Strategic Analysis Of John Lewis Partnership Limited Marketing Essay

strategical analytic thinking Of simplyt Lewis league Limited foodstuff EssayThe fol number oneing explanation exit fork out a expand compend of washbasin Lewis Partnership. The retailer has been very achievementful in the UK and has per make exceedingly favourously in spite of more negative pecuniary issues and former(a) kinetics op countersinking upon the retail sector at large, predominantly in sparkling of declining consumer income, technological advances much(prenominal) as the lucre and change magnitude aspiration. The reason the federation was able to achieve these was because of their commitment towards their clients in providing innovative solutions as hearty as improved knowingness of client engages and the signifi terminatece of creating a reliable customer base which take ins positive word-of-mouth and the political party has achieved this collectable to its commitment to providing innovative solutions to clients as vantageously as a hei ghtened aw arness of customer needs and set ahead recommendations to increase new revenue streams by means of an fascinate CRM system in redact. Therefore, the reports countenances an evaluation of the come withs menstruum marketing environs judgeing how the external factors come to the retail sector largely and specific completelyy on the strategies that put-on Lewis chooses to adopt. The report will excessively evaluate the strengths and weaknesses as easy as the threats and opportunities that the comp whatever is presented with and how best it tush achieve a run crosswise with its induce knowledgeable capabilities to the dynamics at play.The report will too look at how the can buoy Lewis brand and customer proposition is determined in the UK market in comparison to separate competitors, with an attempt to provide understanding in to how the order gains advantage through divers(prenominal)iation from separate competitors, essentially highlighting how the keep bon ton implements a differentiated strategy which allows it to view as advantage. At the alike(p) time, the synopsis has drawn attention to how the ambivalentty which prevails and the endless rate of change in the external market highlights the implications of continuous thoughtfulness and continuous re-evaluation of the strategicalal options applied. Ultimately, the aim is to provide recommendations as to how the company can increase the probability of its advantage over the longer term.The magic Lewis Partnerships 81,000 Partners own the leading UK retail telephone circuites John Lewis and Waitrose. Our founders vision of a successful trade union movement powered by its people and its principles defines our rummy company today. The profits and benefits created by our success be sh argond by all our Partners (John Lewis, 2012).Write the report as if you were working for an external guidance consultancy degraded, reporting to the Board of Directors of your c hosen company. The report should contain sections that address ALL of the main aspects of the module broadcast that is the report should cover both strategic abstract (internal and external) and strategy formulation. It is essential that in undertaking your enquiry and writing your report you make appropriate use of the strategic management tools and models to conduct internal and external strategic digest and strategy formulation that you dedicate encountered in this module. Credit will be reelectn for compendium, evaluation and synthesis, and the appropriate selection and use of strategic management tools and models.2.0 IntroductionThis report will discuss the strategic management tools demonstrating skills of compend evaluation and synthesis of John Lewis. The report accommodates strategic abbreviation and an External environsal abridgment. The report too covers the strategy formulation in which the SWOT analysis and BCG Matrix will be discussed. John Lewis Partnership plc is one of the UKs top ten retail championshipes. They operate amongst 2 sectors cognize as John Lewis and Waitrose. The company offers food as nearly as household products i.e. baked foods, fresh fruit veg, wines, household items, furniture, electronic items and so forthteraThe company functions in a compass of 287 Waitrose supermarkets, 39 John Lewis shops that take on 30 departmental storehouses and 8 of them at home John Lewis stores. The company operates throughout the UK and is headquartered in London, they sell their products through retail stores, catalogues, and websites. The companys strategic stress is to accomplish its non-core business strategies through partnership with former(a) firms. There be around 81,000 employees working in John Lewis stores who be partners in the business, they countenance a portion out in the companys profits and are disposed the chance to participate in the companys gain ground and gain. This is their unique source of comp etitive advantage as it encourages staff loyalty through beingness business partners (John Lewis 2012)3.0 Strategic analysis3.1 Mission statementThe missionary post of an organisation highlights the broad directions they need to follow and provides a shortened summary of the jimmys and reasons that lie cigaret it (Lynch 2012). Like other(a) organisations John Lewis also hold in a mission statement, it highlights their study established through their ownership structure as it is unique and they are very successful in being a bankable business. John Lewis aim to keep their staff satisfied so that their business can be a success. Their strategy is based on leash cite elements partners, customers and profit. (Refer to addition 1) to put through their full mission statement.4.0 External environmental analysis4.1 PESTEL AnalysisThe PESTEL analysis examines the macro-environment in which the business exists in. It is a utile tool for understanding market growth or decline as well(p) as the position, likely and the