Strategic Management and Leadership - John Lewis Partnership - Essay Example

Strategic Management and Leadership Introduction John Lewis Partnership is one of the largest retail companies in UK.The company deals with clothing, food, cosmetics, house wares and different types of direct services. This is a partnership firm. The company was founded in 1929 by John Spedan Lewis. It is an employee owned company. This partnership firm has many departmental stores in all over UK. John Lewis and Waitrose are two subsidiary companies of John Spedan Lewis. The company has it’s headquarter in London. On behalf of the employees a trust governs the company. It is the third largest private firm in UK. To acquire more customers and retain them the company has broaden its marketing strategies. The company has put huge effort to enhance the value of the company. John Lewis partnership firm has also implemented many ways to measure the success of the company. There are many factors which help the company to achieve its goal and objectives. John Lewis did partnership with Waitrose which facilitated the company to generate more revenue. John Lewis Partnership has expanded its business to Philippines. This helped the company to acquire more international customers and make its strong position in international market. The organization maintains good relationship with its customers. By this process the company is able to enhance its customer base. The innovative culture of this firm helps it’s to motivate and satisfy its employees. Advanced technologies are used by this organization to perform its business functions. The leadership style of this company motivates the employees to deliver their work efficiently. John Lewis Partnership has developed many new strategies to improve and update their business process. 2. Measurements of Success The employee ownership is considered as the key to success of John Lewis partnership. John Lewis partnership have the ability to adapt according to the change in the technology and due to its fast adaptability it is being considered as the most renowned The concerned company uses various key performance indicator for monitoring and measuring the performance of the company . The sales growth is considered as the key factor for determining the performance of the market. The return on capital employed of the company has increased more than 8%. Figure 1: Return on capital employed Gross sales of the company has enhanced in 2014 as compared to the previous year. Gross sales measure the density of sales of the company. It is considered as the key indicator for determining the profitability of the company. Figure 2: Gross sales John Lewis partnership has experienced a growth in its operating margin in the financial year 2014. The company is experiencing a growth of 5.4% which indicates the sound financial performance of the company. Figure 3: Operating margin 3. Reason Underpinning John Lewis partnership Success 3.1 Brand Reputation The brand reputation of John Lewis partnership have increased and developed due to the wide variety of products and excellent services that is offered by the Omni channel retailer. It has maintained a strong brand reputation in the market. The popularity of its brand can be observed from the fact that the customers regard it as the guarantee of value, style and quality. Its brand image differentiates it from its competitors. 3.2 Acquisitions John Lewis partnership has acquired the business in the year 1937 by opening the first supermarket named as Waitrose in the year 1955. The number of branches of this retail store is more than 243 that has opened for offering value, quality and customer service to its potential customers. Waitrose have acquired 11 stores from its competitors in the year 2000. Waitrose have acquired four Woolworth store for converting its Waitrose branches in the year 2008. It has also acquired five supermarkets in the year 2010 (John Lewis Partnership, 2010). 3.3 Global Reach and Expansion John Lewis partnership has expanded its business internationally. John Lewis partnership has focused on opening 11 branches of its outlet in Philippines. The John Lewis partnership will expand its business by opening more than 65 outlets in the international market. John Lewis partnership is available throughout the world 3.4 Customer Relationship Management Customer relationship plays an important role towards the success of the business. Since fulfilling the needs and requirements of the customer and retaining them is the ultimate objective or goal of the business. Customer relationship deals with acquiring its customers, retaining its loyal customers and extending its business. Figure 4: Customer Relationship Management John Lewis partnership is focusing on improving its customer relationship management. It emphasizes on offering adequate experience to all its customers. John Lewis partnership has introduced its closeness with the direct marketing channels. It has been observed that 50% of profit of the store is derived from 5 % of its customers. But this 5% changes every year since John Lewis partnership attempts to track its customers through the credit cards and loyalty program. Thus the John Lewis partnership attempts to retain its customers (Sainsburys, 2010) 3.5 Super Service John Lewis partnership focuses on offering super service to its customers as it ensures that each of its customers receives the same level of service. It provides a facility or opportunity to its customers in using their membership cards for shopping either through online service or through phone and it assists them in receiving rewards. The super services that are offered by John Lewis partnership are the gift list service, home design studio, online purchases, travel concessions, beauty retreat and delivering services internationally. 