Strategic management is the continuous planning and monitoring, analysing the environment to develop the strategies. The company has to analyse the environment to develop the strategies in order to gain the objective. There are many tools are used to analyse the environment such as Porter’s Five Forces Framework, PESTLE Analysis, Value chain analysis, and many others (Dobbs, 2014). In this report, John Lewis and Partnership has been taken into consideration to analyse the environment of the company as well as the retail industry. John Lewis & Partnership is a department store which operates throughout the United Kingdom. It was established in 1929 in the United Kingdom. The company has the 51 stores in England, Scotland and Wales. The company earns the operating income with the amount of £243.2 million with the help of 38100 employees (John Lewis & Partnership, 2018).
In the beginning of this report, UK retail market will be discussed. Later on, PEST Analysis and porter’s five forces will be used to analyse the environment of the company. Porter’s generic strategies will be analysed so that the company will get the success in the future.
The apparel market of UK has been growing continuously over the last few years. In the 2018, the market value of the industry is 60.7 billion euros. With the market value, the annual expenditure on clothing, sales volume and the other values will increase with the 57.8 billion pounds in 2017. The majority of the demand of the industry comes from women rather than the men. There are many brands that hold the high market value in the market such as ASOS, Marks and Spenser and many others. There are many consumers who prefer the buying clothes in the physical shops with the per cent of 71.2. But the sale of clothing in internet has been also increases with the continue rate of 56% in 2017. The apparel market of the UK is growing with the number of enterprises in the last five years (Statista, 2018).
(Source: Statista, 2018)
It has been seen that the political uncertainty disturb the retail market of UK. The market of UK exists from the EU that made it difficult for the retailers industry. It is difficult for the retailers to effectively plan the life beyond the Brexit. There are many brands that have their agreements come to an end due to which the prices are rises and the companies face the heavy loss (Hamilton-Hart, and Stringer, 2016).
The population of UK has been rising continuously year by year and reach at 62.2 million in 2010. There are many women than men having a longer life expectancy due to which the population is increases. The GDP rate of UK is also increases with the annual rate 1.3% in the annual chain. The country ace the deflation period with the rate of 4.6% due to which the transportation cost is decreases. The industry has a benefit of reducing the cost of transportation because it has high cost services. The unemployment rate of UK is increases with the rate of 68.1% to 1.53 million. The increasing unemployment rate affects the entire economy. Increasing unemployment rate means decreasing the purchasing power of consumers. The demand of the consumers is reduces due to low purchasing power and negatively impact on high growth of the industry (Computer World UK, 2013).
It has been seen that the taste of the consumers is changing with the passage of time. It is difficult for the industry to adopt the new changes with the passage of time. There are many consumers who does not prefers the fashion trends and wants the old material which is require for it. The demand of those consumers is decreases due to adopting the new trends by the industry. It is difficult for the industry to take care of the demand of both the types of consumers in the market.
It has been founded that the retail industry adopts the new technology in the economy in order to high growth of the market. The market uses the technology by distributing the goods and services to the consumers through online. The industry developed the many websites and applications to fulfil the demand of consumers through online. The industry can use the new technology in buying, selling and weighing the products. New technology helps the consumers to compare the prices with the different websites and with a single click they fulfil their demands. New technology develops the mind of people and brought them closer to each other. The demand of consumers is increases with the high rate that has a positive impact on the industry (Morden, 2016).
It has been seen that the bargaining power of buyer is high due to high competition in the industry. It is observed that the buyers can easily switch their demand due to low cost of switching and the high plenty of alternatives. The market focuses on the customer needs due to which the produce the plenty of product with the different prices which attracts the large number of consumers (Doz, 2017).
The bargaining power of suppliers is low due to high quality of material. The big companies require the high quality of material due to which they did not prefer to switch with the new suppliers. The companies deal with their existing suppliers due to high quality material as they want to sell the branded product in the market.
The threat of new entrants is low due to high capital requirement. The retail industry requires the huge capital to enter the market. High goodwill value of the exiting companies is the other factor of low threat of new entrants. It is difficult for the new entrants to enter the market and beat the exiting companies (Ortega, Jalón, and Menéndez, 2014).
The threat of substitute is low due to no major substitute of clothes. Clothes are the necessity of the consumers and there is no other alternative to replace.
It has been seen that the industry has low threat of competitors due to low threat of new entrants. The high goodwill value of the existing companies is the other reason of low competitors. It is difficult for the companies to enter in the market and beat the exiting company that is why the industry has low level of threat of competitors.
The analysis classified into parts to analyse the market such as Primary Activities, and Support Activities
It has been seen that the John Lewis & Partnership has the nature of storing, distributing and receiving the material. The company store the raw material in the warehouses to protect them for destroys. The company has 31 stores to distribute the raw material in the different areas and reach at the consumers (Wheelen, Hunger, Hoffman, and Bamford, 2017).
The company currently operates the one manufacturing business. The company manufactures the textile to operate the business in the market. The company manufacture and sales of furnishing textiles under the trade name of Jonelle. As well the company also sell the fabrics, curtains and many others (Mudambi, and Puck, 2016).
The company announced the six more stores and distribution centre of Morrisons. The company adopts the warehousing activities, and distributing activities to store and distribute the goods. The company distribute the product across the UK from the various distribution centres.
The company adopts the new technology to promote the products through the advertisement during the year. It also promotes the products through the creative advertisements that the company makes every year. The company uses the games platform to spread the awareness of the brand so that the large number of consumers attract towards the product.
