Strategic Analysis of John Lewis: Macro, Internal Environment Report

This report provides a detailed analysis of John Lewis' business strategy. It begins with an introduction outlining John Lewis' business model and objectives. The main body of the report analyzes the influences of macro-environmental factors on the business using the PESTLE analysis, considering political, economic, social, technological, legal, and environmental factors. It then assesses the internal environment and capabilities of the business through a SWOT analysis, identifying strengths, weaknesses, opportunities, and threats. The report also applies Porter's Five Forces model to evaluate the competitive forces within the market, analyzing the threat of new entrants, the threat of substitutes, the bargaining power of suppliers and buyers, and the intensity of rivalry. Finally, the report applies various theories, models, and concepts to devise strategic planning for John Lewis, including a VRIO analysis of its resources. The report concludes with a summary of the findings and recommendations for strategic development.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
P1. Analysis of influences of macro environmental factors on business and its strategies....1
LO2 .................................................................................................................................................3
P2. Analysis of internal environment and capabilities of business using appropriate
frameworks.............................................................................................................................3
LO3..................................................................................................................................................6
P3. Application of Porter's Five Forces model for evaluating competitive forces of market 6
LO4..................................................................................................................................................7
P4. Application of theories, models and concepts for devising strategic planning................7
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategies acts as a plan made by business organisation to achieve specific goals
and objectives. Strategic plans can bring benefits of business growth, make strong competitive
position and also increases financial performances of business organisation. John Lewis Ltd. is a
partnership company that offers variety of products and services to customers. The products
offered by John Lewis includes giftware, clothing, jewellery, watches, cosmetics, furniture, food,
computing and audio-visual. It also offers financial and direct services and provides employment
to approx. 83000 people. The strategies of John Lewis aim at providing satisfaction to
employees, achieve sufficient profits, creating strong customer base and increasing brand value
and goodwill of company. The present report analyses and assesses organisation's internal
environment and capabilities and also the impacts of macro environment factors. The report
further evaluates the outcomes of Porter's five forces analysis and applies theories, models and
concepts for assisting the interpretation of strategic directions.
MAIN BODY
LO1
P1. Analysis of influences of macro environmental factors on business and its strategies
John Lewis Ltd. Aims at analysing the macro environmental factors that may affect the
business strategies and capabilities. The capability analysis is done in order to assess the ability
of organisation for reaching specific goals and objectives for strategic development.
Following is given the analytical framework of the macro environmental factors of John
Lewis LTD using PESTLE analysis:
Political factors: This factors brings great influences and impacts on every business
organisation. John Lewis may get influenced by the political factors of UK's rising market. The
globalization factor can also lead to bring changes and influences in the planning and strategies
as the globalization factor will increase competitive advantage.
For example: business strategies and operations gets affected due to political factors like
changes in taxation policies, new employment regulations, trade policies, environmental
regulations or trade restrictions.
Economical factors: The economical factors includes interest rates, economic growth of
country, inflation situation, exchange rates, education level of target customers or their
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disposable income, etc. John lewis needs to bring changes in its business strategies and
operations according to the changing economical factors of business environment. Taxation and
other regulations can impact bottom line hard of the business organisation, therefore, it also
affects the business strategies.
For example: The stable economic growth of a country will bring benefits for John Lewis
whereas low purchasing power of target customer may require effective strategies and marketing
techniques.
Social factors: These are also known as socio-cultural factors and it includes attitudes of
population of target markets such as age distribution, career attitudes of people, values and trends
followed by them and their health consciousness. Business activities and strategies needs to be
developed according to the changing attitudes and demands of target customers. The business
strategies gets influenced and impacted according to the changes happening in social factors such
as lifestyle of people, social norms, beliefs and culture followed, etc.
For example: Changing taste and preferences and materialistic behaviours of target customers
requires change in business operations and strategies as John Lewis needs to focus introducing
more and better branded clothing and fashion products in order to attract customers.