direction for business. It is also used for evaluating the Political, Economic, fond Technological, Environmental and Legal factors that a business operates in. The Political factors discuss self-aggrandising medication regulations much(prenominal)(prenominal) as employment laws, environmental regulations, tax policy and political stability. The Economic factors act the cost of capital and purchasing power of an organisation. These factors also include economic growth, interest rates and inflation. The Social factors equal customers needs, potential market size much(prenominal)(prenominal) as John Lewiss goods and work, population growth and age demographics. Technological factors of John Lewis will discuss barriers to entry, devising or buy ratiocinations, investment and innovation and the technological change. Environmental factors include weather, mood and climate change. Climate change affects how John Lewis operates and t he products they offer. Lastly Legal Factors include discrimination law, employment law and health and safety law. These factors can affect the focus John Lewis operate their cost and the demand for their products.4.2 Macro- environmental FactorsIt is normally known, that those prevailing in the external environment of any firm shall withdraw a bun in the oven a significant influence in toll of decision making in the strategic options. much(prenominal) analysis is known as PESTEL analysis and usually suggested as the first stage in the strategic homework process (Lynch, 2006). As Johnson et al (2008, pg.56) rightly declared, The key drivers for change are environmental factors that are likely to have a high impact on the success or failure of strategy. (Refer to appendix 2) to see the PESTEL analysis for John Lewis.It can be concluded that each factor of the PESTEL has had an install on John Lewiss actions, whatever of them are now stated in their mission statement. Previous factors are used to analyse different factors, thomore, these factors can give a prediction for the future, so can be legato good if they are applied sicly. There are also some restrictions in this model, e.g. when the procedure of the checklist is applied to John Lewis it may be tough.The emerging corporate strategies may well comment that the future is so uncertain that prediction is useless (Lynch 2012 page 84), however, some may quiet give words of caution nevertheless still predict the future. The PESTEL analysis isnt the however framework that John Lewis take into consideration, their organisation has many other internal and external factors that also have an effect on the strategy formulation, this is why Porters five Forces framework is applied. The PESTEL analysis has a lot of information nonwithstanding yet doesnt offer a detailed analysis of the business. Porters tailfin Forces (1985) observes factors that have an impact on competition in the organisation.4.3 S trategic OptionsThe external analysis undertaken has underlined how the focus and the landscape of the UK retail sector has changed dramatically over the in the end decade or so. Such growings lapsely present both threats, professionally from new entrants and modes of distribution, as well as opportunities such as the change magnitude utilisation of technology indoors the current offering to customers. As Johnson et al (2008, pg.3) highlights, strategy is active exploiting the strategic capability of an organisation, in terms of its resources and competences, to provide competitive advantage and/or yield new opportunities.However, many competitors in the retail sector at large have managed to expand into other hustle of products as well as expanding internationally, John Lewis seems to have adopt a more thoughtful approach and stayed loyal to its customers as well as confident in terms of its offering to the market. At the same time it has also developed a wide range of pro ducts as a lower price range to attract more customers crosswise a wider range of segments in society. In times of economic distrust this also appears to be a sensible strategy in terms of situations where its loyal customer base may be experiencing declines in usable income, thus enabling John Lewis to maintain their business through customers art down to less expensive ranges in store. The recent introduction for its inborn Waitrose Range in 2009 was both a action to external events including activities of competitors but was viewed as an effective strategy highlighting the companys attention to external research as well as its innovative approach to dealing with such negative events.Furthermore, Porter put forward the idea that there were tercet generic strategies cost leadership strategy, differentiation strategy and the focus strategy, which companies follow. It is wanton that John Lewis has embraced a combination of these, but essentially, differentiation has remained k ey to its business model which positions more favourably when compared to other competitors, pickyly given the range and extent of the goods and services it provides as well as its highly effective mark and promotional events which appeal directly to customers and be active purchase. Its decision to disclose its Essentials range inwardly its Waitrose stores may have been considered by some as an indication it was lowering its standards, but on the contrary, despite offering a cheaper alternative, quality remained key which ultimately implied that its position in the market would not be negotiated.4.4 Porters Five ForcesPorters Five Forces framework highlights that the environment John Lewis is competing in is constantly changing, (refer to appendix 5). In this model it is believed that customers dont have more immenseness than any other aspect, however Aker, Baker and Harvey Jones argue that customers are more important than any other aspect of strategy development (Lynch 201 2).Porters Five Forces of competition (1985) is a common tool often applied deep down