3.6 Innovative Culture John Lewis partnership in the process of adopting innovative culture accepts new suggestions and ideas from its customers and employees. The partners of John Lewis partnership are treated as individuals with honesty, respect and fairness. Fair employment policy is adopted by the John Lewis partnership in providing equal opportunity and facility irrespective of its gender, social background, religion, disability and sexuality. 3.7 Innovative Technology John Lewis partnership is adaptable to change according to the change in the technology. John Lewis partnership has faced challenges in adopting new technology for being considered as the leader of the Omnichannel retail store in Britain. John Lewis partnership has adopted innovation in its technology in a cost efficient and effective manner. It has provided new ways of shopping for people (Picton and Broderick, 2009). 4. Reason of John Lewis partnership Success 4.1 Value Chain The value chain analysis emphasizes on the value of the organizational activities of the John Lewis partnership as compared to the cost of its competitors. John Lewis in the process of its value chain activities have conducted its business online and also in store. The value added activities of John Lewis partnership can be explained by the application of Porter value chain model that includes inbound and outbound logistics. The success of the business model can be evaluated by the superiority in service that is provided to its customers (Lasserre, 2012). Figure 5: Value chain analysis 4.1.1 Primary Activities The primary activities of the value chain activities mainly includes the inbound logistics and out bound logistics. The inbound logistics is developed in such a way that its supplier Mellow Yellow supplies it stock at the right time. It also has many local and regional suppliers for supplying stock and it avoids shortage of stock. It enjoys the support and the strong network that it has established with its suppliers. It is considered as the only retail store that sells all vegetable, fruits and flowers in UK. The competitive advantages that it receives from its inbound logistics are it sells many fresh qualities of products as compared to its competitors such as Tesco, Sainsbury etc, it utilizes the concept of just in time effectively and it has large number of suppliers as compared to its competitors (Johnson, Whittington and Scholes, 2011). John Lewis partnership focuses on its total quality management in providing products with superior quality to its customers. The John Lewis partnership has also gained competitive advantages from its operation that is it enjoys better total quality management as compared to its competitors; it focuses on saving cost which improves their reputation. The outbound logistics of the John Lewis partnership is that it possesses more than 241 supermarkets that is located or situated in London and south east of United Kingdom (Harrison and Van hoek, 2008). The John Lewis partnership gains competitive advantage from its outbound logistics it offers free delivery service to its customers from its in store shopping that attracts lot of its customers. In consideration with the marketing and sales it is observed that it is famous among the middle class consumers of UK. It is required to expand its business in north UK but it is facing problem in its expansion since its main competitor Tesco have their branches situated there. The competitive advantages that are experienced by the John Lewis partnership from its marketing and sales is that it has the opportunity in improving in the new market and it attracts those segment of customers who prefer on purchasing low price products (Kotler and Keller, 2012). 4.1.2 Support Activities John Lewis partnership is successful in gathering its local and regional products. Vegetables, chicken, milk and fruits are supplied to John Lewis partnership by its farm. It is engaged in providing high price to its suppliers which includes the organic growers, farmers, pig farmers etc. It gains competitive advantage from its supporting activities by paying more to its suppliers. It provides product of superior quality (Proctor, 2014). The human resource management of John Lewis partnership is based on the ability and integrity of the employees in working together. It offers retail management training to its staff. In order to motivate its staff it provides a bonus of 15% over the salary to its staff. Waitrose is also advanced in its technology as it provides quick check service to its customers through which it saves the time of the customers that is required in case of unpacking and repacking. Waitrose has adequate infrastructure as it has installed electric vehicle charging point through which it strengthen its infrastructure for supporting its technology. It gains competitive advantage in providing better service to its customers and also saving its cost (Joshi, 2005). 4.2 The VRIN Frame Work VRIN framework has been introduced and developed in order to determine the sustainable competitive advantage of the company over its competitors. The elements for comparing it with its competitors are it must be valuable, rare, not easily imitated by its competitors and non substitutable. 4.2.1 Value The resources or the products of the John Lewis partnership are considered as valuable in increasing the value of the customers. The value of customers is increased by differentiating its product from its competitors and also decreasing its price. The John Lewis partnership offers value to its customers by offering fresh and superior quality of products to its customers (Wintzer, 2007). 4.2.2 Rarity The product that is offered by the John Lewis partnership is very rare. Rare products provide competitive advantages to the John Lewis partnership. The store maintains wide range of assortments as a result of which it provides the store a competitive advantage over its competitors. 