Technological factors: Today's competitive business environment brings various
technological changes that leads to bring changes in business activities, operations and marketing
as well (Venkatachalam, 2018).
For example: Internet shopping is preferred by people and it directly impacts the sales
approaches. Technological advancement and up-gradation in machinery also brings changes in
business strategies of John lewis.
Legal factors: Various laws and regulations are needs to be followed by business
organisation such as health and safety law, consumer rights, employment laws, regulations
regarding provision of equal pay and opportunities. All these legal factors bring impacts and
influences on the business strategies and operations on John Lewis.
For example: John lewis needs to analyse various affecting legal and regulatory frameworks
before entering in new markets. It needs to provide proper health and safety facility for its
employees according to set regulations.
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Environmental factors: These factors may bring great impacts on the working of
business organisation and its strategies. John Lewis needs to make its strategic business plans in
accordance with that sustainable and ethical activities and operations are adopted.
For example: Environment factors have become essential due to increasing pollution, scarcity of
raw materials, carbon foot prints, etc. and John Lewis needs to frame its strategic plans in a way
that it fulfils the corporate social responsibility.
LO2
P2. Analysis of internal environment and capabilities of business using appropriate frameworks
Strategic planning is integral process and procedure that defines directions and strategies
of business organisation and its also makes decisions regarding allocation of available resources
so that it can lead to accomplish strategies and goals. Business organisation gets influenced and
impacted by many factors which are available in the business environment (Priem, Wenzel and
Koch, 2018). The factors can be classified as internal and external factors that affect the business
strategies and organisational capabilities. John lewis analyses the internal environment and
capabilities using SWOT analysis which is explained in detail as follows:
Strengths:
 Company's strong online presence
 Aims at bringing innovation and
creation
 Wide range of products and product
line
 Robust growth strategies (Lozano,
2018)
 High brand image and strength
Weaknesses:
 Limited markets of UK
 technological investments
Opportunities:
 Private labels have growing demand
 Entering in new markets
 Healthy foods
Threats:
 Rigorous regulations and laws
 Intense competition
Strengths of John Lewis:
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Strong online presence: The company have strong presence in online markets and it
brings benefits John Lewis is also considered as the major player in home care products and
financial services. Companies aims at establishing strong customer relationship that is strong
strength of company. The company’s strategies also lie in bringing innovation, creation and
improve the performance and growth of company. John Lewis also invests in strengthening its
brand portfolio by bringing innovative and new products.
High brand image and strengths: The company has built strong brand image through
its wide range of quality products and services. Diversified products are offered by John Lewis in
different segments that helps in building strong brand image of company (Ansoff and et.al.,
2019).
Innovation and Creativity: The company's major focus is to bring innovation and
creation in its business activities and operations so that it can effectively meet needs and wants of
target customers. The business strategy of John Lewis focuses on innovation and it can include
innovation through digitalisation, innovation marketing channel or sales techniques.
Robust growth strategy: The business strategy of John Lewis lays increasing sales and
profits of company through innovation. Company has been a consistent performer in terms of
revenue and sales growth. Great partner service, product innovation and competitive pricing are
the main factors of business strategies and which brings benefits in form of increased customer
base and market share.
Weaknesses of John Lewis:
Limited markets: John lewis needs to focus on entering into new markets and increase
its global presence. The company have limited market share as it operates in markets of UK only
which results in limited market share, limited target customers and also limited profitability.
Technological investments: John Lewis needs to focus on doing more investments in
new and updated technologies and techniques so that it can achieve better results and outcomes
(Strength, Weakness, Opportunity, and Threat (SWOT) Analysis, 2019). Putting more in
technology will lead to bring effective results in form of improved effectiveness in business
operations and in performance level of employees as well.
Opportunities of John Lewis:
New markets: There is an opportunity and scope of entering in to new markets and
achieving great benefits. John Lewis needs to focus on expansion strategy and enter in new
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markets through current or new products and services. It can also expand its business and target
markets through partnership business in new markets or different countries.
