Business Strategy and Environmental Analysis

This assignment requires students to analyze the internal and external environmental factors of business organizations using PESTLE, SWOT, and VRIO frameworks. It also involves evaluating competitive forces using Porter's Five Forces model. The report should include strategic planning, tactics, objectives, and strategies of a company. Students are expected to demonstrate a thorough understanding of business strategy and its application in real-world scenarios.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
LO 1.................................................................................................................................................1
P1 Analyse the impacts and influences of macro environmental factors on business strategies 1
LO 2.................................................................................................................................................3
P2 Analysis of internal environment and capabilities of business organisation.........................3
LO 3.................................................................................................................................................6
P3 Evaluation of competitive forces and market position..........................................................6
LO 4.................................................................................................................................................7
P4 Application of model, theories and concept for devising strategic plan................................7
CONCLUSION................................................................................................................................9
REFERENCES................................................................................................................................9

INTRODUCTION
Business strategies refers to plans and activities developed by an organisation or
company in order to attain desired goals and objectives. John Lewis Ltd. Operates its business in
partnership firm and offers wider range of products and services to its customers. John Lewis
offers products such as jewellery, watches, giftware items, furniture, cosmetic and services
includes computing, direct services and financial services. The John Lewis company provides
employment to approx 83000 persons. The strategic plans of John Lewis company provides
strategic directions to its employees and management and guides them for achieving overall
goals and objectives. The report includes impact and analysis of macro environmental factors on
business and its strategies. Analysis of internal environment and capabilities is done using
appropriate frameworks. Porter's Five Forces model is applied for evaluating and improving
competitive edge and market position. Range of theories, models and concept are applied for
interpreting strategic planning.
MAIN BODY
LO 1
P1 Analyse the impacts and influences of macro environmental factors on business strategies
Every business organisation aims at analysing its internal and external factors so that it
can formulate effective business strategies and policies which help in effectively achieving the
targeted goals and objectives. The macro environmental factors are analysed by John Lewis for
assessing the capabilities of business organisation for accomplishing specific targets and
objectives and developing strategic plans (Holmes Jr And et.al., 2018). The PESTLE analysis is
used for analysing the macro environmental factors and it is explained ion detail as follows:
Political Factors: This includes various laws and regulations, wage legislation, taxation policies,
rules and regulations related to employment and safety of employees, etc. Political factors brings
great influences on the business organisation and business strategies and therefore John Lewis
effectively analyses the political factors of particular country or target markets.
For example: Operations and activities of business gets influenced due to changes in
various political factors. Trade restriction regulation or trade policies leads to bring changes in
business strategies of John Lewis.
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Economic Factors: This includes changes in exchange rates, inflation situation of country, trade
restrictions, disposable income of people in target markets, etc. John Lewis's business operations
and strategies gets influenced and impacted due to changes happening in its economic factors.
For Example: John lewis can get effective benefits if a country is having stable
economic growth or people of country have high disposable income, etc. Business strategies gets
influenced due to changes in various economic factors of a country (Jermias, Gani and Juliana,
2018).
Social Factors: This is known as socio-cultural factors and it includes career attitudes, belief
and values of target market customers, age distribution, education level of country, etc. Business
activities, operations and strategies gets influenced and impacted because of the changing taste
and preferences of target customers.
For Example: Changing lifestyle of people or influences in social norms or target
markets materialistic behaviour brings changes and influences in business strategies and
operations of John Lewis.
Technological Factors: There are various technological developments and up-gradations are
happening in today's competitive markets. This factors includes internet shopping, paper less
transactions and operations, etc. John Lewis effectively analyses and assesses various
technological changes and influences as it leads to bring changes in business operations and
activities.
For Example: John Lewis aims at effectively analysing and assessing the technological
changes happening in the external macro environment of business. Internet shopping and
advancement in techniques and technologies brings effective changes in business operations and
it also influences the business strategies.
Legal Factors: Laws, legislation and regulatory frameworks governs the operations of business
organisation and industries. John lewis focuses on analysing various laws and regulation such as
consumer rights, health and safety law, employment laws and equality laws, because it may lead
to bring great influences and impacts on the working of business organisation and its business
strategies.
For Example: Changes in various laws and regulatory frameworks brings changes and
influences in business operations and strategies, as health and safety needs to be provided to
employees as per the set standards.
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Environmental Factors: The influences of this factor is increasing as its impacts and issues are
also increasing. The environmental factors includes scarcity of raw material, carbon foot prints,
increasing pollution, corporate social responsibility of business, etc. John Lewis aims at
effectively assessing and analysing various environmental factors that can bring changes in
business operations, activities and strategies (Ansoff And et.al., 2019).
