SG7001 Managing Strategy Operations and Partnerships
Activity 4: Critical Analysis of industry environment
PESTEL Analysis
| Identification of the industry in question | What are the various external factors that can affect the business operations? | |
| Factors | Issues | Implications |
| Political | Various political rules and regulations are implemented by the UK government that needs to be followed by the company for operating effectively. Changes in trade agreements after Brexit can also impact the organisational success (Saarelainen, 2020). On the other hand, pandemic restrictions have also affected the sales and revenue of the organisation due to store closure and various restrictions on transportation. | It can be implicated that the sales and revenue have declined due to various restrictions imposed by the government. The company has to work for meeting consumer demands so they can lessen the effects of impacts. |
| Economic | The world is going through a financial crisis that has affected the shopping patterns of consumers when it comes to a luxurious life (Bodrud-Doza et. al. 2020). Even though, the pandemic is responsible for affecting the economies of the company. | The company has to attract consumers by providing them varieties of offers and discounts. On the other hand, they can expand their business in the countries whose GDP is doing great. |
| Social | The consumer trends and demands are changing continuously as every consumer wishes to follow the latest clothing trends (Hallencreutz and Parmler, 2021). It imposes huge pressure on the company to follow these trends so they can hold their potential customer base. | It can be seen that there is an urgent requirement of bringing innovation in their products and services as per market and consumer demands so they get attracted and shop frequently. |
| Technological | In today’s technological world, digitalisation is increasing constantly which imposes huge pressure on the company (Fogarassy and Finger, 2020). As discussed in the previous activity, digitalisation is increasing that supports the online shopping pattern of consumers. | Looking at the technological enhancement, John Lewis & Partners need to support online ordering facilities to improve the shopping experience of consumers. It comes with an increased operational cost, employee resistance to change, and recruitment of new skilled personnel. |
| Environmental | The clothing and accessories sector is a great contributor to increased environmental pollution that makes it essential for them to adopt sustainable practices so they can work ethically. | From the analysis, it can be said that the company must implement strategies for utilising renewable energy sources, decrease their carbon footprint, source raw materials ethically, and adopt many other sustainable activities. |
| Legal | Various legal laws related to employment and the environment can be seen that need to be followed by the company so no violations are made. | The company’s management team must go through legal rules and regulations that can affect their business operations and implement strategies accordingly. |
Porter’s five forces
| Porter’s force | Strength | Justification |
| Bargaining power of buyers | Strong | It imposes a strong force on the organisation as the market trends are changing continuously and if the company is not capable of meeting their demands, then they will switch to other products and services (Anastasiu et. al. 2020). On the other hand, different products similar to this are available in the market that increasing the options for consumers to buy from. |
| Bargaining power of suppliers | Low to moderate | The company operates a strong and healthy relationship with its suppliers and offers them great benefits that keep their power low to moderate. |
| Industry rivalry | Strong | Various companies are there in the market offering similar products as John Lewis & Partners. The increased market competitiveness is challenging and can affect their sales and revenue as well. On the other hand, globalisation is also increasing which allows different MNCs to enter the market and affect their market share. |
| Threat of new entrants | Low to moderate | Various entrepreneurs are entering the market but it requires huge capital and investment to reach the market position of John Lewis & Partners. Therefore, it imposes low to moderate force on the company but can affect their sales to a low extent. |
| Threat of substitutes | Strong | Various market products and substitutes similar to their products and services are available in the market that can affect their sales and revenues along with their customer base (Khurram et. al. 2020). The company needs to focus on fulfilling customer demands so the impact of this force can be controlled. |
Life cycle stage
| Stage in the industry life cycle | Growth |
| Implications | When a product reaches this stage, its sale starts to increase due to various factors as consumers start to buy the products (Kumar et. al. 2020). John Lewis & Partners sales data states that their sales and revenue are continuously increasing showing that their products and services are heavily in demand. The product competition needs to be high so it can beat the competitors. Marketing during this stage aims at increasing the product’s market share of the company. But the competitiveness in the market is increasing and many rivalries can imitate their products and services that can take the company to maturity stage. The company needs to keep this position constant in the market and bring product innovations. |
Issues and survival factors
| Issue | Survival factor | Success factor |
| Digitalisation | Adoption of technologies | Implementing and bringing advancements in technologies as per market demands |
| Sustainability | To implement some sustainable operations | By reducing their carbon footprint, ethical sourcing, meeting consumer demand sustainably, utilising renewable energy wherever possible and many more. |
References
Books and Journals
Anastasiu, L., Gavriş, O. and Maier, D., (2020). Is human capital ready for change? A strategic approach adapting Porter’s five forces to human resources. Sustainability, 12(6), p.2300.
Bodrud-Doza, M., Shammi, M., Bahlman, L., Islam, A.R.M. and Rahman, M., (2020). Psychosocial and socio-economic crisis in Bangladesh due to COVID-19 pandemic: a perception-based assessment. Frontiers in public health, 8, p.341.
Fogarassy, C. and Finger, D., (2020). Theoretical and practical approaches of circular economy for business models and technological solutions.
Hallencreutz, J. and Parmler, J., (2021). Important drivers for customer satisfaction–from product focus to image and service quality. Total quality management & business excellence, 32(5-6), pp.501-510.
Khurram, A., Hassan, S. and Khurram, S., (2020). Revisiting Porter Five Forces Model: Influence of Non-Governmental Organizations on Competitive Rivalry in Various Economic Sectors. Pakistan Social Sciences Review, 4.
Kumar, K., Zindani, D. and Davim, J.P., (2020). Product life cycle. In Rapid Prototyping, Rapid Tooling and Reverse Engineering (pp. 1-10). De Gruyter.
Saarelainen, J., (2020). The role of a changing trade agreement in companies’ market selection.
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