Analysis of Macro-Environment and Internal Environment of John Lewis

This report analyzes the macro-environment and internal environment of John Lewis, a retail company in the UK. It includes a PESTLE analysis of the external factors affecting the company, as well as a SWOT analysis and VRIO model analysis of its internal capabilities. The report also discusses the strategies that John Lewis can adopt to sustain and compete in the market.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Analysis of macro-environment on organisation and its strategies-.................................3
TASK2.............................................................................................................................................6
P2 Analysis of internal environment along with capabilities of organisation through various
analysis-..................................................................................................................................6
TASK 3............................................................................................................................................9
P3 Implementing Porter’s five force model and evaluate the competitive forces of given
market sector of an organisation.............................................................................................9
TASK 4..........................................................................................................................................11
P4 Determining application of concepts, models as well as implement strategic management
plan of the business..............................................................................................................11
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................14
Books and Journal:...............................................................................................................14

INTRODUCTION
Actions or moves which are used by a business attract customers, enhance its
performance, increase customer satisfaction, compete in market and achieve business targets are
called business strategies. This is a map for a business regarding its future moves and steps. It is
helpful for a business to sustain for long term in marketplace. Such strategies are made for long
run in business. These strategies are usually made on three levels which are corporate, business as
well as functional level. In this report discussions are made on strategies of a company called
John Lewis. It is situated in Britain, which is a retail company (Perezand et. al). This company
deals in a number of product categories including clothes, jewelleries, perfumes, watches etc. All
the factors necessary to formulate a business strategy for John Lewis is being discussed in this
report. It was established by Spedan Lewis in 1929. This analysis is done through various ranges
of analysis such as VRIO, SWOT, PESTLE etc. in order to understand the competition in market
Porter’s five force model is also conducted. Other than this Ansoff matrix is performed to learn
about different strategies that could be used by company. All these strategies are used to decide
business strategy of the company.
TASK 1
P1 Analysis of macro-environment on organisation and its strategies-
So that business can be run without any further complications or difficulties it is important
to form such strategies which are formed taking into account all the macro as well as micro
environment which are affecting business. In order to analyse external factors which, have an
effect on business PESTLE analysis on John Lewis is done:
PESTLE Analysis
PESTLE analysis is a term which stands for politic, economic, social, technological, legal
and environmental. This is a tool used to analyse all of the external factors which have an effect
on functioning of business. Below mentioned is PESTLE analysis done on John Lewis Ltd:

Political Factors: All the factors that are somehow related to any government
intervention in an economy can be said to be political factors. These factors take into
consideration taxes, foreign trade policies, government policies etc (Lindsay and et. al. 2015).
When taking John Lewis into consideration company is located in United Kingdom so any
changes in political system of the country have been seen to have a direct effect on company as
well. It is often observed that entry of any company in this market is very easy. This lets in a
number of competitors in industry leading to increase in competition for the company. In order to
boost its trade in nation government is also taking in a number of steps. For instance, government
have reduced its corporate taxes from 30% to 28% which has resulted in entrance of many
competitors for John Lewis. Company now need to take care of this taxation system while
formulating its policies. Company need to take advantage of this situation and increase its
profitability.
Economic Factors: Economic factors consists of all those factors which have an effect
on profits earning capability of business. These factors are interest rates, foreign exchange rates,
inflation, growth rate, GDP etc. John Lewis have been majorly affected due to introduction of
BREXIT. There has been recession in economy due to this also interest rates have been seen
increasing over period. Company is reducing its sales prices in order to create demand in
economy. They are aiming at serving their customers with minimum prices. It needs to make
sure that it does not loose any of its customers to its competitors. There is a major requirement to
carefully analyse the strategies adopted by competitors at this phase of business as well.
Company needs to focus on its loyal customers and provide them with attractive deals. It is thus
required by company to take care of this situation and create its strategies accordingly.
Social Factors: Social factors in PESTLE analysis refers to all the social conditions,
value, beliefs etc. which are followed by people in a specific geographic location or an are or a
market place. This may include population growth, sex ratio, literacy rate, perception of
customers, changing needs and demand in market etc. John Lewis is being affected due to change
in the need and demand of customers and changing trends in market it is dealing into. Due to this
it becomes important for a company to keep innovating and launching new products as well as
services according to demand and changing perception. This will help company to retain old
customers along with attracting the new ones and increasing its brand awareness along with its
market share in its industry. This will also help company to deal with its competitors. Launching

