Business Strategy Report: John Lewis's Strategic Evaluation

This report provides a strategic evaluation of John Lewis, a global chain of department stores operating in the United Kingdom. The report begins with an introduction to business strategy, followed by a PESTLE analysis to assess the macro-environmental factors influencing John Lewis's operations, including political, economic, social, technological, legal, and environmental aspects. A SWOT analysis is then conducted to evaluate the company's internal strengths and weaknesses, as well as external opportunities and threats. Porter's Five Forces analysis is employed to examine the competitive environment within the retail sector. The report identifies strategic choices available to the company and concludes with the development of a Strategic Marketing Plan (SMP). The analysis highlights the impact of Brexit, changing consumer lifestyles, technological advancements, and legal and environmental considerations on John Lewis's business. The report emphasizes the importance of effective marketing strategies, competitive advantages, and adapting to the dynamic retail market. The document is contributed by a student to be published on the website Desklib. Desklib is a platform which provides all the necessary AI based study tools for students.

BUSINESS
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P1............................................................................................................................................1
M1...........................................................................................................................................3
LO 2.................................................................................................................................................3
P2............................................................................................................................................3
M2 ..........................................................................................................................................5
LO 3.................................................................................................................................................5
P3 ...........................................................................................................................................5
M3...........................................................................................................................................6
LO 4.................................................................................................................................................6
P4............................................................................................................................................6
M4...........................................................................................................................................7
D1...........................................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy refers to the combination of competitive course of action as well as
moves taken by a company with a view to direct the performance of organisation towards the
achievement of goals. Such actions and decisions are largely aimed at assisting the organisation
to undertake key methods and processes which can ensure business growth and sustainability for
a long term (Johnson and et. al., 2011). In this regard, the following report is carried out on the
strategic evaluation of John Lewis which is a global chain consisting of departmental stores that
conducts its operations across United Kingdom. This organisation deals in segments such as
clothing, jewellery, accessories, furniture, watches etc. This report consists of PESTLE analysis
for macro-environmental together with SWOT analysis for ascertaining internal resources and
capabilities. Also, it includes Porter's Five Force analysis to get knowledge about the competitive
environment within specific business sector. Lastly, the available strategic choices for company
are ascertained together with the development of a SMP.
LO 1
P1
It is essential that a company constantly evaluates and assesses its external environment
with a view to gain knowledge of the various external environment elements that have an impact
upon the functioning of entity. In relation to this, management of John Lewis has carried out
PESTLE analysis to examine the impact of macro environment on business operations, as
follows:-
Political: John Lewis carries out its operations within the confines of United Kingdom
which is a politically stable and strong country. This provides assistance to organisations like
John Lewis to inflate its sustainability within market place for long term. In addition to this, the
political system of the respective country significantly reduced the corporation tax which tends
to act as an opportunity for the company to enhance its sales as well as profits . Further,
occurrence of political turmoil and/or terrorist attacks within Europe or UK will strive to serve as
threat for the entity. In response to this, entity should always maintain adequate and relevant
quantity of products and essential resources so that political adversities does not lead to shortage
of stock.
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Economical: Being a developed country, the economical state of United Kingdom is very
powerful. This nation fosters the development of establishments which introduce innovations at
rapid intervals with a view to give a boost to the overall economy of nation. In this regard,
Innovate UK Smart Grants is an effective programme run by UK government with a view to
provide assistance to organisations. But British exit from EU is a political and economic state
which has been causing several discrepancies within the nation leading to economic stress in all
the sectors of corporate world, especially the retail sector. To deal with this, John Lewis should
provide its offerings to the population of UK at reasonable prices so that the revenues earned by
company are not affected by the lowering of purchasing power of customers owing to Brexit.
Social: The lifestyles of people of a nation keep on changing owing to the trends that
arise within an economy. In this regard, John Lewis introduces only those products in
marketplace which are consistent with the latest trends and consumer behaviours so as to
guarantee its sustenance for longer time frame. It renders aid to the organisation in effectively
meeting the needs and preferences of people by rendering innovative products like watches,
accessories, designer clothes etc. (John Lewis: competitive advantage in a tough retail market,
2015). In an instance where an external social trend is identified by the competitors ahead of
John Lewis, this will serve as a threat for the entity. This is because such situation possesses the
potential to affect the sustainability of company in marketplace. To obviate such types of
scenarios, company ought to continually put funds within Research & Development so that latest
trends can be ascertained before the rivals with a view to become the leader in retail sector.
Technological: Rapid advancements take place in terms of technology and the new
trends and techniques have to be taken into account by the organisations in order to enhance their
sales and profitability while simultaneously reducing the cost. In this regard, John Lewis gain
entry into online market looking upto it as a technique to significantly cut shot usage of paper,
thereby attaining recognition from customers in marketplace (John Lewis SWOT and PESTEL
Analysis, 2019). However, large expenses have to be incurred so as to successfully introduce a
new technology within the organisational confines. To feasibly deal with this, the organisation
should assign a particular proportion of budget to ensure implementation of a new technology in
every 6 months.
