The following record will provide a detailed analysis of John Lewis Partnership. The dealer has been very successful in the united kingdom and has performed very well in spite of more negative financial issues and other dynamics impacting upon the retail sector at large, mainly in light of declining consumer income, technical advances such as the internet and increased competition. The reason why the company was able to achieve these was because of their commitment towards their clients in providing progressive alternatives as well as better awareness of customer needs and the importance of creating a trusted customer basic which ensures positive word-of-mouth and the business has achieved this because of its dedication to providing ground breaking solutions to clients and a heightened knowing of customer needs and further tips to increase new revenue streams through an appropriate CRM system in place. Therefore, the reviews provides an evaluation of the business's current marketing environment examining how the exterior factors impact the retail sector generally and specifically on the strategies that John Lewis chooses to look at. The statement will also evaluate the advantages and weaknesses as well as the hazards and opportunities that the company is presented with and how best it can perform a match using its own internal functions to the dynamics at play.
The article will also check out how the John Lewis brand and customer proposition is located in the united kingdom market compared to other competition, with an effort to provide understanding in to how the company gains gain through differentiation from other opponents, essentially highlighting the way the company implements a differentiated strategy which allows it to keep up advantage. At the same time, the examination has drawn focus on how the doubt which prevails and the constant rate of change in the external market shows the implications of ongoing observation and ongoing re-evaluation of the proper options applied. In the end, the goal is to provide recommendations as to the way the company can boost the probability of its advantage over the long run.
"The John Lewis Partnership's 81, 000 Partners own the leading UK retail businesses - John Lewis and Waitrose. Our founder's eyesight of an effective business powered by its people and its own principles identifies our unique company today. The profits and benefits created by our success are shared by all our Lovers" (John Lewis, 2012).
Write the report just like you were doing work for an exterior management consultancy company, confirming to the Plank of Directors of your selected company. The record should contain portions that address Most of the main aspects of the module syllabus: that is the statement should cover both strategic analysis (interior and external) and strategy formulation. It is vital that in starting your quest and writing your statement you make appropriate use of the tactical management tools and models to carry out internal and external strategic evaluation and strategy formulation which you have came across in this module. Credit will be given for analysis, evaluation and synthesis, and the correct selection and use of proper management tools and models.
2. 0 Introduction
This record will discuss the proper management tools demonstrating skills of research analysis and synthesis of John Lewis. The record includes strategic examination and an Exterior Environmental research. The article also addresses the strategy formulation in which the SWOT research and BCG Matrix will be discussed. John Lewis Relationship plc is one of the UK's top ten retail businesses. They operate amidst 2 industries known as John Lewis and Waitrose. The company offers food as well as household products i. e. cooked foods, fresh fruit & veg, wines, household items, furniture, electronic items etc.
The company functions in a string of 287 Waitrose supermarkets, 39 John Lewis retail outlets that include 30 departmental stores and 8 of these at home John Lewis stores. The company operates throughout the UK and it is headquartered in London, they sell their products through retail stores, catalogues, and websites. The business's strategic target is to accomplish its non-core business strategies through relationship with other firms. There remain 81, 000 employees employed in John Lewis stores who are partners in the business, they have a show in the business's profits and are given the opportunity to participate in the company's progress and growth. This is their unique way to obtain competitive benefits as it promotes staff commitment through being business partners (John Lewis 2012)
3. 0 Strategic analysis
3. 1 Quest statement
The mission of an company highlights the broad directions they need to follow and a brief summary of the worth and reasons that lay behind it (Lynch 2012). Like other organisations John Lewis likewise have a mission affirmation, it highlights their reputation proven through their possession structure as it is unique and they are extremely successful in being a profitable business. John Lewis try to keep their employees satisfied so that their business can be considered a success. Their strategy is based on three important elements associates, customers and income. (Make reference to appendix 1) to see their full mission statement.
4. 0 External Environmental analysis
4. 1 PESTEL Analysis
The PESTEL analysis examines the macro-environment where the business prevails in. It really is a helpful tool for understanding market growth or drop as well as the positioning, potential and the direction for business. Additionally it is used for assessing the Political, Economic, Social Technological, Environmental and Legal factors that a business manages in. The Political factors discuss federal rules such as work laws, environmental regulations, tax insurance policy and political balance. The Economical factors affect the cost of capital and purchasing ability of an company. These factors also include economic growth, rates of interest and inflation. The Public factors impact customer's needs, potential market size such as John Lewis's goods and services, society growth and years demographics. Technological factors of John Lewis will discuss barriers to admittance, making or buying decisions, investment and invention and the technical change. Environmental factors include weather, weather and local climate change. Weather change affects how John Lewis performs and the merchandise they offer. Lastly Legal Factors include discrimination law, employment regulation and health and safety rules. These factors can affect just how John Lewis operate their costs and the demand because of their products.