Healthy Food Industry: Consumer's now-a-days focus on choosing healthy food
products and alternatives. This sector can bring great opportunities for John Lewis therefore it
needs to build its strategies in a way that it can effectively meet needs and demands of customers
and it can achieve its overall goals and objectives.
Private labels: Changing needs of market and rising growth of private labels can bring
advantages and benefits to John lewis (Hayashi and et.al., 2019). The company has expanded its
market through evolving in partnership businesses. This can bring benefits of increased market
share, strong customer base and improved productivity and profitability.
Threats of John Lewis:
Laws and Regulations: the increasing political and legal factors can act as threat for
John Lewis on its existing categories of products and services. The company deals in wide range
of products and services which can be get affected due to rigorous laws and regulatory
frameworks.
Strong and intense competition: business organisation is going globally and it leads to
increase number of competitors in the markets. The intense competition can lead to bring
impacts on the market share, profitability and sales of the company, therefore, John lewis needs
to effectively plan its business strategies by analysing affecting factors.
John Lewis organisation also undertakes VRIO analysis for evaluating resources of
company and its competitive advantages. VRIO stands for Value, Rareness, Limitability and
Organisation.
Value: John lewis aims at analysing the resources of company in order to identify whether
the resources allows company to exploit the opportunities available in the market and gain
competitive advantages. John Lewis have valuable resources such as skilled and talented human
resources, large product portfolio and effective marketing skills.
Rareness: The John Lewis company has rare resources that are not available to many firms
or organisation, such as large product portfolio or product range.
Imitable: The imitable of having large product range is difficult for other firms to maintain.
Organisation: This refers to if organisation's policies are properly organised so that it can
easily exploit the valuable and inimitable resources. And John Lewis formulates the procedures
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and policies in a way that it can exploit the valuable and inimitable resources of company,
therefore, it can be said that it provides sustainable competitive advantage.
LO3
P3. Application of Porter's Five Forces model for evaluating competitive forces of market
The Porter's Five Forces model is used by John Lewis in order to evaluate the
competitive forces and environment. John Lewis aims at using this model as it helps in
determining the competition level within the industry (Kemp, 2018). Using this model brings
benefits of understanding of the situation of business organisation where power lies.
Threat of new entrant: The John Lewis deals in retail industry and threat relating entry of new
entrant is relatively low as mass capital investments are required for setting up successful and
effective chain store business, therefore, entry of new businesses is quite difficult.
Threat of new entrant can be tackled by building effective economies of scale as it will
help in lowering the cost of products and services. John Lewis can also focus on developing and
manufacturing innovative products and services which can help in meeting demands of target
market, increasing sales and also giving hard-bitten competition to new entrants.
Threat of substitute: The substitute product refers to when new product or services can meet
needs of customers through different ways. The substitute products can greatly impact and
influence the productivity and profitability of company (Kerzner, 2019). John Lewis does have
major substitute of its products and services in clothing, retail and food sectors. As Asda, Marks
& Spencer, Tesco and Sainsbury's can provide substitute of products, therefore, the threat of
substitute product is relatively high for John Lewis.
John Lewis can tackle threat of substitute products and services by focus on to be service
oriented rather than only product oriented. Company can focus on identifying the core need of
target market rather than focusing on what they purchase. It can also increase the switching cost
of target customers.
Level of competition: John lewis operates its business in retail industry that has large and
intense competition. The intense competition makes organisation to come up with innovative and
creative products and services at affordable prices which can effectively attract the target
customers and helps in sustaining competitive business environment (Lozano, 2018). John Lewis
gets great competition from Tesco, Sainsbury’s, Asda, Zara and Marks & Spencer as its product
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range includes clothing,. Furniture, household and apparels. The level of competition is relatively
high.
