Analyzing the Impact of Macro Environment on Business Strategies

This report analyzes the impact of macro-environmental factors on John Lewis, a retail chain in the UK. It explores the political, economic, social, technological, legal, and environmental factors affecting the company's strategies. The report also includes a critical analysis of the internal capabilities and environment of the organization, as well as the use of Porter's Five Force model to evaluate competitive forces in the market.

BUSINESS
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
LO 1................................................................................................................................................3
P1 Appropriate frameworks to analyse the impact and influence of the macro environment on
a organisation and its strategies..............................................................................................3
M1 Critical analysis of macro-environment to communicate strategic decisions..................4
LO 2................................................................................................................................................4
P2 Analysis of internal capabilities and environment of organisation...................................4
M2 Critical analysis of internal environment of organisation:...............................................8
LO 3................................................................................................................................................8
P3 Porter Five Force model to evaluate competitive forces of market .................................8
M3 Strategies to enhance the market position as well as competitive advantage..................9
LO 4..............................................................................................................................................10
P4 Devising a strategic plan for the organisation.................................................................10
M4 Strategic management plan with tactical and tangible strategies...................................11
D1 Interpretation of data to conduct competitive analysis in to formulate strategies:.........12
CONCLUSION.............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
A set of competitive actions and steps which an organisation undertakes so that they can
move towards fulfilment of all goals and objectives which were earlier mentioned in a given
time frame is called business strategy. These course of actions helps and supports enterprises to
adopt various measures and techniques which are favourable for company. All these strategies
help company to strive in the competitive marketplace and also emerge to be leader in particular
industry it is dealing in(Anwar and Hasnu, 2016). For following report John Lewis is chosen in
order to study and analyse all of its business strategies. This report explores a number of
decisions which company have taken in its existence till date. John Lewis is a chain of retail
store in UK. It is one of the largest retail chains in this sector. It consists of clothing, jewellery,
watches, furniture, food etc. the following report includes SWOT and VRIO to analyse internal
environment of company whereas for external evaluation PESTLE analysis is conducted. This
report also consists of Porter's Five Force Model in order to study effects of competitors on
business. In the end various strategic options available with company are discussed taking into
account Ansoff's Matrix.
LO 1
P1 Appropriate frameworks to analyse the impact and influence of the macro environment on a
organisation and its strategies
It is necessary for a business to study all factors which have an effect on its functioning.
In order to study effect of macro-environmental factors on John Lewis PESTLE have been
carried on the company. Below mentioned is analysis:
Political: It have been noticed that government of UK have cut down its taxes which is
beneficial for John Lewis. This helps in increased income after tax for company. Also any
terrorist activities in company may act as threat for company as well. It is therefore, required by
company to keep a check on its stock at time of any such crisis. Such issues may have major
impact on business so it is necessary for business to keep a track of it.
Economical: There are a number of aid provided by government of UK like UK Smart
Grants, which provide help to R&D department of John Lewis. This makes it necessary fro John
Lewis to provide its product at affordable prices as cost of R&D is not added in its selling price.
Also GDP, economic growth, foreign exchange rates are various factors which affects John
Lewis' operations.

Social: All the products developed by company are done after deeply studying lifestyle
and trend followed by consumers. This makes their products to be in demand. It is necessary for
company to follow cultural beliefs in values of environment it is working as well. If a company
does not accept social factors in an environment its functioning in the market becomes difficult.
Technological: There have been a number of changes seen due to dynamically changing
technology and its advancement. It have ventured in e-commerce which requires a lot of
investment by company. It is necessary for John Lewis to consistently keep on developing new
technologies in order to gain knowledge as well as compete in market.
Legal: It is necessary for company to fulfil all the rules and regulations implied by law
in the area of their working. The laws affecting them are all the laws related to hygiene, health,
employees, wages etc (Elton nd O'Riordan, 2016). It is necessary for company to undertake
various measures in interest of these laws. Not abiding by these rules and regulations may lead
to major losses for companies in form or legal actions against them.
Environmental: John Lewis is working with IPCC (Intergovernmental Panel on Climate
Change) in order to reduce emission of carbon in environment. They also provide biodegradable
packaging. Such efforts help companies to do their part for environment.
M1 Critical analysis of macro-environment to communicate strategic decisions
From Pestle analysis of company it is clear that there are a n umber of positive as well as
negative factors in macro-environment which is affecting functioning in John Lewis. BREXIT is
heavily influencing company in terms of political as well as economical factors. It can also be
included in legal factors. There have been a number of changes in demands and perception of
consumers which are included in social factors. Other than this innovations and technological
advancement account to technological factors . All these factors have been critically analysed in
order to study the effect of macro environmental factors on John Lewis. Using these factors
efficiently helps company in running their businesses smoothly (Allen and Truman, 2016).
LO 2
P2 Analysis of internal capabilities and environment of organisation
In order to conduct an analysis of internal environment of John Lewis there are two
modes used namely SWOT and VRIO, which are helping business to gain knowledge as well as
capabilities.

