Business Analysis of John Lewis Partnership - Outline Example

?Introduction The John Lewis Partnership is renowned throughout the UK for holding several retail stores and providing assistance to small business owners interested in selling the products. The approach of the John Lewis Partnership is to create a main retail store then to allow suppliers and individuals to take part in the main initiatives for sales. This has led to a diversity of suppliers that are able to invest in the retail stores as their own business while providing the partnership with more accessibility to products, ranging from food to pet supplies, insurance, fashion, household goods and even flowers (John Lewis Partnership, 2011). This paper will examine the methods that have been used by the partnership as well as how these have led to initiatives that have moved ahead of competitors in the UK. The several areas of analysis performed in relation to the John Lewis Partnership will provide insight into strategies which businesses can apply to begin to move forward in the retail sector. SWOT Analysis The relevance of the SWOT analysis is to work into new strategies that will help to monitor and change the aspects within the corporation. The main ideal is to work toward a sense of knowledge management which can be applied within the organization while moving forward with different strategies and approaches that are associated with the corporation (Zhiping, Yonghong, 2002). When looking at the strategies of the John Lewis Partnership, it can be seen that the strengths of the corporation should be a continuous feature. This is based on the diversity of products that are offered with the retail store, ranging from wine shops to business solutions and insurance (Felicitta, 2009). This diversity is followed by finding partners and small business owners that can tap into the retail store as a part owner. This allows the internal environment to have a spirit of entrepreneurship, while creating more opportunities for growth and support within the community. As this is done, it helps to stimulate loyal customers and responses among those that are in the community (Shi, 2007). The weaknesses that are from this main attribute come from the dimensions of positioning. This is a main problem with those who are in the retail industry, specifically because it changes the outcome of which customers will decide to shop in a specific area and will also alter the relationships and partnership that are provided within the company (Messinger, 2007). The positioning of the John Lewis Partnership is one that is limited by the partnerships which are incorporated as well as the sectors which have already been developed. This allows other competitors to begin to move into the sector and change the outlooks with other retail management options. Since most of the stores are built on partnerships, this may mean that the partners don’t have the necessary opportunities to continue and to make the desired profit (Tustin, 2006). The opportunities and threats that are associated with this can lead to further strategies to change the level of popularity against competition. The main opportunity comes from the multiple stores offered. Most competitors create a vertical relationship, meaning the association is based only on the one set of stores opened (Liu, Davies, 2007). This particular opportunity led to a 79.3% increase in 2008 and another 3.6% increase in 2009, with 11,365.4 million as the revenue (Aark, 2010). However, the partnerships established allow the John Lewis change into a multiple layer orientation of expansion, allowing them to move beyond competitors because of the diversity offered. While this works effectively, the mass amount of partnerships also limits other attributes. There are not as many price cuts and quality differences in most of the retail stores because of the partnerships established. Competitors with independent stores and national chains often move ahead of John Lewis Partnership because of the differences in price and the diversity of products which can be offered (Hall, 2007). TOWS Analysis The SWOT analysis shows where the main competition is. Building a strategy with the TOWS analysis can help the John Lewis Partnership to build a different approach to what is needed to change the company outlook while creating a strategy for growth outside of the competitors (Alexandria, 2006). The TOWS analysis can be seen in the table below, as used from the main SWOT analysis for better strategy. Table 1: TOWS Analysis Strengths Weaknesses Opportunities Diversity of products / diversity of location / wider range of businesses/ internal partnerships form the organization Partnerships through the organization / wide range of businesses / unable to offer competitive prices / unable to provide locations outside of larger stores Threats Unable to offer competitive prices / unable to provide locations outside of stores / Diversity of business partnerships and stores Unable to offer competitive prices / unable to provide locations outside of stores /Competitors with lower prices / Competitors with different quality and diversity of products As can be seen, the strategy that is associated with the John Lewis Partnership is the partnerships and diversity of products through the several stores. Competitors that are independent or which have more flexibility in pricing offer the main competition. To alter this, the strategy will need to be created to ensure that the competitors are only offering the basics of the pricing. This follows the evolutionary theory where the partnership can begin to expand and diversify more of the products, specifically based on lower pricing and reaching segments of markets that are currently going to competitors. By building a segment from new and expanding partnerships, there will be the ability to lessen the threats and risks of the corporation (Faulkner, Campbell, 2003). PESTLE Analysis To further this strategy, a PESTLE analysis can define what is needed for the retail management. This includes the external influences that are a part of the firm and which create the main changes from consumer demands. The influences include political, economic, social, technological, legal and environmental outcomes (PESTLE Analysis, 2006). The analysis for the John Lewis Partnership is as follows: Political: The main change to the retail environment is coming from new policies in terms of logistics. Policies range from new expectations for employment and move into the care of consumers and social responsibility needed in businesses (Fernie, 2007). The John Lewis Partnership has altered this by incorporating social responsibilities for employees, the environment and new policies as its primary focus. Economic: One of the most pressing issues of the time is the economic stance, specifically because of the fluctuation from the world recession which occurred in 2007. It is noted that most consumers decided to adapt to this, specifically by cutting on unnecessary spending and finding