Comprehensive Business Strategy Report: John Lewis Retail Analysis

This report provides a comprehensive analysis of John Lewis's business strategy. It begins with an introduction to business strategy and its importance. The report then applies various frameworks to analyze the macro-environment, including a PESTLE analysis of political, economic, social, technological, legal, and environmental factors impacting John Lewis. It also analyzes the internal environment and capabilities using SWOT and VRIO models to assess strengths, weaknesses, opportunities, and threats, as well as the value, rarity, imitability, and organization of resources. Furthermore, the report applies Porter's Five Forces model to evaluate the competitive forces within the market. Finally, the report discusses strategic planning for the organization using the Ansoff matrix, and concludes with an overview of the key findings and recommendations for John Lewis's strategic direction.

BUSINESS
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
P1 Application of frameworks to analyse the impact of macro environment on organisation
and its strategies...........................................................................................................................1
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks..................................................................................................................................3
P3 Porter Five Force model to evaluate competitive forces of market........................................6
P4 Strategic planning for organisation.........................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy refers to the planning done and decisions taken by firm to give a
strategic direction to the operations and functioning of company. This is largely done with the
aim to capture the attention of a large number of people (Brewster, 2017). Business strategy
assists a company in undertaking measures so as to ensure timely achievement of organisational
goals and objectives. This renders a competitive advantage to enterprise over rivals present in
marketplace. The present report is based on John Lewis which is a retail organisation offering
products belonging to a variety of segments such as clothing, food, furniture, cosmetics, watches,
furniture etc. This report includes PESTLE analysis to gain an insight into the influence of macro
environment together with SWOT and VRIO analysis for gaining knowledge about
organisational capabilities. Further, Porter Five Force analysis is done to examine the company's
competitive environment. Lastly, Ansoff matrix is used to conduct analysis of available strategic
options and do strategic planning.
P1 Application of frameworks to analyse the impact of macro environment on organisation and
its strategies
In today's hyper competitive era, companies have to continuously examine the macro
environment in order to ascertain the external factors which have a significant influence upon
business operations in marketplace. This analysis assists an organisation to develop strategies
which can ensuring orderly conduct within the enterprise (Cavusgil and et. al., 2014). The
manager of John Lewis has conducted PESTLE analysis to make an evaluation of the macro-
environmental factors as follows:-
PESTLE Analysis
This can be referred to as a strategic tool which assists the organisation in taking into
account the external factors which impact upon an organisation in order to devise and develop
strategies that ensure effective execution of business activities. PESTLE analysis of John Lewis
Ltd is given below:-
Political: John Lewis has been conducting operations within UK which is a part of
Europe. The political system of Europe is strong and significantly fosters the growth of business
organisations. In this regard, the UK government has reduced the corporation tax from 30% to
approximately 28% which will assist John Lewis to enhance the sales and profits of entity within
UK (John Lewis PESTEL Analysis, 2019). The political system can also act as a threat for the
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company owing to terrorist attacks or a political turmoil. To effectively deal with this, entity
should maintain adequate stock so that there is no shortage of resources or goods in adverse
political situations.
Economical: The economy of United Kingdom is strong which supports the business
operations of company within marketplace. Also, UK government provides assistance to the
organisations which come up with rapid innovations. However, the economic system of UK is
presently affected by Brexit which tends to create a lot of economic tensions within all the
corporate sectors across the country (Goffee and Scase, 2015). To deal with this, John Lewis can
provide products at reasonable prices so that the inflation resulting from Brexit do not impact
upon the sales figure and profitability of company. The organisation can even offer lucrative
discounts or attention grabbing deals to keep the loyal customer base in-tacked.
Social: The trends of population of a country as well as market have to be continuously
taken into account by businesses to make sure that they sustain in market for a long period of
time. Post the evaluation of market trends and consumer psyche, John Lewis launches unique
and fashionable products into market which assist in grabbing the attention of a large number of
people within UK. Such products include clothes, accessories and other trending items (John
Lewis: competitive advantage in a tough retail market, 2015). Apart from this, the threat for this
enterprise is the probability that a market trend or consumer lifestyle is anticipated by
competitors before John Lewis. To escape such situations, organisation should constantly invest
in R&D department to tap the advantage of utilising and formulating the latest trends.
