Business Strategy Analysis: John Lewis's Internal & External Factors

This report provides a comprehensive business strategy analysis of John Lewis, a prominent UK retailer. It begins with an introduction to business strategy and its importance in achieving organizational goals. The report then delves into the impact of the macro environment on John Lewis, utilizing P...Read More

Business Strategy

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1 ..........................................................................................................................................1
P1 Impact and influence of
the macro environment on John Lewis and its strategies...........................................................1
TASK 2 ...........................................................................................................................................3
P2 Internal environment
and capabilities of a John Lewis Ltd..........................................................................................3
TASK 3 ..........................................................................................................................................5
P3 Porter’s Five Forces
model evaluate the competitive forces
of a John Lewis Ltd. ..................................................................................................................5
TASK 4 .........................................................................................................................................6
P4 Theories,
concepts and models, interpret and
devise strategic planning for John Lewis Ltd. ..........................................................................6
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10
.......................................................................................................................................................10
.......................................................................................................................................................10

INTRODUCTION
Business strategy is a set of competitive moves and actions that business uses to attract
customers, compete with competitors and accomplish organisational goal effectively. It is
considered as an important component to enhance the business environment in order to gain
competitive advantage. Business environment is the combination of all external and internal
factors which have direct or indirect influence on the growth or expansion of company. It is not
static in nature as it acquire enormous opportunity which enable them to attain high profitability
( Progress, H., Whilhemia and Tarisai, 2013). Furthermore, business environment enable the
firm to identify their strength and weakness and to analyse or evaluate their competitors
strategies in order to achieve target positioning among market. John Lewis Ltd, one of the
successful retailer that operates in department store, home store, supermarket etc. which is
incorporated in the year of 1864. It's headquartered is in London, UK and it is regarded as the
UK largest employee owned business. This report covers influence of internal and external
factors on business growth, application of PESTLE, SWOT and Porter's five force model to
analyse the business capabilities and its competitive forces. Finally the usage of theories and
models which is mentioned in this report in order to interpret strategic planning or decisions.
TASK 1
P1 Impact and influence of the macro environment on John Lewis and its strategies.
Business environment consist of two main factors in which company has control over the
internal while on external factors firm has no control over its operation (Amran and et. al.
2016). It is classified into two types such as micro and macro environment. Micro environment
are those factors such as suppliers, customers, marketing intermediaries etc. which has direct
influence on the operation of company on the other hand macro environment consist of general
factors on which business has no control over its functions or operations. Some of the macro
factors are political, legal, cultural, economic etc. which is complex and dynamic in nature.
Apart from this business environment helps the firm to understand their strength and weakness in
order to improve their performance and make effective business decisions. A company frames an
effective business strategy to get proper direction in contributing their best effort towards the
attainment of pre determined goal. In case of John Lewis, one of the famous company in retail
industry which is founded in they year of 1864. It has several competitors i.e. macro factors

which affect its sales and productivity. In order to cope up with these factors John Lewis's
manager understands the dynamic business environment and take corrective course of action in
order to face heavy global competition effectively and efficiently. However, PESTLE is a tool
which analyse or evaluate the external environment or factor and enable the firm to anticipate the
current and future competition in order to accomplish high productivity and profitability. John
Lewis applies the PESTEL to analyse its macro environment which is described below:
 Political Factor: This factor includes political changes, modification in interest rate,
government policies and regulation etc. which effect the business operations and its
productivity (Ghorbani, Bahrami and Arabzad, 2012). Due to Brexit, UK government
modified the trading policy and marketing strategy of company which effected John
Lewis operations. UK government decided to exit the European Union which reduced the
value of pound and created an uncertainty with trade restriction in Europe. However,
John Lewis is benefited with the stability of UK government which enable them to
reduce the corporation tax which help them to gain competitive advantage.
 Environmental Factor: In the current scenario everyone is concerned about clean and
healthy environment in order to stay fit and energetic. In the current scenario of UK,
customers prefer eco friendly product which impact the productivity of John Lewis.
However, John Lewis introduced the eco-friendly and recyclable products like pollution
free vehicles, kettle, washing machine etc. in order to reduce or minimise the operational
waste in order to improve the morale and gain the satisfaction level of customer.
 Social Factors: This factor is concerned with attitude, lifestyle, behaviour of an individual
which influence the productivity and performance of company. Recently, there was a
tremendous demand occurred among customer in terms of trends of fashion which effect
the John Lewis overall performance. However, John Lewis adapt corrective course of
action as they introduced trendy clothes for young and middle aged group people which
gain the attraction of customer and enhance their business effectively.
 Technological Factor: In today's world technology plays a vital role in the expansion of
business operation. Now, online trading becomes the trend among the customer which
impact the John Lewis business operation. However, John Lewis grasped the opportunity
and introduced the online websites where customer can order any product of their own

