Analyzing the Impact of Macro Environment on John Lewis: A Business Strategy Report

This report analyzes the impact of macro environment on John Lewis, a departmental store in the UK. It includes PESTLE analysis, SWOT analysis, and VRIO analysis to assess the internal and external factors affecting the organization's business strategy.

BUSINESS
STRATEGY

Contents
INTRODUCTION...........................................................................................................................3
LO 1................................................................................................................................................3
P1 Applying effective frameworks analyse with the impact of macro environment.................3
LO 2................................................................................................................................................5
P2 Identify the internal environment and capabilities of the organisation with the help of
appropriate frameworks..............................................................................................................5
LO3...............................................................................................................................................10
P3 Porter’s five force................................................................................................................10
LO4...............................................................................................................................................11
P4 Strategic direction and strategic management plan.............................................................11
Conclusion.....................................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Business strategy defines as a set of different competitive functions and actions which is
undertaken by an organization for leading the company for the achievement of organizational
goals & objectives. These are the courses of action which provide help to the business entities in
order to adopt favourable techniques and measures. These help in performing all the business
functions in an effective manner and attain pre defined targets. This will help the organisation to
become leader at the competitive marketplace. John Lewis is chosen as the base organization
which is a departmental stores perform its business functions at the marketplace of United
Kingdom & mainly deals in food products, watches, furniture, clothing, jewellery, accessories
and many more. This report includes PESTLE analysis along with SWOT and VRIO analysis in
order to conduct internal resources as well as capabilities. Along with this, the report consists of
Porter's Five Force model which will provide insight entity's competitive situation. At the end of
this report, Ansoff’s matrix along with strategic management plan is also going to be discussed
in this report.
LO 1
P1 Applying effective frameworks analyse with the impact of macro environment.
For conducting a business operation at the competitive marketplace in an effective and
appropriate manner it is very essential for the management team to examine the market
condition on a regular basis. Reason behind this is that, these are the macro-environmental
elements which have their own impact on the overall business operations of the company. In this
context, higher authority of John Lewis adopts PESTLE analysis to examine the influence of
macro factors. Below mentioned is the discussion about Pestle analysis related to John Lewis:-
Political: The business functions of John Lewis are carried out at the marketplace of
United Kingdom where the political system of the country is strong as well as stable. This as a
result assists organisations like John Lewis in order to ensure that they maintain their
sustainability at the marketplace for a long duration. Apart from this, UK government has cut
down the corporation taxes which was 30% and now comes to 28% which as a result provide
opportunities to the organisation like John Lewis to enhance their revenues. As a result political
factors provide positive impact on the performance of business organization as the taxes are
mainly reduced by government and have political stability.

Economical: United Kingdom economic conditions are quite strong which effectively
assist in the growth and development of the organization which mainly come up with unique
products, innovative techniques and system. It has also been identified that innovate UK Smart
Grants define as a programme which was started by the UK government’s R&D department
which provide assistance to innovative organisations such as John Lewis. Apart from this,
BREXIT influences the economy of UK in negative manner which leads towards ample number
of economic distress within retail sector. For this, John Lewis requires offering their products
and services within affordable prices and requires providing them discount. Economic condition
of the country is not so effective as due to Covid19, the overall stability got affected due to the
uncertain event arise and affects the living being in a huge negative manner.
Social: It has been said that John Lewis provides products and services to their
customers after conducting an effective research on the lifestyle of consumers. This will help
them in order to provide goods to their customers as per their needs and wants which include
clothing, accessories, watches and many more. Therefore, if management team of the company
consider all the latest trends then it will create threat to the rival companies and customers will
remain loyal towards the organisation. As the situation is very negative at the current
marketplace the social factor highly get influenced in a adverse manner which affects the overall
business operations.
Technological: By passing the time, technology has been changed in a fastest manner
which helps organizations to maintain their sustainability for a long period of time. In relation to
John Lewis it has been identified that company is currently entering into e-commerce with the
motive of reducing consumption of paper. This requires huge investment by the higher
authorities of John Lewis which acts as threat for company. Brexit highly affects the overall
performance and functionality of the business organisation reason behind this is that all the
external factors are linked with the current scenario of Brexit. Along with this, due to rise of
Brexit, it has been said that restriction arise when doing business operations which affects the
technology related aspects. This as a result affect the overall performance of the company in an
adverse manner.
Legal: John Lewis ensures that each and every units of the company need to follow laws
& legislations which are linked with retail sector. In addition to this, the organisation adopts
renewable resource for their cloth production. Furthermore, if the business entity fails to adopt