Technological: With the passage of time, constant advancements take place in market
and corporate world which have to be taken into account by business organisations so as to
ensure long term sustainability. John Lewis entered into online selling channels to ensure decline
in use of paper and to significantly gain the attention of customers and to offer convenience and
ease to people (John Lewis SWOT and PESTEL Analysis, 2019). This business entity makes use
of advanced techniques and systems to effectively manage its business operations. However,
formulation of advanced technologies across the organisational premises require huge investment
which may act as a threat for the entity. Thus, John Lewis should incorporate this cost in the
financial budget so that there is no discrepancies in relation to finance.
Legal: John Lewis ensures compliance with all the legalisations linked with health and
safety, employment, corporation tax so as to avoid getting penalised or publicly prosecuted. They
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make use of renewable resources for production of clothes (John Lewis to boost renewables use
in SmartestEnergy deal, 2019). Further, an instance where the company fails to abide by the laws
and standards set by statute, it may have to face adverse consequences. To avoid this, John Lewis
is required to act in the interest of governmental and legal bodies.
Environmental: In today's rapidly evolving world, retail companies are required to act in
interest of environment so as to gain recognition from customers and governmental agencies.
John Lewis has entered into a partnership with Intergovernmental Panel on Climate Change
(IPCC) for significantly reducing its carbon footprints (John Lewis pledges to reduce carbon
emissions, 2017). Also, John Lewis makes use of biodegradable packs so as to significantly
decrease the contamination from environment and execute it in an effective manner (John Lewis
unveils biodegradable packs, 2019). This assists in drawing the attention of customers towards
the products offered by entity. But this requires huge cost to be incurred and thus, organisation
should effectively manage the funds to implement such techniques.
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks
To effectively analyse the internal environment of business, John Lewis Ltd. has
conducted SWOT as well as VRIO analysis as this will assist in gaining knowledge of its internal
capabilities.
SWOT Analysis:
Strength Weakness
 John Lewis possesses a strong brand
image which assists the organisation in
gaining the attention of a large number
of customers towards their products
(Wheelen and et. al., 2017).
 John Lewis has well structured online
presence which helps the company in
increasing its sales and profits.
 John Lewis do not make use of
effective and strong marketing
strategies to be able to enhance its
customer base and consequently, its
profits.
 This enterprise also lacks effective
initiatives to gain a high stake in
marketplace.
Opportunities Threats
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 John Lewis has the capability to expand
in new geographical locations and tap
the advantage of new customers.
 They can make use of effective
marketing strategies to promote their
offerings among people.
 John Lewis can also launch new
products within markets so as to
enhance sales and profits.
 This organisation faces threat of rival
firms such as Tesco, Marks and
Spencer, ALDI, LIDL, ASDA etc.
 The products sold by this entity are
close substitutes of goods offered by
other rivals (Klettner, Clarke and
Boersma, 2014). Thus, rivals can gain
the advantage of this and solicit the
customers of John Lewis.
VRIO Model:
Resources Valuable Rarity Inimitable Organized What is the
result?
Global
presence
Global
presence
- - - Competitive
Disadvantage
Products Products Products - - Partially
competitive
Software Software Software Software - Competitive
advantage for
temporary
basis
Employees Employees Employees Employees Employees Competitive
advantage
To determine the internal capabilities of John Lewis, four resources have been taken into
consideration, namely, global presence, products, software and employees.
Valuable: This can be referred to as those resources which are capable of adding value
for customers so that organisation can gain a strategic edge in market. Valuable resources of
John Lewis are:-
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 Global presence: This organisation has an excellent presence within global market owing
to which it is able to gain competitive edge over rivals (Laudon and Traver, 2016). Products: The exceptional quality products produced by organisation using advanced
technologies are offered to customers so as to gain their trust and loyalty. Software: John Lewis makes use of software to optimally manage the activities of
organisation in order to ensure an orderly conduct across the premises.
 Employees: The workforce of John Lewis carry out operations in a manner that renders
assistance to company in attaining set targets in stipulated time.
Rarity: These are those resources of an organisation which are unique to a company
which are rare and provide competitive edge to enterprise within market (Jeston, 2014). In
relation to John Lewis, global presence is not rare because a number of other large scale
companies have global presence. Rare resources of this enterprise are:- Products: Products rendered by John Lewis such as clothes, accessories and other items
are as per the latest lifestyle trends and technologies, thus, they are hard to be copied by
any other enterprise. Software: The software utilised by John Lewis for maintenance of records and execution
of operations is found to be rare as this is developed in accordance with the requirements
of company (Lawton, 2017).