For Example: John Lewis focus on developing sustainable products and fulfil its
corporate social responsibility. Business strategies and operations gets influenced according to
the changing environmental issues and its prevention regulations.
LO 2
P2 Analysis of internal environment and capabilities of business organisation
Business organisation and strategies gets influenced by both internal and external factors
of business environment. Business strategies refers to the integral procedure of process which
aims at defining directions and decisions related to allocation of available resources. Business
strategies provides guidelines and directions to business organisation regrading the effective
achievement of targeted goals and strategic objectives of company. John Lewis aims at analysing
its internal capabilities and resources. The internal factors and capabilities are analysed by using
SWOT analysis, which is explained in detail as follows:
Strengths
High Quality Products: John Lewis aims at providing high quality goods and services to its
target customers so that it can effectively meet needs and wants of them. The company also
provides excellent services to their customers. John Lewis has renowned for the relaxed
shopping atmosphere. The business strategies of John Lewis also lays down objectives as
bringing creation, innovation and improvements in performance of company (Carraher, 2018).
Brand Image: John Lewis focuses on satisfying customers by providing them with quality
products and services. This leads to meet needs and demands of customers and they feel satisfied
and happy. Satisfaction of customers brings effective benefits of improved brand image of
company and also develops customer loyalty.
Strong online presence: John Lewis aims to provide effective services to customers so that they
feel satisfied and it lead to bring accomplishment of overall goals and objectives of company.
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The organisation have strong online presence and gain advantages as it is considered as strong
and major player of home care products and also of financial services.
Large product portfolio or range: John Lewis offers large variety of products and services to
its customers in target markets. The business aims at effectively meeting needs and wants of its
target customers and also to bring further improvements and innovation in business performance.
This factor acts as a strong strength for John Lewis company.
Weaknesses:
Lacks experience of international business: John Lewis operates its business in the markets of
UK only, therefore, it lacks experience of international and global business (Gabriel and et.al.,
2018). This brings limited market share, limited target customers, limited productivity and
profitability for business organisation.
Lack of effective strategies of marketing: John Lewis needs to focus on developing effective
marketing strategies for its business so that it can effectively achieve the targeted goals and
objectives. Formulating effective business strategies and policies can bring better results and
outcomes and it also ensures accomplishment of overall goals and strategic objectives of
company.
Opportunities:
Entry in International Market: John Lewis can bring effective and efficient improvements by
developing its business in international and global markets. Entering in international markets
leads to bring effective results and outcomes for John Lewis in form of increased target
customers, increased market share and also increased productivity and profitability.
New product development: John Lewis can also gain benefits and advantages by developing
new products and adding more products in its product portfolio. The company also introduce
personal finance services or insurance services in order to gain available opportunities (Gerard,
2018).
Technological Investments: John Lewis company can also invest more in new and improved
techniques and technologies for gaining better results and outcomes. Investing more in
technologies would lead to bring benefits of improved processes, operations and also employee's
performance.
Threats:
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Rules, regulations and legislation: The changing rules and regulations of target markets may
lead to bring impacts and influences on business operations and also on existing products and
services. John Lewis deals in large product range which have number of rigorous rules and
regulation and brings great impacts on the company and its business strategies.
Intense Competition: John Lewis operates its business as retail markets that have great
competition from companies like Marks & Spencer, Tesco, Asda, etc. The company needs to
focus on developing effective business strategies so that it can gain competitive advantage and
sustain profitability in competitive business environment (González-Rodríguez and et.al., 2018).
John Lewis also aims at analysing its competitive advantages using VRIO analysis,
which is described in detail as follows:
Valuable: This refers to that if the resources of John Lewis adds value to exploit opportunities
and/ or defend threats of company. The resources of John Lewis company may help organisation
to gain available opportunities and restricts impacts of threats as well. The valuable resources of
John Lewis are its effectively engaged employees, management, techniques and technologies
used in business operations and activities.
Rareness:This refers to that if the resources of company are scarce and hard to find. The
valuable resources of John Lewis company are its employees, management and technologies.
Company aims at effectively satisfying and motivating employees and engaging them in business
operations and activities, therefore, it is considered as one of the valuable resource of company.
Whereas, techniques and technologies used by John Lewis can be obtained by other firms and
organisation in the target markets (Hayashi and et.al., 2019).
Imitable: This refers to that it is expensive for duplicating the resources and capabilities of
organisation or finding the substitute of resources or offerings. John Lewis effectively manages
and motivates its human resources so that they feel satisfied and encouraged. Satisfaction is the
most important factor for employees and valuable resources of John Lewis company are rare and
inimitable.
