
responsible
In context of John
Lewis they aimed
to open the new
store in market of
Vatican city to
2022 in order to
enhance their
business and sales
by 20%.
The major actions
taken by
organisation to
achieve the
defined objectives
that in regards
conduct the
research and
development in
order to collect
potential
information.
To allocate
resources firstly
they observe the
need to potential
department and
arrange funds to
potential
individual in
order to gain
desirable
outcomes.
To evaluate
success is
enhance
consumer base
and profitability
of organisation.
In that regards the
person who is
responsible is
CEO.
Evaluation and monitoring the plan:
To gain potential outcomes it is very much important for an organisation to evaluate the
plan in order to improve the results in future. To expand in the market they set standards such as
KPI and benchmarking that are tools that set standards and organisation need to follow them for
evaluating their own performance.
CONCLUSION
From the above report it has been concluded that Business strategy is the long term plan
of action designed to attain specified goals or objectives in order to remain competitive in
market. For an organisation it is very much potential to analyse the market environment by using
various kinds of frameworks such as PESTEL for evaluating macro environment, SWOT For
analysing micro business environment and Porter's five force model to examine the competitor
strength that effective proved beneficial while prepare strategies for organisation in order to gain
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competitive edge. After analysing environment of business with help of respective models and
frameworks organisation by drafting strategic plan with objective of amend performance in order
to gain the desirable outcomes.
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Zucchella, A. and Previtali, P., 2019. Circular business models for sustainable development: A
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Online:
PESTEL Analysis of John Lewis | Business Teacher, 2019. [Online]. Available through.
<https://businessteacher.org.uk/pestel/john-lewis.php>.
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