4. 2 Macro- environmental Factors
It is commonly known, that those prevailing in the exterior environment of any company shall have a substantial influence in terms of decision making in the strategic options. Such research is recognized as PESTEL research and usually advised as the first stage in the proper planning process (Lynch, 2006). As Johnson et al (2008, pg. 56) rightly announced, "The key individuals for change are environmental factors that will probably have a higher effect on the success or inability of strategy". (Refer to appendix 2) to see the PESTEL evaluation for John Lewis.
It can be concluded that each factor of the PESTEL has already established an impact on John Lewis's actions, some of them are now mentioned in their mission statement. Earlier factors are used to analyse different factors, furthermore, these factors can give a prediction for the future, so can be peaceful effective if they're applied correctly. There are also some limitations in this model, e. g. when the procedure of the checklist is put on John Lewis it can be tough.
"The emergent corporate strategies may comment that the future is so uncertain that prediction is useless" (Lynch 2012 page 84), however, some may still give words of extreme care but still anticipate the future. The PESTEL analysis isn't the sole framework that John Lewis consider, their organisation has many other internal and exterior factors that also have an impact on the strategy formulation, this is why Porters five Causes construction is applied. The PESTEL evaluation has a lot of information but yet doesn't provide a detailed evaluation of the business enterprise. Porters Five Makes (1985) observes factors which have a direct effect on competition in the organisation.
4. 3 Strategic Options
The external analysis carried out has underlined how the focus and the landscaping of the united kingdom retail sector has improved dramatically over the last decade or so. Such developments clearly present both threats, primarily from new entrants and modes of syndication, as well as opportunities such as the increasing utilisation of technology within the existing offering to customers. As Johnson et al (2008, pg. 3) features, strategy is about "exploiting the proper capability of an company, in conditions of its resources and competences, to provide competitive benefits and/or deliver new opportunities. "
However, many opponents in the retail sector at large have were able to develop into other range of products as well as increasing internationally, John Lewis seems to have adopted a far more thoughtful methodology and stayed loyal to its customers as well as self-assured in conditions of its offering to the marketplace. At exactly the same time it has also developed an array of products as a lower price range to appeal to more customers across a wider selection of segments in modern culture. In times of economical uncertainty this also is apparently a reasonable strategy in terms of situations where its loyal customer base may be experiencing declines in disposable income, thus enabling John Lewis to maintain their business through customers trading down to less expensive ranges waiting for you. The recent advantages because of its Essential Waitrose Range in '09 2009 was both a reaction to external situations including activities of competition but was viewed as an effective strategy highlighting the company's attention to external research as well as its impressive approach to coping with such negative happenings.
Furthermore, Porter submit the theory that there were three universal strategies; cost command strategy, differentiation strategy and the concentration strategy, which companies follow. It is clear that John Lewis has embraced a combo of the, but essentially, differentiation has continued to be key to its business model which positions more favourably when compared to other competitors, especially given the range and degree of the products and services it offers as well as its impressive branding and promotional events which appeal directly to customers and incite purchase. Its decision to add its Basics range within its Waitrose stores may have been considered by some as a sign it was cutting down its expectations, but on the other hand, despite supplying a cheaper substitute, quality remained key which eventually implied that its position in the market would not be negotiated.
4. 4 Porter's Five Forces
Porters Five Causes framework features that the environment John Lewis is rivalling in is continually changing, (refer to appendix 5). Within this model it is thought that customers don't possess more importance than every other aspect, however Aker, Baker and Harvey Jones claim that customers are usually more important than any other aspect of strategy development (Lynch 2012).
Porters Five Forces of competition (1985) is a common tool often applied within the strategic management process to businesses across several areas. It is similar to the PESTLE examination as it requires a predominantly exterior perspective of the organization within its given industry taking a look at how it is positioned against other opponents in the same sector. Lately many have criticised the ensuring importance of the framework given the changes which may have risen, particularly with regard to the diversification of business which includes finally created blurring across many previously distinct sectors.
