The Overall Management Strategy in John Lewis Company - Case Study Example

A Report on John Lewis By Name Presented to Instructor Course Institution, State Date of Submission Word Count Contents Executive Summary 3 Introduction 3 Body 4 Question 1 4 Question 2 5 i.Number of partners (employees) 5 ii.Company’s profit per average per average FTE 6 iii.Number of shops 6 iv.Group performance 7 v.Partnership profits margin percentage 7 Question 3 7 i.Economic Responsibilities 8 ii.Ethical responsibilities 8 iii.Philanthropic responsibilities 9 iv.Legal responsibilities 9 Question 4 9 Conclusion 10 References 12 Executive Summary John Lewis partnership exists as one of the few United Kingdom Companies where over the few years it has proved hat bumper bonuses do not necessarily provoke a public outcry. The partnership structure was established by a prolific business person named John Spedan Lewis, whom the father is believed to have founded the entire business in the year 1864. John Spedan Lewis signed away the company’s ownership to allow for coming generations of employees to continue with his work of experimenting industrial democracy. John Spedan’s ideas are set out in the company’s legal constitution which consists of an idea to establishing a better form of business (PLC, and Knowledge, 2016). About 76,500 of John Lewis’s permanent working staff are partners who ultimately own 272 Waitrose supermarkets and 35 department stores which are estimated to generate revenue of around £8bn. In the constitution, John Lewis’s lists a formal mission aimed at maximizing the happiness of the working staff responsible for perfecting business activities. John Lewis Partnership Company remains to be a visionary organization which puts the happiness of the workers at the center of every business operation that the company undertakes. The form of leadership exhibited by the corporation as a whole is also transformational which has aided in the achievement of its goals and objectives. Introduction The partnership structure was established by a prolific business person named John Spedan Lewis, whom the father is believed to have founded the entire business in the year 1864. John Lewis’s structure combines the aspect of business expertise in its operations with a legally mandated commitment to ethical structures, cultural involvement, employees transparency, and co-ownership. The company’s structure is a good illustration of a trust mechanism which consists of an intricate set of organs with separate roles of business management and democratic representation linked together at the divisional level (divisional councils) and apex level (chairperson role and partnership board). In the business, John’s partnership makes use of a combination of corporate structures and trust mechanism to establish a subtle as well as a finely balanced system of governance to combine financial benefits, democratic involvement and business efficiency in the business market. In the technical legal sense of the business world, the John Lewis business is not a partnership as such but rather a collaborative relationship among the co-owners and the employees with the trustees bound controlling the legal form of the company under trust obligations. The ‘partners’ commonly regarded as the employee-owners enjoy bonuses arising from a proportion of salary I accordance with the performance of the company. The business is more like workers co-operative than a consumer co-operative. Despite their form of ownership, John Lewis has exhibited an outstanding performance in its activities and has proved to be an effective and efficient sustainable company. The report elaborates further on John Lewis’s business by answering specific questions that will bring forth insights regarding the enterprise. Body Question 1 The most appropriate way to impact a business is to pay attention to transformational leadership. In transformational leadership, there is no limit of manifesting extemporary outcomes through recruiting suitable and qualified individuals who contribute a lot to the development of an organization (Bass and Riggio, 2005, p. 12). In this case, according to the interview conducted, it is evident that John Lewis Chairman Sir Charlie Mayfield has used the transformational model to impact significant change in the company. From the interview, it stated that the partnership needs to move from taking baby steps to making grown-up steps in its activities. Transformational leadership is that which leads the organization or business to positive and excellent changes in those who follow. Sir Charlie Mayfield has considerably applied this form of leadership to generate a vision for the John Lewis Company and as well inspiring its followers to meet the challenges that the company sets (PLC, and Knowledge, 2016). Sur Charlie exhibits top-notch leadership skills, motives, and values that are responsible for inspiring a feeling of loyalty and trust among the employees and co-owners. From the rapid growth and development of the John Lewis Company, it is right to state that Sir Charlie Mayfield is not a creator f a status quote but instead a change-oriented leader. In one of the many interviews conducted to examine the fate and activities of the business with Charlie Mayfield, he stated that the company will focus on preparing for the future. Mayfield with the collaboration of the employees and co-owners has worked to up the pace of preparing for the future as well as innovation. He aims at producing unique products that cannot be bought anywhere else. He drives the company to produce more new products and as well making an investment in systems and supply chains in the business. The company’s motives are to be at the forefront of the retail sector and have significantly invested in new channels, price promotions and store openings that will ferociously impact a competitive advantage over the rest of the companies. Charlie Mayfield has continued to withhold the culture of the company while still advocating for transformational changes (O'Regan and Ghobadian, 2012, p.105). John Lewis Partnership Company remains to be a visionary organization which puts the happiness of the workers at the center of every business operation that the company undertakes. The form of leadership exhibited by the corporation as a whole is also transformational. It is one of the firms that have a strong relationship between the co-owners and the