Strategic Planning at John Lewis

Introduction

Strategic planning is referred to the management activity by the organisation used for setting priorities, identifying resources and focussing energy, strengthening business operation, ensure employees are working hard to meet goals, establish agreement and adjust the company’s response towards changes in business environment. Thus, it is disciplined effort which leads the organisation to develop fundamental decision and shape as well as guide actions in business to serve the consumer effectively so that the focus in future can be achieved. In this assignment, before the development of strategic plan, the macro and microenvironment along with competitive edge of John Lewis Limited are to be evaluated. Later, based on the information strategic decisions available for the organisation are to be evaluated and finally a proper strategic plan is to be developed.

Implementing proper framework and analysing the impact of the macro-environment on the organisation (P1, M1, D1)

Analysis:

In the UK, as a result of Brexit increased political turmoil has been faced that has impacted in hindering management of trade relation, labour, economy and others. This, in turn, has impacted the department stores in the UK as 5.5% fewer sales are faced by them (theguardian.com, 2019). The condition is seen to negatively impact the business by John Lewis Ltd. as they are seen to slip from 5% to 4.9% in market share due to reduced sales (theguardian.com, 2019). As mentioned by Johnsen et al. (2018), to cope with political turmoil by the companies they are to understand the nature and scope of the uncertainty. Thus, John Lewis Ltd. at the first requires understanding the nature and scope of uncertainty that is created for them due to Brexit and accordingly developing hedging strategy to overcome the situation. The hedging strategy is taking offset position in relation to liability or assets of the company (Caldentey and Haugh, 2017). As argued by Touzani et al. (2016), the company require to overcome hindrance in political turmoil otherwise they are going to experience downfall in their business. In case of John Lewis, it is seen that they have tried coping with the uncertainty created by Brexit to some extent as they are still seen to experience at least 1% rise in their collection of revenue than the previous year (retailgazette.co.uk, 2019). The economic condition informs that the UK government has planned to lower the corporation tax for businesses in the country from 19% to 17% in 2019 (theguardian.com, 2019a). This means that companies which have establishments in the UK are required to pay less tax related to property and operation of their business. In case of John Lewis Ltd, it is seen that they pay four times the tax of Amazon in the UK to management its department stores (thetimes.co.uk, 2018). Thus, the reduction in corporate tax would impact John Lewis to experience reduction in paying off the taxes and saving of finances in the UK while operating their business. As commented by Jones et al. (2017), reduction in the number of business outlets indicates that the companies are unable to deliver effective satisfaction to customers or management labour to ensure effective deliver of customer services. This is because improper management makes the labour and employees feel lack of value making them work inappropriately out of negligence which in turn affects to deliver hindered customer services naming the customer to avoid shopping from such places or outlets.

The reduction in department store impact John Lewis Limited in two ways out of which the positive impact is that reduction in number of department stores means they have to experience less competition, in turn, helping them to have opportunity to attract more customers. However, the present UK social condition indicates that more consumers are orienting to shop through online mode as it is more convenient (forbes.com, 2018). Thus they are avoiding to visit department stores making the companies running such stores close their business due to lack of customers. This aspect may have negatively affected John Lewis Limited to close the number of department stores. However, they are seen to have effective online presence as well where they offer click and collect my order opportunity (johnlewis.com, 2019). Thus, they do have to fear about closing their stores as they are always going to have customers to avail products from them through offline purchase or collecting online order from stores. The technological factors in department stores in the UK inform that increased use of in-store technologies is implemented to offer better experience to customers (globalbankingandfinance.com, 2018). This is going to positively impact the business of John Lewis Limited as they are seen to be on the same pathway of developing a mobile application. The application is said can be used by customers and employees to make queries about product, keep required product always available through direct communication with inventory with the help of the app and others (campaignlive.co.uk, 2017). Thus, it can be seen that John Lewis Ltd. is technologically upgraded to offer better customer services to its consumers to ensure their smooth business operation. In the UK, increased wastes are controlled by the department stores through implementing paperless transaction and controlling of plastic use (forbes.com, 2019a). This aspect is well understood by John Lewis Ltd. and they are using every way to protect the environment by controlling plastic use under the UK plastic pact, installing recycling bins and others (johnlewispresscentre.com, 2019). As mentioned by Dubihlela and Ngxukumeshe (2016), customers wish to buy from those organisations that are contributing to protecting the environment to make a better future. This is because the customers feel that in this way they are able to contribute indirectly to protecting the environment from damage. Since John Lewis Ltd. is involved in effectively protecting the environment, therefore it is going to impact them to have steady flow of customers. John Lewis Ltd. is seen to appropriately abide by the Sales of Goods Act 1979, Description Act 1968 and Data Protection Act 1998. This is evident as they are ensuring proper standards and description of theory products are maintained and they are securely storing the customer information to ensure privacy (legislation.gov.uk, 1979; legislation.gov.uk, 1968; legislation.gov.uk, 1998). Thus, in the legal aspect, the company is going to have the impact of operating their business legally and ethically without having and legal actions against them.