This is emphasized by the supermarkets getting into the clothing and gadgets sector for example, as well as vendors including John Lewis growing into financial services through insurance and credit facilities to customers. Barney (1995) and Henry (2008) underlined how Porter's model is more helpful when it is applied at a strategic business product level somewhat than at higher degrees of industry analysis such as the sector most importantly as it cannot be expected that all opponents will be competing against one another. This tool is also believed to be useful in conditions of evaluating a company's talents and weaknesses in light of how it stacks up against competition. As Barney (1995, pg. 49) shows, "A total understanding of
sources of competitive advantages requires the examination of any firm's internal advantages and weaknesses as well. The importance of integrating inside with environmental analyses is seen when assessing the resources of competitive benefit of many firms. "
Looking at Porter's five forces of competition, it is clear that John Lewis has attemptedto never to just respond to the external dynamics and activities of competitors, but actively be considered a step ahead. It has constantly modified its business model, including the introduction of store credit cards, its online offering and the Waitrose Requirements range to be able to provide its business with a far more appropriate fit to the marketplace consistent with Mintzberg's (1994) theory. A major aspect of its strategy however, is its reputation, branding and following positioning in the market and exactly how consumers view the business enterprise in its entirety. It offers remained rather committed to its original proposition and further enhanced its appeal through appropriate branding and its own reputation for quality and enhanced service to customers.
5. 0 Internal Source of information analysis
5. 1 Value examination chain
The term 'Value String' was employed by Michael Porter (1985), the goal of the value chain is to analyse the activities that are performed by the business, linking those to the competitive position. In addition, it evaluates this activities to see which add value to the firms products or services (quickmba 1999-2010)
While many critics and leading government bodies dispute the validity of Porter's previous theories, a lot of his ideas do still appear useful from the perspective of strategic analysis, particularly the idea of the worthiness chain. Finally, it is at the value chain which John Lewis has generated that this has been successful in conditions of sustaining advantage in its market sector. It has created efficiencies and synergies through the interrelationships within (Mintzberg and Ghoshal, 2003). Value Chain Analysis which is often compared to the RBV of the organization as it appears to both inside and external dynamics impacting an company.
In modern times importance in addition has been given to joint projects, collaborations and connections which add value to the company's positioning. Components of the chain such as HR that have been previously considered as supporting elements are actually viewed as central which is showed by John Lewis in terms of its commitment to and investment in staff. By enhancing the quality of its inside resources it can achieve distinctive competencies that happen to be difficult to emulate by other competition (Teece et al, 1997; Terwiesch and Ulrich, 2009). As Porter (1985, pg. 36) emphasises, "just how it performs individual activities are a representation of its background, its strategy, its method of implementing its strategy, and the main economics of the activities themselves. "
6. 0 Strategy formulation
6. 1 SWOT Examination: John Lewis Partnership
A SWOT analysis is a good tool for understanding and decision-making, businesses such as John Lewis use this tool in every types of situations, a SWOT summarizes the Strengths, Weaknesses, Opportunities and Hazards. This framework includes a crucial area of the tactical planning process a check of the internal and exterior environment. Durability, Weaknesses are considered to be inner to the business whereas, Opportunities and Threats are part of the external environment.
Looking at the SWOT research (make reference to appendix 6) it could be concluded that John Lewis take this tool under consideration when coming up with business decisions predicated on their customers. However, John Lewis need to broaden their market because at this time they are only targeting a mature audience "need to enhance the diagnostic electric power of a SWOT analysis is to identify the elements from a person perspective as opposed to the organizational point of view". (Baker 2007, pg. 267). Using this method they will make a higher profit margin. If john Lewis desires to stay ahead of their competition they need give attention to their weaknesses such as they need to ensure their prices are similar to their competition. Also John Lewis need to focus on threats the business may need to face nonetheless they can avoid such things by acting upon the threat before it occurs.
Although the SWOT research tool is useful to businesses when making decisions, it has been criticized because of its simplicity and possible deceptive approach to tactical analysis. It is because companies have failed to follow a few simple types of procedures. The SWOT analysis is a centered technique (Baker 2007), therefore, when John Lewis the applying this tool they need to ensure they could follow correct procedures of this tool to ensure they are able to achieve success.
