Analyzing Business Environment of public and Private Sector Companies
In this modern era of globalization, there have been an influx of extensive business structure and its branches have spread all over the globe very rapidly. The myriad business companies and organizations that have cropped up in this era have also been the result of the prevalence of constant competition. This immutable presence of the competition in the market has created the need for a better business environment in every business structure. In this essay, one public sector company is taken into account, which is the Save The Children, and one private sector is taken which is the John Lewis Partnership (Johnlewispartnership.co.uk ,2016). and their business environment is discussed elaborately.
Hitherto, it has been discussed of the various differences of the public sector and the private sector organizations or enterprises. The basic size and structural differences between the public sector organization that is the Save the Children and the private sector organization that is the John Lewis Partnership is also discussed above. A more in depth analysis of the private sector enterprise that is the John Lewis Partnership is to be accounted here. The John Lewis Partnership is one of the most esteemed companies in the world. An employee-based company operates the John Lewis store and the Waitrose supermarkets all around the world. It has its branches all around the nook and corner of the globe with its headquarters being in London, England. It is the third largest company of the United Kingdom and it has been in the forefront of the retailing business for a long time. The John Lewis Partnership company employs almost 88,900 employees all around the world. The JLP Company has a net revenue of around 11 million dollars and the net income of almost 409.6 million yearly.
The structure of the John Lewis Partnership company has a tall structure or a hierarchical structure in the management body. There are many managers in the John Lewis Partnership company who has a small span of control over the recruitment policy regarding the employees of the company. The objectives of the company are also to employ the best labor or service provider for the betterment of the profit of the company. The tall structure of the company helps in the proper scrutiny of the people that are to be employed. The objectives of the company are also to achieve maximum profit in any of its dealings and any of the work process. The company deploys various techniques and policies in the monetary section to meet the financial needs of the organization.
The business environmental analysis helps John Lewis Partnership with a chance to achieve a competitive edge in the retail market of UK through being aware about core strengths and drawbacks of the company. The macro and micro environmental analysis helps the business organization to evaluate the business spectrum for incurring an improvement in business performance.
The Macro Environment factors affect both positively and negatively on the business operations of a retailer organization like John Lewis Partnership. The positive impacts of microenvironment are-:
●Target market of loyal demographic forces can eventually help this retailer to increase the sell and revenue generation. The socio-demographic impact can be vehemently feasible for John Lewis Partnership to retain a loyal customer base.
●The stable economic condition of the market can help the retailer to adopt a premium pricing strategy to enjoy supreme financial advantage from a market.
●The quick and easy availability of the raw materials and effective supply chain shed positive influence on the business performance of John Lewis.
●The steady political and technological development of the country enables John Lewis partnership to take sound decisions for procuring betterment in the organizational marketing functions.
On the other hand, the negative affects of macro environment are-:
●A political tumultuousness can cause eventual hazard to the business performance by spoiling the market condition through social unrest.
●A stagnant condition in the technological advancement of the country can bring peril for retailers like John Lewis Partnership to conduct the business operations with utter proficiency.
●Strict tariff rules and business taxes impacts negatively on the financial aspirations of the organizations by reducing the amount of expected revenue from the business.
The McKinsey 7s Model can be a delicate tool to analyze the internal strengths and weaknesses whereas Porter’s Five Forces can be effective to analyze the external environment of John Lewis Partnership.
|Hard Elements||Soft Elements|
Strategy- This retailer has formulated an effective plan to sustain the market credibility in competitive market of UK.
Structure- John Lewis maintains tall structure inside the organization that often create weaknesses for the company to maintain swift flow of information.
System- The daily work system and working schedule are flexible to provide ease and comfort to the staffs to maintain motivational workforce.
Shared values- The super ordinate goals of John Lewis Partnership generate ability to respect the working ethics and moral values of the company that is core strength to increase market credibility.
Skills- The competencies and developing skills of the employees are sheer strength for this company.
Staff- The general abilities of the staffs are fluctuating that is a sheer weakness of the retailer.
Style- The democratic leadership style of this retailer generates motivational outburst in the workplace to increase productivity.