Strength Weakness
 Brand image of John Lewis is very
strong. Company have built a good
image by providing products of good
quality at reasonable prices. Its
products are also technologically
upgraded (Zhu and Chertow, 2017).
 Company also have a good position in
online market. Revenues from online
selling are contribute a large portion
toward its revenue.
 Customer loyalty is not given much
importance in this company. Importance
of customer must be understood by
employees
 Company do not take various effective
measures to increase its market share.
All strategies are old and out dated.
Opportunities Threats
 Expansion is a great effort which can be
carried by John Lewis in new markets
which have not been touched by
company earlier. This will help
increasing brand popularity
 Strong market plans and strategies
could be made by company which
would help in increasing its sales as
well as profitability.
 John Lewis can also innovate new
products and launch them in existing
markets to its loyal customers. This will
help enhance brand image of company.
 Major threat to John Lewis is facing a
number of competitors in this sector. Its
major competitor's are Tesco, LIDL,
ALDI, ASDA etc.
 There are a number of substitutes
available for products provided by John
Lewis. This makes it difficult for
company as they need to evolve
continuously in order to provide goods
better than their competitors.

VRIO Model:
Resources Valuable Rarity Inimitable Organized Result
Global
presence
Global
presence
- - - Competitive
Disadvantage
Products and
Services
Products and
Services
Products and
Services
- - Partial
competitive
advantage
Software Software Software Software - Competitive
advantage but for
temporary basis
Staff Staff Staff Staff Staff Competitive
advantage
In order to study all the capabilities in company there are four resources which have been
analysed. These resources are Global Presence, Products and Services, Staff and Software.
These resources are judged based on four criteria which are Valuable, rarity, inimitable and
organised.
Valuable: These are such resources which will help customer by adding value to their
satisfaction. These resources provide company a benefit over its competitors in the marketplace.
In this regard below mentioned are all the valuable resources for John Lewis: Global presence: John Lewis is gaining an edge over its competitors as it has worldwide
presence. Company have a good brand name as well as it is a popular brand which
allows company to stand in competitive advantage ( Kranz and Picot, 2016). Products and Services: All the products and services offered by John Lewis re of
premium quality. They also try and bring in required innovations in product along with
advanced technologies which helps to gain trust and loyalty of customers. Staff: Workforce present at John Lewis carries on business in order to achieve aims and
objectives of company. They help entity to also make a good impression over customers
as they have been trained to communicate properly and keep them engaged. Staff of John
Lewis also makes sure of fact that goals are achieved in given time period.

 Software: John Lewis is using Paragon's Live management software so that they can
easily manage their operations in global market. This also helps in increasing efficiency
in company. It is beneficial for both operations as well as it makes work of employees
easy. .
Rarity: There are such resources whose existence in organisation are very unique for it.
They require it in order to have a lead in competitive environment. In case of given organisation
it have been analysed that global presence is not at all rare. Whereas, some of the factors which
are rare for company are mentioned below: Products and services: There are a number of goods which are offered by John Lewis in
market. These range includes clothing, accessories, general merchandising, and a number
of such items. It is difficult to copy such huge product line. It is therefore, difficult for
rivals to copy it (Afonso and et. al., 2018). Staff: The employees at John Lewis have been trained in such a way that there skills and
capabilities now make them very rare. Any firm cannot imitate or copy them either. It is
hard work and efficiency of its workforce which leads company to achieve its goals and
objectives.
 Software: Software used by company to manage its work and tasks is also very rare. It
have been specifically designed to fulfil all the needs and wants of company which
makes it rare.
Inimitable: All those resources which are impossible to be copied by any competitor or
any other organisation in market are called inimitable resources. In context of John Lewis, it
have been evaluated that product and services can be easily copied by rivals. Also along with it
technologies used to produce this can be copied by rivals. Staff: Staff of company are skilled, knowledgable and competent enough. Company
have trained them in such a way that its competitor cannot easily copy that. Human
resource is most difficult to copy as human nature and perception differs from person to
person.
 Software: The program used by company is specifically designed for them according to
their needs and requirements. This makes it difficult to be copied by any other
organisation.