employees who do share profits and benefits of the business. Charlie understands and in turn leverages technological innovations. He plans that by the year 2020, half of the company’s revenues will be generated from online sales. According to the interview conducted by Graham Ruddick the Telegraph, John Lewis is determined to spread its operations over the next decade and as well launch a French website to cater for the changes in the market economy. Also, the interview provides insights that Charlie Mayfield is concerned with the change in the company. He anticipates opening up new stores outside the United Kingdom as part of the partnership growth plan. It is estimated that the company will increase its stores from 40 at the present to about 65 stores with returns estimated to the company will increase its stores from 40 at the present to about 65 stores with returns estimated to be £7bn from the present £4bn. Question 2 Key performance indicators abbreviated as KPI are a set of quantifiable measures used by a company to compare or gauge its performance regarding meeting their operational or strategic goals (Parmenter, 2007, p. 4). Key performance indicators changes from one company to the other depending on their performance criteria and priorities. Across the John Lewis Company, it focuses on some key performance indicators intended to identify the trends in the company’s trading performance of both John Lewis and Waitrose. These key performance indicators are devised to help in measuring as well as understanding the operational performance of the company (Chan, and Chan, 2004, p. 205). The following are some of the KPI used by the John Lewis Company to assess their operational performance. i. Number of partners (employees) Under this type of KPI, John Lewis measures the company’s growth and development realized over a period. Measurement in John Lewis is usually informed of partners and net new jobs created by the company over a given period. In the year 2015, John Lewis created an average of 2800 jobs principally in Waitrose (PLC, and Knowledge, 2016). Below is a diagram showing an increase in the number of employees in the company over the years. ii. Company’s profit per average per average FTE The company assesses the profit realized before partnership tax, bonus, and exceptional item divided by the number of full-time equivalent partners. This form measures the profit realized per average FTE, which is used to assess John Lewis is growing efficiently and progressively. In 2015, Partnership bonus and tax per FTE decreased due to a fall in operating profit as well as an increase in FTEs (PLC, and Knowledge, 2016). iii. Number of shops The John Lewis Company examines the total number of shops owned by the company at the end of the year. This assessment demonstrates the progressive change in the retail space within one year of business activities. The company relies largely on this form to determine the driver of growth. Look into the year 2015; Waitrose opened an average of 33 branches with 20 branches being convenient shops while John Lewis opened three new outlets. Also, in the same year, there was an active pipeline of new sites as well. Comparing to the previous year, that is 2011, 2012, 2013, and 2014, the number of shops has been recorded to increase constantly (PLC, and Knowledge, 2016). iv. Group performance The partnership measure the performance exhibited in the business operations. In the year 2016, the collaboration in the year 2016 traded strongly in a competitive market and achieved an outstanding robust profit growth and sales. Sales at both John and Waitrose grew well ahead of the respective increasing corporate market (PLC, and Knowledge, 2016). v. Partnership profits margin percentage This aspect looks into profit prior partnership tax, bonus and exceptional item manifested regarding percentage revenue. This form of key performance indicators measures John Lewis’s profitability at both high and low rate of its income (PLC, and Knowledge, 2016). However there exist several suggestions that could be aimed to improve the current situation of assessment: 1. The partnership should only make use of the available metrics as the key performance indicator. For instance, if the net promoter score is not available in the partnership, then they should not use it as a key performance indicator. Factors which are not capable of measuring such as customer’s level of frustration should not be used as KPIs (Reh, 2015). 2. The basis of KPIs should be based on the relevance of the particular KPIs. If certain KPI does not impact the business in any way, then such should be regarded not useful in assessing the business operations (Reh, 2015). Question 3 Corporate responsibility involves revolving around understanding the business’s effect on the wider world as well as considering ways through which the impact can be used in a positive manner. Corporate social responsibility cuts across day-to-day operations of a company (Jamali and Mirshak, 2007, p. 253). It boils down to the suppliers chosen and the way the company deals with them, how the employees are treated, how the business affects the surrounding environment, and finally but not the least how the business affects the local community. Below is a diagrammatic of Pyramid of Corporate Social Responsibility (Carroll, 1991 p. 40). The following is a discussion of the corporate social responsibilities of John Lewis: i. Economic Responsibilities The company has an economically responsible especially to the particular countries in which it operates. The company is supposed to provide employment opportunities to the society members that are geared to improving on their reputation as well as raising the living standards of the members of the society (Moon, and Siegel, 2009, p. 15). Also, provision of employment makes the society experience the feeling of being loved and cared. In addition, through its business activities, the company is supposed to generate revenue for the national and local government which in turn precipitates to economic growth and development. For instance, the proposed John Lewis Keynes development supports development strategy from the year 2011 to the year 2016. The economic strategies relate to job creation and articulating compelling offer to the public (PLC, and Knowledge). ii. Ethical responsibilities John Lewis Company is entitled to observing ethical responsibilities