4.2.3 Inimitability The products are very costly to imitate. The store has established strong relationship with its suppliers in order to provide quick delivery of its products. Therefore it is able to maintain a wide stock of products and it offers high and superior quality of products at a comparatively low cost. Therefore it would be costly for its competitors to imitate. 4.2.4 Non-substitutability The products should not be substituted easily by its competitors. The products must be able to capture the value in order to gain competitive advantage from its competitors. The store has focused on various strategies which creates a barrier in substituting the product (Johnson, Scholes and Whittington, 2014). 5. Contribution to John Lewis partnership Success 5.1 Leadership of John Lewis partnership John Lewis Partnership is one of the famous companies which treat its employees in a very good way and help them to deliver their best performances. The company has large number of staffs. It is the duty if the organizational leaders to manage the employees and deliver the work on time. The leaders of this company constantly motivate and guide the employees. The company hires many inspirational leaders who are the pride of the company. The democratic culture John Lewis Partnership helps the leaders to implement different plans and processes for achieving the target of the company. The leaders of this firm are also responsible to develop and implement strategies. They play a vital role in managing the service operations of this company. Some of the great leaders of this organization are Patrick Lewis, Paul Bestford, Kirsty Homer, Gavin Howell etc. 5.1.1 The 4 Es of Leadership By implementing 4 Es of leadership the leaders of John Lewis Partnership are able to establish different various plans and strategies for improving the business process. These different factors of leadership help the company to increase the motivation and dedication level of its employees. As per the changing business environment the leaders guide the employees and help them to overcome different problems. 5.1.2 Envision Envision factor helps the leaders to measures the results of their actions. By this process the leaders of John Lewis Partnership helps the company to recognize the activities which will increase the productivity of the company. This factor facilitates the leaders to the capability of the employees to convert their energy into actions and edge into results. Executions of organizational strategies and policies are one of the important tasks of the leaders. Growth and success of the company depends largely on this factor. This will motivate the employees to learn many vital things from their leaders. 5.1.3 Enable John Lewis Partnership has many leaders who believe in strong competition. This factor enables them to motivate employees for improving their performances. As a result the employees become capable to deliver high quality of services in the competitive environment. The leaders of this company who believe and follow this factor make vital decision for John Lewis Partnership. They are also involved in hiring and firing huge number of employees. This type of leaders promotes many new ways for achieving business objectives (Kostova and Roth, 2002). These leaders love to face challenges and motivate organizational members to accept new challenges for proving themselves. 5.1.4 Empower The organization has leaders who have high level of energy. They spend huge amount of time for delivering high quality of products and services. The leaders who believe in this factor love to perform different types of work. The leaders having high level of energy are always involved in performing work and guiding employees. These leaders strongly believe in disciplined way of doing work. The employees of John Lewis Partnership who work under these leaders follows discipline but they also get many types of freedom (Luthans, 2005). These types of leaders create an environment in the company where the employees get various opportunities to enhance their career. 5.1.5 Energize The leaders who have this character are aware of the ways to motivate others for improving their performances. John Lewis Partnership leaders design the ways and process by which employees should carry out their jobs. They highlight different positive sides and aspects of a job and by this process the leaders motivates the employees to deliver their best performances. These leaders play a vital role in energizing the organizational members to adopt various new organizational processes and policies. Sometimes these leaders behave in selfish way while giving credit to other organizational members for performing job (Reiss, 2012). But they are always ready to accept various responsibilities for the growth and development of the company. 5.2 Organizational Culture The organizational culture of John Lewis Partnership is established in such a way which helps the company to maintain a good relationship with its customers and enhance its productivity. The organization follows decentralized structure. This facilitates the company to provide many benefits and opportunities to its employees. The company is very much concerned about its employees. Therefore to some extent the organizational culture of John Lewis Partnership is employee oriented (Leopold, Harris and Watson, 2005). The organization mainly follows role culture. In this type of culture the company gives power and authority to bits employees for performing their job efficiently (Bamberger and Meshoulam, 2000). The leaders of John Lewis Partnership play a vital role in maintaining this culture. 