Introduction to Global Management:
The following questions relate to John Lewis (you are not required to include Waitrose in your answers).
It is required that you make reference to a model in your answers. Consequently your answers must not be simply descriptive of John Lewis’s activities but describing them in comparison to a model and evaluating them against that model.
You are also expected to provide evidence in your answers e.g. quotes
Pick one question per team member.
Answer all of the following questions:
1. Using information found in at least two interviews with John Lewis Chairman Sir Charlie Mayfield, describe the leadership characteristics of Sir Charlie using one of the models below (remember to support your answer with evidence):
a. Servant
b. Transformational
c. Charismatic
d. Authentic
e. Authoritarian
f. Democratic
g. Laissez-faire
2. Describe the trading performance measures (KPIs) that John Lewis use to measure their annual performance, and suggest two improvements that could be made.
3. Using the Pyramid of Corporate Social Responsibility describe and evaluate John Lewis’s approach to Corporate Social responsibility
4. John Lewis says ‘Our Partnership model gives us our distinctive culture. This, combined with the efforts of our Partners, gives us our competitive advantage.’
Explain how the John Lewis employee partnership model could give John Lewis competitive advantage.
Guidelines for you report
The report is to be 2,500 words excluding the Coversheet, Contents page and References.
Andy Street, managing director of John Lewis
By Graham Ruddick The Telegraph
02 Jan 2014
John Lewis is preparing to almost double in size over the next decade as well as launch a French website.
The moves are part of ambitious growth plans for the UK and overseas that the department store chain is working on following a successful Christmas.
Despite the gloom surrounding the high street during the vital festive season, John Lewis said that like-for-like sales rose by 6.9pc to £734m in the five weeks to December 28. It marked a stark contrast to the profits warning issued on Tuesday by rival Debenhams.
Andy Street, managing director, said John Lewis had “outperformed” the market and enjoyed its biggest ever day on December 27, when the company generated sales of more than £35m.
Mr Street said that consumers had held back spending until the final week before Christmas and that retailers who “held their nerve” by not cutting prices will have benefited.
“People were expecting it to be better, but actually, one of the most interesting features is how trading has been a different shape to previous years. You usually see a steady uplift and then it actually plateaus, but there was a very intense, late peak.”
According to Mr Street, John Lewis is likely to open a store outside of the UK within the next decade as part of the growth plans that will see the retailer almost double in size. By 2023, Mr Street said that John Lewis is likely to have 65 stores, compared to 40 at present, with annual revenues increasing from approximately £4bn at present to £7bn.
“It will still be predominantly a UK brand, lets be absolutely clear about that,” Mr Street said. “I think we will have moved from taking baby steps to slightly more grown up steps internationally.”
Mr Street was speaking in an interview with The Telegraph as John Lewis prepares for a year in which it will celebrate its 150th anniversary.
The store chain is planning a series of events to mark the occasion from May, culminating in a celebratory event for staff and a one-off event for customers. It is also launching products with historical designs from the company’s archive.
In 2014, John Lewis will open stores at York and Heathrow airport, while Mr Street is preparing to step up the retailer’s international strategy by launching a French website that will be denominated in euros.
“We have got two baby steps, which are both proving successful,” Mr Street said of the overseas drive.
“JohnLewis.com being available internationally is established and we are going to go again in terms of a French website paying in euros.
That has appeared to be the most successful market for us.
“The other thing is that we have had great success with our wholesaling deal in Korea and we are looking now for ten more countries to do a similar wholesaling deal.”
Mr Street also believes that by 2020 online sales will account for half of John Lewis revenues.
“We will have national coverage, we will probably be a 50-50 business: 50pc online, 50pc in store,” he added.
“But most importantly of all, the thing that John Lewis does brilliantly and it is the reason that customers come here for their Christmas shopping, is we will still be selecting from that morass of stuff that is out there. This is what we recommend for you. We don’t want to become, to put it bluntly, an Amazon, with everything you can possibly get on your website. We are not a marketplace website. We want our website to be approved by our buyers, that’s the crucial thing.”
Mr Street said John Lewis may also explore expanding the brand into health-related products. “This is not an announcement, but I can see with the trust there is for John Lewis, it has got an opportunity there,” he said.
“We are not that far away. If you think about what we do with our beauty retreats, it isn’t far from that to the edge of some of the health-related services. So that’s an interesting area for us.”
The next 12 months is also likely to see the future of the John Lewis pension scheme resolved. The John Lewis Partnership, which also includes Waitrose, is reviewing the scheme, which still offers a final salary pension but is nursing a deficit of almost £1bn.
Mr Street said: “I think they will decide to change. We offer the best pension on the high street, probably of any UK plc, by a country mile at the moment. Final salary, non-contributory, accrual rates best in the market.
“Now, we still want to best in the market, lets be clear. We are not rushing to the rest of the pack, but it’s the degree of difference between us and the rest in the market.
“Bear in mind, I have got to bear the cost of that on my profit and loss account. So when you see our results at the end of every year, we have already paid for that pension.”
The gold-plated pension scheme is one of the benefits of John Lewis’s partnership model, which means the retailer is owned and run by its staff. However, the stability of employee-owned businesses has been called into question after the crisis at The Co-operative.
“Our corporate governance is totally different to the Co-op’s,” Mr Street said. “If you look at our conformity with the Combined Code, then we have got absolutely nothing to hide.
“This brand has been very well managed over the years. It gave us a brilliant foundation and trust in the brand. What I think we have been able to do is extend that trust and actually the recession has helped us in one sense because it has made customers really think of the values that businesses reflect.”