 Employees: The employees within John Lewis are found to be rare as their skills and
competence are unique to the organisations which provides assistance to John Lewis in
accomplishment of organisational goals.
Inimitable: It include those resources which can not be copied by rival firms. In context
of John Lewis, products do not fit in this category as the technologies utilised to develop them
can be used by competitors also. Software: The software used by John Lewis is designed and created as per the
organisational requirements, thus, it is difficult to be imitated.
 Employees: The skills and knowledge of staff are unique to individuals owing to the
training provided to them and their personal traits, thus these can not be copied by rivals.
Organized: This can be referred to as those resources which need to be properly
organised in an orderly manner so as to achieve organisational goals (Jocovic and et. al., 2014).
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Software used by John Lewis needs to be updated at frequent intervals to fulfil the requirements
of company and thus, it does not fit into this criterion.
 Employees: John Lewis takes assistance of its highly skilled, efficient and competent
employees to carry out business operations in a desirable manner and gain competitive
edge in market. This helps the company to ensure its long term sustainability within
marketplace.
P3 Porter Five Force model to evaluate competitive forces of market
It is essential for an organisation to constantly evaluate and analyse the competitive
forces of market in order to develop effective strategies which can ensure sustainability of
enterprise for long period of time. In this regard, manager of John Lewis has conducted Porter
Five Force analysis as follows:-
Threat of new entrants: This force defines the ease with which new companies can gain
entry into a business sector. In this regard, the threat of new entrants within retail sector is
ascertained to be quite low for John Lewis. This owes to the high capital which is required to be
invested by new entrants to gain access into retail industry (Chang, 2016). This is not feasible for
new companies and thus the low threat of new entrants is justified. Also, the governmental
regulations and retail laws which guide and govern the operations of retailers are quite complex
which create difficulties for these entities to gain entry.
Threat of substitutes: Within retail sector, the threat of substitutes is found to be high. This
owes to the presence of a large number of retailers who offer similar products like John Lewis
and possess the capability to solicit the customers of the organisation with their high quality and
low priced goods. The supermarket retail chains like Tesco, ASDA, ALDI, LIDL which offers
products belonging to segments such as clothing, accessories, home appliances, general
merchandising, cosmetics etc. tend to act as threat for John Lewis. Thus, the company is required
to focus upon the core needs of population and adopt differentiation so as to ensure that the
products sold by this entity are not replaced by rivals (Chen and Jermias, 2014).
Bargaining power of customers: The bargaining power of purchasers is found to be high
within retail sector as customers are the ones who render opportunities to an organisation to be
able to sustain for a long duration of time in market. With reference to John Lewis, this power
acts as threat for company as there are several companies which deal in similar product line and
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thus possess the capacity to influence the purchase behaviour of customers in their favour. Thus,
John Lewis should offer best quality products to people at reasonable prices.
Bargaining power of suppliers: The bargaining power of suppliers is ascertained to be
low for John Lewis within retail sector owing to the high number of corporate contacts that this
entity maintains with the vendors and suppliers. Thus, the organisation can acquire resources
from the cheapest and the best source available.
Competitive rivalry: This force depicts the actual competitiveness for organisations
belonging to a business sector (Peng, 2017). The competitive rivalry within retail industry is very
high. In relation to John Lewis, the main competitors are Tesco, Marks & Spencer, ALDI, ASDA
who offer optimum quality goods at affordable prices. Thus, John Lewis should develop
products by using diversification to ensure an edge over competitors in marketplace.
P4 Strategic planning for organisation
Ansoff matrix can be referred to as a strategic tool which assist the management of a
company to effective carry out business planning to develop an effective business strategy. With
reference to John Lewis, its manager has used this matrix to create an optimum business strategy
which can ensure growth of company in near future. In this relation, the four strategies of this
matrix are described below:-
Market Penetration: This strategy focusses upon offering the existing products within
current markets of company. With reference to John Lewis, it can be said that this strategy will
render an edge to organisation as this enterprise already has a well established loyal base of
customers who do not intend to switch to other brands. This strategy assists the enterprise in
effectively enhancing its customer base as well as market share (Scholes, 2015).