Organisation: This refers to that if company have proper system, process and management
structure for capitalizing resources and capabilities. John Lewis has proper organised structure
and system for capitalizing capabilities and resources of company. Therefore, it can effectively
achieve overall goals and sustain in competitive markets through its valuable, rare and inimitable
resources and also properly organised management structure.
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LO 3
P3 Evaluation of competitive forces and market position
John Lewis company aims at evaluating its competitive forces and environment using
Porter's Five Forces model. Using this model will help in determining the level of competition in
target markets and within industry it is operating in. Porter's five force model brings advantage
for understanding the situations where power lies for business organisation (Holmes Jr And
et.al., 2018). Following is given the explanation for Porter's Five Force model for John Lewis
company:
Threat of new entrant: The John Lewis company deals in retail markets and also aims at
meeting needs and demands of customers by providing quality products and services to its target
customers. The retail industry requires large capital investment, strong customer base and large
product portfolio. John Lewis has already established strong customer base and developed brand
image of company, therefore, threat of new entrant is relatively low.
Threat of substitutes: John Lewis aims at providing quality products and services to its
customers and also focus on effectively meeting their needs, wants and demands. The business
strategies of company lies on bringing innovation and creation in its products and services,
therefore, threat of substitute products is low as substitute products can not effectively meet
demands of target customers.
Level of Competition: John Lewis deals in retail market industry and in this industry
competition is extremely fierce. John Lewis has great level of competition from other retail
business organisation such as Marks & Spencer, Asda and Tesco (Jermias, Gani and Juliana,
2018). The company is exposed to competition as it deals in food industry, retail markets and
clothing sector as well. Therefore, threat of competition or level of competition is high for John
Lewis company.
Bargaining power of buyers: There are large number of alternatives available to target
customers. Customers often aims at purchasing best quality products at low prices. John Lewis
gets pressure on developing quality products and services to its customers at lowest possible
prices but it also affects the profitability of company on a long run. The bargaining power of
buyers is relatively high.
Bargaining power of suppliers: John lewis deals in wide range of products therefore requires
large number of suppliers who can effectively deliver the products to target customers and meet
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their demands. John Lewis does not only depend only on suppliers as it aims at selling its own
branded products, therefore, bargaining power of suppliers is relatively low.
As per the competitive analysis done, it shows that John Lewis needs to focus on
increasing its products range so that it can gain benefits of increased market share and also over
economies of scale and will easily limit the bargaining power of buyers (Priem, Wenzel and
Koch 2018). Threat of new entrant can be limited by developing more innovative products and
building stronger customer base. John Lewis needs to be more service oriented rather than being
product oriented as this will lead to bring benefits of limiting the threat of substitute products.
Company can also focus on developing sustainable products and gaining benefits and advantages
over competitors, thus limiting threat of competition. John Lewis also needs to focus on
developing and maintaining effective supply chain and distribution channels so that it can limit
the bargaining power of suppliers.
LO 4
P4 Application of model, theories and concept for devising strategic plan
John Lewis company aims at formulating effectively strategies so that it can meet
demands of target customers and achieve overall goals and objectives. The strategic planning
involves application of various concepts, theories and models so that it can effectively guide and
direct the employees and management of company. And ultimately it leads to growth and
development of company John Lewis. The various theories assists with understanding and
interpretation of strategic directions to system , process and human resources of organisation.
Strategic directions refers to the strategic plan of company the includes vision of company,
business objectives, tactics and strategies. The tactics and strategies are the plan of actions that
helps in achieving the organisational objectives. Porter's Generic model is used by John Lewis
while formulating the strategic planning of organisation and it is described as follows in detail:
Cost Leadership: This refers that company can focus on being low cost manufacture or
producer in the industry. The source available for having cost advantages are different and it
depends upon the structure and type of industry. John Lewis can adopt to cost leadership by
pursuing copyrighted technology and benefits of economies of scale. The low cost
manufacturing company needs to find available sources for having cost advantages. The cost
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leadership strategy leads to attract large number of customers and also gain advantages over
competitors (Porter's Generic Competitive Strategies (ways of competing), 2016).
Differentiation: This refers to that company can focus on broad market area with unique
products and services. The differentiation strategy can help business organisation to gain benefits
of attracting more customers through unique products and taking advantages over competitors.
John Lewis needs to focus on developing unique and different products from its competitors so
that it can effectively achieve targeted goals and objectives. Good and effective research and
development, innovation and creation in business processes and effective use of techniques and
technologies available may lead to develop unique products which can bring effective benefits
and results for John Lewis (Pucheta‐Martínez and Bel‐Oms, 2018).