6. Innovation Strategy The innovation strategy that is adopted by John Lewis partnership for gaining competitive advantages and succeeding in the market are it has focused on the strategy that is associated or related with interdependent aim or objectives that will make the business successful. The innovation strategy that is adopted by the John Lewis partnership are Realizing the potentiality of the market that will assist in attracting and retaining new customers, increasing or developing the advantage that it can received from its partners which will help them in achieving their work and gaining competitive advantage over others. The John Lewis partnership is required to provide satisfaction to its partners so that they feel motivated and a part of the organization and growing efficiently and effectively which explains that the business the business is required to grow in the future. With the increase in growth, the cost also increases. Therefore it is important to achieve efficiency in order to achieve a balanced and profitable growth in future and also expanding its business internationally. (Robbins and Coulter, 2009) 7. Continuation of John Lewis partnership 7.1 SWOT Analysis Strength The strength of John Lewis partnership can be explained as it maintains its own perfectly balanced and strong label. It offers high quality products to its customers at a reasonable cost. The John Lewis partnership provides importance on offering salary to its staff and bonus is also provided to the staff. Therefore the staff feel motivated and as a result the number of staff turnover decreases. The John Lewis partnership also gains advantages in providing wide variety of products to its customers. Opportunities The existence of strong partner is considered as the opportunity for John Lewis partnership. Apart from offering of food to its customers it is also engaged in offering flower, toys, bed, kitchen, nursery etc. Due to its expansion in the grocery and food market it has significantly developed its market share (Fill, 2006). 7.1.1 Weakness The weakness of the John Lewis partnership can be explained as it faces a lot of problem in expanding its operation in the north of UK. It is considered as the luxurious super market by the consumers. Since it is engaged in providing high and superior quality of products to its customers therefore the customers feel that the price charged in this superstore is high. The process of delivery is slow as compared to its competitors (Onkvisit and Shaw, 2009). 7.1.2 Threat It encounters threat from some of its main and strong competitors in the UK market which mainly includes Sainsbury, Morrisons, Tesco and ASDA. The delivery process may be delayed since the climate of UK is not favourable as it encounters fog, heavy rain and wind. 7.2 Recommendation Recommendations suggested for the future development of the John Lewis partnership for its future strategic development are: John Lewis partnership offers high quality products to its customers which differentiates it from its competitors therefore the John Lewis partnership is required to focus maintain its high quality since it will serve as a differentiation strategy for the John Lewis partnership. The high quality of products that is offered is considered as the important factor for the customer in selecting Waitrose It is concentrated in carrying out its operation in south UK and therefore it is required to expand its business in north west UK to acquire more market share. It enjoys advancement in technology. Therefore it is advisable that it must focus more on improving its skill and technology for saving cost and offering best service to its customers. Since it has strong competitors operating in the same market, the John Lewis partnership is required to lower its price for attracting more of its customers The John Lewis partnership enjoys strong relation and support from its suppliers. Therefore the John Lewis partnership is required to maintain its relationship with its suppliers in order to receive the supply quickly and adequately. Conclusion  The main aim and the objective of John Lewis partnership is that it develops strong partnership with its partners. The John Lewis partnership adopts a differentiation strategy from its competitors as it is engaged in providing fresh and high quality products as compared to its competitors. Its main competitors are Morrison’s, Tesco, Sainsbury and ASDA. On the basis of the analysis which includes the value chain analysis and the SWOT analysis it has been observed that it enjoys competitive advantages from its competitors by offering high and fresh quality of products to its customers, it establishes and develops a strong relationship with its suppliers, it offers good service to its customers, it adopts high and advanced technology in its operation, it offers the facility of free home delivery and it enjoys the support and assistance of its qualified and loyal staff. The John Lewis partnership is dynamic in adapting changes according to the requirement of the market and its customers. John Lewis partnership has focused on its innovation techniques which lead to the change in the environment and also resulted in the improvement in the value chain activities of the John Lewis partnership. John Lewis partnership has also maintained a good relation with its staff and has focused on providing training to its employees or staff and motivating them by offering bonus. It has focused on expanding its business in the national as well as in the international market. References Bamberger, P., and Meshoulam, I. (2000). Human Resource Management Strategy. CA: Sage. Daft, R. (2009). Management. Masson: Cengage Learning. Fill, C. (2006). Simply marketing communications. UK: FT Prentice Hall. Harrison, A. and Van hoek, R. (2008). Logistics Management and Strategy, 3rd edn, pp.184-190. Harlow, Prentice Hall John Lewis Partnership. (2010). Waitrose Leckford Estate. Retrieved from: http://www.johnlewispartnership.co.uk/Display.aspx?&MasterId=8e0ea790-e907-4a9a-988d-3ac3691dc985&NavigationId=591. Johnson, G., Scholes, K. and Whittington, R. (2014). Exploring Strategy. Tenth Edition. FTPH. New York: Pearson Education. Johnson, G., Whittington, R. and Scholes, K. (2011). 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