6. 2 BCG Growth-share Matrix
"The Boston Consulting Group (BCG) growth-share matrix was developed by Bruce Henderson, founder of BCG, in the overdue 1960s" (Baker 2007, pg. 125). The BCG Matrix is a straightforward tool used to evaluate a company's position in terms of its product range. It simplifies how a company's thinks about the merchandise and services and makes decisions about which it should keep and let go and which products to invest in further. It provides a useful way of finding the opportunities that are available to the business and also really helps to consider how the company can maximise the profits in the foreseeable future. Below is the BCG Matrix for John Lewis, highlighting where in the market the several departments of John Lewis sit.
John Lewis was voted Britain's best store in 2009 2009 and have won prizes "House Beautiful Awards 2008: Online Home Dealer of the Year Gold Award" (washerhelp 2012), making them leaders in departments such as House and Garden, Electrical Equipment, Fashion, Presents and Toys. They will have a high growth and a high market talk about in this portion, thus adding them in the celebrity category. Further, technology and baby departments are between the celebrity and question make category this may be due to high growth and market share or high development and low market talk about as they are faced with high demands but have low returns. Moving on to the activity team as it is in the cash cow category, as a market segments it isn't growing yet somehow the market show for the products is high. Considering the ultimate category it can be said that John Lewis are safe as there's no products in your dog category.
7. 0 conclusion
Overall, the business has responded admirably to the changing dynamics impacting upon its market and customers, additionally it is clear that going forward, more difficulties and threats shall be shown to it, specifically given persistent doubt associated with the global overall economy as consumer confidence within the UK. Any difficulty. in addition to a thorough and constant approach to its markets with regards to external analysis of these factors deemed to impact most significantly; the business also adopts an interior approach, analyzing its inherent resources and competencies within the business enterprise. In line with the resource centered view of the organization (Barney, 1991) and following research by other creators such as Give (2005), this evaluation is often seen as a more appropriate approach to the duty of proper management as eventually, organisations have much more control over their internal resources than external market variables. Such an approach permits companies to incite the development process and therefore create change in the wider environment as well as improvements to its value string. This appears to be just what John Lewis did thus far through its enlargement into the areas, as well as stretching its range to customers through on-line facilities as well as credit, insurance etc.
Threat of New Entrants
This is known as to be rather low for John Lewis given the original capital investment required as well as the legislation governing the marketplace. At the same time, the actual fact that discount merchants and the supermarkets who reap the benefits of vast size economies may offer lots of the same goods at greatly lower prices, is a concern and could very well be indicative of why many stores such as John Lewis now offer an electronic service in addition with their store offering. More entrants to the web space does seem inevitable though may become increasingly difficult given the variety presently in existence as well as the perception that customer service is often diminished. In this value, John Lewis is clearly at an edge given its reputation on the market.
Threat of Substitutes
The risk of substitutes is low from a product point of view yet in conditions of suppliers, is high and it is underlined by the success of the supermarket chains in their clothing lines as well as the competitive panorama in the web space and the carrying on reputation of price evaluation websites and similar discussion boards. Over time, trusted online retailers could exert increased pressure on representatives such as John Lewis, particularly in conditions of pricing as well as sourcing of product runs.
Bargaining Ability of Buyers
This is recognized as being extremely high given the range of suppliers in the market and the realisation that customers are faced with unprecedented choice. Price is plainly a key edge for the merchants, but at the same time, in the particular segment where John Lewis handles factors such as location, quality, customer service and atmospherics and added benefits to be derived from the in-store experience are significant. Such variables also assist in conditions of differentiating the store from other opponents in the TRADITIONAL.
Bargaining Electricity of Suppliers
Though it was just couple of years ago the retailers were considered as having a major impact over suppliers, this appears to be fairly changing, particularly in regards to to constraints in way to obtain some recycleables and also other concerns in the global supply chain which can position the suppliers in a far more favourable position and increase their bargaining vitality.
Degree of Rivalry
Rivalry is obviously intense due mainly to the immense choice available as well as the increasing pressure from on-line sellers. Upon this basis, opponents are ultimately "jockeying for position" (Porter, 1979) and more and more retailers test themselves to differentiate for some reason through providing extended runs as well as complementary goods and other services. The success of John Lewis Holiday promotional campaigns in the last few years highlights the way the company tries to differentiate itself, particularly concentrating on those issues which are considered to impact most on succeeding drive of customers to produce a purchase.