the most secure ways of building on spending habits (Briggs, 2011). The partnerships of the John Lewis Partnership provide a different outlook to the economy by providing several business owners with financial stability. However, there is a weakness with the ability to change the pricing to fluctuate with the economy and to offer lower prices with high quality products. Social: The leverage of political and economic changes has also changed the social status of those that are interested in retail shopping. The social initiatives are based on the individuals which are most interested in shopping at a specific store because of the trends that are associated with the reputation of a given store. New trends include convenience of the store, as well as methods such as technology for easier shopping (Wood, 2002). The convenience of the John Lewis Partnerships is available because of the several locations of the store. The convenience as well as the wide reputation of the store has helped with its sustainability and growth. They are also offering online methods for shopping for every need. Technological: The technology is one of the areas where many are stating that change is the main component. It is known that the fast adaptation of technology, using Internet shopping and tapping into mobile components are the main alternatives for those shopping in retail (Farmbrough, 2010). The John Lewis Partnership has incorporated several online shopping areas, all which are divided according to the partnerships. This offers entrepreneurs as well as partner businesses the ability to build and grow with the convenient options that are now a part of technology. Legal: Similar to the political changes, are legal alternatives for retail. Employment considerations, regulations with pricing and human resource issues are the most pertinent issues. Making sure that the work and employment is fair and regulating new levels of social responsibility are the main ways in which the political options have been defined (PWC, 2011). The partnership is able to comply with this by the strong belief in social responsibility and the continuous updates for employee needs. However, the different business plan of using partnerships also limits the ability to implement all necessary legal changes. Environmental: Climate change and the need to be environmentally responsible are the pressing issues currently a part of the main considerations. Green retailing is now being noted, specifically with those in retail stores considering how much are used for manufacturing and selling of products. Consumers are furthering this concern with individual items bringing an awareness of the need to change environmental practices, as seen in graph 1. Graph 1: Consumer Environmental Concern (Beverage Pulse, 2011). Product development to meet consumer needs, saving of energy and reducing the amount of waste used for production are the main areas of consideration (Retail Research, 2011). To assist with this, the John Lewis Partnership is continuing to take initiatives to change the environment. The most recent achievement is the promise to reduce the carbon emissions by 15% within one year. They are also known for actively working in the environment and taking a stand within the corporation to begin changing the environmental issues (JLP, 2011). Industry Life Cycle The advantage of the retail industry is that the life cycle of various products differs according to the demand associated with what is needed. The main concept with retail is to increase the amount of value which is available, specifically through the several life cycles which can be established through the products available. The products can individually go through innovations and changes as well to further the changes needed (Juttner, Godsell, Christopher, 2006). For the John Lewis Partnerships, there is the ability to have continuous new alternatives with the life cycle because of the partners involved with the new stores. At the same time, the well – known products from the retail store can be used and updated to construct a continuous and sustainable demand for the corporation. The industry life cycle for retail stores then works to the benefit of the John Lewis Partnerships. Porter’s Five Forces The concept of Porter’s Five Forces, as seen in Image 1, are the next aspect of the John Lewis Partnerships. Image 1: Porter’s Five Forces (Sarma, 2011). The bargaining power of the customers is one of the weaknesses of the John Lewis Partnerships. Pricing is the main consideration with this, specifically with other retail stores that work independently and have a better option for changing the prices and working competitively according to the external environment (Gersbach, Haller, 2006). The new entrants and substitute of products also work as a threat for the company. The main threat with new entrants comes from the emergence of the Internet, which is able to offer more variety and price flexibility. Unless the corporation is able to move into the technological factors, this will lead to a loss in consumers. This will also affect the substitute of products that can be provided by other companies at a lower price (Bereseteanu, 2005). The bargaining power of the suppliers can then further this because of the higher amount which can be given in turn for the retail from competitors and the ability to deliver specific quality goods to those interested in the retail products (Cave, 2006). The amount of competition in the industry as well as the consumer demands all work as weaknesses for the John Lewis Partnerships. The continuous changes and the ability for other retailers to move ahead with the bargaining options, innovations and the competitive pricing create the main rivalry within the industry (Agarwal, Ferratt, 2007). Strategic Groups The competitive marketing structure that is in retail relates to the strategic groups which are defined among those in the industry. The most strategic option available is known as the hybrid structure, which includes pricing, quality and innovation of various products. This also incorporates the new dimensions of corporate responsibility and strategies that match with the technologies required today (DeSarbo, Grewal, 2008). The John Lewis Partnership has strategic groups by the amount of diversity in products, which attracts several to the line of options available. This is combined with the corporate responsibility and the movement into new technologies used. However, the pricing and the innovation is often limited and is available among independent retailers because of the different types of flexibility available. Core Competencies The core competencies of quality, pricing, internal structure and the consumer responses can all be established as a part of the market saturation (Evans et al, 2008). The core competencies of John Lewis Partnerships include the internal structure, specifically with the business ownership values and the incorporation of social responsibility. The quality of products in turn affects