Table 1: McKinsey 7s Model of John Lewis Partnership
(Source: Popescu, 2013, p. 172)
|Forces||Degree of existence|
|Buyer Power||High- John Lewis experienced a high buyer power due to easiness to swap without being loyal to the retailer brand. The sensitivity to price changes increases the force of external market.|
|Supplier Power||Low- The huge number of suppliers and many options make the supplier power a low force external factor for John Lewis. This retailer can easily switch the suppliers.|
|Competitive rivalry||High- The UK retail market is utmost competitive and thus John Lewis faces high degree of rivalry in the market. The steady growth of retailing industry increases the rivalry in the market.|
|Substitution threat||Low- The trend of transformation of retail supermarkets into convenience store makes this threat utterly low for John Lewis Partnership.|
|New entry threat||Moderate- High scaling economy of the UK retail market and the need of huge capital for newcomers encompasses moderate threat for John Lewis from the new entries.|
Table 2: Porter’s five Force of John Lewis Partnership
(Source: Rauh 2015, p.35)
The organizational and environmental strengths and weaknesses of John Lewis Partnership are cordially interlinked with the external macro factors. The internal strengths are the key to capitalize the external chances of macro factors as the organizational strategy enables the company to avail the market chances for competitive edge. On the other hand, the structural weakness of this company perils the flow of information to acquire relevant knowledge about the aspirations of the customers to provide adequate services. The legal macro factors like labour law are obeyed comprehensively by providing a comfortable work schedule in the workplace.
The strength of leadership style is maintained properly by this organization to enable innovative generation of ideas for allowing technological advancement in the performance. The buyer power is a weakness for this retailer as this degenerates the market performance and the supplier power is a strength that is related closely with the environmental macro factors. The low substitution strength of this retailer is cordially related with economic macro factor to avail; more market benefits.
Section 4 (M3, M4)
|Political||The unsterilized political situation and the exit from EU are perilous for the retailers like John Lewis to cope up with the tariff rates. The international business and trade bloc activities are severely disrupted through this incident. The friendly attitude of government towards retail business is another helpful perspective for John Lewis Partnership to quench the aspirations of the organization.|
|Economic||The economic inflation rate is a struggling aspect for this retailer to achieve desirable market outcome. The Brexit has trudged the UK currency in the international market that became a problem for this retailer. The stable social economy and the customer ability to pay a demanding price has become a cause for the fulfillment of financial goals of this retailer.|
|Social||The unequal distribution of income and demographic changes are vehemently impactful in the retail business. The UK labor market and social mobility is helpful for the companies like John Lewis to solve labor problems. The fashionable trend of the modern market is feasible for the retailers to grab market opportunities.|
|Technological||The continuous technological development and the trend of online shopping has incurred a massive change in the business perspective of John Lewis Partnership. The increasing rate of technological transfer and the advancement of mobile technology has procured ease in the process of business performance of John Lewis Partnership. The Information Technology sector of UK is facing rapid growth in the present days that is a vehement influencing factor in the business of John Lewis.|
|Environmental||The environmental rules and regulations of UK government needs to be followed properly by the retailers to avoid legal actions. The entire business process is managed appropriately to avoid carbon footprint to provide environmental sustainability.|
|Legal||The tax policies and different employment acts of UK are vehement to be maintained by the retailers by providing legal rights to the staffs. The Employment Act 2001, The Health and Safety Act 1986 needs to be followed and implemented in the workplace to act legitimately.|
Table 3: PESTEL Analysis of retail industry of UK
(Source: Denhardt, and Catlaw 2014, p.25)
Strength●International delivery provision with online marketing.
●38000 employee with utmost proficient attitude.
●Availability of diversified brand with respectable market reputation.
Weakness●Limited range of offers and options.
●High market price in comparison with other eminent supermarkets.
●Limited target audience
Opportunity●Brand and image consciousness of modern generation
●Increasing purchasing ability of the customers
●Expanded network and technological improvement
Threat●Robbery trend degrades the security of the employees in late night shift
●Utmost competitive market
●Scarcity of large scale development space
Table 4: SWOT Analysis of John Lewis partnership
(Source: Cai & Yang, 2014, p.132)
Impact on decision-making process
John Lewis Partnership evaluates the macro and microenvironment properly to take adhere decisions in compliance with the market situations. The political and legal factors are accounted to take effective business and trade decisions that can be suited in the tumultuous political situation. The economic factor of macro environment enables the organization to fix a solemn pricing policy that can attract the customers (Popescu, 2013). The currency fluctuation has to be kept in mind before taking decisions on international trade. The social demography and target market are important to be taken into consideration for acquiring relevant information about market trend to provide appropriate product services to satisfy them. The legal and environmental factors must be acknowledged to eradicate the chances of legal violation.
b) Reflective Assessment
This report deeply evaluates the macro and micro factors for the retail business of John Lewis Partnership to figure out the impact of the factors on the decision making process of the organization. The micro factors like budget, staff ability and organizational framework are subsequently impactful to derive solemn information to take effective organizational decisions in the aid of the retail business. On the other hand, the macro factors like demography, technology and environment are stressfully effective to consider and evaluate for taking decisions based on the facts to avoid futility in market performance.
The business environment analysis plays a pivotal role in the market performance of an organization as it provides with sufficient information to take firm decisions for betterment. John Lewis Partnership and Save the Children may belong to different sectors of services but both of them are dependent on the internal and external analysis to incur improvement in business. It provides the chance to the business organizations to take effective business decisions for getting competitive advantage in the market.