all the laws related with health and safety, hygiene, employment and many more then they need
to face adverse consequences. Therefore, management team of John Lewis need to adopt all the
laws and legislation in an effective manner so that they can create positive impact at the
competitive marketplace.
Environmental: In the current modern era, organisations which generally act in the
interest of society as well as environment get favour from the government along local bodies.
For this context, John Lewis made a partnership with IPCC (Intergovernmental Panel on
Climate Change) as there aim is to reduce the use of carbon emissions. Apart from this,
management team of John Lewis adopt biodegradable packing in order to make sure that they
least harm the environment by their functioning. On the other hand, these are the strategies and
initiatives which require lot of investment which as a result create financial imbalance and affect
the overall business operations in a negative way. Therefore, it is required by the top
management team of John Lewis to allot specific proportion or amount of money for conducting
their efforts as well as take initiatives which provide assistance to the environment.
LO 2
P2 Identify the internal environment and capabilities of the organisation with the help of
appropriate frameworks
In order to effectively conduct an analysis forth internal environment of a business entity,
SWOT and VRIO analysis are commonly used by organisation. In relation to John Lewis Ltd.
management team of the organization conduct an analysis for the organisation which are going
to be discussed as follows:
SWOT Analysis for John Lewis:
Strength Weakness
 John Lewis biggest strength is there
strong goodwill and brand image at the
competitive marketplace. As company
provide high quality products and
services to their customers by using
innovative and advanced technology,
 Weakness of the company is that
because of the current environment or
situation the demand of products
offered by John Lewis is reduced which
affect their overall profitability.
 Along with this, it has also been

they retain their potential customers for
longer (Kingsnorth, 2019)
 Another biggest strength of the
company is that they have capture
strong position among online
marketplace which assist them in order
to enhance their profitability and sales
at the competitive marketplace.
 Strength of the organization is their
highly talented and skilled staff
members which provide them
competitive advantage at the market.
identified that the organisation does not
modify their strategies and policies
according to the changing environment.
 Another weakness of John Lewis is that
internal structure of the company is not
so effective which affects their overall
business activities as the environment is
changing on a regular basis. This as a
result leads towards the decline of sales
of the company (Burgelman, 2020)
Opportunities Threats
 John Lewis have the capability to
perform their business expansion
among their unexplored geographical
area so they can significantly improve
their customer base at the competitive
marketplace (Lawrence and et. al.,
2019).
 John Lewis have effective marketing
plan which assist them in order to
enhance their overall sales as well as
profitability of the organization.
 John Lewis is an organization which
has the capability to launch new as well
as innovative goods and services which
will assist in providing ample number
of growth opportunities at the
marketplace.
 John Lewis performs its business
functions in fashion and retail sector
where they face ample number of
threats in terms of competition firm.
Some of the rivalry firm includes Marks
& Spencer, ALDI, Tesco, ASDA and
many more.
 All the products and services offered by
the organisation have substitute
products at the competitive marketplace
which raise competition level and affect
the overall performance of the company
in an adverse manner (Robinson, 2020).

