Influence of External Factors on John Lewis: A Strategic Analysis

BUSINESS
STRATEGY

INTRODUCTION
Business strategy is defined as a plan which is designed to attain targets and expectations
of company in an efficient manner. It is game plan of management to strengthen the capability
and performance of an organisation (Anwar and Hasnu, 2016). This assignment is prepared in
relation with John Lewis which is a Britain based retail organisation. This company is employee
owned and its headquarter is present in London, UK. Organisation offers watches, cosmetics,
giftware, furniture, clothes, food and financial service to customers. This assignment discuss
about influence of macro and micro environment on business firm and its strategies so that
organisational capabilities can be acknowledged in a proper manner. To evaluate competitive
force present in marketplace, porter's five force is mentioned. At last, range of theories, concepts
and models are applied to formulate a strategic plan in context with selected company.
TASK1
Apply frameworks to analyse the influence of external factors and environment on business firm
and associated strategies
Business strategy is referred to the tactics and techniques which are implemented by a
company so that they can earn high profits and revenues. Macro factors are those aspects which
are not directly linked with a company but impacts its business operations in a considerable
manner. There are some frameworks such as Ansoff's matrix and PEST analysis which helps a
company in identifying external forces. These frameworks in respect with John Lewis are
mentioned below:
PEST analysis: It is a strategic tool which helps firms in identifying about social, political,
economical and technological aspect of the region in which company is operations. This will
help in identification of those aspects which can impact business of John Lewis in either positive
or negative manner. PEST analysis for John Lewis is mentioned below:
 Political factor: In case of politics and governance, UK is a stable nation. Government of
country supports retail organisations and charge them low corporate taxes. Other tax rates
in UK is also low due to which it is beneficial for John Lewis to operate there (Chang,
2016). But due to Brexit, large retail firms are impacted in a negative manner. This can
be a disadvantage for concerned company in smoothly operating their business.
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 Economic factor: This aspect of external environment is concerned with the GDP,
interest rate, inflation rate and purchasing power of people. In UK, people have high
earnings due to which their purchasing power is high. This is advantageous for John
Lewis as they can earn more revenues by operating in UK. Increased inflation rate after
great depression of 2018 can impact the profits of company in a negative way.
 Social factor: These factors relates with the value, opinion, belief and attitude of an
individual or society. People in UK are educated and live a standardised life. This is the
reason they prefer to spend on lavish items. This factor is also in the favour of John
Lewis as they offer standardised products to customers in high prices. People will buy
their products to show off their status.
 Technological factor: This aspect of PEST framework is linked with the technological
advancement of a nation. UK is a highly technological and advanced country. People in
UK perform their most of the activities via digital media and online. Updating technology
and machines will help John Lewis in sustaining their customers base for a long time
span (Chen, Eshleman and Soileau, 2016).
Ansoff's growth matrix: This model is referred as a strategic tool of planning that helps a
business firm in adapting right strategy of growth. In case of John Lewis, this growth matrix is
elaborated beneath:
 Product development: In this strategy, a new product is introduced in marketplace
which gains the attention of potential and existing customers. By this, John Lewis can
attain high sales and revenues which will help them in attaining their targets easily.
 Market development: In this strategy to achieve growth, already available products of
organisation are given to customers. This will benefit the company in attaining high sales
that maximises the popularity of firm in a considerable manner.
 Market penetration: This is a basic growth strategy in which a company tries to expand
their market shares and profit margins by offering existing products to existing
customers. Here, company reduces the rates of their offerings or providing free samples
and complementary services to their customer base so high profits can be earned (Christ,
Burritt, and Varsei, 2017).
 Diversification: This diversification strategy is treated as most risky strategy to achieve
growth in which a new products and services are offering in new market so that
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