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Essay / Macro Environment Case Study - 723
Question 1: For a retailer of your choice, describe the important macro- and micro-environmental factors that should be considered when attempting to satisfy the needs and wants of its consumers in this market and explain why a clear understanding of the environment in which it operates is important. Introduction: The microenvironment describes the elements that have a direct impact on a business, which includes the company's internal environment, competitors, suppliers and consumers (Kolter, 2012). And the macro environment refers to the broader forces that also affect its competitors, the overall industry, and the micro environment (Kolter, 2012). Kolter (1998) also highlights four factors known as PEST in a macro environment: political, economic. The main one is that a massive initial investment is required to start a blockchain business. Second, as the retail sector is mature and offers a similar range of products, it is difficult for new entrants to stand out by offering something completely new (Medlin and Ellegaard, 2015; Pookulangara and Shephard, 2013). Additionally, other key retailers like Tesco and Asda have the largest market share with very strong brand awareness (Mintel, 2014). Without sufficient economy of scale, new entrants cannot place large volume orders like large retailers to gain a cost advantage (Porter, 2008). All this leads to a high entry rate. JLP, particularly Waitrose, has a large proportion of own-brand products, allowing it to not rely heavily on suppliers (Howie, 2015). By working with multiple suppliers, including third parties and own partners around the world, JLP reduces switching costs (John Lewis Partnership, 2015a). As a supplier, they can enjoy the benefits of JLP's huge turnover and wide customer base, and the long-term partnership and competitive prices offered by JLP will also bring them more profits (John Lewis Partnership, 2015a). On the other hand, it is very costly to change the existing retailer to sell one's product, especially when one is accustomed to the stores (Matsa, 2011). And all this will reduce their negotiating capacity