JOHN LEWIS PARTNERSHIP PUTRA BUSINESS SCHOOL MALAYSIA

JOHN LEWIS PARTNERSHIP PUTRA BUSINESS SCHOOL MALAYSIA

Background What : JLP runs UK s largest multi retailer When : Established in 98 Who : John Spedan Lewis (Found) Where : 8 stores presence

Key issues BREXIT - Supply chain management becomes more difficult Trend moving towards electronic and mobile payment and e-commerce Maintaining Spirit of Humanness = Staff as partners = more sales Understanding different demographic and ethnicity needs through racial diversity What is the right job design for the future?

Root Cause BREXIT is the trigger point Emergence of online businesses balancing need for diversity Sustainability of business under threat

ANALYSIS: ORGANISATION STRUCTURE JOHN LEWIS PARTNERSHIP Department Stores Home Shop Supermarkets Online and Catalogue business Production Unit Farm Competitive Advantage : uality Products Customer Service

ORGANISATION Brand Target Product Competitor Department Stores John Lewis, Oxford Street Day visitors, tourists, Fashion (%) Home Goods (%) Technology (%) Marks & Spencer Peter Jones, Chelsea Iconic, premium store Supermarkets Waitrose Food retailing Medium to high end Fashion (0%) Home Goods (0%) Technology (0%) Premium Traditional supermarket with wide food selection Small convenience stores with localised choices High quality fresh food Harrods Dickson, H&M, Nike Marks & Spencer, Tesco, Sainsbury, Asda, Morrisons, Aldi, The Cooperative, Lidl

PESTEL ANALYSIS P BREXIT impact on United Kingdom E Steady economy growth for UK E S T Consumers looking for better products and services Increase of technology application in daily life Increase in environment friendly methods L Regulations on Employment Act, Sales of Goods Act

5 FORCES ANALYSIS Threat of new entrants High 5 Forces Relatively, department store and food retailing industry are facing high competition from : Bargaining power of suppliers High Industry Rivalry High Bargaining power of customers High i) existing players with bigger market share and number of stores. ii) new competitors with lower capital through e-commerce channel. iii) evolving consumers demands and needs. iv) other smaller local retailers. v) big number of suppliers which requires better supply management. Threat of substitutes High

SWOT ANALYSIS Strength Weakness Opportunities Threats uality Products Customer Service Strong brand and image Preferred employer A lot of employees from Eastern Europe Labour dependent business Consumers looking for fresh, non- GMO foods Growth of e- commerce retailing Impact of BREXIT Adaption to new retailing trends

VALUE CHAIN ANALYSIS Value Chain Finance, HR, Administration Supplier Customers Procurement Logistics Sales Marketing Customer Service PROFIT MARGIN Supported by People Technology Process Employees Recruitment, Re-skilling, Up-skilling, Customer Relationship Management (CRM), Supply Chain Management (SCM), Enterprise Resource Planning (ERP) Business Intelligence & Analytics System Pay by Phone, R Code Scanning, Self-Checkout

ANALYSIS Strategy Canvas 6 5 JLP and competitiors ***areas to be improved JLP Dept Stores competitors Supermarket competitors 0 uality products Customer service Number of products Numbers of stores E-commerce channels

Alternatives and Recommendations

Strategies Alternatives Not Feasible Feasible (Lower priority) Recommended (Higher priority) Redesigning jobs towards the future AI customer service (Cons: Lose human touch, cannot reutilise current partners) Implementation of Kindle Firelike virtual customer service and reskilling of partners Total online presence (Cons: Need to lay-off partners) Improve Supply Chain Management to solve BREXIT issue Maintain suppliers within UK (Cons: High costs of labour) Lobby with Government for better tariffs Find suppliers beyond internationally (not only EU) that provides best price (inclusive of tariffs) Collaboration with Tesco, Sainsbury (Cons: trade secret may be revealed) Managing Diversity of Workforce Recruit top minds of different ethnicity from various universities and headhunting Appoint Diverse group of Key- Timers Assist existing partners in getting PR to preserve loyalty

Implementations, Timelines and Milestones

Implementation of KindleFire-like consultants Spirit of the company: Believe in humanness, firing is the last resort Less staff needed in stores, but they can be relocated to back-end operations and online consultants Training needed to reskill partners to know how to deal with customers online over voice, video call and text chat

Strategy and Alternative Activities and Milestones Implementation Costs ($) 08 09 00 Redesigning jobs towards the future Job Analysis: to identify jobs suitable to be done virtually 00 k Activity: Customer Service Online like Siri (Personalised Shopper) or KindleFire TOTAL COST FOR IMPLEMENTATION: $0 mn Identify needs of software (Term of Reference) Shortlist rd party software developers Appoint software developer and hardware supplier as well as contractual matters Development period Beta hardware & software testing/pilot testing Training of partners (regional level) Rollout plan/execution and launching with press and promotion Monitoring and feedback - 50 k 50 stores x 500 k = 7.5 mn 5 regions x 50k =.5 mn mn

Implementation of improvement in Supply Chain Management Suppliers majority are not in the UK, mostly outside EU, and some inside EU Bilateral and multilateral agreements between countries with differing import duties As UK no longer part of EU, import duties may increase for costing of items within EU. For items within EU, suppliers have to found within UK to reduce logistics cost. find outside of EU. Those with Free Trade Agreement with UK are preferred.