throughout its business activities. Some of the ethical responsibilities in the company include carrying out business activities that do not pose a danger to the environment. The company is supposed to communicate environmental messages to the employees and the partners too. Such messages will act as incentives to conserving the environment (Sullivan, and Gouldson, 2013, p. 733). Also, while making advertisements, the company should ensure that it does not provide overstated or false information concerning their products to the public. The company has observed such aspect by giving correct information of their products and maintaining the standards of the products as well (PLC, and Knowledge). iii. Philanthropic responsibilities The company should exercise benevolent aspects to the society. Over the years, John Lewis has truly taken part in philanthropic responsibility by making donations as well as funding Society programs. John Lewis recognizes that the society matters a lot to its activities. For instance, in 2013, John Lewis made a donation of £750 to Teignmouth Coast watch (PLC, and Knowledge). iv. Legal responsibilities Like any other company, John Lewis is subject to legal responsibilities and is required that it follows the stipulated laws of the country. To operate soundly, the partnership has taken an initiative of familiarizing itself with the internal and external factors that govern the company within the country that it operates within. Matters such as security issues require that John Lewis’s legislate for the necessary information concerning public affairs, public companies, and business affairs (PLC, and Knowledge). Question 4 John Lewis partnership model is built upon as a set of rules or principles relating to how business activities should be conducted, and how the relationship between employees and employers should be structured. The form of partnership used by John Lewis highlights its unique organizational culture that is the primary source of the competitive advantage. This type of partnership creates strong motives or incentive for the workers to act in profit creation interests. Also, the partnership reduces agency risk thus maintaining a unique profile and status in the market economy. By making use of its unique model, John Lewis allows its employees and staff to evaluate the whole business operations. This permits the identification of the need gaps and consequently strengthening on the same. Being a private company, it has vested many employees stakes who in this case are considered as their business partners and own the organization. The employees due to the sense of belonging and ownership, they toil hard to ensure the company is driving towards the right direction, and that the business earns commercial access to the domestic and international arena. In light of the company’s partnership, the partners work towards being a worthy stake owners since they feel like part of the success. Regarding such efforts, the company can maintain a competitive advantage in the changing market economies. The company’s structure acts as the backbone to the company’s competitive advantage which enables the partnership to flourish and, in turn, to take it to new heights. John Lewis through paying attention to the employee’s welfare results to a high labor productivity among the workers. This type of partnership feels more like a family business that every employee is part and parcel of its success. In addition, the aspect of sharing profits regarding bonuses act as incentives to productive work. The company’s culture reflects the belief, attitude, and purpose of the organization. In John Lewis, the staff and workers both work to the enrichment of the company through embracing the company’s visions and perfections. This kind of cooperation and coordination lacks in most businesses thus giving John Lewis a competitive advantage over other companies in the market. Conclusion In conclusion, the overall strategy in John Lewis Company depicts a high level of coherence between the company’s partnership and the strategic choices, capabilities, and resources that have been employed to achieve its aims and objectives. The company has drawn insights from the knowledge that organizational culture and structure is the main ingredient to achieving top-notch standards in any business. By making use of the right leadership skills and partnership model, the company has consequently achieved a competitive advantage in the market economy. This has strengthened its operations making it outshine the rest of the companies. References Bass, B.M., and Riggio, R.E. (2005) Transformational leadership. 2nd edn. United States: Lawrence Erlbaum Associates, p.1-30. Carroll, A.B., 1991. The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons, 34(4), pp.39-48. Chan, A.P., and Chan, A.P., 2004. Key performance indicators for measuring construction success. Benchmarking: an international journal, 11(2), pp.203-221. Jamali, D. and Mirshak, R., 2007. Corporate social responsibility (CSR): Theory and practice in a developing country context. Journal of business ethics, 72(3), pp.243-262. Moon, J. and Siegel, D.S. 2009. The Oxford handbook of corporate social responsibility (Oxford handbooks in business and management). Edited by Andrew Crane, Abagail McWilliams, and Dirk Matten. Oxford: Oxford Univ Pr, Cary, North Carolina, U.S.A. pp. 10-37. O'Regan, N. and Ghobadian, A., 2012. John Lewis Partnership lessons in logical incrementalism and organic growth: A case study and interview with the Chairman, Mr. Charlie Mayfield. Journal of Strategy and Management,5(1), pp.103-112. Parmenter, D. (2007) Key performance indicators (KPI): Developing, implementing and using winning KPIs. 8th edn. United Kingdom: Wiley, John & Sons, pp 1-20. PLC, J.L., and Knowledge, T. (2016) Home. Available at: http://www.johnlewispartnership.co.uk/ (Accessed: 4 April 2016). PLC, J.L. and Knowledge, T. (no date) Our responsibilities. Available at: http://www.j ohnlewispartnership.co.uk/csr.html (Accessed: 4 April 2016). Reh, J.F. (2015) Key performance indicators (KPI) how an organization defines and measures progress toward its goals. Available at: http://management.about.com/cs/generalmanagement/a/keyperfindic.htm (Accessed: 4 April 2016). Sullivan, R. and Gouldson, A., 2013. Ten years of corporate action on climate change: What do we have to show for it?. Energy Policy, 60, pp.733-740. Read More