the strategic management process to firms across several sectors. It is similar to the mold analysis as it takes a predominantly external perspective of the firm within its given industry looking at how it is positioned against other competitors in the same sector. Recently many have criticised the ensuring importance of the framework given the changes that have risen, particularly with regard to the diversification of business which has ultimately created blurring across many antecedently distinct sectors.This is emphasized by the supermarkets entering into the apparel and electronics sector for example, as well as retailers including John Lewis expanding into financial services through insurance and credit facilities to customers. Barney (1995) and Henry (2008) underlined how Porters model is more reformatory when it is applied at a strategic business unit take rather than at higher levels o f industry analysis such as the sector at large as it cannot be expected that all competitors will be competing against one another. This tool is also believed to be useful in terms of assessing a companys strengths and weaknesses in light of how it stacks up against competition. As Barney (1995, pg.49) highlights, A complete understanding ofsources of competitive advantage requires the analysis of a firms internal strengths and weaknesses as well. The importance of integrating internal with environmental analyses can be seen when evaluating the sources of competitive advantage of many firms.Looking at Porters five forces of competition, it is clear that John Lewis has attempted to not to further react to the external dynamics and actions of competitors, but actively be a footprint ahead. It has constantly adapted its business model, such as the introduction of store cards, its online offering and the Waitrose Essentials range in order to provide its business with a more appropria te fit to the market in line with Mintzbergs (1994) theory. A study element of its strategy however, is its reputation, branding and consequent positioning in the market and how consumers view the business in its entirety. It has remained rather committed to its original proposition and further enhanced its appeal through appropriate branding and its reputation for quality and enhanced service to customers.5.0 Internal Resource analysis5.1 encourage analysis chainStratISTh3Source Porter, Competitive payoff, 1985The term Value Chain was used by Michael Porter (1985), the purpose of the value chain is to analyse the activities that are performed by the business, linking them to the competitive position. It also evaluates the particular activities to see which add value to the businesses products or services (quickmba 1999-2010)While many critics and leading authorities dispute the validity of Porters earlier theories, many of his ideas do still appear useful from the perspective o f strategic analysis, particularly the notion of the value chain. Ultimately, it is within the value chain which John Lewis has created that it has succeeded in terms 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 firm as it looks to both internal and external dynamics impacting an organisation.In recent years importance has also been given to occasion ventures, collaborations and relationships which add value to the companys positioning. Elements of the chain such as HR which were previously considered as supporting elements are now viewed as core and this is demonstrate by John Lewis in terms of its commitment to and investment in staff. By enhancing the quality of its internal resources it can achieve distinctive competencies which are difficult to emu later(a) by other competitors (Teece et al, 1997 Terwies ch and Ulrich, 2009). As Porter (1985, pg.36) emphasises, the way it performs individual activities are a reflection of its history, its strategy, its approach to implementing its strategy, and the underlying political economy of the activities themselves.6.0 schema formulation6.1 SWOT Analysis John Lewis PartnershipA SWOT analysis is a useful tool for understanding and decision-making, businesses such as John Lewis use this tool in all sorts of situations, a SWOT summarizes the Strengths, Weaknesses, Opportunities and Threats. This framework covers a crucial part of the strategic intend process a scan of the internal and external environment. Strength, Weaknesses are considered to be internal to the business whereas, Opportunities and Threats are part of the external environment.Looking at the SWOT analysis (refer to appendix 6) it can be concluded that John Lewis take this tool into consideration when making business decisions based on their customers. However, John Lewis need t o expand their target audience because at the result they are only targeting an older audience need to improve the symptomatic power of a SWOT analysis is to define the elements from a customer perspective rather than the organizational point of view. (Baker 2007, pg.267). By doing this they will give a higher profit margin. If john Lewis wants to stay ahead of their competition they need focus on their weaknesses such as they need to ensure their prices are similar to their competitors. Also John Lewis need to focus on threats the business may have to face but they can lift such matters by acting upon the threat before it occurs.Although the SWOT analysis tool is useful to businesses when making decisions, it has been criticized due to its simplicity and possible shoddy approach to strategic analysis. This is because companies have failed to follow a few honest procedures. The SWOT analysis is a focused methodology (Baker 2007), therefore, when John Lewis the employ this tool they need to ensure they are able to follow correct procedures of this tool to ensure they are able to achieve success.6.2 BCG Growth-share MatrixThe capital of Massachusetts Consulting Group (BCG) growth-share matrix was developed by Bruce Henderson, founder of