choice and also provided the facility to post their feedback regarding the service of
product which improves the overall performance of company.
 Legal Factor: This factor is deal with legal policies, government rules and policies, tax
policy etc. which has direct influence on John Lewis business operation. Currently UK
government modified the laws of Health and Safety in terms of natural renewable
resources for making clothes. However, due to stability of UK government, John Lewis
were able to perform their potentiality by adapting the opportunities which increases the
satisfaction level of customers and gain competitive advantage.
 Economic Factor: This factor deals with inflation rate, economic growth, fiscal policies
etc. which effect company's profitability (Higgins and et. al. 2015). Recently UK
undergoes with economic certainty which causes economic fluctuation, increased cost of
the product and shift in consumer spending that affected the productivity of John Lewis
However, John Lewis took this threat as an opportunity to grow and they implement
several discounts, offers on product which help them to sustain in market.
From the above explained statement, PESTLE analysis helps John Lewis to identify their
opportunity and strength in order to face the threat or challenges by acquiring effective strategies
and technology which enhanced their growth and productivity.
TASK 2
P2 Internal environment and capabilities of a John Lewis Ltd
Business environment encompasses of internal and external factors which has positive
and negative impact on the overall performance of company. Internal environment deals with
those elements or components which occurs within the organisation and is effect its choices,
activities and decisions. There are some factors which influence internal environment or
business strategy i.e. value system, vision and mission, organisational structure, corporate
culture etc. Internal environment enable the company to determine the cost position among
industry buy providing appropriate platforms in order to enrich the profit maximisation (Kolios
and Read, 2013). In relation to John Lewis, one of the leading high end department store which
is established in the year of 1864 and its headquartered in London, UK. It is well known for its
effective internal business environment as they make use of all available resources or
opportunities which makes them to stand firmly among the competitors. SWOT analysis is a

most useful and integral element of company for evaluating the internal forces or factors such as
value system, manpower, attitude of behaviour towards product or company etc. in order to
attain organisational goal. John Lewis imply the SWOT analysis to identify their potentiality
which are as follows:
Strength
 It is well known for its brand image in
UK and the customers are highly
satisfied with products (John Lewis
SWOT Analysis, 2012).
 John Lewis has wide range of product
such as clothing, home appliances,
home ware etc.
 It has effective technology i.e. online
trading which enrich their expansion
faster.
Weakness
 The prices of products are higher than
the other competitors.
 It's area of scope is limited as they only
serve or operate in UK i.e. there is lack
of flexibility in among.
 Its marketing strategy is not much
effective which effect its overall
productivity.
Opportunity
 There is a huge opportunity in e-
commerce retailing.
 Currently consumers are seeking for
fresh and GMO foods which enable
them to expand their business in new
segment (Mazzarol and et. al. 2014).
 There is a huge competition in trending
and fashionable clothes for youths and
middle aged group people.
Threat
 Increase in number of competitors in
clothing and grocery industry.
 There is a high influence of Brexit on
the business operation of John Lewis.
 Lack of flexibility becomes a threat for
the enlargement of business operation.