Organised: It includes all those resources which are required to be arranged in a manner
so as to make sure that all the objectives and aims of company are achieved efficiently by
company (Taneja, 2017). It is necessary for this company to update their software from time to
time so that all the requirements of company are achieved, these are the reasons it can be
categorised under this section in VRIO analysis.
 Staff: Taking help from its employees which are highly efficient, competent and skilled
John Lewis makes sure that all the work they do helps them to sustain in global market
for a long period of time (Bhave, 2016)(Liu, 2017). This is major assistance in providing
business with enhanced sales as well as profits.
M2 Critical analysis of internal environment of organisation:
From SWOT analysis all the strengths as well as shortcomings of John Lewis can be
stated. There are a number of opportunities for company to grow and threats which can lead to
losses for company as well. Company have a human resource which is its greatest asset. The
have trained them well in order to get maximum work done from them effectively and
efficiently. Company however is lacking in formulating good strategies. Its advertisement and
promotion plans are not that good either. Company need to make effective plans in order to
increase its revenues. Another threat company has is from a number of its competitors which are
Tesco, ASDA, ALDI, Marks & Spencer etc.
LO 3
P3 Porter Five Force model to evaluate competitive forces of market
Michel porters five force model were introduced in 1979, for the competitive position
analysis of the company. Porters five force model analyse or evaluate the competitive strength
and position of the company. Porters competitive theory help in identify the strength and
weaknesses of the company. This model help in identifying those factors which have direct or
indirect impact on the business (Moskowitz, 2017). This is also help in identifying what is the
impacts of other rival or competitive companies on the business. John Lewis five force are
discussed below:
 Threat of new entrant- The companies also affected or influenced by the new entrants
in the market. Entry of the new company in the market create competition. Companies
with good and strong image in the market have less impact of new entrants. There is less

impact of new entrants on John Lewis, because new entrants need huge amount of
investment to give competition to John Lewis. They have some other advantages like
there good market strategies, maintain good customer relation, distribution network,
which increase their sales and probability.
 Threat of the Substitutes - Substitute products and services used by the customer at the
place of company's products were consider as a threat for company. If company produce
different or unique item then chance of substitute product threat is low. But if companies
product substitute is available in the market it increase competition (Venkitachalam and
Ambrosini, 2017). There is some similar brand in the market offer substitute to John
Lewis but the standard of product offered by the John Lewis is unique and different
from other substitutes and they are able to fulfil demand of customer.
 Bargaining power of the supplier- There is huge impact of supplier on the companies
product. The suppliers have power to drive the cost of inputs and advantage to push the
trade services. John Lewis have huge number of suppliers in the market. That's why their
suppliers bargaining power is low. Because of low number of substitutes company have
advantages, they offer less cost to the suppliers.
 Bargaining power of the customer- The companies growth is depend on the purchasing
power of customer. Customer have power to drive the cost from high to low. Companies
growth and cost affected by the number of customers or buyer have. When company
have few customer they have power to increase product prices, if company have many
customer they already have high power. John Lewis provide good cost benefits which
prevent their customer from switching to other brand.
 Competitive rivalry- Now a days every type of industry weather it is small, large
facing high level of competition in the market. In macro environment number of
competitors are increased which affects or influence the growth of the companies. There
is high competition for John Lewis in the industry but they have good market strategies,
unique ideas to deal with competitors (Gavinelli, 2016). John Lewis can attract their
customers through marketing. The company offer better deals at low price to reduce the
competition.