VRIO ANALYSIS
It is an analytical tool and framework that measure the resources and competitive
benefits of the company in effective and appropriate manner. This model is part of the resource
based view that is a perspective that determines the link among an organisation’s intrinsic
characteristics and its execution (Anwar, 2018). This framework is developed by Barney J. B. in
1991 to analyse the venture‘s assets and sustained competitive benefits with the help of four
attributes that company’s resources must possess in order to become a source of sustained
rivalry benefits. To determine the internal strengths of John Lewis Ltd. four resources have been
properly considered such as international presence, products and services, technical resources
and human resource.
Resources Valuable Rare Inimitable Organisable What is the
result?
International
presence
Yes No No No Competitive
drawbacks
Products and
services
Yes Yes No No Partially
rivalry
Technical resources Yes Yes Yes No Competitive
benefits on
temporary
basis
Human resource Yes Yes Yes Yes Rivalry
benefit
Valuable- It refers to those resources and assets of the company that are valuable and able to aid
possible value for consumer in reference to offer a rivalry benefits to business venture in
marketplace (Encarnation, 2019). In context of it, valuable assets of respective origination are
described as under:
International presence- John Lewis has an outstanding presence in global business
market and operating its business in different nations, cause of which this firm is able to gain
competitive benefits.

Products and services- Due to offering high quality commodities to its target audiences
that are produced by utilising effective technology with the motive of building trust and believe
of customers gaining their loyalty (Kingsnorth, 2019).
Technical resources- The company use effective resources to manage its business sin
global business environment, for example, the administration use Paragon’s Live Management
software which help i operating its business effectively and accomplishing its goals.
Human resource- In respective business venture, employee are valuable resource to the
firm because they make their effective contribution in performing business activities and
operations and assist in attaining its business objective in set time duration.
Rare- It refer to those assets whose accessible and existence is unique to the firm and help in
delivering a competitive benefit in market. It has been identified that international presence is
not rare for John Lewis because there are several companies that are exist in retail industry and
operating globally. The rare assets identified in this enterprise are as below:
Products and services-The commodities that are provided by respective venture like
clothing, accessories, jewellery and many more are in according to the lifestyle trends of
individual and marketplace. Therefore, these are complex and hard to be copied by competitive
enterprises.
Technical resources- The software and other technological resources that are used by
firm in its business in term of managing business and delivering services are differ from other
and cannot be copied by other in ease manner. For example, the management of respective firm
use Paragon’s live management software in its business which is able to share real time delivery
information across its store network. These kinds of technology and software are costly and
cannot be afford and use each retail firm. Only capable and large firm can be implement them as
well as the feature of this technical resource is unique which put is in the category of rare (John
Lewis delivery with new software. 2020). This technological resource is beneficial to John Lewis
as this update the firm with the delivery activity and also help in making good relationship
between customer and organisation by providing information of offering services on time.
Human resource- The employee of John Lewis is rare because each person and
individual has unique skills and abilities which cannot be copy by others.
Inimitable- This includes of those assets that cannot be copied by competitors’ organisations
(Örsdemir, Deshpande and Parlaktürk, 2019). In context of John Lewis, it has been ascertained

that commodities do not hold this characteristic because the unique and innovative techniques
utilised to design these can be used by competitors also.
Technical resources- The Paragon’s Live Management Software taken into utilises by
the company are designed to accomplish the demands of company and therefore, it is not easy to
be copied.
Human resource- The competencies, knowledge and abilities of workforce are
inimitable to their character owing to their educational background and the training provided by
the company. Therefore, these cannot be imitated by rivals in easily.
Organisable- This includes of those assets that are needed to be conducted to be conducted in
an effective way in order to assure the attainment of aims and goals of organisation (Burgelman,
2020). The software which is utilised by John Lewis across its premises has to be effectively
updated and maintained to accomplish the current requirements of entries and therefore, it does
match this criterion of VRIO analysis.
Human resource- With reference of John Lewis, the human resource management teach
of this entity is highly effective, skilled and capable which also handles the overall workforce in
rightful manner. Respective firm is capable to organise its international operations in an efficient
way and assure its sustainability in market for a long time. It provides help to company in
developing its sales and profit margins.

