Business Strategy of John Lewis Partnership: A Comprehensive Analysis

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BUSINESS STRATEGY
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LIST OF FIGURES
Figure 1: MCKINSEY 7S MODEL.............................................................................................. 10
Figure 2: Porter five force model............................................................................................12
Figure 3: Ansoff matrix...........................................................................................................14
Figure 4: Porters generic strategies........................................................................................15
Figure 5: Bowman’s strategic clock........................................................................................16
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INTRODUCTION
Business Strategy is the plan for achieving the goals and vision of the business for optimizing
financial performance. Business strategy analyse the macro environment to determine
management decisions (Knott, 2015).
John Lewis established their business in 1864 and conduct their business in the products like
Clothing, accessories, furniture, food, financial services and many more. This Company is
owned by the trust that is known as partners and comes with the idea of ‘Value' scale to
John Lewis and ‘Essential’ scale to Waitrose. John Lewis Partnership is considered as an
employee-owned company that operates supermarkets, financial services and banking
related activities.
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ASSIGNMENT 1
INTERNAL AND EXTERNAL ANALYSIS
John Lewis Partnership Ltd. is considered to be third largest UK private company that is
headquartered in London and was founded by John Lewis, England and UK and was founded
by John Lewis and focuses on manufacturing unique products. It also focuses on its own
brands and innovation for 155 years.
Mission Statement
John Lewis partnership ltd has a mission of providing good quality of products with the
purpose of giving happiness to all the members with friendly and expert service. It states the
correct example of employee ownership (Knott, 2015).
The vision of John Lewis Partnership
JLP vision is to fulfil the overall requirement of members by gathering the staff who own
John Lewis department stores dedicated to serving customers with fairness.
PESTEL AND SWOT ANALYSIS OF JOHN LEWIS
The business strategy is defined to achieve the desired long term goals under some
uncertain conditions.
BUSINESS STRATEGY OF JOHN LEWIS
John Lewis sets the strategy of Differentiation under which it focuses the business through
differentiation rather than scale. The group which owns the John departmental stores
ranked top50. This strategy of John Lewis leads to profitability (Knott, 2015).
John Lewis has a business strategy of maintaining a higher level of investment in products
and services.
IMPACT AND INFLUENCE OF MACRO ENVIRONMENT ON JOHN LEWIS
The impact and influence which the macro environment created on John Lewis are tested
through the different frameworks. Some of the external factors include political and social
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conditions, economic and technological changes and many more which affects the
marketing of John Lewis Ltd. The environmental analysis will be conducted through PESTEL
analysis and organisational audit will be analysed through SWOT analysis (Rockwell, 2019).
PESTEL ANALYSIS OF JOHN LEWIS
POLITICAL FACTOR
Political factors will strongly affect the performance and the decision making of John Lewis.
As the UK Government bring the laws, it affects John Lewis more than others. This law puts
the limitations on the company and ensures that the goods manufactured by the company
should be satisfying and protected by an unauthorised person (Bang et al., 2016).
ENVIRONMENTAL FACTOR
The main aim of John Lewis is to reduce carbon footprints and to bring energy efficiency.
Wool and Cotton that are used in production is environmentally friendly. John Lewis
Partnership will have to prove that they are not leading impact on the environment.
SOCIO-CULTURAL FACTOR
Each society has its own traditions. John Lewis should manufacture the products according
to the taste, fashion and demand of the customers because the citizens living in the United
Kingdom give more preference to experiential goods rather than traditional values. They
should come with more branded products to please consumers. Customers are shifting their
lifestyle correspond to chances for the business. This will help the company to understand
the customer preference and way of doing business (Bang et al., 2016).
TECHNOLOGICAL FACTORS
Technologies in the UK is lowering production and cost in the consumer sector. The proper
balance between the cost structures and the customer needs should be maintained by John
Lewis to bring more flexibility. Technological Innovation is providing greater access to
information (Wheelen et al., 2017).
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ECONOMIC FACTORS
The temporary exchange in the rate of the United Kingdom is affecting the John Lewis short
term as well as long term investment plans. It leads to an impact on the efficiency of the
financial markets in the UK. Economic factors will increase the liberalization of trade policy
that can help John Lewis to invest in different regions of the UK (Gürel and Tat, 2017).
LEGAL FACTORS
Legal protections help John Lewis to achieve the goals without any obstacles. IPR rights such
as patents, intellectual property and copyrights, their legal protection are available in the
United Kingdom (Phadermrod et al., 2019). In terms of consumer rights, national legislation
is conducted for the safety and health of the consumers.
SWOT ANALYSIS OF JOHN LEWIS
Under the SWOT analysis, the strength, weakness, opportunity and threat will be identified.
John Lewis Partnership categorised for the departmental store with online shopping has
some strength and weakness that will be determined for achieving the objectives of the
organisation (Gürel and Tat, 2017).
STRENGTH
The biggest strength of John Lewis is that the firm comes under one of the largest retailer
stores in the United Kingdom (Phadermrod et al., 2019). It provides the variety in their
products and brands to choose from and also offers an international delivery system if shop
online. This company has spread over the world and have more than 35,000 employees.
WEAKNESSES
John Lewis has the weakness of lack of varieties in their products as compared to the
supermarkets, the options provided by them is limited to some extent only to the
customers. With the lack of varieties, they also charge the products high than supermarkets
which sometimes are not affordable by the customers (Gürel and Tat, 2017).
