Strategic Management Plan for L'oreal

Business Strategy INTRODUCTION 1 P1 & M1Impact and influence of the macro environment on a given organisation 1 TASK 23 P2 & M2 The internal environment and capabilities of a given organisation 3 TASK 36 P3 & M3 Porter's Five Forces Model for examining competitive environment. It is also very important for the managers of John Lewis to make consideration on the external and internal factors of business environment which can influence the whole profitability or performance of organisation in positive or negative manner (

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
P1 & M1 Impact and influence of the macro environment on a given organisation.................1
TASK 2............................................................................................................................................3
P2 & M2 The internal environment and capabilities of a given organisation............................3
TASK 3............................................................................................................................................6
P3 & M3 Porter's Five Forces Model for examining competitive environment.........................6
TASK 4 ...........................................................................................................................................7
P4 & M4 Strategic management plan for L'oreal by including strategies, objectives and
tactics...........................................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy is defined as a set of plan which are formulated by the organisations for
achieving their preset objectives or goals. It also helps the managers of firm in taking appropriate
decisions as per the situations so that pre-determined targets can be achieved in a given time
period. There are several factors exists in the marketplace which influences the business
operations in positive or negative manner for overcoming from these factors, managers can use
PESTLE or SWOT analysis. The chosen organisation for this report is John Lewis limited which
is a retail group chain along with headquarters in UK. This assignment will analyse the abilities
of organisation through using SWOT and influences of external factors on the operations of firm
through using PESTLE analysis. Porter's five forces model and generic strategies for improving
the competitive advantage of firm will also discuss in this report.
TASK 1
P1 & M1 Impact and influence of the macro environment on a given organisation
Organisation was established in 1864 by John Lewis and in present there are 51 stores of
the firm are providing clothing products across the UK. Company have an effective team of
managers who believes in delivering quality product at the marketplace so that growth and
sustainability can be maintained in the marketplace. Competition in clothing sector is rapidly
growing because the giant players like M&S, Tesco, Debanhams are providing quality products
at affordable prices to the customers in UK. Therefore, it can provide difficulty to John Lewis in
attracting customers towards their offerings. For this, management of John Lewis have to
formulate effective plans and strategies so that they can get sustainability in the marketplace. It is
also very important for the managers of John Lewis to make consideration on the external and
internal factors of business environment which can influence the whole profitability or
performance of organisation in positive or negative manner (Newton, 2015). For analysing such
factors managers of firm can conduct PESTLE analysis which will help them in identifying
potential risks that can influences their business operations and profitability. PESTLE analysis of
John Lewis is given as under:
Political factors- This factors are comprises of tax duties, stability of government, trade
policies etc. which can affect the performance of organisation in positive or negative manner. As
John lewis is providing their offerings across the UK therefore, the managers of firm have
1

responsibility to follow the norms and patterns which are formed by UK government for the
clothing industries. For e.g. sale tax rate on fashion sector in UK is approx. 20% that is stable
from the previous year so that it can provide influences on the business strategies of organisation.
Whereas, rivals of firm like M&S, Tesco which are determined as the giant players of the fashion
sector are providing quality offerings at affordable prices to the customers so that sales figures of
them can enhanced. Therefore, it is very essential for the Managers of John Lewis to make focus
on the plans and policies of the competitors so that negative influences of their strategies can be
overcome in effective manner.
Economical - It includes economic growth, per capital income, GDP of a particular
country. As John lewis perform its business operations in whole UK. Therefore, management of
firm have duty to make consideration on these elements as per the economic situations of UK
while making strategies. Citizens of UK nation are more focusing on the prices of offerings
because of the recent inflation and John lewis is also offering products at higher prices which
posses negative impact on the sales figures and revenues of firm. Per capital income of UK
nation in current year is 44,761 USD which defines a good economic condition of nation after
leaving European union. As a result of it, customers are more preferring the quality products of
John Lewis which can helpful in future for firm in making a strong customer base in UK market.
Social factors- It consists of beliefs, taste and preferences of customers etc. which can
influences business operations of John Lewis in favourable or adverse manner. Citizens in UK
nation mostly preferred those products which are unique and attractive and easily available at
affordable prices. Therefore, it can provide positive influences on the profitability and revenue of
organisation (Peng, 2017). Main targetted customers of John lewis are youngsters and youth of
20-30 years who mostly prefers the fashionable clothes therefore, after providing them products
as per their needs and wants John lewis can take a good position in the mindset of customers. On
the other hand, demands and needs of customers can change according to the market trends
which can directly influences on the business strategy or profitability of firm in negative manner.
Technological factors – These factors includes advancement of tools and techniques like
availability of internet connection, CCTV surveillance, automation security which can influences
the decisions and strategies of John lewis in positive or negative manner. Current marketplace of
UK is completely based on online networks because citizens in UK nation gave their importance
to their time and money whereas, offline process of buying or selling products consumes more
2