Market expansion: Also commonly referred to as market development, this strategy
strives to offer existing products within new markets (Veit and et. al., 2014). The biggest
advantage of using this strategy within John Lewis is that it assists the organisation in gaining the
attention of new customers by entering new geographies. This will ensure enhanced sales as well
as profitability for entity.
Product expansion: Here, organisation is keen on offering new products within existing
markets. John Lewis can make use of this strategy to meet the needs and demands of customers
within existing markets so as to enhance its share in marketplace. In this regard, John Lewis can
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execute this by entering into perfume or watch segment as this will aid in increasing the sales
and profits of enterprise within United Kingdom.
Diversification: This growth strategy stresses upon offering the new products within new
geographical locations. This is viewed as one of the most risky strategies owing to the equal
probabilities of success and failure of this business strategy (Spender, 2014). In regards to John
Lewis, this will prove to be an expensive strategy as a number of marketing strategies and plans
have to be devised to promote the new products among people of new geographies. If this
strategy becomes successful, it will directly enhance the sales and profits for entity.
As per the analysis and evaluation of the above mentioned strategies, it can be said that
John Lewis should make use of market penetration strategy for achieving business growth. This
strategy will assist the organisation in enhancing its existing market share within UK as
customers are already aware about the organisation and its offerings. This will make it easier for
entity to gain satisfaction of customers. Also, this would further ensure increased sales and
profits for John Lewis.
Strategic Management Plan
Aim: To significantly enhance the scale of operations of company within existing market.
Vision: To become a leader within global retail industry.
Mission statement: To offer high quality products with value addition to ensure
maximum satisfaction for people.
Goals and Objectives: The short-term goal is to focus upon pricing and quality of
products while the long-term goal of company is to gain entry into emerging markets to
significantly enhance its sales and profitability.
Strategies: John Lewis will adopt market penetration to increase the base of customers
within existing markets. This will provide them a strategic edge in market over rival firms.
Tactics: The tactics used by John Lewis in this regard will be to introduce new products
with value addition at reasonable prices to gain the attention of customers belonging to all
income levels.
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CONCLUSION
On the basis of above discussion, it can be concluded that strategic planning and
management is the key to success of an organisation and to ensure timely achievement of
organisational goals and objectives. Also, it has been ascertained that performance of an entity
should be in accordance with the developed strategies to ensure sustainability of company for
long term in market. SWOT analysis depicts that enterprise is capable of introducing new and
unique products in existing market to enhance the overall share of entity in global market.
PESTLE analysis demonstrates that macro-environmental factors serve as opportunities as well
as threats which should be considered by company to gain rapid success within marketplace.
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REFERENCES
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performance. Accounting & Finance. 54(1). pp.113-134.
Goffee, R. and Scase, R., 2015. The Real World of the Small Business Owner (Routledge
Revivals). Routledge.
Jeston, J., 2014. Business process management. Routledge.
Jocovic, M. and et. al., 2014. Modern business strategy Customer Relationship Management in
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Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability:
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Laudon, K. C. and Traver, C. G., 2016. E-commerce: business, technology, society.
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Peng, M. W., 2017. Cultures, institutions, and strategic choices: Toward an institutional
perspective on business strategy. The Blackwell handbook of cross
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management, pp.52-66.
Scholes, M. S., 2015. Taxes and business strategy. Prentice Hall.
Spender, J. C., 2014. Business strategy: Managing uncertainty, opportunity, and enterprise.
Oxford University Press.
Veit, D. and et. al., 2014. Business models. Business & Information Systems Engineering. 6(1).
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Wheelen, T. L. and et. al., 2017. Strategic management and business policy. Pearson.
Online
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John Lewis unveils biodegradable packs. 2019. [Online]. Available
Through:<https://businessteacher.org.uk/pestel/john-lewis.php>.
John Lewis to boost renewables use in SmartestEnergy deal. 2019. [Online]. Available
Through:<https://www.businessgreen.com/bg/news/2318149/john-lewis-to-boost-
renewables-use-in-smartestenergy-deal>.
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John Lewis: competitive advantage in a tough retail market. 2015. [Online]. Available
Through:<https://www.accaglobal.com/in/en/member/discover/cpd-articles/business-
management/john-lewis.html>.
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