LO3
P3 Porter’s five force
Porter Five Force Model
This framework is basically used to analyse industry in detailed manner so that
businesses can easily determine actual opportunities available at marketplace which would
support company in accomplishing their business objectives in quicker manner. It also provides
opportunity to the company so that they can easily develop rightful strategy towards the same
that would also maximise their profitability in rapid manner. Porter’s five force analyses
includes 5 different forces such as threat of new entrants, threat from substitute products,
bargaining power of buyers, bargaining power of suppliers and rivalry among existing
competitors. With reference to John Lewis, porter’s five force analysis of this company has been
specified as below:
Threat of new entrants: Influence of this force is relatively low for the retail sector as
there is range of market leaders within the same industry who owns good market share. This
simply makes it difficult for the new entrants to develop their own place at the same
marketplace. Along with this, it can be further said that the industry requires huge capital
investment which is not at all possible for all new companies. This clearly depicts John Lewis
does not require to get worried about new entrants as it has strong image at marketplace.
Threat from substitute products: Threat from substitutes products is extensively high for retail
sector because there are lots of companies belonging to the same sectors who are already serving
its customers from past years. This simply states that there are higher chances of bringing
alternative in retail sector that could be introduced as the substitute product. It has been analysed
that John Lewis is already having strong brand name at marketplace thus it should focus on
bringing substitute product which could influence its sales performance. This clearly depicts
higher influence of this force for John Lewis.
Bargaining power of buyers: Influence of buyers power is higher for the John Lewis as
the customers of this company has lots of options for them at marketplace thus if they does not
get satisfied with the respected company then could easily move to the other company. Along
with this, it can be further said that COVID 19 has increased number of issues for the JL as it
mainly serves upper class people. In order to deal with this, John Lewis is required to offer its

products and services to the customers at nominal prices with the motive of making it feasible
for the people to buy the products and services at COVID-19 crisis too. This would definitely
raise number of loyal customers.
Bargaining power of suppliers: Bargaining power of supplier for retail industry is highly
low for John Lewis as it is large scales company which is placing bulky orders to the suppliers.
This simply means that if the supplier does not get agreed to the provided rate then they could
move another one. This shows that suppliers have to agree to the rates provided by the company
as it provides regular based business to them.
Rivalry among existing competitors: Competitiveness within the retail industry is
relatively high as it has range of market leaders such as ASDA, Sainsbury’s, Morison and
Waitrose which offers similar kind of products at similar price range. In order to tackle this,
John Lewis must focus on providing high quality products and services at lower prices to the
customers so that they can easily gain competitive edge.
LO4
P4 Strategic direction and strategic management plan
Ansoff’s growth matrix
This model is necessary seen as the strategic framework which helps the organization to
make use of rightful business strategy that ultimately develops business opportunities which
generate revenue with minimum risk. By analysing the current scenario of COVID 19, it can be
said that the respective company is required to analyse all the market scenario and then acquire
best possible strategy for them which could go smoothly with the situation of COVID 19. Its
main aim is to determine best strategy through this model can excel at marketplace. It is the one
of the most broadly used models to focus on the growth of business which increases the sales in
new market. This analysis with Ansoff’s matrix is explained below in detailed manner:
Market Penetration: It can be seen as the strategy which helps the organization in
dealing in the existing market with a old product with low price during its initial offering. With
reference to John Lewis, the management team can lower the price of the product and services
offered by them so that they can make it feasible for the customers to buy the products within
their own market in the pandemic situation of COVID 19. This would definitely attracts the