new products will help company to fight customers and remain competitive while sustaining in
market for longer period of time (Lewis, J. and D'orso, M., 2015).
Technological Factors: Technological market can be said to be different ways in which a
company can produce, distribute as well as communicate its good as well as services in target
market. It is required by company to take care of new advancements taking place in environment
and be up to date with them. When talking about John Lewis the company is being affected by
ways in which its goods are communicated and distributed in market. Due to this company is now
following online methods in order to distribute its product in the market. Company using this
method uses less papers and human resource which is beneficial for environment and also
reduces the cost for company occurring on recruitment and training of its employees (Bar-Zeev
and KleinMicrosoft, 2017). Company is changing its traditional ways of advertising and shifting
towards more digitalised ways to communicate its products and services into market. There is a
great requirement to keep a check on financial needs to use these upcoming technologies in
market. Adapting new technological advancements can be very expensive as it requires huge
investments. It is thus required by company to go through all these factors and only then develop
strategies and plan for its future growth.
Environmental Factors: The factors which take into consideration environment and
surroundings in which business works are taken under environmental factors. Major factors can
be pollution, carbon footprints, resources extracted from environment etc. it is required by
companies to create an environment which is safe and clean for a business to work in. John
Lewis needs to take care of carbon footprints it is releasing in environment. Company uses
upgraded machines to produce its products. They are also using bio-degradable packaging.
Pollution laws also have huge effect on John Lewis. Company needs to make sure no land
pollution is caused due to its functioning in marketplace.
Legal Factors: Company requires to make sure that all the laws and legal procedures are
followed by it while conducting its operations in a marketplace. Legal factors under PESTLE
analysis includes Labour rights, consumer laws, right to information, product safety,
advertisement standards and so on. Even small changes in these legal proceedings have great
impact on functioning of companies in a market (Leonidou and et. al., 2017). Those legal factors
which John Lewis needs to take care of are All the laws related to products and treatment of

labours in an economy. In such cases company need to keep a regular tap on such effects and
changes which may change functioning and operations in business
TASK2
P2 Analysis of internal environment along with capabilities of organisation through various
analysis-
Internal analysis of a company can be done with the help of various frameworks. In order to
conduct this analysis in John Lewis SWOT analysis and VRIO have been conducted on
organisation.
SWOT analysis stands for strengths, weaknesses, threats and opportunities. It helps a firm
to deal with shortcomings and grab all the coming opportunities. Below mentioned is SWOT
analysis performed for John Lewis:
SWOT Analysis:
Strength Weakness
John Lewis have built a great brand image and
brand awareness within its life of dealing in
this industry. The customer base available with
company is huge as well as loyal. This is major
strength for John Lewis (Lai, A., Melloni, G.
and Stacchezzini, R., 2016).
 There are various mediums through
which company distributes its products
in market. This also includes digital
mediums. This helps company to enter
new market with a lot of ease.
 Company does not follow proper guides
and rules to analyse the international
market it is venturing into. This have
led company to losses and proved to be
one of its weakness.
 Company is not focusing towards its
loyal customers. Strategies are required
to retain all its old customers. Only
focusing on new customers can be
harmful for company in near future.
Opportunities Threats
 In order to increase its revenue and
profits company have a great
opportunity ahead to tap untapped
 Company have to deal with changing
laws and governmental policies. This
has led to downfall of company as its

