Business Strategy Report: John Lewis, PESTEL, Stakeholders, VRIO, SWOT

This report provides a comprehensive analysis of John Lewis's business strategy. It begins with an introduction to business strategy and then delves into a PESTEL analysis, examining the political, economic, social, technological, and environmental factors affecting the company. The report then evaluates stakeholder analysis, categorizing stakeholders based on their power and interest levels. Following this, the report assesses John Lewis's strategic capabilities through VRIO analysis, evaluating its resources in terms of value, rarity, imitability, and organization. A SWOT analysis is also included, identifying the company's strengths, weaknesses, opportunities, and threats. Finally, the report determines competitive forces and strategic direction, providing a holistic overview of John Lewis's business strategy and its position in the retail industry.

Business
Strategy

INTRIDUCTION
Business strategy is define as activities that are used by a firm in order to develop
competitive action as well as strategies which an organisation can be used in order to attract their
potential service users. Along with this, it will also leads to several other achievements such as
improving performance, developing goal and objective and many more (Brewster, 2017). It can
also aid a firm management in creating plan of action which help them in achieving its desire
ends or goal. Organization selected for respective report is John Lewis which is a public limited
company that operate at retail industry. It is funded by John Lewis in the year 18694 and its
headquarter is established in London , United Kingdom. This organization serve variety of
merchandise ranges at worldwide level. Topics which are included in this are report are
definition of business strategy, impact of PEST analysis, evaluation of stakeholder analysis as
well as it will also include analysis of strategic capabilities through VRIO and SWOT. Along
with this, respective report will also include determination of competitive forces and strategies
direction through the use of proper method or theory.
TASK 1
a)
It is define as approach of activity and decision which assist enterpriser to accomplish its
company goals as well as targets in better as well as productive manner (Laudon and Traver,
2016). In other words, it is a type of master plan which helps organisation to enhance their
position at competitive marketplace and give cut throat competition to rivals. The primary aim of
making kind of respective plan of action is to helps in accomplishing effectualness as well as
explore opportunities that can assist a company in expansion of its business. In addition to this,
by implementing effective business strategy it helps the company to acquire customers and retain
their existing customers for huge duration. In context of respective organisation, by making
effective business strategy, the company will be able to build strong brand image as well as will
also secure its position at marketplace. Along with this, respective company will also able to
meet external threats as well as challenges in effective mode.
b)
PESTEL Analysis
Political:
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This factor is define as a change in political policies, instability that is formulated by the
government that affect the operation and functions of firm (Lawton, 2017). In respect of John
Lewis, if the company is enters uphill marketplace in which United Kingdom is the region of
European Federal. It is possible because rivals form Europe can enter the UK market without any
barrier. For example, authorities of United Kingdom decided to reduce the corporate tax to 28%
(John Lewis PESTEL Analysis, 2019). This will provide an opportunity to the respective
company to enhance its profits as well as market share.
Economic:
It is define as those factor which occur when there is changes in interest rate, exchange
rate and others that affect transactions with other countries. Due to this, there is great impact on
the profits of organisation. In reference of respective organisation, the company is operating in
UK which is facing the problem of recessions well as changes in interest rates. There is tough
competition in every sector that belongs to retailing which is more concerned in giving
incentives to customers. Due to this, prices of John Lewis is greatly influenced as well as gets
decreased. This affect their sales as well as profitability ratio.
Social:
In this factor, the main focus is on societies, communities and other which is related to
social factor. These factors have a great influence on sales and profits of the company. As
preferences of customers keeps on changing, opportunities in the market becomes more
materialistic. In context of John Lewis organisation, they have to focus more branded products in
UK market so that they can meet customers need and make them satisfy with their services and
goods.
Technological:
It is one of the major factor that influence quality of services and goods of organisation.
In respect of John Lewis, company make effective use of advance technology which will assist in
enhancing quality of their commodity as well as services and extra value in it. This will help
respective company to differentiate their product from their competitors as well as secure
position at competitive market place.
Environmental:
These factors are concerned with change in environmental laws such as production of
eco-friendly products, chemical free goods and many more. In reference of respective company,
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they are going to reduce its greenhouse emission to zero by 2050 which is set by
Intergovernmental Panel on Climate Change (IPCC) in order to limit global warming to 1.5C
(John Lewis pledges to reduce carbon emissions, 2017).
c)
Stakeholders analysis:
It is define as a process of identifying people prior to beginning of project and grouping
them as per the level of interest, participation and impact of project (Peng, 2017). There are four
categories of stakeholders is characterised which is explained as follows:
 High power-High interest (Managed most thoroughly) : In this category owners,
debtors and stakeholders are involved. John Lewis Company, need to determine that their
stakeholders consist of high power as well as interest in firm. This is essential for
respective company, to keep them happy as well as satisfied by their products and
services. This is because their profits are greatly influenced by these stakeholders. The
stakeholders whose interest is high as well as influencing power also high are to be
managed all thing thoroughly. For example: CEO, Directors, managers and others.