Analysing and evaluating micro environment and capabilities of the mentioned organisation (P2, M2, D1)

SWOT Analysis

Analysis:

John Lewis Limited is regarded as one of the biggest chains of department stores who have been offering unhindered services to its customers for the past 155 years without any major failure (johnlewis.com, 2019). This brand image of the company acts as its strength because for the consumers the name of the company makes them consider in their mind it as an effective brand which can be availed without doubts to get good experience in buying products. As mentioned by Bocken et al. (2016), providing consumers with the ability to avail diverse and extensive range of products at the same place makes them decide to avail from the same organisation. This is because it becomes easy for the consumer to have all goods of their diverse needs be able to be bought without travelling to places. As argued by Jaenke et al. (2017), lack of presence of the company in the online media makes them experience geographic barriers to reach target customers. In case of John Lewis Limited, it is seen that they have a strong online presence which acts as it strength because they are going have the efficiency to attract consumers from each and every place in the UK were they would not have been able to have reached without using the online mode. The lack of international presence acts as weakness for the company because they are unable to experience benefit from currency exchange or collect increased revenue by increasing their customer base globally (Ahi et al. 2017). Since John Lewis Ltd. does not have international presence they are going to experience this weakness. In order to cope the weakness, they are required to spread to new countries unable to do so would make their revenue stagnant due to failing market condition of UK as a result of Brexit making them experience financial loss in business. As mentioned by Thanasuta (2015), benefit of selling private level brands is that they are able to sell with higher profit margin. This is because the costs involved in manufacturing own product is more compared to private levels. In addition, private levels lead brands to separate them from their competitors by selling exclusive products to the consumers (Reinders and Bartels, 2017). In case of John Lewis Limited, they are seen to operate in private levelled goods which offer them have the opportunity to create better market presence and separate them from their competitors to operate their business in attracting more customers by delivering exclusive products. However, the increased number of department store presence in the UK is raising threat for John Lewis Limited as they have to face increased competition is operating their business, in turn, lowering their market share and customer base (johnlewis.com, 2019). Further, extensive regulation to be faced after Brexit is creating threat to smooth operation of the business by the John Lewis Limited. (Refer to Appendix 1)

Applying Porter’s Five Forces Model to evaluate competitive forces (P3, M3, D1)

Porter’s Five Forces Model

Competitive Rivalry: In the UK, there are increased numbers of department store chains are present such as JE Beale, Browns, W J Daniel and Co., Debenhams and others apart from John Lewis Limited (johnlewispartnership.co.uk, 2018). This indicates the company is going to experience increased competitive rivalry as many competitors are present in the market that are competing with them to establish their customer base over other to have competitive advantage in the market.

Threat of New Entrants: The threat of new entrants is weak for John Lewis Limited. This is because they are an already established company with high reputation as well as economic present in the industry (johnlewis.com, 2019). The entrants would require increased finances and time to establish the same higher brand image like John Lewis as they have to gather loyalty of customers over the years through services. Since the new entrants would have lack of time and money to reach the reputation created by John Lewis in the UK, therefore they this force is going impact then in weaker way.

Threat of Substitutes: John Lewis Limited is seen to provide diverse and extensive nature of goods and products to the customers through their single store in different places such as cutlery, clothes, electronic goods and others (johnlewis.com, 2019). Therefore, the threat of substitution is limited for them making it a weak force to impact their business.

Bargaining power of buyers: John Lewis Limited provides high-quality goods to its customers within reasonable and fair prices as well as provides discounts and rewards with products (johnlewis.com, 2019). Thus, this condition leads the buyers of the brand have weak bargaining power as they are already provided proper quality products in fair prices in an effective way meeting their needs as well as valuing them.