markets. Specially the international
market which are still left untouched by
them.
In order to attract new customers an fulfil
hidden needs of customers company have an
opportunity to launch new products in its
already existing markets (Wu, P., Gao, L. and
Gu, T., 2015).
 Company owns a number or
personalised labels. Company have a
huge opportunity ahead to gain market
shares with the help of these brands.
They need to formulate proper
marketing strategies for these labels.
strategies are not flexible enough to
deal with these changes in law.
There are a number of threats present for
company in market which are proving to
hamper the business of company. Major threats
are Marks and Spencer, H&M. Tesco and so on
(Revathi, R. and Aithal, P .S., 2018).
VRIO Model:
VRIO model is used to examine and evaluate capabilities of a firm that gives the business a long-
term benefit. VRIO model conducted in context of John Lewis is mentioned below-
Components Valuable Rarity Inimitable Organized What is the
result?
Global
Existence
Global
Existence
Competitive
drawback
Goods and
services
Goods and
Service
Goods and
Service
Competitive
Partially
Technology
and software
Technology
and software
Technology
and software
Technology and
software
Competitive
Edge
Workforce/
Staff
Workforce/
Staff
Workforce/
Staff
Workforce/
Staff
Workforc
e/Staff
Competitive
Edge

John Lewis examine the internal capability such as company’s global existence, goods
and services, technology and software, workforce/staff.
Valuable - These components are really beneficial for the company; these elements help in
achieving firms’ goals and objectives within the available time frame (Dent, 2015). Valuable
factors in John Lewis are-
 Global Existence - John Lewis maintain good mand strong image in the market,
company’s strong brand image gives competitive advantage.
 Goods and Services – John Lewis latest trending products in the market, increase the
number of customers. They provide better quality good to the customers, which satisfy the
customers.
 Technology and Software - Company manage their functions effectively by using latest
technology and also use software in company’s storage, distribution, packaging.
 Workforce/staff - Company maintain good relationship with their employees to achieve
the targets and goals on time.
Rarity – It include unique and rare factors which make a company different or rare from the other
organizations. Companies unique products and services, staff, technology, image maintain rarity.
This help the John Lewis in getting competitive edge in the market.
 Global Existence – The global presence of the company is not unique or rare because
there are many companies with the strong image in the market.
 Goods and Services – John Lewis provide rare or unique goods and services because they
always take care their customers’ needs and wants, preference and also try to adopt
market changes. This make company a strong competitor for other company.
 Technology and Software – John Lewis have their own unique software which provide
them rarity.
 Workforce – Company trained their employees effectively. Copying of staff members is
not possible by any company, so this is also a rare factor of the company.

Inimitable -This include factor which is not simply copied by the competitors, John Lewis
inimitable resources.
 Technology and software – John Lewis software are not imitable by the other companies
because they are specially developed software for the company.
Staff/Workforce- This is also inimitable factor of the company because they provide special
training to their employees which make them unique (Akter, Wamba, and et. al., 2016) .
Organized – This include systematic arrangement of the company’s staff members, technology,
equipment, machines etc. in order to achieve goals and objectives of the company. Company’s
manager organized and coordinate the resources like employees, policies, roles, tasks to attain the
goal.
Workforce/ Staff – John Lewis specially focus on their employees training and development
because employees are the important assets of the company, so it is necessary for the company to
analyze or examine the performance of the employees to increase the level of performance in
order to achieve the goal and objective (Gupta, 2016).
TASK 3
P3 Implementing Porter’s five force model and evaluate the competitive forces of given market
sector of an organisation
Porter’s five forces model helps in defining the business strength and position in market.
This model also supports in defining strategies and methods in competitive market (Weng, 2020)
. Also makes easy for decision making in business and firm. Porter’s five forces model which
supports and expands operation in market are mentioned below-
Competitive Rivalry – Competition and clash are essential for business because it motivates
and also helps in improving performance of business. So, competitive clash helps in determining
and studying competition in market. Organisation uses this method as tool which help them in
identifying changing trend in market. Gaining market share, target market and customers
competition in market arises. Increase competition in UK has affected JOHN LEWIS at broad
level. Therefore, this method is used to enhance and improve performance in target market.
Threats of substitutes – Availability of product more than one in market is called substitute.
This is most vital factor of five force model. Switching behaviour of customer rises due to