customers from the competitors and it also helps to increase the sales performance within the
existing area.
Market Expansion: This strategy clearly states that launching a same product in new
market place. The management team of John Lewis can implement this strategy to get expansion
to new geographical location which helps the company to get profit and attract the customers.
This expansion can be achieved in three ways: The same product can find the different
customer segment by promoting their product. The management team helps to enter the product
in new regional market. And the last way to help the product enter into foreign market. While
acquiring any of these situation, the company must focus on following safety measure associated
with COVID 19 so that they can gain trust of new customers.
Product Expansion: This strategy mainly emphasis on introducing a new product in
existing location. The superior authority of John Lewis can typically move forward in the
direction to bring up the new product in the same location. As the company knows about the
taste of the customers as well as the current situation related to COVID 19 at the same place so
that they can plan their product according to them. The brand name also helps the company to
establish their product. Thus the strategy helps the company for their feasible growth and they
can introduce the product to increase their portfolio.
Diversification: In this Strategy the organization introduces a new product into a new
geographical area as it is riskier method to adopt. With reference to John Lewis, It is very riskier
to enter in new market with new product. This strategy only works for the company who has a
strong management team which helps them to focus on their product and to attract the customers
with their marketing strategy. It is very necessary for an organization to have a huge investment
amount and the team with great promotional strategies can make the customer attract towards
their product in a very effective manner. Apart from this, the respective strategy is also not
feasible with the pandemic of COVID 19 as people will not trust any new entity and wont
purchase anything from them.
On the basis of above analysis it has been analyzed that Product expansion is the best way to
achieve the goal of John Lewis for their growth. This method helps the company to encourage

the customers to buy their new product in existing market place. The marketing team of John
Lewis is suggested that they could give free sample to their customers for trial basis to promote
their product in same area and also realise them they are providing products and services
according to the need of people in the crisis of COVID 19. This helps to increase the market
value of John Lewis.
Strategic management plan
For every business organization, strategic management plan plays very important role as it
assist in framing all the functions in an effective and systematic manner. It has also been said
that this is a kind of blueprint which includes all the strategies and policies of the business
organisation so that they can grab opportunities available at the marketplace within given time
frame. In relation to Joh n Lewis, it has been identified that an effective strategic management
plan is going to be developed by the management team so that they can attain positive response
at the marketplace. All the strategies related to the new business plan are going to be included in
this report which helps in communicating with the stakeholders in an effective manner:
John Lewis Aim: To increase the level of operations of business organization among the
local or domestic marketplace.
Vision statement: John Lewis vision statement is to become fastest leading organisation
among global retail sector.
Mission statement: To provide high quality offerings to their customers with the value
addition which mainly ensure that customers are highly satisfied with the products and services.
Goals as well as Objectives: Every organisation has their own goals and objectives for
which they operate their business functions at the marketplace. In reference to John Lewis, short
term goal of the business entity is to provide high quality offerings to their customers whereas in
reference to long-term goal of the higher authorities is to capture large market share and grab
access into the emerging marketplace. In reference to the present context, it has been said that
the present objective of John Lewis is to enhance their sales by 10% within next 6 months for
which they need to introduce new and innovative ideas as per the requirements and demands of
consumers.
Strategies: In order to attract large number of people towards the organization, it is
required by the management team to modify their strategies and policies according to the

changing environment. In relation to John Lewis, top management team of the company adopt
market expansion strategy so that they can significantly improve their overall profitability and
sales among external market area.
Tactics: In context of John Lewis, higher authority decides to launch new goods and
services with value addition. These products are offered by the company to their customers
within affordable price in order to grab attention of customers who mainly belongs to all income
groups.
Conclusion
With the assistance of above stated report, it has been identified that each and every
business entity needs to examine their competitive marketplace so that they can perform their
functions in more effective and efficient manner. It is essential for them to modify their business
strategies as per the need and requirement of the external marketplace. It has also been identified
with the help of Pestle analysis that before expanding business functions at the competitive
marketplace, it is required to examine the whole marketplace in an effective manner. This will
help management team to grab opportunities available at the market and can easily enhance their
sales. Apart from this, internal environment analysis is also necessary for an organisation as they
easily identify their strength as well as weakness. Furthermore, Ansoff’s matrix assists in
adopting favourable strategy for the organisation which leads towards the growth of the
company at competitive era.

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Online
John Lewis delivery with new software. 2020. [Online]. Available Through:
<https://www.retailtechnology.co.uk/news/6836/john-lewis-boosts-delivery-with-new-
software/#:~:text=Using%20Paragon's%20Live%20Management
%20software,information%20across%20its%20store%20network.&text=By%20adding
%20Paragon%20Live%20Management,vital%20information%20across%20the
%20Partnership.>.