M3 Strategies to enhance the market position as well as competitive advantage
From the following analysis it can be concluded that company lacks in making effective
policies for attracting customer as well as retaining them. Proper analysis of consumer behaviour
and decision-making process is needed to be done by company. John lewis needs to make use of
various platforms such as social media, online marketing, and other effective promotion
techniques which will help company to increase its performance in market and enhance
customer loyalty. The strategy which is mentioned above is effective in providing support to
company in order to provide increased revenue and profits of business.
LO 4
P4 Devising a strategic plan for the organisation
Ansoff matrix is one of tools used for strategic planning which helps a company to
formulate and design strategies and policies in order to grow business successfully. There are
four strategies in Ansoff's Matrix which are mentioned below:
Market Penetration: In this focus is on existing product of company in existing market
in which it is already dealing. This is the best strategy for John Lewis because it already have a
good customer base now it needs to attract customers from its competitors. Pricing less then
them will help as a bate to attract more consumers (Sturiale and Scuderi, 2016). It will help
organisation to increase its market share.
Market expansion: Market expansion can also be called market development. In this
strategy company enters into new markets with their already existing products. It has a number
of benefits as popularity of product and company increases, company comes to know about
different set of consumers, goodwill of company also increases. This leads to increase in
revenues as well as profits.
Product expansion: In this strategy company focuses on developing new products. It can
be stated as innovation in products. The market in which product will be sold remains same. It is
beneficial for John Lewis as company already have goof hold of existing market. When
company launches a new product it is easy to sell it as they already have a set of loyal customer's
who will definitely buy those products. This will help company to meet requirements of
consumers and increase revenues for company. They can start new venture of perfume segment
in their supermarkets, this will increase number of foot falls in stores.

Diversification: In this strategy new products are developed which are sold in new
markets. This strategy is a risky one with lot of speculation and investments. There is a high
possibility that customers may not like product (Habib and Hasan, 2017). There can be various
reason behind it. It is important for a marketer to thoroughly study markets before venturing into
diversification strategy. John Lewis is not opting for this strategy as it may require huge
investment in promotion which cannot be afforded by company now.
Once study of Ansoff Matrix on John Lewis is completed it can be concluded that in
order to gain maximum market share with calculated risk , company must opt for market
penetration strategy. This is very helpful as company have a well established customer base
consisting of loyal customers. Company needs to attract other customer to increase its market
share. Focusing on already existing product will help company to review its performance and
correct any mistake it made in past (Gauthier, 2017).
M4 Strategic management plan with tactical and tangible strategies.
Strategic plan for John Lewis in order to launch its new business line and communicate it
to is stakeholders is as followed-
Aim: Aim of John Lewis is to increase its dealing and business operations in domestic
market.
Vision: Its vision is to be largest retail chain in industry in world.
Mission statement: Its mission is to provide good quality products in fair prices and
provide maximum satisfaction to is consumer.
Goals and Objectives: Company have short term goals of increasing sales and providing
maximum satisfaction to their customers. There long-term goals consists of growing sustainably
in global market.
Strategies: John Lewis plans to use penetration strategy which will help it to attract more
customers and compete with companies like Tesco. This strategy can prove to be beneficial for
company and help it in gaining major market share.
Tactics: As tactics John Lewis will add new products to its product line and also sell
them at very reasonable prices in order to increase its market share (Peng, 2017).

D1 Interpretation of data to conduct competitive analysis in to formulate strategies:
Illustration 1: Leading 10 retailers based on sales in the United Kingdom (UK) in 2017/18
(Source: Leading 10 retailers based on sales in the United Kingdom (UK) in 2017/18, 2019)
The above graph helps in interpreting that Tesco is largest brand dealing I retail chain
industry in United Kingdom. It can be seen that in year 2017-2018 Tesco had a total revenue of
£38.7 billion. Apart from this John Lewis can be seen in 5th position in all over United Kingdom
in retail chain sector(Leading 10 retailers based on sales in the United Kingdom (UK) in
2017/18, 2019). This is showing the reason behind John Lewis using market penetration strategy
in order to grab maximum of market share and compete with its competitors. This is also helping
company to enhance their profitability a lot. In addition to this John Lewis is also adding to its
product range in order to grab customer's attention. With the help of all the studies and model
company can easily formulate their strategies and achieve all their objectives and goals(Dzever
and Jaussaud, 2016).
CONCLUSION
From the following it can be concluded how John Lewis is looking for new strategies in
order to expand its business and make its place I global market. Company have a number of
factors affecting it internally as well as externally. Company have a number of competitors
which are major threat to it. It has also been analysed that even after having a loyal customer-

base company is not able to retain them. It is required by John Lewis to make sure they retain
their old customers and along with it they need to focus on new customers to gain more market
share. Apart from this company is focusing on market penetration strategy to get a lead over its
competitors. These are analysis which have been carried on John Lewis in this report.

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