Cost Focus: This refers to that company can focus on market or industry with little competition
and offer low cost products to target customers. John Lewis company can enter in niche markets
and provide target customers with possible lowest price for it. This will lead to bring effective
benefits and results for John Lewis organisation as it will help in increasing target market share
and improved customer base. The understanding of market dynamics and demands of customers
of niche markets will ensure costs are low and will also lead to attract customers.
Differentiation Focus: This refers to that company can focus on markets with little competition
and offers unique products and services to them. John Lewis can make use of the Differentiation
Focus strategy and achieve growth and development of company. This strategy can effectively
work when company has strong customer base and good brand image and loyalty of customers.
John Lewis also needs to ensure that it brings unique products so that it can gain competitive
advantages (Spillan and et.al., 2018).
As per the Porter's Generic model, John Lewis can focus on Cost Leadership and Cost
Focus strategies for developing its business and gaining advantages over competitors. The cost
leadership and cost focus strategies will lead to make the customer base more stronger and
increase the brand image and loyalty of customers. Business strategies act as a plan of action
which can guide and direct John Lewis company to accomplish the objectives. Following is
given the strategic plan of John Lewis company:
Strategic plan
Vision: The Vision statement of John Lewis states that it aims at generating sufficient profits,
satisfying employees and customers and sustaining commercial vitality.
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Objectives: The John Lewis company describes its strategic business objective as strengthening
companies brand and driving new growth. The strategic objective of company also aims at
creating better jobs and pay for better performing partners.
Tactics: John Lewis company aims at using Cost Focus tactics so that it can achieve targeted
goals and objectives of company.
Strategies: Cost Leadership strategy is used by John Lewis for accomplishing strategic
objectives.
CONCLUSION
Strategic decisions and plans can assist a business to achieve growth, competitive
advantages as well as enhance productivity and profitability. The strategies of company helps in
developing strong customer base, satisfying employees, gain sufficient profits and improve brand
image and goodwill of organisation. Appropriate frameworks are used in the report for analysing
internal and external environmental factors of business organisations. PESTLE analysis is used
for analysing and assessing the macro environmental factors and SWOT and VRIO frameworks
for analysing the internal environment and capabilities of business organisation. Porter's Five
Forces model is used for evaluating competitive forces of target markets. The report further
includes the interpretation of strategic planning of company and includes tactics, objectives and
strategies of company.
REFERENCES
Books And Journal
Ansoff, H. I. And et.al., 2019. Societal strategy for the business firm. In Implanting Strategic
Management (pp. 285-310). Palgrave Macmillan, Cham.
Carraher, S. M., 2018. An examination of an instrument to measure Porter’s Five Forces Model.
In International Journal of Arts & Sciences Conference at Harvard University.
Gabriel, R. and et.al., 2018. SUSTAINABILITY AS BUSINESS STRATEGY OF SOCIALLY
RESPONSIBLE COMPANIES. International Multidisciplinary Scientific
GeoConference: SGEM: Surveying Geology & mining Ecology Management. 18. pp.775-
782.
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Gerard, H. T., 2018. The Relevance Of Porter’s Five Forces In Today’s Innovative And
Changing Business Environment.
González-Rodríguez, M. R. and et.al., 2018. Revisiting the link between business strategy and
performance: Evidence from hotels. International Journal of Hospitality
Management. 72. pp.21-31.
Hayashi, H. and et.al., 2019. Circular Economy in Business Strategy of Manufacturing
Company. In Technologies and Eco-innovation towards Sustainability I (pp. 171-182).
Springer, Singapore.
Holmes Jr, R.M. And et.al., 2018. International strategy and business groups: A review and
future research agenda. Journal of World Business. 53(2). pp.134-150.
Jermias, J., Gani, L. and Juliana, C., 2018. Performance Implications of Misalignment Among
Business Strategy, Leadership Style, Organizational Culture and Management
Accounting Systems. Leadership Style, Organizational Culture and Management
Accounting Systems (January 9, 2018).
Priem, R. L., Wenzel, M. and Koch, J., 2018. Demand-side strategy and business models:
Putting value creation for consumers center stage. Long range planning. 51(1). pp.22-31.
Pucheta‐Martínez, M. C. and Bel‐Oms, I., 2018. What have we learnt about board gender
diversity as a business strategy? The appointment of board subcommittees. Business
Strategy and the Environment.
Spillan, J. E. and et.al., 2018. Strategic capabilities, niche strategy orientation and performance:
a four-nation assessment. International Journal of Business Performance
Management. 19(4). pp.427-449.
Online
Porter's Generic Competitive Strategies (ways of competing). 2016. [Online]. Available through:
<https://www.ifm.eng.cam.ac.uk/research/dstools/porters-generic-competitive-
strategies/>
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