John Lewis Micro & Macro External Environment Analysis

Executive summary


John Lewis is one of the top retailers in the United Kingdom. Its headquarters is in London, UK. John Lewis was founded in 1864. The company deals in home furnishing like furnishing fabrics, voile services, roller blinds, duvets, curtains and pillows. The company also offers services such as nursery advisory, Bureaux de Change, beauty services entailing brow bars as well as spas, John Lewis opticians, personal styling and also Kuoni travel concessions. John Lewis has been exporting its products to fifty two countries across the world and is currently operating in 50 John Lewis shops and also 353 Waitrose shops. It also has an online business. The company operates in a highly competitive industry. Therefore, in order to gain a competitive advantage over its competitors, the company has based its strategy on three interdependent objectives which includes, profit, partners and also customers. The company has also established itself as the cheapest vendor in its sales which are of high quality and unique. This paper will conduct John Lewis’ micro and macro external environment analysis, the internal environment analysis to determine its performance and provide some recommendations for the company.

Key findings

  1. Main recommendations
  • Macro external environment analysis (PEST)
    • Political factors

Globalization appears to be both an opportunity and challenge to this company. Globalization remains to be a challenge to John Lewis since it will render this company to compete with other retail stores across the world who might even be superior to them and offering customer with better products and services. Globalization is also an opportunity to John Lewis since it enables the company to expand and establish itself in any part of the world.

Government taxation policy are capable of increasing or reducing John Lewi’s profitability on the services and products it is offering. For instance, the increased corporate tax by 20% renders the company to pay more taxes which ends up decreasing its profitability.

  • Economic factors

The flexibility of the credit availment terms of the country allows credit availing to be very easy from financial institutions. This enables John Lewis to easily secure credit to facilitate its quick expansion and growth.

Economic conditions together with band policies play an integral role in impacting the customers’ purchasing power. As the country offers flexible band policies and with a healthy economy, it increases the purchasing power which consequentially increase the profit margin of the company.

Economic situations of the company have become more intense due to the increasing competition from the top competitors such as Marks and Spencer which makes the management of John Lewis to constantly change into different types of marketing strategies, thus affecting the prices of their products and leading to low profits.

  • Social factors

Currently, a lot of changes have been noted as people do not like to stand in queues but rather opt to buy things online and the products delivered to them at their homes.

Today, people tend to choose billing themselves through self-billing kiosks. In order for a company to be success full at this time, it has to focus more on innovation as well as proper marketing.

Moreover, the consumers within the market are now knowledgeable regarding the global climate issues. Therefore, they tend to choose shopping from retailers who are environmentally conscious and more considerate on their carbon foot print in their operations. 

  • Technological factors

Technology such as 5G internet can be utilized in improving efficiency in communication and enhancing work flow. Suppose it is adopted, this technology will result in less inventories for retailers therefore leading to increased profitability.

  • Micro external environment analysis
    • Customer
  • Supplier
  • Competitor

Internal environment analysis (SWOT)


One significant strength of John Lewis is that the company is established on its reputation for providing products that are of high quality and their excellent customer service. Since its introduction, it is well known for its favorable, cool and relaxed shopping atmosphere. Apparently, the business is a partnership which means that everyone obtains equal profits from the company. Moreover, this implies that there is no shareholder that holds a larger share and tend to make corporate decision without consulting from other shareholders.

It also has happy customers since when they are employed they are allowed to have a say in running the company which is beneficial to the company in terms of suggesting ideas for future development.

The company is also a highly ethical business and this boosts the reputation of the company.

The company also has an E-Business which helps in drastically cutting down costs since it does not require to have department stores since its products are obtained from the warehouse. This also reduce the staff levels also leading to reduced costs.

The company has records steady profits and also a strong cash position. Its profits have been continuously increasing from 2001 and also has proven to have a stronger cash position.


One of weakness is on the challenge of consumer loyalty whereby John Lewis is facing because of its option to cut costs in its stores then incorporating the basics line into a Waitrose arm business.

The introduction of budget lines has negatively impacted their consumers’ loyalty since the company lost product differentiation that has been making it to stand out from the rest.

Decision making in this company appear to be often slow thus rendering key gaps within the market to be missed because of lack of effective leadership.

John Lewis began cutting prices on its products and services so as to catch up with the rising competition. This is actually devaluing John Lewis’ brand.


One big opportunity for this company is that it is currently in a position of selling its products at cheaper price since its suppliers are desperate of selling their supplies because of the high rates of credit with limited companies willing to make purchases. John Lewis can utilize this to its advantage through buying the products now and keeping them and later sell them at high prices when the market booms.

Government legislation has increased opportunities for this company by giving it a 2.5% VAT break, this made consumers to think they are given a better deal but instead the company is amassing more profits.

The company also has increased opportunities for expanding into other markets. With John Lewis credit card, it is attracting more customers and also give the company 19.9% returns in charges on customers who fail to pay their bills at end month.

Moreover, this company has an opportunity of expanding with its budget food items specifically in the Waitrose as well as the Ocardo stores. In essence, the changing market is offering a lucrative opportunity for this company.

John Lewis’ online business is another potential opportunity for the company to thrive. Having an online store will enable the company to significantly cut costs as well as enabling consumers shop from anywhere as they prefer. Moreover, discounts can be given to customers since there are minimal overheads that are involved in the operation of the store.


John Lewis’ greatest threat arises from its own business structure. Since its business structure is a partnership structure, everyone is a shareholder. Theoretically, suppose enough shareholders pull up and stage an opposition to the managing body of John Lewis, then the company will be left without a leader. This also leaves John Lewis open to a probable takeover bid from certain shareholders thus rendering the current shareholder in control of the company to lose the power and thus ending up being minority shareholder.

The increasing number of competitor is also posing a threat to John Lewis’ operations since many of them are providing same services and products.

The changing economy is also a threat to this company. Declined economy can possibly make John Lewis to run into losses since their products are carrying a high price tag.

Fluctuating exchange rates also posse threats to this company since price of the products that are imported depend on the prices that they were purchased on. As such, in store prices cannot vary, therefore, when exchange rates are low, the company will fall into losses.