John Lewis needs to focus on establishing sustainable differentiation in its products and
services as compared to its intense competitors in order to tackle them and gain competitive
advantages. Collaboration with competitors will also bring effective advantages and benefits in
terms of increased market share and profitability.
Bargaining power of buyers: John Lewis aims at satisfying needs and wants of customers and
also to bring innovation and creation its products and services (Priem, Wenzel and Koch, 2018).
Switching cost are low for customers as there are many alternative available in the retail
industry, therefore, the bargaining power of buyers are high.
The company can focus on innovating new products and services rapidly in order to limit
bargaining power of target customers. It will also bring benefits of stronger and larger customer
base.
Bargaining power of suppliers: John Lewis is a large company that deals in variety of products
and services and it also enjoys large and strong customer base (Schuetz, Mair and Schrefl, 2018).
The large product portfolio of John Lewis requires number of suppliers for effectively delivering
the products and services to end customers, thus, the bargaining power of suppliers are relatively
low.
John Lewis needs to focus on building effective and efficient supply chain so that it can
gain benefits and limit their bargaining power. The company can also focus on building effective
relationship with them and develop dedicated suppliers in order to bring effective results and
outcomes.
LO4
P4. Application of theories, models and concepts for devising strategic planning
John Lewis aims at effectively formulating new strategies for its business so that it can
achieve better results and outcomes. In order to formulate effective development and growth
strategies it aims carrying out stake holder's analysis. The stakeholder of company are
employees, shareholders, directors, government bodies, customers, etc. All the stakeholder can
bring direct and indirect impact and influence on business and its strategies.
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Employees: These are termed as the most essential stakeholder of the organisation as
they can bring innovation and creation in business activities and operations through their
improved level of performance. Therefore, John Lewis aims at motivating and encouraging
employees by providing them benefits and performance appraisal (Shuen, 2018). Employee
relation and engagement is also encouraged in order to get their views and suggestions while
formulating business strategies.
Shareholders: These are investors of the company and they invest in company for
operating different operations and activities. The shareholders are important to be considered
while formulating the business strategies as they can help in gaining more required resources.
Shareholders also helps in leading for formulating the successful plan.
Customers: John Lewis aims at satisfying the needs, wants and demands of customers in
order to achieve overall goals and objectives of company. Customers are indirectly connected
with the success of organisation and they helps in increasing the sales turnover of company.
While developing the business strategies, John Lewis considers the taste and preferences of
target markets so that it can focus on increasing their attention and also can effectively address
their needs and wants (Tsangas and et.al., 2019).
Government: While formulating the business strategies, John Lewis considers all the
factors of government such as tax policies, employment and labour law and corporate social
responsibility. Considering theses factors while formulating business policies and strategies
helps business organisation to ensure fulfilling social responsibility and also ensure ethical
conduct of business.
Creditors: They also play important role in business as they provide financial help and
assistance to company. The John Lewis takes into account the interest of creditors while
formulating business strategies so that it can ensure about certainty for future activities of
business.
Stake holder's analysis brings effective benefits and results while formulating business
strategies. The stakeholders serve as the direction and guideline for company and also ensures
successful growth and development of company. John Lewis can make use of several
business strategies which can be related to market entry, limited growth, substantive growth or
retrenchment. The different types of strategic directions which are available to John Lewis are
discussed as follows:
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Direct market entry strategy: this strategy refers to the structural methods which can be used
by John Lewis for delivering products and services to new target markets (Um and et.al., 2018).
Company can enter in new markets and gain benefits in term of increased markets share and
profits of company.
Limited growth: market penetration, market expansion, product diversification or product
expansion strategies can be used by John Lewis to bring better results and outcomes. These
strategies brings limited growth of the company but also ensures better results and outcomes.
Substantive growth: This refers to bringing development and growth in revenue as it is one of
the important objective of the company. Targeting new customers or developing new products
can help business organisation to increase its revenue and sales and will lead to possible growth
strategies.