how the core competencies are established. The consumer responses are based on these two components. However, there are often restraints with the pricing while there is a lack in core competencies because of the larger size of the retail store. Value Net The value net that is a part of the competition can be seen in Image 2. Image 2: Value Net Credera, 2011). When looking at this chart, it can be seen that the company is one which has strong brand recognition because of the several partnerships built. This has led to loyal customers and a long, established reputation. At the same time, the corporation has met the current needs with technologies and responsibility to the community. The competitors are then based on independent individuals and other types of retail businesses that specifically offer lower pricing. The complementors for the John Lewis Partnerships include the several partners that are able to remain loyal and establish the reputation for the business. Ratio Analysis for Past 2 Years     GBP mill   Per cent Allocated to Partners   57.0   47% Retained in business   64.2   53% Total after-tax profits   121.2   100% (Davidmann, 2011). The overall net profit ratio has moved from 4.31% to 4.49% in the past two years. This has been continuous for the past five years of the company. Competitors have an average ratio analysis change of 2%, making this corporation stronger than others (Barley, 20011) Ansoff Matrix Present New Present Market Penetration – Use of the Internet, continuity of diversity of products Product Development – Additional partners, additional products of electronics and latest brands New Market Development – Reputation, ads, locality, technology, catalogues, business opportunities Diversification – business opportunities, growth of products, more services and products to consumers The main strategy that can be seen has been developed from the trend of diversity. This allows the corporation to continue to grow while adding in the new products that compliment the current situation of the company. The use of diversification can be expanded to include more in the structures, such as pricing structures, partnerships and different expansions of retail stores, either with brick and mortar solutions or with an online presence (Parolini, 2009). Boston Consulting Group Matrix `The Boston Consulting Group matrix, also known as the growth matrix can also be considered. The two main parts that is used within the retail industry are cash cows and stars. The cash cows include high profit options within a slow growing industry. The supermarket, wine and other main staples with the industry work in favor of the cash cows (Chen, Chiu, 2005). The stars work with the high market and continuous change. The technology, emerging fashions and electronics are the main stars that bring revenue to the corporation (Reynolds, 2004). The dogs, while associated with some of the products, are not as pertinent. For example, the insurance is considered a dog because it doesn’t change as much and is currently affected by the economy (Cruz, 2006). The question marks, or problem children, are inclusive of the gifts and items like furniture that don’t provide as many options for growth within the company while carrying high competition. Porter’s Generic Strategies The generic strategies of Porter’s also show specific strengths and weaknesses among the John Lewis Partnerships. Image 3 gives an overview of this application. Image 3: Porter’s Generic Strategies (Breyfogle, 2011). The segmentation that is a part of the partnership is based on two the product location. This includes the segmentation by different types of retail stores, including fashion to supermarkets. This is further segmented by the different online websites that allow individuals with specific behaviors to shop online (Kim, 2004). The differentiation strategy follows this with brand recognition as well as providing one of the most recognized chains in the industry. The uniqueness comes from the brand identity and diversity associated with this (Akan, 2006). The weakness is with the cost leadership, which doesn’t fit with the main business portfolio and causes some business to be lost because of cost differentiation (Porter, 2008). Value Chain Analysis The value chain that is defined is one which is specific to both the variety of retail stores as well as the online presence. Marketing, coordination, procurement and internal operations are all considered, specifically because this each affects the way that the other functions work (Zhu, 2005). The marketing and coordination is one which is well – known because of the diverse selection and the brand identity of the company. The internal operations, specifically with the focus on providing business opportunities and the ability to incorporate the social responsibility have also provided more opportunities. However, the procurement and the approach to the pricing remain as the main weaknesses because of the lack of flexibility from the internal operations. This value chain is one which is common in the retail industry, specifically with fashion, food and other fast changing industries (Moedas, 2006). Marketing Mix The marketing mix is the last attribute which contributes to the growth and success of the John Lewis Partnerships. This is based specifically on the ideals as seen in image 4. Image 4: Marketing MIx (Constantinides, 2006). The pricing of the partnership is the main default, which is higher than most areas because of the partnerships formed and the association with the main business structure. However, the products are of a higher quality and are known for their reputation of providing convenient and fashionable alternatives. This is combined with the promotion of the Partnership, which includes several billboard and TV advertisements as well as new technologies used to promote the business (Balmer, 2006). The placement of the businesses and the use of the Internet are also strengths with the business, specifically because of the capabilities of having several locations while being virtual (Baloglu, 2006). Conclusion The several features of the John Lewis Partnerships have built a strong reputation throughout the UK. The retail stores are able to continue to provide features for high quality items and consistent consumers while changing with electronics, fashions and other essentials for the time. The corporation is known most for the internal organization, which works with partners establishing businesses and which provides a stronger presence throughout the UK (Gronroos, 2006). As this has grown, it has become easier for the product life cycle and other orientations within the organization to develop. The result is the ability for the corporation to continue to expand with quality products based on the internal organization and the responses to the external environment. References Aark. (2010). “John Lewis Partnership: Market Research Report.” PR Media. Agarwal, R, TW Ferratt. 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