Business Strategy Report

This report analyzes the business strategy of John Lewis, a UK-based departmental store, using PESTEL, SWOT, and Porter's Five Forces models. It examines the company's internal and external environment, identifies strengths, weaknesses, opportunities, and threats, and assesses its competitive position in the market. The report also suggests a market development strategy for John Lewis to expand its business and achieve sustainable growth. Desklib provides past papers and solved assignments for students.

Business Strategy

INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1.PESTEL Analysis of John Lewis...........................................................................................1
TASK 2............................................................................................................................................4
P2. SWOT Analysis of John Lewis.............................................................................................4
TASK3.............................................................................................................................................5
P3. PORTER FIVE FORCE MODEL OF JOHN LEWIS..........................................................5
TASK4.............................................................................................................................................7
P4. Range of theories, concepts and models, interpret and devise strategic planning................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy is the big plans made the company to perform their activities more
effectively and smoothly. It is also termed as master plan of the organisations for securing a
competitive position in the market as well as achieve company's goal and attract more customers
toward the firm. It is a long term plans of organisation which is concerned with major issues like
arrangement of finance and other resources. John lewis is taken to understand the concept of
business strategies. It is a UK based departmental store which was founded in 1929 and its
headquarter is in London. Organisation is only working within UK with more than thirty
thousand employees. With the help of this, further in this report organisation's internal as well as
external impact has been explained with the help of PESTEL & SWOT analysis. Apart from it,
company's competitiveness will also be judged with the help of porter's five force model
(Torrent-Sellens, 2015).
TASK 1
P1.PESTEL Analysis of John Lewis
PESTEL stands for political, economical, social, technological. Environmental and legal. It
is a tool which every company including John Lewis uses to analyse the macro
environment or factors and to know how it affects the performance of the company. This is
used by the organisations mainly at the time of marketing because these factors plays
important role at that time. In the context of John Lewis these are affecting the organisation
in such a way-:
 POLITICAL- This factor is related to the impact of government decisions on the
performance of the organisation. John Lewis is only working in UK so will get affected
by the political issues of that country and not from the others. These factors include
change in government and any other decisions made by government. Political factor of
UK very much affect the John Lewis, for example government of UK has a high debt as
well as consumer debt is also very high and this situation is not acting favourable for the
company. This is because consumer’s attitude is getting affected by this as it is reducing
their purchasing power which in return putting lot of pressure on business activities and
organisation. Other than this, political instability is also a factor which affect the John
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Lewis like at the time of BREXT, UK’s government was not stable which affected the
organisation a lot (Leonidou and et. al., 2015).
 ECONOMIC- This factor is related to the economy of the country in which it is
working. It includes factors like cost, prices, inflation, deflation, GDP, educational level,
demand. Supply etc. John Lewis is working within UK so it get affected by its economy ,
for example UK’s inflation rate is very high which is limiting the flow of money in the
market and as result, purchasing power of the buyers has been reduced. This is negatively
impacting the performance of John Lewis as their sales is decreasing because country’s
citizen is not spending much and instead saving money for future uses. It is reducing the
organisation’s profit as well as its productivity. Other than this level of skills in
employees of the company is also one of the economic factor which affect its
performance. Unemployment rate, interest rate, labour costs, economic growth,
Discretionary income, exchange rate and currency stability or instability are other
economic factors.
 SOCAL- These factors include customer’s choice, preference, taste, culture, belief,
values etc. which impact the performance of the company. For example now days people
prefer to buy all products under the one roof or by one- stop shopping. This is easy for
buyers as well it saves their time; John Lewis is a departmental store which is offering
their customers everything at one place, this social factor is impacting the company in
positive way which is increasing its sales as well as the profit. Other than this, skill level
of population is also a social factor for the organisation as it has very skilled labours
working for them, John also provide them regular training which enhance the knowledge
as well as the skills of the company. People are becoming more conscious for their health
and they prefer to buy and eat healthy item, but John Lewis selling the packed products
which is negatively impacting the image of the company (Buckley and Ghauri, 2015).
 TECHNOLOGICAL- This is the technological factors; it is growing very fast and
affecting the performance of every organisation including John Lewis. Technology is
getting advanced day by day and it is positively impacting the organisation by providing
them growth. For example taking advantage of technology, John Lewis has started their
digital app which is made for the customers to buy the product from home and it will get
delivered within 30 minutes. This is attracting the customers toward the organisation and
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increasing its sales as well as the productivity. Technology has also impacted the cost
structure of the company, John is selling their own brand in which technology is helping
to reduce the costs of production (Malerba and et. al.,2015)
 . This is also reducing the expenses of organisation and helping them to increase their
profit. Product Company is offering is also improved with the technological
development.
 ENVIRONMENTAL- This factor is related to the environmental condition of the
country which affects the performance of the organisation. For example citizens of UK
are getting very conscious about the environment like they promote and prefer eco
friendly products as it does not harm the health of people as well as it help in saving the
environment from exploitation. To get the positive impact of this factor, company has
started producing and selling items which follow reduce, reuse and recycle approach to
attract the customers. They have proper arrangement to manage the wastes, using eco
friendly & recyclable packaging of the items. It is focusing on reducing their carbon
footprint from the environment to make it eco friendly. It is improving the brand image of
the company and attracting the customers which increase their sales. Apart from this,
weather, climate change, pollution level, waste management, endangered species etc are
also some of the factors.