availability of substitutes in market and it creates deep impact on firm’s productivity. In context
with JOHN LEWIS, many alternatives are available which creates negative image on company’s
profit and sales revenue. So, firm should decide various type of strategies to tackle this situation.
Threat of new entrants – Competition and alternatives in market arises due to entry of new
business organisation in market. New entry of business firm depends upon government rules and
regulations and also various entry barrier. When we talk about JOHN LEWIS, threats of new
entry are low. Before commencing a diversified business, a hug amount of investment and
network is required which is lengthy process and also risky (Tsai and Lin, 2016).
Bargaining power of suppliers -Networking and maintaining contacts is essential for every
business organisation to run their business sound and successfully. Suppliers are those person/
firm who makes available of resources such as raw materials, tools, equipment’s to enterprises.
Due to wide market there are number of suppliers who arrange resources for business firm. In
case of JOHN LEWIS, bargaining power of suppliers is very low because company deals with
many products such as apparel, shoes jewellery and many more. Due to this firm takes benefit
and influence other suppliers depending upon circumstance and price.
Bargaining power of customers – Customers acts as a main source for gaining profit and
rise in sales of product. Customers are assets to firm and due to wide market they also affect
decisions of the firm, therefore bargaining power of customer is very high. To understand
consumer’s taste and preference a proper research and data is required . JOHN LEWIS is affected
by this force in a very negative way because availability of substitutes creates a great impact in
customers taste and their buying behaviour. To gain more consumer a firm needs to provide great
quality of products within affordable prices. This will create brand image and goodwill in market.
This study of Porter’s forces model directs business organisation to make strategies, statistics
and policies depending upon market situation. Every activity in business firm should be verified
and rechecked because any factors can affect business organisation. JOHN LEWIS is
multinational company dealing with variety of products and both micro and macro factors can
affect business, therefore company must participate actively in competitive market.
Strategies helps in assisting guidelines and measurable goals and also objectives. By
adopting proper method and techniques can give error free path for sound survival of business.
So, to identify the effect of strategies Porter’s five forces model is being used. This model can
analyse firm’s growth and helps in identifying market. To evaluate risk in business organisation

Porter’s five force model is being used. After detailed statistics of Porter’s five force model its
seen that clash is high in market due to which JOHN LEWIS can lose opportunity to become
competitive in market due to its static nature of business. Substitutes are big threat and easily
availability of substitutes in market may affect JOHN LEWIS productivity (Elias Mota and et. al.,
2020). Affordable prices of products may help to tackle this situation. Further, new entries are the
threat in which new industries takes place in the market. This may also lead in clash and conflicts
in market. But this threat has low impact on JOHN LEWIS, because man power is required for
commencing ne business which is not easy for new firm. In relation to JOWH LEWIS bargaining
power of suppliers is low. Due to number of suppliers in market JOHN LEWIS can take
advantage of this factor. Bargaining power of buyers is high because of number of substitutes and
various factors which can change consumer behaviour.
Thus, JOHN LEWIS should provide consumers with various schemes and offers to attract
them. Risk associated with this force is high in market and uncertain situations are bound to
happen. So, in context with JOHN LEWIS they should not adopt this method.
TASK 4
P4 Determining application of concepts, models as well as implement strategic management plan
of the business
It is required by every organisation to look for various ways and strategies through which they
can increase their market share and grow its business. Ansoff’s Matrix ix a great way to learn
about these strategies. There is a total of four strategies included in this analysis. It assists
business to grow its market share as well as its profit (Tardieu and et. al., 2020)
(Weng, 2020). These four strategies are product development, market development, market
penetration and diversification. All these strategies come along with a number of risks attached to
them. Below mentioned are all these strategies and ways in which John Lewis can effectively use
them in their business:
Market Penetration- Market penetration is a strategy in which a company uses its
already existing products in its already existing markets. Usually company reduces prices of its
products and services to take care of penetrating strategies (Bai and et. al., 2020). Company
through this strategy makes sure that new products and services launched in market does not
hamper its already existing product sale. John Lewis is adopting this strategy so that it can take