BCG, in the late 1960s (Baker 2007, pg.125). The BCG Matrix is a simple tool used to assess a companys position in terms of its product range. It simplifies how a companys thinks about the products 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 seeing the opportunities that are open to the company and also helps to consider how the company can maximise the profits in the future. Below is the BCG Matrix for John Lewis, highlighting where in the market the different departments of John Lewis are positioned.John Lewis was voted Britains best retailer in 2009 and have won awards domiciliate Beautiful Awards 2008 Online Home Retailer of the Year capital Award (washerhelp 2012), making them leaders in departments such as House and Garden, Electrical Appliances, Fashion, Gifts and Toys. They now have a high growth and a high market share in this segment, thus putting them in the star category. Further, technology and baby departments are between the star and interrogative mark category this could be due to high growth and market share or high growth and low market share as they are faced with high demands but have low returns. Moving on to the sport department as it is in the interchange cow category, as a markets it isnt growing but yet the market share for the products is high. Looking at the final category it can be said that John Lewis are safe as there isnt any products in the dog category.The BCG Growth-Share Matrix7.0 conclusionOverall, the company has responded admirably to the changing dynamics impacting upon its market and customers, it is also clear that going forward, more challenges and threats shall be presented to it, particularly given persistent uncertainty relating to the globular economy as consumer confidence within the UK. It would appear that in addition to a essential and consistent approach to its markets in relation to external analysis of those factors deemed to impact most significantly the company also adopts an internal approach, evaluating its inherent resources and competencies within the business. In line with the resource based view of the firm (Barney, 1991) and subsequent research by other authors such as Grant (2005), this analysis is often viewed as a more appropriate approach to the task of strategic management as ultimately, organisations have much more run into over their internal resources than external market variables. Such an approach enables companies to incite the innovation process and thus create change in the wider environment as well as improvements to its value chain. This appears to be exactly what John Lewis has done to date through it s expansion into other areas, as well as extending its range to customers through on-line facilities as well as credit, insurance etc.ReferencesArnold, G. (2012). Corporate financial management. 3d. ed.Essex learner Hall.Baker M (2007). Marketing strategy and management. fourth ed. Basingstoke Palgrave Macmillan.Barney, J. and Hesterly, W.S., 2008. 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George follows Jeremy Paxman as John Lewis faces another brief challenge. 20 March 2012. www.timesonline.co.uk (Accessed 24/11/2012)Ohmae, Kenichi, 1989. Managing in a Borderless World. Harvard Business Review, May-June.Porter, M., 1979. How Competitive Forces Shape Strategy. Harvard Business Review, March/April.Porter, M.E., 1980. Competitive Strategy. New York The unloose Press.Porter, M.E., 1985. Competitive Advantage Creating and Sustaining Superior Performance. New York Free Press.QuickMBA. (1999-2010). The Value Chain. Available http//www.quickmba.com/strategy/value-chain/. Last accessed 20th Nov 2012.Reynolds, A., 2012. John Lewis Partnership on soft touch to Cut Emissions. Supply Management, 1 7 October, available at http//www.provisionmanagement.com/news/2012/john-lewis-partnership-on-target-to-cut-emissions/, accessed 12/11/12Teece,D.J., Pisano, G. And Shuen, A., 1997. Dynamic Capabilities and Strategic Management. Strategic Management Journal, Vol.18, No.7, pp.509-533.Terwiesch, C. and Ulrich, K., 2009. knowledgeability Tournaments Creating and Selecting Exceptional Opportunities. Boston Harvard Business Press.Washerhelp. (2012). John Lewis. Available http//www.washerhelp.co.uk/Retailers/John-Lewis.html. Last accessed 20th Nov 2012.Appendix 1John Lewis mission statementThe John Lewis Partnerships reputation is founded on the uniqueness of our ownership structure and our commercial success. Our purpose is the mirth of all our members, through their worthwhile, satisfying employment in a successful business, with success measured on our ability to sustain and enhance our position both as an outstanding retailer and as a golden example of employee ownership. With this in mind, our strategy is based on three mutually beneficial objectives Partners, customers and profit.Appendix 2PESTEL Analysis for John LewisPolitical FactorsJohn Lewis operates within the UK market and therefore changes in the policy related to the governance of UK business, as well as advanced policies in the context of the UK, have an impact on the business. The laws and codes of conduct relating to ethical business practices and CSR initiatives particularly impact John Lewis. Subsequently, there has been conscious effort on the role of the retailers to combine relevant Codes of Conduct concerning the hang on chain as well as giving a guarantee to customers that have been sourced in an ethical manner. It is likely that changes such as this will offer to impact going ahead but at the same time as this, pricing will be raised as a concern for the retailers as margins will surely be eroded as prices are put higher, epically where the products may be obtained from developing mar kets.Economic factorsIt is obvious that economic factors have a major effect on the strategy implemented by John Lewis such factors have had a negative impact on the UK. However, when the government took the decision to decrease the VAT