time and energy. Therefore, for this managers of John Lewis has launched a new mobile
application for attracting the customers and saving their time and money. With the help of this
application, firm has posses a positive impact on the mindset of customers which will helpful for
them in gaining a good customer base in UK market. For updating the application on regular
basis company have to recruit new knowledgeable and experienced employees of this field
which would be expensive and can negatively influence on the profitability and revenue of firm.
Environmental – It includes natural climates or weather of a particular country which
can influences positively or negatively on the profitability of firm. Therefore, management of
John Lewis have responsibility to follow all the environmental rules and regulations which are
formed by UK government so that good brand image can be maintained in marketplace.
Government of UK have also formed (EPR) Extended Producer Responsibility that is formulated
for decreasing the wastage of textile organisations. If management of John lewis will not
consider such responsibility then they have to pay penalties which is not good for the brand
image of organisation (Agyapong, 2013).
Legal – UK government have formed various legislations like health and safety of
employees at workplace, employment law, equal pay etc. for all business organisations. As John
Lewis is following all these laws due to which their employees are retained and providing their
support to their superiors in formation of long term strategies. As a result of it, the firm has
maintained a good brand image in the UK market along with a strong customer base. If these
regulations will not followed by the managers of John Lewis then they have to pay heavy
penalties which will not beneficial for the brand image of firm.
TASK 2
P2 & M2 The internal environment and capabilities of a given organisation
For taking growth and profitability in the marketplace, it is very essential for the
managers of John Lewis to analyse their strength and weaknesses so that future opportunities or
threats will be identified and suitable strategies will be formed for achieving or overcoming
them. For analysing such elements managers of John lewis can conduct SWOT analysis which is
defined as under:
Strengths Weaknesses
 Company is providing quality products  Management should make focuses on
3

at affordable prices to their customers
due to which they have maintained a
good market presence in UK market.
 It offers a huge variety of fashionable
products to the customers.
 The firm has employed around 30000
employees who are giving their
services from a long time period across
UK.
the pricing of their offerings which are
very high then the supermarkets and
stores that can influence negatively on
the profitability of firm.
 Management team of John lewis is not
capable in formulating effective
strategies due to which market-share of
organisation is not increasing in global
markets.
Opportunities Threats
 A large number of youngsters are
coming regularly in UK for completing
their education. Hence, firm has
opportunities for increasing their sales
figures and customer base.
 Organisation has sufficient funds
which will helpful for them in opening
new outlets across UK. It will also
helpful for them in expanding their
market share in global markets.
 Giant players of UK nation like M&S,
Tesco, are also providing tough
competition to the organisation.
 Company have poor management due to
which its resources are not utilised in
proper manner which can become a big
threat for the firm in future.
 Company is using old techniques of
marketing for attracting customers
which can become a major threat in
future for the firm.
To analysis the organisation's abilities:
Abilities of firm provide always helps the managers to formulate strategies in proper
manner so that organisation can achieve its goals. With the help of effective strategies,
organisation can easily enhance their efficiency and productivity (Jayaram, 2014). For analysing
the abilities of firm management of John Lewis can formulate VRIO framework which will
helpful for them in evaluating their resources like human, material or non-material. VRIO
framework of John Lewis is defined as under:
4

 Valuable: Value is defined as how much value is gained by the capabilities of firm in
providing satisfaction to the customers. If any resource of firm is not valuable then it will
create competitive disadvantage in the marketplace. For example all the above resources
are valuable and always helps the firm to perform better like HR department always assist
the managers to doing activities in better manner but it is valuable or can be used as
maintaining competitive equality in the marketplace.
 Rare: It can be defined as those resources which can only acquired by the company or
not by others. For example- Human resource are considered as valuable but they are not
rare in nature because other companies like Tesco or M&S have also skilled and
knowledgeable employees who are providing their services across the world. Whereas,
marketing functions of John lewis are valuable and rare because it assist them in
identifying profitable opportunities for the firm so that sales figures can eb enhanced.
Therefore, rare resources like marketing activities can provide temporary competitive
advantage to the John lewis over their competitors.
 Imitate: It defines that how much easy for other firms to copy the offerings of John
lewis. For example financial resources can be arranged by every firms to performing their
business functions. Marketing activities can also copied by other firms because it is very
easy to understanding and copy the marketing activities which are performed by John
Lewis for attracting a large number of customers. As marketing activities are changed
according to the demands and needs of customers which incurs a lots of funds of firm. So
that it can be said that marketing activities of organisation can be considered as unused
competitive advantage for John Lewis (Kohler, 2015).
 Organisation: It is defined that does organisation is using their resources in optimal
manner or not. For example, As John Lewis has created a goodwill or brand image in UK
market which is valuable in nature because it always helps the firm in attracting a large
number of customers. It is also rare in nature because it can't be imitate or stolen by
anyone. Therefore, it can be said that company can use their brand image for gaining a
long term competitive advantage in the marketplace.
5