The company provide the excellent services to the customer that is why it is famous brand in UK market. It earned the high revenue due to which they decide to distribute the excellent services to the customer by providing them discount on the special occasions.
The company infrastructure is appropriate which helps to operate the business in the higher level. The company adopts the warehouses to protect the material, financial professor to handle the accounts and finance. The company has flexible infrastructure which helps it to operate in the market and grab the high market shared (Hill, Jones, and Schilling, 2014).
The company has 83000 of employees who help them to achieve the objective. The human resource management of the company is motivated, employee retention, recruitment and employee deployment. Human resource management focuses on the goals and implement the strategies to achieve the objective of the company. Human resources are the main asset of the company which hold the development (Shabanova, Ismagilova, Salimov, and Akhmadeev, 2015).
The company build the strong relationship with the suppliers to buy the quality of services. It cannot switch with the other suppliers due to high quality of services. The company sell the brand product that is why it does not switch with the other suppliers.
From the above discussion, it has been seen that the company use the technology to promote the products in the market. It promotes the products through internet so that the large number of consumers attracts towards the goods and services of the company. The company also use the technology to produce the quality of product in the market. The company produce the fabric product with high quality due to which it can use the high technology (Rothaermel, 2015).
From the above analysis it has been seen that the company has to adopt the strategy in order to achieve the objective. The company has to follow the porter’s generic strategy so that it can earn the high revenue. The Porters generic strategies contain the three strategies such as cost leadership, focuses and differentiation strategies. It is an appropriate method in response to external environment.
As the above discuss, the retail market of UK is affected by the inflation and deflation period. Now days, the deflation is increases due to which it is difficult for the company to compete with the competitors. The company has to set the prices so that the company can grab the high market share by beating the competitors. The company has to implement the cost leadership strategy so that it can provide the products to the consumers in low prices (Banker, Mashruwala, and Tripathy, 2014).
It has been seen that the retail industry has less threat of substitute due to which the consumers attracts towards the company. The company has the opportunity to implement this strategy to develop the product little bit differ from the others. The company has to introduce the new product thrice in a year. It is beneficial for the company to produce the differentiate product in order to achieve the objective. It is also beneficial for the consumers to get the new product in the year (Moon, Hur, Yin, and Helm, 2014).
The company has to implement these strategies by combining them then it would be beneficial and helps it to achieve the objective. The company attracts the large number of consumers by reflecting the low prices as compare to the others with the different quality of services. The focus strategy helps the company in order to earn the high revenue and grab the high market share by attracting the large number of consumers (Grant, 2016).
I believe to use the Porters Five Forces in order to analyse the external environment of the company. It was so beneficial for me at the time of analysing the external environment. There are many advantages I felt about this model. The model is based on the ideal of competition which helps me to analyse competition threat for the consumers. It is difficult for the company to analyse the opportunity and threat but by using this model it is easy for me to identify the threat and opportunity. I believe that this model helps to analyse the current position of the company and obstacle in the way of growth of the success. The information collect from this analysis helps me to recommend the appropriate strategies in order to achieve the objective (Moreno-Izquierdo, Ramón-Rodríguez, and Perles-Ribes, 2016). As compare to other models, it is best model that I found for the analysis of external environment.
There are also some limitations due to which it is difficult to analyse the whole information. I found that this model is not applicable to handle the accounts of the company. I believe that this model is beneficial for the company to analyse the current position but it founded that it fails to found the financial position. The financial position of the company does not analyse by this model that is why I can said that it is difficult to identify the appropriate position of the company. At time of analysing the environment, it is founded that the model used by me is focuses on the two or three factors without focusing on the others.
Conclusion
From the above analysis, it has been concluded that the Apparel Retailers subsector of UK has the opportunity to grow in the market. John Lewis & Partnership came under the retail industry of UK market. The analysis states that the company has less threat of competitors and substitutes. Low level of threat reflects the more opportunity for the company in order to grab the high market share. As per the PEST analysis of the industry, it is founded that the industry has high opportunity to grow in the market. As per the value chain analysis, it is observed that the company has excellent infrastructure and human resources to operate in the market. From the above analysis, it has been recommended that the company has to adopt the cost leadership and differentiation strategy in order to achieve the objective. There are many benefits and limitations founded while using the Porter’s five forces. It has been concluded that the company will grow in the near future.
References
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Computer World UK. (2013) John Lewis Partnership transforms HR with self-service capabilities. [online] Available from: https://www.computerworlduk.com/it-vendors/john-lewis-partnership-transforms-hr-with-self-service-capabilities-3474098/ [Accessed 31/12/18].
Doz, Y.L. (2017) Strategic management in multinational companies. In International Business (pp. 229-248). Oxon: Routledge.
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Hill, C.W., Jones, G.R. and Schilling, M.A. (2014) Strategic management: theory: an integrated approach. UK: Cengage Learning.
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Moon, H.C., Hur, Y.K., Yin, W. and Helm, C. (2014) Extending Porter’s generic strategies: from three to eight. European Journal of International Management, 8(2), pp.205-225.
Morden, T. (2016) Principles of strategic management. Oxon: Routledge.
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Ortega, A.G., Jalón, M.L.D. and Menéndez, J.Á.R. (2014) A strategic analysis of collective urban transport in Spain using the Five Forces Model. Investigaciones Europeas de Direccióny Economía de la Empresa, 20(1), pp.5-15.
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