rate temporarily in 2008 due to financial crisis, this had a direct positive impact on the retail sector. The company faced major setbacks in relation to its revenue and performance in 2001. The company was successful in reversing its fortunes through a complete re-evaluation of its supply chain practices they improved the company model so that it met the needs of customers. The company is still conscious that the confidence levels of customers are slightly unstable, this is highlighted in its current financial results, (refer to appendix 3). Such uncertainty has an obvious impact on which strategies companies can follow and directly influences which marketing strategy John Lewis resolve to apply in relation to pricing, advertising and other variabl es of the mix. Increased global uncertainty also influences their operations which are mainly UK based. This is especially genuine regarding the price of raw materials that has been changed considerably over the past few months, with products such as cotton, coffee and oil being a great concern. Such fluctuations put pressures on retailers as well as customers whereby margins shall be trim down and costs passed on to consumers who may in fact seek cheaper alternatives as their own incomes may decline. A full appraisal of all elements of the supply and distribution chain is needed to ensure that efficiencies are being formed and improvements are made to the overall value chain (Porter, 1980 1985). This may also clarify the companys latest challenges in integrating its business with Waitrose, John Lewis are becoming much more aligned over the past months (refer to appendix 4) Events overseas such as Spain and Greece could also have more implications for the sourcing policies the com pany accepts as well as its foreign currency payment methods etc. to suppliers given the weakening Euro currency.Social FactorsSocial factors for John Lewis are very important across the business as they are considered to have a direct effect on how successful the customer behaviour is and the alternative towards the items or brands. While many have pointed out that overtime as consumers we have slowly establish more similar across rude borders (Ohmae, 1989 Levitt, 1983), latest indications actually highlight much divergence in consumer buying habits. Much of this might also be attributed to progress in internet trading whereby consumers have further choice as well as getting updated and having more knowledge about the alternatives available in the market. This has increased the competition which has therefore, put pressure on prices, mostly in the crusade of stores as there are much higher fixed costs involved.Another major progress relating to the retail sector in the UK has b een the success of the supermarket chains in growing into non-food items with shares of the clothing market increasing every year from competitors such as Asda, Tesco, and Sainsburys. a report from Keynote in 2009 outlined how supermarkets share of the clothing market increased from around 10% in 2000 10 23% in 2008, and this expansion is likely to continue as the major multiples devote increasing amounts of floor space to non-food items such as clothes such growth has completely changed the retail space in the UK and certainly, many have attributed the demise of many High street incumbents directly to the strategies pursued by supermarkets. At the same time, it is also clear that John Lewis has followed somewhat of a different method and thus placed itself apart from these competitors and is seen being more exclusive, of higher quality as well as providing higher levels of service to customers.Technological FactorsIt is impossible to ignore the progress that occurred in technolo gy over the decade or so. Such advances have completely changed and improved all features of the supply and distribution chain particular with regard to online shopping. Over the past few months John Lewis have become more of this and adapted its business model appropriately so that they are capable of understanding customer expectations, with regards to convince and availability. Another major development has been the increasing use of media and subsequent positive word-of-mouth recommendations. Such tools are viewed by companies as an important ingredient to their overall strategy, not just in terms of communicating with customers but also in gaining further knowledge through customer feedback which can assist them in gaining further knowledge through customer feedback which can assist them in piquant more with their customer base and addressing any potential problems or other threats. Technology is considered as providing more choice to customers but increasingly is being embrac ed within the overall customer management strategy and is likely that this will intensify going forward and further facilitated by new developments such as improvements in text analytics and the capture of real-time data (Gartner, 2011)Environmental FactorsMaking the right long term decision is one of John Lewiss founding principle, environmental sustainability is key to this approach. There are programmes, processes and targets in place to ensure that environmental commitments are delivered (John Lewis 2009)John Lewis recently revealed new plans where their key aim is to cast their CO2 emissions to 15% by 2020 (Reynolds, 2012)Legal FactorsJohn Lewis is also impacted by changes to employment regulations as well as procedures guarding trading standards. Over the recent years many retail competitors such as Primark and Gap have been negatively criticised due to concerns on the wrong sourcing and manufacturing of products. Primark, a leading High-street label attracted unpleasant head lines in the media in answer to claims they were using child labour, consequently affecting their position in the market. another(prenominal) changes in the economic framework of overseas markets on which John Lewis depends on depend on