 High power-low interest(Keep completely informed) :Investors, suppliers and others
are involved in the category high power and low interest. This is because the main
purpose of these stakeholders to get return in terms of profits. It is responsibility of John
Lewis organisation to give them assurance about their investment that is made by them in
their company. These people are satisfied with just getting appropriate amount of
information but not more as they get bored. For example: investors, suppliers and so on.
 Low power-high interest (Regular minimal contact):In this category, mainly
employees are involved. They are those asset of the company who accomplish targets of
company to maintain goodwill of company. In context of respective company, it is
important to provide healthy and positive environment to workers which will aid in
performing project successfully. Along with this, apart from the organisational goals they
have also make sure that their personal goals are also met. These stakeholders have less
contacts as they do not have more power but their interest is high. For example:
employees etc.
 Low power-low interest (Anticipated meet needs): In this category, organisation
degrade employees such as sweepers, care taker are involved. In respect of John Lewis,
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these employees are not concerned about any change that occur in the company. Their
main motive is to get compensation on basis of their work. Watchmen, sweepers, guards
etc. all these stakeholders have low power and low interest they only seeks to meet the
requirements.
TASK 2
a)
VRIO analysis is define as technique which used by an organisation for evaluate their
resources for identifying competitive advancement at potential marketplace. This framework
include four factors which help in determining effectiveness of resources i.e. valuable, rarity,
inimitably and organized (Cavusgil and et. al., 2014). Analysis of respective firm resources
through VRIO analysis is given below:-
Factors Valuable Rarity Inimitable Organized What is the
result?
Financial
Resource
Financial
Resource
- - - Competitive
Disadvantage
Quality of
Products
Quality of
Products
Quality of
Products
- - Partially
competitive
Distribution
Network
Distribution
Network
Distribution
Network
Distribution
Network
- Competitive
advantage for
temporary
basis
Employees Employees Employees Employees Employees Competitive
advantage
For conducting effective VRIO model most effective resources of John Lewis are
financial resource, quality of products, distribution network and employees.
Valuable: It is define as those resources which are valuable for resources and help them in
attaining goal and objective. In respect of John Lewis their valuable resources are-
 Financial resource- John Lewis is one of the well know retail brand which operates at
global level. This proof that respective company have huge financial resources as well as
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their turnover in 2019 is approx 3.8 billion that will help them in adopting new process
and resources (Annual sales revenue of John Lewis in the United Kingdom (UK) from
2009 to 2019* (in million GBP), 2019).
 Quality of products- John Lewis provide variety of products range such as woman and
men clothing, home and garden products, electrical products, baby and child care
products and many more. Quality of respective company products are of supreme quality
due which their price is also little high then competitive firms.
 Distribution Network- Without effective distribution channel company not able to
communicate their customers. In respect of John Lewis their distribution network is very
effective because they offer their products through online medium as well as offline
medium (Chang, 2016).
 Employees- Employees are one of the most valuable resource of respective company
because they are skilled, knowledgeable, experienced and creative which always come up
with new ideas and design. Through which this company able to attract their customers
and gain high profitability at potential marketplace.
Rarity: It refers to those resources that are rare and help company in gaining competitive
advancement at their potential marketplace. In regards of John Lewis their some resource are not
rare like financial resources because there are several other company who have huge capitals and
funding like H&M, Debenhams and Primark (Chen and Jermias, 2014). Rare resource of
respective company are mentioned-
 Quality of products- The respective company offer expensive products but those are of
high quality products which help them in attracting customers customers and encouraging
them to retain with company for long time duration.
 Distribution Network- This resource of respective company is rare because they
operates with both online as well as offline mode and their suppliers helps them in
fulfilling requirement of customers in effective manner and at proper time duration
(Goffee and Scase, 2015). Along with this they also use advance technology software that
help in managing distribution channel effectively.
 Employees- Employees of respective company have their own skills and knowledge
which make them rare from other company employees. Moreover they are also very
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creativity, experienced and adaptable which help company in gaining their target
effectively.
Inimitable: It is define as those resources of company which are not copied by other competitive
company. In regards of John Lewis their some resources can easily inimitable by competitors
such as financial resources as well as quality of products. But they are have several resources
which are inimitable, which are mentioned below-
 Distribution Network- Distribution channel adopted by respective company are based
on advance technology which is not easy for other or competitive company to copy.
Along with they also conduct improvements on regular basis according to their
requirement which make their distribution network unique (Jeston, 2014).