Legal: To ensure compliance with all laws and legislations across the departments of
organisation, the HR manager of John Lewis enforces a stringent corporate culture wherein strict
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action is taken against the people breaching the legal obligations. Furthermore, corporation
utilises renewable energies to carry out production of clothes (John Lewis to boost renewables
use in SmartestEnergy deal, 2019). In case the organisation fails to adhere to the variopus types
of legislations pertaining to retail sector, it would have to tackle a number of adverse outcomes.
Thus, it is required by the respective corporation to undertake business activities in a lawful
manner.
Environmental: John Lewis has entered into a partnership with IPCC with an aim of
reducing the carbon footprints and give its contribution towards the protection of environment.
Apart from this, company also makes use of biodegradable packaging material with a view to act
in interest of nature. However, such initiatives and efforts on the part of company require large
investment. Thus, the respective corporation should allocate a proportion of funds within the
budget for taking up environmental initiatives.
M1
The external environmental analysis conducted by manager of the respective company
depicts that along with the opportunities, there are certain threats also associated with macro-
environmental elements. In this context, Brexit adversely impacts upon the operations of John
Lewis in terms of political and economical factors. Further, alterations within user's lifestyle
(social), lack of technological initiative (technological), failure to comply with laws and
regulations (legal) and unwillingness to act in the favour of nature (environmental) are few of the
other crucial aspects associated with the macro-environmental factors (Chang, 2016). The
management of respective entity needs to consider these influences in due consideration and
formulate effective strategies that can assist the enterprise in tackling the before-mentioned
critical situations.
LO 2
P2
It is essential for an organisation to constantly assess and analyse the internal
environment with a view to identify the opportunities and threats that the operations and other
key aspects of entity offers. In this relation, the management of JL Ltd. has conducted SWOT
analysis so as to identify the internal capabilities of company.
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SWOT Analysis
Strength Weakness
 This large scale company has a strong
market image owing to the provision of
best quality products to customers
which ensure maximum satisfaction
derived out of people (Goffee and
Scase, 2015).
 John Lewis is a key player within e-
commerce sector and its leading
position within UK owes largely to the
online channels adopted by entity
which is its core capability. This aids
the organisation in increasing its
revenues and profits.
 This organisation lacks the initiative to
develop effective marketing strategies
and plans which possess the potential to
assist the organisation in gaining
attention of people.
 This enterprise has not been adopting
effective technologies for reducing the
cost of operations.
Opportunities Threats
 John Lewis has the capability to
facilitate business expansion in new
markets so as to enhance the overall
market share and customer base.
 This company possesses the potential to
make use of strong and effective
marketing plans so as to increase the
sales and profitability of enterprise.
 The company also has the potential to
launch new products with value
addition to ensure sustainability in
marketplace for a long duration of time
(Jeston, 2014).
 John Lewis Ltd. faces the threat of
competitive rivalry prevailing in retail
industry due to companies such as
Tesco, ASDA, Marks and Spencer,
LIDL etc.
 The products offered by this company
have close substitutes owing to which
entity faces the threat of substitution
with alternate brands.
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M2
Based upon the above conducted internal analysis, it can be said that micro-environment
of John Lewis offers a number of opportunities and threats. In this regard, the analysis also
illustrates that the organisation’s effective marketing plans and initiatives in order to gain the
attention of population to offerings of entity in market place (Peng, 2017). In addition to this,
rivalry in the respective business sector also poses danger to the existence of company.
LO 3
P3
Porter’s five forces model refers to the tool which helps business organisation in analysing
competitiveness within the industry. With reference to John Lewis, the top management team of
this company has conducted Porter’s five forces framework to evaluate actual competition
available for the company at marketplace.
Threat of new entrants: With reference to John Lewis, it has been analysed that threat of
new entrants within the retail industry is low as this industry is highly competitive and it requires
high capital investment for establishing their business effectively at marketplace. Therefore, it
seems like it is an advantageous situation for John Lewis as they do not have any fear of new
entrants who could give competition to them (Scholes, 2015). Hence, the company can earn high
profits in the same industry.
Threat of substitutes: Threat of substitute is high for John Lewis, this is because, there are
various companies which are focusing on providing substitute for the purpose of gaining
competitive advantage. Thus, it’s important for John Lewis to emphasis on customer’s
requirement in order to satisfy them and retains them for longer period of time. This will
ultimately develop sustainability of John Lewis at marketplace.
Bargaining power of customers: For John Lewis, bargaining power of buyers is
relatively high as customers play an essential role in growth and success of business. It can be
said that retail industry has numerous of companies which offer similar kind of products and
services (Klettner, Clarke and Boersma, 2014). Therefore, if John Lewis does not offer quality
product then its customers might move to another brands. In this case, it is essentials for this
company to provide high quality of products at reasonable rates to customers in order to get
their interest toward them.