TASK 3
P3 & M3 Porter's Five Forces Model for examining competitive environment.
Porters Five Forces Model : This is an analysis tool which is invented by Michael porter
that helps the firm in analysing their competitive position and attractiveness in the market. It can
be use by the managers of John lewis for knowing their position in the marketplace and form
strategies accordingly. Parts of this model are given as under:
Bargaining power of suppliers: This is the ability of suppliers which can be higher or
lower in the market and is based on the number of suppliers exist in marketplace. There are a
large number of suppliers which are exists in fashion industry and providing raw materials at
lower rates therefore, it can be said that the power of supplier in clothing sector is low.
Management of John lewis can select various suppliers for delivering their products at time
because if one supplier is charging more than others then company can opt other suppliers for
performing similar duties.
Bargaining power of Buyers: Customers are determined as the king of market because
growth or sustainability of every firm is based on their taste and preferences. Therefore, it is
clearly identified that power of customers are higher than the sellers. As managers of John Lewis
are using old marketing strategies for attracting customers which can decrease the customer base
and profitability of organisation. So that, it is very essential for the managers of John Lewis to
make modifications in the strategies of firm on regularly basis so that ample number of
customers will be attracted towards offerings of organisation.
Competitive rivalry: There are various giant players like M&S, Tesco, Debanhams,
Topshop etc. which are providing huge impact in adverse manner on the profitability or sales
figures of John lewis. So that, it can be said that there is a high competition in the marketplace.
For overcoming such influences, management of John lewis have to formulate some effective
strategies so that customers will always attracted towards their offerings. They can also offers
discounts and loyalty cards to their new customers so that a good brand image of firm can be
developed in their mindsets which will be helpful for the managers of John lewis in gaining
competitive advantage for a long term over their competitors (Wheelen, 2017).
Threat of new entrants: Establishing a new setup in clothing industry is not easy because
entrepreneur or owner has to face numerous barriers and restrictions which are formed by
government of UK and a huge amount of funds are required for finishing this procedure. As all
6

the norms and regulations can't be fulfilled by entrepreneurs in easy manner therefore there is a
lower threat of new entrants to the John lewis. But it has been seems that various small players
like Bench, Freed of London have made joint ventures with big players such as M&S and Tesco
for enhancing their market-share and revenues. So that, Managers of John lewis have duty to
make focus on these joint ventures which can become a threat in future period.
Threat of new substitutes: Substitute products can be defined as those products which are
fulfilling the needs and wants of customers as the original products that is introduced by the
organisation. Threat of this factor is very high in clothing sector because firm launches new
products as per the market trends and wants of customers on regular basis due to which
competitors also launches their products as per the original product. Organisation have faced a
huge challenges from their rivals like M&S have recently launched apparel in better quality for
the customers at reasonable prices which have directly impacts on the sales figures of John lewis
because company is also providing same apparel at a few higher prices to the customers.
Therefore, it can be said that threat of this factor is relatively high than others.
Managers of organisation can use the above strategies for identifying the suitable strategy
so that a good customer base and competitive advantage can be gained by them in a shorter
period of time. Organisation can implement new features in their offerings so that threat of
substitutes can be reduced and they can also make joint ventures with small players so that sales
figures and market-share of both firms can be enhanced. Management of firm have duty to make
effective relations with the suppliers so that threat of suppliers can be overcome in effective
manner. With the help of these techniques or strategies, customers of firm will be retained and
stayed loyal towards offerings of firm which will be helpful for the managers of John lewis in
making a good position in the marketplace (Montgomery, 2011).
TASK 4
P4 & M4 Strategic management plan for L'oreal by including strategies, objectives and tactics.
Strategic management plan is defined as a long term strategy which is formed by
managers of organisation for communicating the specific targets or aims to their employees so
that effective contributions can be gained by them for achieving these objectives. With the help
of it, management of John lewis will easily achieve their desired goals or objectives in given
7