 Employees- Respective company employees have their own skills, experience, creativity
and knowledge which cannot be copied by other person. Along with this their employees
are loyal towards their company because they provide them various benefits as well as
opportunities.
Organized: It is define as those resources which required to be organised after certain time
duration in order to attain their goal as well objective in effective manner. In respect of John
Lewis there are several which required to be organized after some time duration such as financial
resources, distribution network and quality of products (Jocovic and et. al., 2014). This is so
because these all resources required some kind of organization after particular time duration. But
this resource which didn't required to be organized, which is mentioned below-
 Employees- Staffs or members of John Lewis are highly skilled, knowledgeable, creative
and innovative which help company in gaining competitive advancement at their
potential sector. Along with this they also ensure about sustainability of them for a long
time duration.
By this analysis it can be determine that John Lewis have several factors which them in
gaining high competitive advancement at potential marketplace as well as it will also show their
capabilities.
b)
SWOT analysis is conducted by John Lewis in order to know its strength, weaknesses,
opportunities and threat that will help them in developing decision as well as policies which
leads to attainment of goal. SWOT analysis of respective company is given below:-
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Strength Weakness
 The respective company have strong
online presence which attract customers
and increase sales of company.
 John Lewis have strong brand strength
which offer high quality products.
 The respective company growing their
presence at international market day by
day.
 They generally focus on innovation as
well as creativity which help them in
attracting target or potential service
users towards them.
 The main weakness of this organisation
is that they have inconsistent profit
ratio.
 The respective company also offer their
products at high prices then their
competitors (John Lewis SWOT and
PESTEL analysis, 2019).
Opportunities Threat
 They have huge scope of enter into new
marketplace that help in increaser
customers base (Klettner, Clarke and
Boersma, 2014).
 They can also come up with new range
of products such as eco friendly
products, healthy food and beverages
and many more.
 They are operating at huge location due
to which they also face large
competition such as Primark, M&S,
Debenhams, ASOS, Zalando and many
more.
 Respective company operating at retail
industry due to which they have to
follow various rules and regulation
which impact on their operations and
function.
By this it can be analysis that John Lewis have several strengths which help them in
grabbing opportunities and overcoming threats in effective manner.
TASK 3
a)
Porters five force model:
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Bargaining power of suppliers: Suppliers are those who provide raw material to the
company for production of their goods and services (Scholes, 2015). In respect of John Lewis
company, there is low bargaining power of suppliers due to which they are able to get supply of
raw material at reasonable price. As the respective company operated their operations and
functions at wide scale which provide them opportunity to switch their suppliers who will
provide them supply of quality of raw materials at affordable price. Moreover, the bargaining
power of suppliers are low as John Lewis are not totally dependent upon suppliers, they
generally sells its own branded products. They purchases raw material as well as non finished
products, that are favourable for their margins.
Bargaining power of customers: There is a high bargaining power of customers as they
are source through which company is able to retain at competitive marketplace for long period
(Spender, 2014). In context of John Lewis, in order to retain their customers, the company has
provide unique and different product to their customers. Due to this, there will be less
possibilities that their customers will switch to their competitors who provide same products as
respective company. In addition to this, by adopting such strategy, John Lewis, will not only
retain their customers but will also acquire new consumers. This will aid them to strengthen their
customer base as well as will also increase their revenue and sales. Moreover, its bargaining
power of customer s is high as they can switch to its rivals who facilitates same products. So
continuously it have to facilitated unique as well as different products to its consumers.
Threat of substitute:It is also high for respective company. It is because there are large
number of competitors which provide same products as John Lewis. Due to this, it provides
options to customers to switch their preference which can act as a loss for the company. Along
with this, it will also affect sales of respective company and they wont be able to gain
competitive advantage. This can affect their position and will also weaken their customer base.
In order to avoid such issues, respective company should determine customer interest and their
preferences so that they can produce goods as per their requirement. Apparently, there are no
such substitutes for clothes so the threats of substitutes is low. So, the key threats in substitutes
within cloth market is Peter Jones, Tesco, and others.
Threat of new entrants:John Lewis has low threat of new entrants. This is because, if
the organisation want to enter in a competitive marketplace, they have to invest a lot for their
establishment and also have to apply different strategies which can aid them to sustain at market.
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So, there is high possibility that it is not possible for every company to adopt as per the
environment in short duration. This enhances the chance of the company to avoid the threat of
new entrants. Moreover, the respective industry is enough mature as well as new entrant within
marketplace will consider offering something new that is somehow tough in cloth retailing.