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OPPORTUNITIES
John Lewis has the opportunity to increase the target group by knowing the taste of the
youths and young generations that are living away from their home and are very status and
brand conscious. John Lewis can reach to customers by starting up more stores
(Phadermrod et al., 2019).
THREATS
Competitors are the biggest threat to John Lewis. The three main competitors of John Lewis
are ASDA group limited, Tesco PLC and Marks and Spencer Group Plc. , the supermarkets
and other stores situated nearby the company are also competitors. Another threat is
attempts of Robbery which can be harmful to the employees working late at night as well as
the threat to the property. Security for safety should be given to the employees of John
Lewis (Gürel and Tat, 2017).
ORGANISATIONAL INTERNAL ENVIRONMENT
STRATEGIC CAPABILITIES
The term STRATEGIC CAPABILITY is referred to detect the abilities of the organisation by
applying strategies on it which will increase value-creating activities.
KEY COMPONENTS OF STRATEGIC CAPABILITY
There are mainly three components of strategic capability of John Lewis that are Customers,
Partners and Profit. John Lewis Partnership works to explore the ownership of employees
(Channon and Caldart, 2015).
MCKINSEY’s 7S MODEL
Through McKinsey's 7s model the analysis of John Lewis can be conducted to get the
efficient output of the business.
Structure
John Lewis structure is based on the safety of Partnership future to increase prosperity and
ensure integrity. They have made three authorities of governance that are Council, Board
and Chairman. It also follows the structure of “employee ownership” (Ravanfar, 2015).
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Skills
John Lewis emphasizes exploring the skills of employees with the help of framework,
principles and the partnership. John Lewis created the skill builder framework to build skills,
aspirations and experience (Channon and Caldart, 2015).
Staff
At present, John Lewis partnership in the United Kingdom is working with employees more
than 85,500. John Lewis is known for the “employee-owned” where over 300 employees
owned the company across the UK.
Style
John Lewis believes in personal styling. They always find a way to create a fashion that is
unique. It is a place where individual expression is encouraged. John Lewis has created the
most desired outfits that are easy to wear (Channon and Caldart, 2015).
System
The systems followed by John Lewis are focuses on customer needs and satisfaction. John
Lewis also followed the guarantees and damage insurance under which they offer a
guarantee on home and electrical products.
Strategy
The main strategy of John Lewis is to maintain the prices and quality of the products
through investment. It will then automatically increase the range of products and their
quality (Ravanfar, 2015).
Shared Values
John Lewis works on the shared values of fairness, openness and transparency and thus
leads to commercial success.
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Figure 1: MCKINSEY 7S MODEL
Source: (Ravanfar, 2015)
VRIO FRAMEWORK
The VRIO Framework by John Lewis is used to determine the way of cooperating operations
in addressing customer happiness and competitive advantages. (Chatzoglou et al.,2018)
It shows value, rarity, imitability and ability
VALUE RARITY IMITATION ORGANISATION
Its financial
resources are highly
valuable and help in
investing in
opportunities, its
food products,
patents and
employees are also
valuable resources to
the firm.
Financial resources
are found to be rare
because strong
financial resources
are only held by a
few companies. Also
distribution network,
patent and
employees are
considered as a rare
resource
(Phadermrod et al.,
2019).
The employees and
the local food
production are not
costly to imitate
because other firms
can train their
employee but
financial resource
and patents are very
costly to imitate
because this
resource is acquired
by the company over
years.
The distribution
network and
financial resource
are well organised
and used to invest in
right places where
patents are not well-
organised means an
organisation is not
using it to full
potential
(Phadermrod et al.,
2019).
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CRITICAL EVALUATION OF INTERNAL ENVIRONMENT OF JOHN LEWIS
The Internal environment of John Lewis will be analysed in order to match up the increasing
competition.
Human resources
There are million different lines and their network of selling branches. The range of career
opportunities is extensive. They have their team in different fields such as management
roles and catering position in their restaurants (Wheelen et al., 2017).
Culture
John Lewis has a culture of Innovation and Uniqueness and they influence the organisation
with the trust, fairness and engagement mode that seeks for satisfying employment.
Organisational Structure
The Organisational Structure of John Lewis involves synchronization, direction and task
provisioning which works for achieving desired goals but it also influences the individual
work and behaviour (Mullins L2009).
Financial Strengths
John Lewis have almost zero profit in the first half of the year but presently they are very
financial strong as they are given an annual bonus to their employees, it depicts the financial
growth of the firm.
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ASSIGNMENT 2
ANALYSIS OF COMPETITIVE ENVIRONMENT USING PORTER’S FIVE FORCES
MODEL
COMPETITIVE ANALYSIS USING PORTER FIVE FORCES MODEL ON JOHN LEWIS
Porter's 5 force model is a strategy that not only analysis the present competition but also
took another strategic decision. It focuses on John Lewis operations while studying the
competitiveness and attractiveness of the industry (Salavou, 2015).
Figure 2: Porter five force model
Source: (Noe et al., 2017)
Bargaining power of suppliers
John Lewis came with the new policy of rebate charging to the suppliers through its stores
for increased sales. It is not totally dependent on the suppliers as it sales own branded
products so mostly it buys raw material rather than finished goods. At the same time,
supermarkets are becoming more powerful and the bargaining power of the distributor is
increasing and makes it harder for the suppliers to earn profit (Olson et al., 2018).
Bargaining power of buyers
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