time-frame. For making effective plans or strategies, management of John Lewis can use model
of porter's generic strategies which is defined as under:
Porters Generic Model: It is used by the organisations for identifying a suitable path so
that a good competitive advantage can be gained in a smaller period of time. This model was
given by Michael porter in 1980 which can used by the managers of John lewis in formulation of
effective strategies so that a strong position and customer base in the marketplace can be gained.
Managers of John Lewis can also use any of the strategies which are discussed as under:
 Cost leadership: In this, firm have to produce some good products and delivers them to
customers at reasonable prices so that a good image of firm can be created in the mindset
of them. With the help of this strategy, Managers of John lewis can set effective pricing
of the offerings so that a large number of customers can be attracted towards goods and
services of the organisation.
 Differentiation: It consists of those strategies which encourages the organisation to
produce new products which are relatively different from the products of other firms and
having unique features that can easily attract and fulfil the needs of customers. In this
strategy, Management of John Lewis have to make unique fashionable clothing products
so that new customers can attracted which will helpful for the firm in gaining competitive
advantage at the marketplace.
 Focus: This strategy consists of two parts such as Cost focus and differentiation focus.
In cost focus, Management of organisation have to make focus on reducing the cost of
offerings so that funds of firm can be saved and used in other operations. Whereas, in
differentiation strategy organisation have to manufacture different products along with
implementing unique features in it. With the help of these both strategies, managers of
John lewis will be able in providing tough competition to their rivals.
It has been identified from the above strategies that differentiation strategy is most
suitable and appropriate for John lewis for gaining competitive advantage over their rivals in
market. By using such strategy, Management will be able in making products with adding unique
features in it through which a large number of customers will be attracted and purchase the
products of organisation (Boamah, 2013).
Aim: Main aim of John Lewis is to increase their market share through making expansion
of portfolio of the firm in UK market.
8

Objective: Objectives of organisation is to create a good customer base along with
achieving a huge market share in retail market of UK through satisfying the needs and wants of
customers.
Management structure: Management structure of firm is designed in various parts and
all parts are formed for achieving goals and objectives within a given time-frame. Key elements
of organisational structure are work specialisation, chain of command, decentralisation which
helps their managers in performing their duties in proper manner.
Mission and Vision- Vision of John lewis is to gain attraction of a large number of
customers. Whereas, mission of organisation is to provide better quality products to the
customers so that a good satisfaction can be provided to them (Chang, 2016).
Cost and time: For making expansion of organisation in other locations of UK
management have estimated a budget of 4,00,000 pounds for achieving the preset objectives. In
order to achieving these objectives management have estimated a time period of 2 years.
Problems: Management of John lewis is facing the problem of pricing strategies and
substitute of products which are provided by their rivals. Organisation is also facing issues of
lack of knowledge in formation of effective strategies which can influences the overall
performance of organisation in negative manner.
Goals – Goals of John Lewis are to win the trust and confidence of customers along with
providing better products at reasonable prices to them
Strategies: For expanding the product portfolio in effective manner organisation is using
differentiation strategies and providing quality products with unique features to their customers
so that strong customer base and competitive advantage can be gained within a small period of
time.
CONCLUSION
It has been concluded from the above report that business organisations should emphasise
on their skills and capabilities for accomplishing their predetermined organisational objectives in
a better manner. The organisations should determine the forces of the market which can impact
the business operations of the firm with the help of Porter's five force model. Strategic
management plan is useful for the firms to determine the cost, strategy, objectives of the future
time period which must be achieved for sustaining in the market.
9

REFERENCES
Books and Journals
Kohler, T., 2015. Crowdsourcing-based business models: how to create and capture value.
California Management Review. 57(4). pp.63-84.
Jayaram, J., Choon Tan, K. and Laosirihongthong, T., 2014. The contingency role of business
strategy on the relationship between operations practices and performance.
Benchmarking: An International Journal. 21(5). pp.690-712.
Jeston, J., 2014. Business process management. Routledge.
Agyapong, A. and Boamah, R. B., 2013. Business strategies and competitive advantage of
family hotel businesses in Ghana: The role of strategic leadership. Journal of Applied
Business Research. 29(2). p.531.
Chang, J. F., 2016. Business process management systems: strategy and implementation.
Auerbach Publications.
Peng, M. W., 2017. Cultures, institutions, and strategic choices: Toward an institutional
perspective on business strategy.The Blackwell handbook of cross‐cultural
management, pp.52-66.
Pretorius, M. and Maritz, R., 2011. Strategy making: the approach matters. Journal of Business
Strategy. 32(4). pp.25-31.
Wheelen, T. L. and et. al., 2017. Strategic management and business policy.Pearson.
Brewster, C., 2017. The integration of human resource management and corporate strategy. In
Policy and practice in European human resource management(pp. 22-35). Routledge.
Montgomery, C. A. ed., 2011.Resource-based and evolutionary theories of the firm: towards a
synthesis. Springer Science & Business Media.
Peng, M. W., 2017. Cultures, institutions, and strategic choices: Toward an institutional
perspective on business strategy.The Blackwell handbook of cross‐cultural
management, pp.52-66.
Newton, J. D., Tsarenko, Y., Ferraro, C. and Sands, S., 2015. Environmental concern and
environmental purchase intentions: The mediating role of learning strategy. Journal of
Business Research. 68(9). pp.1974-1981.
Online
SWOT Analysis. 2018. [Online]. Available through:<https://www.liveplan.com/blog/what-is-a-
swot-analysis-and-how-to-do-it-right-with-examples/>.
10