Retrenchment strategies: This strategy can be used by business organisation for reducing size
of operations through cutting the expenses so that company can achieve become more profitable.
John Lewis can make use of the appropriate and best strategies that can bring effective
results and help company to develop and grow its business. John lewis needs to make use of the
following business strategy to gain advantages and benefits:
market entry: John lewis needs to focus on entering in new markets as this will help the
company to grow and develop its business and market share. Company can enter in global
markets as it will provide maximum benefits in form of large market share, increased
productivity and profits as well (Venkatachalam, 2018).
Substantive growth: John lewis can also make use of this strategy. By entering in new markets
it can bring benefits of increased productivity and increased revenue as well. Online platforms
can also provide benefits to company in order to provide satisfaction to new customers.
Porter Generic Model is used while developing strategic planning of company, and it is
explained in detail as follows:
Cost Leadership: In this John Lewis can focus on being the low cost manufacturer and producer
in target market so that it can gain benefits. Company needs to focus on bringing cost advantages
and they are varied and dependent on the business structure (Schuetz, Mair and Schrefl, 2018).
John Lewis needs to aim at reducing the cost of production of various goods and services in
order to reduce the overall cost. The company can make use of economies of scale, focus on
preferential raw material and proprietary technology and techniques.
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Differentiation: This refers to that organisation needs to be unique and different from
other firms in the industry and target markets as it is valued by buyers. John Lewis can make use
of one or more attributes which target market customers perceive as essential and important. This
will provide company to be different and unique position from other companies which can
provide benefits of charging premium price and also to gain competitive advantage.
Cost Focus: Organisation aims at seeking low cost benefits in small number of market
segments. John Lewis can focus on niche markets or markets with little competition and offer
low cost products.
Differentiation Focus: The focus refers to that company can select a group of segment in
industry and according tailor its business strategies for serving them and exclusion of others.
John Lewis can either focus on buyers with some unusual needs and demands, unusual delivery
system or production techniques.
According to Porter's Generic Model, John Lewis can make use of Cost leadership
strategy. The cost leadership strategy can lead to bring effective benefits and advantages for John
Lewis. The Cost Leadership strategy aims at keeping the low cost for products and services of
company so that it can gain benefits of increased market share which can help in increasing
profits of company. Business strategy refers to action plan that is designed by John Lewis
organisation for overall aims and objectives. John Lewis makes strategic plan which includes the
objectives, tactics and strategies of business organisation, and it is shown as follows:
Strategic plan of John Lewis Company
Mission: The mission statement of John Lewis is to provide happiness to all the
members through worthwhile and also to satisfying employees by successful business.
Vision: The Vision statement of John Lewis is to make sufficient profitability so that it
sustains commercial vitality and also adopt to continuous development and share profits with its
members.
Objectives: John Lewis describes three business strategic objectives as to strengthen
John Lewis brands and also to drive new growth. The another strategic objective describes that
it aims at creating better jobs on better pay and for better performing partners. The third
strategic objective is related to strengthening the financial performance of partnership business.
Tactics: John Lewis uses Cost Focus tactics in strategic planning for achieving
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organisational goals and objectives.
Strategies: John Lewis uses Cost Leadership strategies in order to achieve its strategic
objectives and goals.
CONCLUSION
The present report is based on the strategic planning and business strategies of
organisation. Business strategies refers to plans made by business organisation to accomplish
business objectives and goals. The appropriate use of PESTLE analysis helps in identifying
various macro environmental factors that brings great influences and impacts on the working of
business organisation and on its strategies as well. SWOT analysis helps in assessing and
identifying internal environmental capabilities and weaknesses. Evaluation of competitive forces
of markets are done by using Porter's Five Forces Model in the report. Interpretation and
devising of strategic planning is made by applying range of models, theories and concepts. The
strategic management plan also have tactical and tangible strategic objectives and priorities.
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