 LEGAL- These factors are related to the laws and regulations made by the government.
There are number of framework which is made to protect the intellectual property rights
of the company. For example government has made some anti discrimination law for the
every industry including retail, which says that companies are not allowed to make any
difference between female or male employees and they are obligated to pay the equal
wages to the employees and company does not discriminate on the basis of colour of
gender. Organisation is following this law and considering both male & female workers
equal. They are paying them on the basis of their performance, which in return positively
impacting the organisation by improving its brand image (Scholes, 2015).
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TASK 2
P2. SWOT Analysis of John Lewis
SWOT analysis is a tool which every organisation including John Lewis uses for analysing
their internal environment of the company and how does it is impacting their performance.
It has been designed to determine the current and future potential of the company as well
as it provide facts and data which is relevant to the organisation. It also help in identifying
the internal strength and weaknesses of the company as well as external threats and
opportunities. It is a technique which is also used by the John Lewis for assessing its
performance, risk, competition and potential of survival.
 STRENGTH: Strength is which help in making company different from others
and which is the reason for its survival. John Lewis has a good brand image in the
market because of its good quality product which is value for money. It is one of
the strong point of the company which is helping in attracting customers as well as
increasing the profit of the firm. Apart from this John has a good financial position
which is making the company sound and helping to take big decisions as well as
investing in other sources. Company has qualified management team which make
the organisation’s performance more efficient and resources are properly get
utilised.
 Weakness- John Lewis is a very famous organisation working from UK but it has
some weaknesses which they really need to remove for better survival in the
market. Company has started cutting prices of their products to meet the
competition but has negatively impacted the image of organisation and it
devaluated the value of the company. Customers have started thinking it as a low
budget company which is making their survival very difficult in the market. Other
than this, there are one more weak point of the company which they need to focus
are their lack of transparency. Organisation’s poor managerial performance is
making many investors upset which is not good for the company as well as its for
its brand image (Akter and et. al.,2016).
 Opportunities- john Lewis is working only in UK, there are many opportunities
for the company like expanding its business. Organisation should try to open their
more outlets in different cities and countries so that they can increase their market
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share as well as customer base. Company is working with very limited stores,
opening new will act as a opportunity for them. Apart from this use of digital
technology is another opportunity which organisation can grab, according to which
they can start their online apps through which people can order from their homes.
Life style of customer’s is changing and they prefer to shop by just one click, so
opting this techniques can increases company’s sale as well as their profit.
 Threat- John Lewis is a very old and famous supermarket store of UK but its
major threat is their other competitors who are also having a strong brand image as
well as working in many countries. This is making survival of organisation very
difficult in comparison to others. Even company has low support from government
also which also one of the threat for the organisation. There were some negative
publicity also faced by the origination which affected their brand image a lot.
TASK3
P3. PORTER FIVE FORCE MODEL OF JOHN LEWIS
Porters five force model is an analytical tool which every organisation uses including
John Lewis for determining its competitiveness in the market. This model is only applicable on
industries from which company's competitive position can be find out. There are five forces in it
which impact the performance of an organisation, it include two vertical forces (bargaining
power of buyers and bargaining power of suppliers) and three horizontal forces (threat of
substitution, threat of new entrants and competitive rivalry).
 Bargaining power of buyers- bargaining power of buyers in departmental retail industry
is high because customer’s have different tastes and preferences which can impact the
performance of the business. There are number of companies working in the industry and
serving almost same product which is increasing competition in the industry and in return
affecting the survival of the John Lewis. In retail industry customers have low switching
cost because they have number of options available for them; they can easily switch from
one to another without losing anything. Buyers have power to decline the prices of the
products and services offered by the company. For example around 2012-13, UK’s
economy got slow because of which retailers were forced reduce their prices and focus
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more on consumer’s demand. Other than all this reasons, availability of information also
make consumer’s power high as compare to the sellers or companies (Pisano, 2015). Bargaining power of suppliers- It is related to the power of sellers or suppliers who
supply raw material to the companies working under the retail industry. Bargaining
power of suppliers are low in retail industry because there are number of famous
departmental stores are working just like John Lewis. And on the other hand supplier are
also large in number and each of them want to have a contract with these big large
companies. But every company have their fixed suppliers from whom they buy raw
material on bulk and shifting to others will waste their time as well as money. So under
this case suppliers have no power of affect the prices by declining it. In case of John
Lewis, they deal in their own products so they are not very much dependent on suppliers
for the raw material. Threat of new entrants- This is related to the entry of new players in the market. Threat
of new entrant is the retail industry is relatively low as compare to others because it
require a huge capital investment for successfully running their activities in the market.