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Bargaining power of suppliers: Bargaining power of supplier for John Lewis or retail
industry is low as the company is large in size and due to that there are numerous of suppliers
who are wishing to get attached to this company for long term business. Therefore, its suppliers
get convinced at provided rates in order to develop their relationship with the company.
Competitive rivalry: Retail industry itself is very competitive in nature therefore its
competitive rivalry is very high. It can be said that this heavy competition places remarkable
impact over profits of whole industry as well as its existing firms (Wheelen and et. al., 2017).
Therefore, it is important for John Lewis and other companies of this industry to provide high
quality products to its customers in order to retain them for longer period of time. This would
also help firm in gaining competitive advantage.
M3
From the above made discussion, it has been analysed that effective marketing activities and
planning is helpful for developing customer base, but still it is required by companies to develop
their marketing strategies for influencing buying behaviour of customers. With reference to John
Lewis, suitable marketing strategies are marketing campaigns, social media marketing, flyers
promotions etc. for spreading awareness about its products. By following these activities, John
Lewis can easily enhance its profits with better sales and enable to get its strong position in
market.
LO 4
P4
Ansoff growth matrix is referred as the strategic tools which are used by business
organisations to plan and effectively develop best strategies through which firm can grow its
business in effective manner. Ansoff matrix for John Lewis has been explained below:
Market Penetration: In this growth strategy, major focus of company is to provide
existing product within existing market. In John Lewis, it will help the company in enhancing
their sales by grabbing attention of untouched customers within local market.
Market expansion: This growth strategy is commonly named as market development
approch. In this, main aim of company is to provide existing product in a completely new market
(Chen and Jermias, 2014). In context of John Lewis, its top management can use this strategy by
6

entering into a new market for attracting more number of customers from different geographical
locations.
Product expansion: Product development strategy of ansoff matrix focuses on
developing new product into existing market place. In relation to John Lewis, its manager can
introduce new products (trendy cloth with new designs) in local market by evaluating demand
and requirements of customers in order to enhance their sales with better customer experience.
Diversification: This growth strategy is considered as one of the most riskiest strategies
among all Ansoff growth strategies. It mainly focuses on introducing new products into
completely new markets in order to expand business (Chan Kim and Mauborgne, 2015). With
reference to John Lewis, if company focuses on adopting this strategy then it will require huge
capital for conducting effective marketing campaigns for promoting its new products at market
place.
As per the above specified various growth strategy of Ansoff matrix, it can be said that
Market Penetration is seen as the best strategy for John Lewis as with this growth approach,
company can easily develop strong customer base as they are already aware about customers
preferences which will ultimately improves their sales (Brewster, 2017). Along with this, with
this strategy John Lewis can easily enhance its market share.
M4
Strategic management plan helps companies in developing their business effectively with
proper guidance. With reference to John Lewis, the strategic management plan for its growth has
been stated as below:
Aim: To enhance operations of company in domestic area.
Vision: To become market leading retail company at international scale.
Mission statement: To provide best quality products to customers as this is valuable to
them and gives higher satisfaction to them.
Goals and Objectives: The long term goal of the company is to enter into new markets.
On the other hand, short term of goal of John Lewis is to deliver high quality products to
customers so that profits can be earned by them.
Strategies: John Lewis will mainly rely upon market penetration strategy in order to
increase its sales in existing market to enhance its profits.
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Tactics: John Lewis will introduce some new and innovative products with value
addition to customers on reasonable prices so that people belonging to every age and income
group can purchase them.
D1
Top 10 retailer companies of UK on the basis of revenues in 2017/18
In accordance with the stipulated picture, Tesco is the leader in retail industry of UK with
a sales of £38.7 billion in 2017-18. Besides this, it can be interpreted that John Lewis stands on
5th position within the retail sector of country . Taking this into account, market penetration
would be beneficial for the respective corporation as this would provide assistance to company in
ensuring increment of sales and profits in domestic territory of entity to improve the overall
market position within retail market. Further, the company will launch new and unique offerings
by making use of tactic of value addition with a view to attract more and more people of
domestic country. Through this, company would significantly achieve the aim of becoming top
global retailer.
CONCLUSION
It is acknowledged that strategic planning ensures that entity has an edge over rivals
present in marketplace. Further, it assists in attainment of predetermined goal in a timely manner.
Besides this, it is comprehended that output of a company must be aligned to strategic course of
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action implemented by organisation. This ensures long term retention of corporation in
marketplace. Micro environmental examination revealed that company possesses the potential to
launch innovative offerings in domestic location to inflate present market positioning and
consequently, sales and profits. Further, PESTLE analysis illustrated that company is capable of
bringing in products which are as per the latest trends in market as well as match the choices of
customers.
9

REFERENCES
Books and Journals
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