From the above mentioned statement it has been signified that due to SWOT analysis,
John Lewis is enable to identify its strength or weakness in order to face the challenges and make
use of available resources which enrich the profitability and productivity of company.
TASK 3
P3 Porter’s Five Forces model evaluate the competitive forces of a John Lewis Ltd.
Each business has their own structure and environment which directs or guides them to
accomplish organisational goal effectively and efficiently. It includes all external and internal
factors which influence the business operation directly or indirectly. It helps the business to
examine their threat or challenges in order to identify the opportunities to grow and expansion of
company (Phadermrod, Crowder and Wills, 2019). In order to face competitive forces or
challenges Michael Porter introduces a technique which directs the company to examine their
potentiality. It helps the company to frame effective planning and identify the behaviour of buyer
and suppliers. In order to determine the competitive forces of John Lewis, it implies Porter five
force which are as follows:
 Threat of substitutes: It is mainly deals with the threat of products in terms of demand
and price. In case of John Lewis its threat of substitute is relatively low because By this
they can easily increase the productivity and gain the competitive advantage.
 Threat of new entrants: This force refers as the threat new competitors pose to existing
competitors in an industry. In relation to John Lewis, its threats of new entrants is fairly
low with the evidence that high barrier in initial investment, in terms of radical or quality
of product etc. which prevents company from unbearable risk and helps them to attain
organisational goal in an effective and efficient manner.
 Bargaining power of supplier: It's an ability of suppliers to exert on business by raising
prices, lowering quality or reducing availability of their product etc. John Lewis
bargaining power of supplier is low as they are not mainly dependent upon suppliers
rather they sells their own branded products which means it largely buys raw materials
not finished goods.
 Bargaining power of buyer: This forces is concerned with the capability of an buyer to
utilise or drive the price of the product down. In context to John Lewis, its bargaining

power of buyer are relatively high as its price of goods is little bit expensive. It directly
effects the purchasing power of buyers as well as its products are undifferentiated.
 Rivalry among competitors: This force signifies that firms within an industry put pressure
on each other and limit's each other potentiality or capability. In case of John Lewis,
competition level in retail industry is extremely fierce which impact the productivity of
company (Rumelt, 2012). Currently every company is digital based which raises more
competition and provides enormous platforms to perform their potentiality or capability
in an effective and efficient manner. Some of the competitors of John Lewis are Mark
and Spencer, ASDA group Ltd etc. which creates more competition and effect the
operation of company.
From the above explained statement it explains that Porters five force model helps John
Lewis to determine their lacking factor and make them to develop or improve those factors in
order to obtain high level of productivity and profit maximisation.
TASK 4
P4 Theories, concepts and models, interpret and devise strategic planning for John Lewis Ltd.
Every company requires each other support in order to survive or sustain for a long term
basis. For this they should have effective and impressive business environment which can
identify the external forces or factors and take course of action in order to improve the decision
of company. Furthermore they should have effective business strategy in order to attract
customers, strengthen the performance and achieve organisational goal. Apart from this, to
analyse or evaluate the shortcomings and to improve the performance of company it contains
several theories and models which provides the proper direction to company in order to attain pre
determined goal (Sridhar and et. al. 2016)). John Lewis applies Ansoff Matrix, which provides a
framework to help executive, senior mangers and marketers to implement effective business
decisions for the growth of company. The Ansoff Matrix of John Lewis company is described
below:
 Market Penetration: This strategy is least risky as it concerned with the existing product
in existing market. IN other words, in this firm is aiming to increase its market share
with this strategy as they implies several ways like decreasing prices to attract existing
customer, increasing promotion and acquiring competitor in the same marketplace.

 Market Development: Under this strategy, it deals with the firm enters into new market
with existing product. In this company expand their their business into new
geographical region, new customer segments etc. in order to attain high profitability.
Apart from this they adapt several ways like catering to a new customer segment,
entering into new domestic market and expand internationally i.e. entering to a foreign
market.
 Product Development: In this strategy, company develops new product to capture the
existing market as it involves extensive research and development and expansion of
product range. Along with this it is effective for those firms which have a strong
understanding of their market and are able to introduce innovative solution to anticipate
and meet the needs of existing market. This strategy can be done in many ways such as
investing in R&D to develop new product, acquiring competitors product and merging
resources etc. in order to attain organisational goal effectively.
 Diversification: In this, firm enter into new market with new product but such strategies
are riskiest as it require market and product development. It is classified into related
and unrelated diversification.
From the above statement John Lewis can apply market development strategy. Due to
its successfulness and effectiveness it can easily capture the new market in new geographical
region and can gain competitive advantage effectively.
Strategic management plan
It is a document which is used by the management of the organization to make interaction
and communication with in the company. It include organisational goals, aims and objectives, set
priorities, configure resources, ensure the employees and other stakeholder who are working
towards that common goals (Riky, 2014). This strategic plan is beneficial for John Lewis when it
enter in new market with its existing product. For example, this firm expand its business in China
market so that it can gain or earn more profit with its existing products. The strategies, objectives
and tactics are as following:
Strategies- There are several strategies that can be applied by the management department of
John Lewis in the condition of expanding and operating business in a new market with its
existing products and services. The strategies which can be used by the firm are as following:

Market analysis- It refers to the analysis of dynamism of the market. In John Lewis, the
management department of the company can use this strategy to analyse the needs and demands
of the customers when it entered its business in new market. With the help of this strategy, they
can identify the strengths, weaknesses, opportunities and threats for their business in a new
market.
STP( Segmentation, Targeting and Positioning)
Segmentation- It is process of dividing customers into groups of people which is done on
the basis of their common characteristics and needs which allows organisation to tailor their
approach in accordance with customer needs in order to gain competitive advantage. For
example, in China, John Lewis make segmentation on the basis of demographic factor such as
ages, gender and others.
Targeting- it focus on deciding the target audience which is based on certain factors such
as by considering profitability of each segment then choosing from the available customer group.
For example, in China market, John Lewis can target youngsters, newly married couple,
employees, professionals and others to sell its products and services.
Positioning- The last step is to identify how an organisation wants to position its product
to the target and valuable customers. It is order to position product in an unique manner so that
more customer and be attracted and retained in the entire process. For example, by using social
media as promotional tools, John lewis can positioned its products such as apparels to its
targetted customers.
Objectives- To increase the revenue of the company by 10% in next 2 years by expanding the
business in new market with existing products and services.
Tactics
Cash management- It refers to the process by the companies gather, manage and collect cash.
With the help of it John Lewis, manage it funds which can be invest by the company in
promotion of the products and services when it entered in new market. By using cash
management, the management department of the company have proper information about its
cash and budget.
Packaging- It refer to the process of designing, evaluating and producing packages. It is most
important for attracting consumer when the company entered in new market. In John Lewis, by

using good and attracting packing they can attract more customer. By using good quality
material which is ease to recycle they can follow the environmental law.
CONCLUSION
From the above given report it has been concluded that business strategy is the most
important aspect of any organisation. If the organisations wants to achieve their desired goals
and objectives than various theories such as PESTEL analysis and SWOT analysis can be used to
analyse the internal and external environment of any organisation. Porters five force model can
also be used by the organisation for the effective and efficient policy formulation. As by using
proper and adequate strategic planning the competitive advantage can also be easily achieved by
the organisation. The employees of the organisation will also be motivated to work in the poper
manner if adequate business strategy is formed and implemented.

REFERENCES
Books and journals
Amran, A and et. al. 2016. Business strategy for climate change: An ASEAN perspective.
Corporate Social Responsibility and Environmental Management. 23(4). pp.213-227.
Ghorbani, M., Bahrami, M. and Arabzad, S. M., 2012. An integrated model for supplier selection
and order allocation; using Shannon entropy, SWOT and linear programming. Procedia-
Social and Behavioral Sciences. 41 pp.521-527.
Higgins, D and et. al. 2015. The influence of a firm's business strategy on its tax
aggressiveness.Contemporary Accounting Research. 32(2). pp.674-702.
Kolios, A. and Read, G., 2013. A political, economic, social, technology, legal and
environmental (PESTLE) approach for risk identification of the tidal industry in the
United Kingdom. Energies. 6(10). pp.5023-5045.
Mazzarol, T. and et. al. 2014. Strategy in action: Case studies of strategy, planning and
innovation in Australian SMEs. Small Enterprise Research. 21(1). pp.54-71.
Phadermrod, B., Crowder, R. M. and Wills, G. B., 2019. Importance-performance analysis based
SWOT analysis. International Journal of Information Management. 44. pp.194-203.
Progress, H., Whilhemia, S. and Tarisai, C., 2013. The Delineation of Porter’s Five Competitive
Forces Model from a Technological Marketing Perspective: A Case Study of Buffalo
City Metropolitan Municipality. Journal of Economics. 4(2). pp.169-182.
Riky, A. 2014. Porter Five Forces Model Pada PT. RUCI GAS. Agora. 2(2). pp.1285-1296.
Rumelt, R. P., 2012. Good strategy/bad strategy: The difference and why it matters. Strategic
Direction. 28(8).
Sridhar, R. and et. al. 2016. A Political, Economic, Social, Technological, Legal and
Environmental (PESTLE) approach for assessment of coastal zone management practice
in India. International Review of Public Administration. 21(3). pp.216-232.
Online
John Lewis SWOT Analysis. 2012. [Online]. Available through:<https://research-
methodology.net/john-lewis-swot-analysis/>.