Bargaining power of suppliers: The number of suppliers present in the retail industry within UK is huge in number (Littlechild, 2016). Moreover, most of the suppliers in John Lewis Limited are adequately trained and offered assistance during hindrances to ensure proper relationship is maintained with them in the business. Therefore, bargaining power of suppliers for John Lewis Limited is weak as the company properly manages its suppliers and in case the suppliers wish to revolt against they have increased number of preferences in the industry to switch to other suppliers to ensure smooth operation of business.

Strategic decision to improve competitive edge of the organisation based on Porter’s Five Forces Model analysis (P3, M3, D1)

Porter's five force analysis informs that John Lewis only has competitive rivalry as the weak force. This informs that they are to take strategic decision in such a way so that they can distinguish them from the competitors and develop an advantageous place in the industry. As mentioned by Simões and Sebastiani (2017), developing a sustainable differentiation from the competitors the company can be able to reduce force of competitive rivalry. This is because sustainable differentiation leads the company permanently separate them from the competitors in the minds of consumers to make to be treated separately. John Lewis Limited requires executing market research and need to inform the customers through proof regarding the way their products and services are diverse and higher in quality than any of their competitors. The decision is going to help the company create a sustainable difference of their brand in the market helping them to attract customer without facing increased rivalry from the competitors. This is because the competitors cannot found common grounds or characteristics to show rivalry to attract their loyal customers to switch to them. As argued by França et al. (2017), inability to develop a differentiated image from the competitors makes the company fail to cope with rivalry. This is because the competitors have common characteristics of products with the company to be used in different way for making the customers of the company switch towards them. Thus, the decision is effective to help John Lewis Limited develop competitive edge in the market by lowering competitive rivalry.

Applying different theories and models to devised strategic planning and producing strategic management which has strategic objectives and priorities (P4, M2, D1)

Evaluating different type of strategic direction available for the company

The strategic direction is referred to the central forces which propel the business to reach the intended business objectives. The strategies, mission, vision, tactics along with core values collaboratively contribute to the development of strategic direction (Jenkins and Williamson, 2015). Porter's Five Forces Analysis informs that John Lewis Limited is mainly experiencing issue of competitive rivalry in the market. The different strategic direction available for the organisation to overcome this issue is to be identified by using Ansoff matrix. As mentioned by Galpin (2019), Ansoff matrix provides framework for strategic management of the company to frame strategies to ensure better future growth. The four growth strategies mentioned in the Ansoff matrix are product development, market penetration, diversification and market development that are available for John Lewis Limited as strategic direction in developing better competitive edge for the business. The market development is referred to as the strategy in which the business tries to sell their existing products in new markets (Medarac et al. 2016). In case of John Lewis Limited, it is seen that they have effective amount of finances present in the company to support them to enter, grow and expand in the international market. This is evident as their current revenue is £10.2 billion with net income of £172 million in 2018 (johnlewispartnership.co.uk, 2019). Moreover, John Lewis Limited has only present in the UK and thus have the strategic direction available to grow in other geographic markets to incur more finances and profit through currency exchange facility. It would help John Lewis Limited have better brand image in the market and improved competitive edge. This is because global brands allow the companies to develop improved brand awareness and develop products that are more focused to fulfil key needs of individual consumers (Kasemsap, 2016).

