Macro Environment Case Study

Question 1:

• For a retailer of your choice, outline the important macro- and micro-environmental factors that would need to be considered in trying to satisfy the needs and wants of its consumers in that market, and explain why a clear understanding of the environment within which it operates is important.

Introduction:

Micro environment describe those elements that impact directly on a company, which includes the internal environment of the company, competitors, suppliers and consumers (Kolter, 2012). And Macro environment refers to the broader forces that also affect its competitors, the whole industry and Micro environment (Kolter, 2012). Kolter (1998) also point four factors that known as PEST in Macro environment: Political, Economical,

The main is that massive initial investment is required to begin a chain business. Then the mature retail industry with similar range of products make it is difficult for new entrants to stand out by providing something totally new (Medlin and Ellegaard, 2015；Pookulangara and Shephard, 2013). Additionally, other key retailers like Tesco and Asda occupy most market share with very strong brand awareness (Mintel, 2014). Without enough economic of scale, new entrants cannot place large volume orders like big retailers to acquire cost advantage (Porter, 2008). These all lead to the high entry

JLP, especially Waitrose, own a great proportion of own-branded products, which make it to not rely heavily on suppliers (Howie, 2015). By working with many suppliers including both third parties and own partners around the world, JLP has lower switching cost in shifting suppliers (John Lewis Partnership, 2015a). For supplier, they can enjoy the benefits of the huge turnover and large customer base of JLP, and the long-term partnership and competitive price provided by JLP will also bring them more profit (John Lewis Partnership, 2015a). On the other hand, it costs a lot to switch the existing retailers to sell their product, especially when they are accustomed to the stores (Matsa, 2011). And all of these will decrease their negotiating