For a new company it is not possible to raise so much of funds to invest in the well
developed market where already so many big and famous companies like John Lewis are
working. Other than this retail industry have lot of organisations working under it with
strong brand name and so many trusted customers, it is also stopping new player to enter
into the market and to increase more competition. Existing organisations of retail industry
try their best to counter new entry in the industry. Apart from all this, they do not have
much knowledge about the market which makes their survival impossible.
 Threat of substitutes- This is related to the threat from the item which can be used in the
replacement of other and also which satisfies the needs. Threat of substitutes is moderate
in nature in retail industry because substitute of departmental stores are grocery shops
from where customers can buy same products. But there are different kinds of shoppers
in the market, some want everything to be displayed and want more choices to choose
while others are quick shoppers. Some prefer grocery shops while some prefer
departmental stores to do their shopping. One can easily shift here & there without losing
anything because of the low switching costs. There are very low substitutes present in the
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market for the John Lewis according to which there is not much threat available in the
industry from the substitutes (Wheelen and et. al.,2017).
 Competitive rivalry- This force is related to the existing competition is the market.
Competition is retail industry is very high because there are many companies which is
working under it . Organisation’s are offering same products as John Lewis, which is
making tough for the company to stay in the market. It is creating rivalry because there
are many other supermarket stores like TESCO, Sainsbury etc which is working in the
make market and offering almost same products at same prices to the customers. It make
bargaining power of buyers more and low switching costs, if customers want they can
easily shift from one brand to other without losing anything. To compete and sustain in
the retail industry, John Lewis started dealing in apparel and household goods other than
foods and drinks. Companies in retail industry try to maintain the level of competition by
copying each other prices or strategies. Jon Lewis tried to make itself different from
others by providing higher quality products at lower prices but this has affected the brand
by devaluating it in the market
TASK4
P4. Range of theories, concepts and models, interpret and devise strategic planning
Ansoff model is a technique which company uses to increase its growth and to find out its
potential in the market. It consist of four phases that are, market penetration, product
development, market development and diversification.
 Market penetration- If John Lewis uses this element they are required to grow by
increasing itself by selling the same product in the existing market, and for doing
this they need to increase its production level. This will help the company to
capture more market share and increase its production.
 Product development- This is the phase in which company develop new products
for their existing customers. For doing this John Lewis is require to plan for the
new item which they can launch into the market for attracting customers. company
is require to do a research for this.
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 Market development- This is the phase in which company sell their existing
product in the new market. For doing this, organisation is require to determine the
choice and preference of people in new market before launching its product in it.
 Diversification- This is the phase in which company plan to launch new product in
completely new market. For doing this John Lewis has to plan for both markets as
well as about the new product (Eaton and Kilby, 2015).
After analysing all the phases of Ansoff matrix, company is suggested to go for the
market development. This is because John Lewis is only working in UK which is
critical for their survival as other competitors are working worldwide. For
increasing the market share organisation is suggested to expand its market and for
doing this they need to analyse the demand of the particular market in which they
decide to expand. It will help them to find out the potential of their existence in the
market and about their growth.
John Lewis Vision-
Company’s vision is to create workplace where customers love to shop and
people love to work. They will do this putting customer on number one and by
investing more on their organisation and people.
John Lewis Mission-
Company’s mission is to serve their customers better every day by making
improvement in their functions and activities.
SMART Objectives of John Lewis-
 Organisation wishes to expand its business by 20% in one year with the
help of market development.
 Company wishes to increase their customer base and market share within 2
to 3 years of market development strategy.
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CONCLUSION
From the above report it has been concluded that it is very important for every organisation
to analyse their internal as well as external factor of environment and its impact on their
business activities or performance. Some tools are made to understand this concept which
make business activities much easy. Organisation’s competitiveness in the market has been
determined with the help of porter’s model and some suggestions has been made to the
organisation to follow for expanding its business so that it can sustain in the market and
compete with its competitors.
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REFERENCES
Books and Journals
Scholes, M. S., 2015. Taxes and business strategy. Prentice Hall.
Thompson, A., Strickland, A. J. and Gamble, J., 2015. Crafting and
executing strategy: Concepts and readings. McGraw-Hill
Education.
Akter and et. al.,2016. How to improve firm performance using big
data analytics capability and business strategy
alignment?. International Journal of Production
Economics. 182. pp.113-131.
Pisano, G. P., 2015. You need an innovation strategy. Harvard
Business Review. 93(6). pp.44-54.
Wheelen and et. al.,2017. Strategic management and business
policy (p. 55). Boston: pearson.
Eaton, D. and Kilby, G., 2015. Does Your Organizational Culture
Support Your Business Strategy?. The Journal for Quality
and Participation. 37(4). p.4.
Buckley, P. J. and Ghauri, P. eds., 2015. International business
strategy: theory and practice. Routledge.
Leonidou and et. al., 2015. Environmentally friendly export
business strategy: Its determinants and effects on
competitive advantage and performance. International
Business Review. 24(5). pp.798-811.
Torrent-Sellens, J., 2015. Knowledge products and network
externalities: Implications for the business
strategy. Journal of the Knowledge Economy. 6(1). pp.138-
156.
Malerba andet. Al.,2015. Dynamics of knowledge intensive
entrepreneurship: Business strategy and public policy.
Routledge.
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