The market penetration is referred to the growth strategy in which the company plans to sell their existing products in a better way in the existing market (Geissdoerfer et al. 2018). John Lewis Limited is seen to have effective market share of different products in the market. In addition, they are also seen to offer membership cards to its customers to ensure them provide occasional rewards and discounts on purchase (johnlewis.com, 2019a). In order to develop successful market penetration, the company need to secure its dominance in the market (Geissdoerfer et al. 2018). This is because dominance in the market helps the company have competitive edge. Thus, this informs that John Lewis Limited requires using different nature of sales promotion and implementing varied pricing strategies for increasing the selling of their existing products. Moreover, they are to improve their available membership schemes for its customers by including better rewards and discounts so that the existing consumers can be attracted to make increased usage, in turn, helping the organisation increase their competitive edge through increased market presence. The product development is the strategy in which the business is made to introduce new products in the existing markets (Alkasim et al. 2018). In order to develop new market, detailed insight into the needs of consumers as well as effective research and development team is required in the organisation (Geissdoerfer et al. 2018). This is because research along with specification of needs of consumers would guide the company about the nature of new product to be developed in the market so that the consumers can be satisfied to develop a better competitive edge. John Lewis Limited is seen to have already presence of an effective research and development team to identify the way futuristic markets in the industry are to be managed (johnlewis.com, 2019a). They are to use this research and development team to determine what new product they are to deliver to consumers so that their needs can be more effectively fulfilled than before. John Lewis Limited is also seen to have effective customer relationship available and they are to use this to understand the inner needs of customers in a better way to develop new products. The diversification is the strategy where the business enters new products in new markets (Galpin, 2019). John Lewis Limited has not yet involved in car delivery services which they can add while entering new markets to develop diversity in their business operation. It is going to help them become different from their competitors in turn assisting them to develop a better competitive edge.

Justifying and recommending the appropriate growth platform and strategies

In case of John Lewis Limited, the market develops strategy is the effective growth strategy to be implemented according to which they are to intensify the selling of their existing products to new markets. This is because the SWOT analysis informs that there is already increased number of department stores being present in the UK and current political turmoil due to Brexit has intensified the regulation that creates hindrance for them to smoothly operate business. Thus, moving to expand in new geographic markets where there are fewer department stores would provide John Lewis Limited with the opportunity to capture increased customer base ensuring them better growth. Moreover, their reputed brand image is going to assist them in this condition as positive brand images ensure consumers to have valued experience on purchase making customers decide to buy from such brands (Raj and Roy, 2015). In addition, John Lewis Limited requires using market penetration strategy as another effective growth strategy to expand its business in the UK. This is because the SWOT analysis informs that they sell privately labelled goods which are presently high in demand in the UK with increased in demand for their healthy foods are seen. Thus, if John Lewis Limited is to dramatically change their current marketing strategies they would be able to place their existing products in an improved way than before making more customers to avail from them, in turn, would result them to experience growth in the market. In order to establish market penetration strategy, John Lewis Limited also needs to use digital promotion as their awareness platform to attract more customers, in turn, helping them to grow their market share.

Strategic Management planning

The strategic management planning is done to determine way actions, priorities and business goals are to be set so that they can be properly achieved to attain better growth in the market (Ansoff et al. 2018). The objectives of strategic management plan set for John Lewis Limited are as follows:

Objectives:

To expand selling of existing products to new geographic markets for collecting better revenue as well as create expansion of business

To implement better sales promotion to market existing products in a new way

Strategies:

In order to expand to new geographic market, John Lewis Limited has the strategy of recruiting its research and development team to analyse the new geographic market to be entered so that insight into the needs and demands of the consumers in the market can be identified. This is done with the intention to understand way the products are to be introduced to their target customers in the new market so that they are attracted to buy from them. The lack of knowledge of customer needs of new geographic market makes the company unable to make successful market development as they would be unaware about the nature of products to be required by the customers (Santos and Spring, 2015).

The better sales promotion in the existing UK market is to be achieved by John Lewis Limited through the strategy of implementing new and innovative advertisement content of their existing products so that consumers can be attracted to buy from them. They have also strategized to include new opportunities of reward for its customers who are in the membership scheme of the company to promote their sales. This is because better rewards and discounts make consumer feel more valued by the company as well as feels they are able to save finances in buying products (Thomas et al. 2016).

Tactics:

The research and development (R&D) of new market is to be executed by asking feedback as well as asking needs of customers directly through survey developed on social and commercial media by John Lewis Limited. In addition, the R&D of the company is going to personally survey the existing performance of business in the new geographic market to understand the cultural and social taste of their target consumers.

The sales promotion for market penetration is to be done by John Lewis Limited through digital and commercial platforms.

Conclusion

The above discussion informs that current political turmoil as a result of Brexit has created hindrance for business operation of John Lewis Limited in the UK. The SWOT analysis informs that increased competition is acting as threat and lack of presence in international market is acting as its weakness in business. In relation to this, the company has developed the strategic direction to use market penetration and market development to improve their growth in the market. The strategic management plan developed in this aspect indicates that expanding selling of existing products to new geographic markets and implementing better sales promotion to market existing products in current markets are the two strategic objectives to be abided by the company.

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