Competitive rivalry:There are large number of competitors of John Lewis such as
TESCO, Marks and Spencer and many more (Veit and et. al., 2014). This implies that there is
high competition for John Lewis to retain at market. Due to this intense competition, it affects
the overall sales as well as profitability ratio of company. In order to overcome such practices,
respective company has to produce diversify product which assist them to give cut throat
competition to their rivals. Along with this, it also expand their opportunities to attract customers
which will improve their brand image and will also increase their goodwill. Moreover, John
Lewis is specifically exposed to competition as they sells not only. Also, due to high competitive
rivalry they have to regularly modify their products designs, features and many more so that their
potential customers do not mover towards its competitors.
TASK 4
a)
Strategic directions include numerous plans and actions which are requires to be taken by
an organisation in order to attain their target objectives and goals (Wheelen and et. al., 2017).
These kind of activities are based on different business strategies which needs to be put in place
of organisational working practices. John Lewis is a chain of high end department store that
provide their quality services to its services users a per their requirement and need. For them, it is
required to identify different strategic direction that are available for firm in order to attain their
target objectives by implementing some changes in their business practices. In this process, it is
required for firm to analyse different key areas with the help of different models as:
Porter’s generic model: For an organisation, it is required to identify their position in specified
industry that assist in determine whether firm’s growth rate is above or below among its
competitors. To attain desired success, it is required for firm to identify appropriate path for them
thus, this model assist in determining different pathways to reach at defined goal of organisation.
John Lewis can identify criteria for their firm that aid them in attaining maximum competitive
advantages easily. Strategic options of Porter’s generic model are defining below as:
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Cost Leadership: As per this strategic process, an organisation can gain maximum
competitive advantages by reducing cost of their offerings. In this process reduction of cost
determine charging an industry average prices or provide lower prices services to users. For John
Lewis, it can be about minimising the cost by making changes in their manufacturing and
production practices. On the basis of these strategic process, firm can easily build their own
monopoly in target market by undercut their prices easily. This strategy contains a negative
approach as the low-cost producer can attack easily to business services and can impacts
negatively upon its potential market share. Therefore, the John Lewis can used this particular
strategies to become the low cost producer within their sectors. Moreover, with the help of this
respective firm can able to gain more competitive advantage as they reduces the offerings cost.
Differentiation: This strategy denotes a strategy firm in which they seek to be unique
along with its offering which are valued by its services users (Brewster, 2017). John Lewis can
implement such strategies in their business process by implementing changes in their product
design and its quality as well. on the of this approach an organisation can easily create their own
image in target market that assist them in attaining desired competitive advantages. Moreover,
they can also utilise this particular strategy to produce differentiated products or services. They
may be different in design, features, product performance etc. Also the respective firm can able
to charge high price for their differentiated products as well as gaining consumers loyalty.
Focus: This strategy defines its meaning similar to both cost leadership and differentiation
strategy but focuses rests on the choice of a narrow competitive scope. This strategy classifies in
two different areas as:
Cost Focus in which an organisation target niche market and provide their offerings at
possible lowest prices. Main objectives of this strategic process is to understand consumer’s
requirement and capabilities in niche market in order to ensure that the cost remain low.
Therefore, John Lewis can use this strategy for enjoying the high degree of consumers loyalty as
well as concentrate upon narrow marketplace such as geographic market, group of consumers
and many others.
Differentiation focus define a concept in which an organisation pays their maximum
attention towards their business services that has unique features that they can offer in niche
market. Main objectives of this strategic process is to develop strong brand loyalty among target
consumers. So, John Lewis can utilise this particular strategy so that they can differentiate their
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offering products into small number of target market segments. Also help them to make strong
brand loyalty.
In order to implement most suitable strategic option, John Lewis requires to identify their
capabilities that assist them in implementing appropriate strategy. As John Lewis has a strong
online presence and they pay their maximum attention toward innovative as well as creative
practices therefore, differentiation strategy will be more suitable for them (John Lewis SWOT
and PESTEL Analysis, 2019). By implementing this, organisation can make positive changes in
their brand image as well as can create strong image in competitive market. John Lewis growing
demand for private labels thus differentiation strategy assists them in offering new and unique
features in their services to gain opportunity of business growth.
CONCLUSION
By evaluating above discussed point it can be summarised that for every organisation it is
necessary to adopt effective business strategy so that they can conduct their business operation in
effective manner. This will help them in gaining various benefits such as attracting customers
customers, improving quality of work, gaining competitive advancement, adopt new technology
and many more. For adopting proper business strategy, management of a company need to
conduct several activities by adopting appropriate methods as well as theories such as PEST
analysis and stakeholder analysis for evaluating external environment. Along with this company
may also adopt VRIO for competitive analysis and SWOT analysis for evaluating inner
capabilities. For determining competitive force a firm may adopt Porter’s Five Forces model as
well as they also adopt Porter's Generic strategy framework for determining their position at
potential marketplace.
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Online
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John Lewis pledges to reduce carbon emissions. 2017. [Online]. Available
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