care of its old customers and make them loyal. This is proved to have a positive impact on
company’s image. Old buying behaviour of company’s customers are remains unchanged with
the help of it.
Market development- Market creates a number of new opportunities for any company.
In this strategy company focuses on new market areas with its already existing products present
in market. Market development enables companies to gain new customers and tap new untapped
markets. This help companies to gain new product dimensions and also increases a network of
distribution for company. John Lewis adapted this strategy which resulted in increasing its
market share and profits. It also led company to grow its market awareness and brand image. This
strategy has led company towards an overall development
Product development- Under this strategy a company is bound to introduce new
innovative product and services in its already existing market place. This strategy results in
innovation for the company along with monopoly in the market. It also helps company to grab
attention of its customers as well as its competitors. When taking john Lewis into consideration,
company may use this strategy on it apparels line (Pucheta‐Martínez and et. al., 2019). This can
be introduced to UK as well as other countries it is dealing in. This is an important strategy
through which company can grow its business. Although investment required in this strategy can
be high.
Diversification- Last strategy present in Ansoff’s matrix is diversification. This strategy
requires a detailed information and analysis of market as well as its customers. In this a new
product is developed and it is launched in a new market. It requires a lot of efforts along with
huge sum of money. It is considered most risky strategy amongst all. John Lewis can launch a
range of its own perfume in different markets with the help of this strategy. Company however,
needs to take care of research as well as investment required for this strategy.
John Lewis can affectively use these strategies to improve its business. Product
development and Market Penetration are two of best strategies suitable for its present situation.
Strategic management plan
In order to improve standard and management in an organisation a company uses a well
formulated strategic plan. Aims, goals and objectives of a firm are developed through a strategic

plan in a business (Peng and et. al.,2019). Strategic management often work as a road map for an
organisation. Below mentioned is a strategic plan formulated for John Lewis:
Aim- Increasing productivity, functional as well as operational activities in company is
the major aim on which John Lewis is focusing.
Vision Statement- John Lewis’ vision is to increase its market share and diversify in
different markets including both international as well as domestic market so that it may become
leading company in its industry one day (Balon and et. al.,2019).
Mission statement- Company’s mission in short term is to create its brand awareness in
market and attract more customers in order to increase its market share.
Values- Company’s values ask it to work with utmost loyalty and ethics so that it can
improve its work environment and keep its employees as well as customers satisfied.
Strategies and tactics- Strategy that John Lewis adopted is penetration which helps it in
increasing its market share in the same market it is dealing in and with the same product range.
Tactics which company follow is providing reliable products to gain more customers and increase
its revenues.
Market research- Company is taking market research and collecting first hand data. It is
conducting primary market research. This helps company in knowing about hidden needs of
customers and forming strategies for such needs. This also helps company to know about tastes
and preferences of customers before entering a new market so that proper marketing strategies for
their target market can be created and executed successfully (Wambaand et. al., 2016).
CONCLUSION
In order to survive in today’s competitive market every business is required to formulate
some business strategy. Strategies formulation involve strategies for human resource, operations,
finances etc. It is a company’s choice to choose from any of these strategies. They help a
company to attain its objectives and goals in a proper aforesaid manner in a given time frame.
There are a number of frameworks help from which are taken to formulate these strategies. Those
used during this report are PESTLE, SWOT, VRIO, Ansoff’s matrix, Porter’s five force model
etc. To increase productivity and profitability of John Lewis its management have used the
above-mentioned analysis to create its strategic model and plan.

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