Strategy and Alternative Milestones Implementation Costs ($) 08 09 00 Improve Supply Chain Management to solve BREXIT issue Identify key suppliers from respective countries that can offer best price 00 k Activity: Find suppliers beyond internationally (not only EU) that provides best price (inclusive of tariffs) Shortlist key suppliers Establish contacts and engage the key suppliers Visit and evaluation of key suppliers mn TOTAL COST FOR IMPLEMENTATION: $ mn Appointment of key suppliers and contractual matters Provide company s ERP manual and support for systems integration 900 k Monitoring and feedback -

Strategy and Alternative Milestones Implementation Costs ($) 08 09 00 Improve Supply Chain Management to solve BREXIT issue Identify strategies, agents of campaigns (ad companies) and target groups 00 k Activity: Lobby with Government for better tariffs Establish public campaigns and ambassadors.5 mn TOTAL COST FOR IMPLEMENTATION: $ mn Rollout plan 00 k

Implementation of managing diversity of workforce Existing non-local partners = Expedite PR Blue Ocean Shift: Collaboration with Tesco and Sainsbury to lobby for expediting PR process for non-locals Ensure ratio of diversity in company by key timers by hiring foreign students For permanent staff s diversity = choose top people = meritocracy and headhunting Consumer power in China, India and Middle East, hire Chinese, Indians and Arabs to understand culture

Strategy and Alternative Milestones Implementation Costs ($) 08 09 00 Managing Diversity of Workforce Identify non-local partners without PR 00k Activity: Assist existing partners in getting PR to preserve loyalty Find and appoint credible legal advisors.9 mn TOTAL COST FOR IMPLEMENTATION: $ mn Application process - Monitoring -

Strategy and Alternative Milestones Implementation Costs ($) 08 09 00 Managing Diversity of Workforce Identify positions that can requires keytimers 00 k Activity: Appoint Diverse group of Key-Timers Establish job descriptions and candidate requirements Advertisements for jobs mn TOTAL COST FOR IMPLEMENTATION: $ mn Evaluation & interview processes Appointment of successful candidates Provide orientation and training 900 k Monitoring and feedback -

Strategy and Alternative Milestones Implementation Costs ($) 08 09 00 Managing Diversity of Workforce Identify strategic positions 00 k Activity: Recruit top minds of different ethnicity from various universities and headhunting Establish job descriptions and candidate requirements Identify top universities and headhunting process mn TOTAL COST FOR IMPLEMENTATION: $ mn Advertisement, evaluation & interview processes Appointment of successful candidates Provide orientation and training 900 k Monitoring and feedback -

Risks and Mitigation Strategies Risks Mitigation Redesigning jobs towards the future Partners may not be agreeable to plan Talk to and convince partners council Engagement forums Improve Supply Chain Management to solve BREXIT issue Reduction in product quality Trust and reliability issues with new suppliers Increase in logistics cost Visit and engagement sessions to establish trust Stringent evaluation of new suppliers Centralised logistics Managing Diversity of Workforce Reduction in service quality Trust and reliability issues with new partners Proper training and orientation Establish clear objectives and KPI to new partners

Critical Success Factors Strategies Critical Success Factors Redesigning jobs towards the future Clear terms of references Obtain support from partners Great hardware and software capabilities to meet customers requirements Improve Supply Chain Management to solve BREXIT issue Strong negotiation skills Improved management of logistic and procurement systems Proper identification of key suppliers Managing Diversity of Workforce Proper job analysis and identification of key people

Financial Analysis

Revenue Revenue Years 0 0 05 06 0708E 09E 00E CAGR Growth Waitrose 56.0 575.70 65.0 6086.00 65.50 66.0 66.80 680.9.08907.89% John Lewis 09.0 7.0 565.70 66.80 780.70 96.79 0.7 0.7.09.9% 865.50 907.80 970.00 978.80 006.0 07.8 07.97 0.0.069.6% Revenue growing at a slow rate of.6% overall, with John Lewis leading at.9% and Waitrose at.89%

Net Finance Costs Net Finance Costs Years 0 0 05 06 0708E 09E 00E CAGR Growth Net Finance Costs -0.0-9.50-99.60-96.60-07.80-07.5-06.89-06. 0.995787-0.% Net Finance Costs with Recommendations -0.00-9.00-8.00 Net Finance Cost predicted to be in the range of $0mn to $00mn in the coming years without recommendation Predicted to increase to $0mn with our recommendations

Operating Profits Operating Profits Years 0 0 05 06 0708E 09E 00E CAGR Growth Waitrose 9.0 0.0 7.0.60 5.50 6.8 9.6.7 0.9798 -.8% John Lewis 6.70 6.0 50.50 50.0.0 8.88 5.69 60.6.0.% 509.00 56.0 87.90 8.80 96.70 95.6 9.5 9.7 0.9976-0.% Profits are growing at a slow rate or even negative, signifying margins are low, and costs could be lowered to increase profit margin

Partnership Bonus Partnership Bonus Years 0 0 05 06 0708E 09E 00E CAGR Growth Partnership Bonus -0.80-0.50-56.0-5.00-89.0-90.00-90.00-90.00 0.85-5.76% Percentage 0.7 0.5 0. 0.0 0.06 0.06 0.06 0.06 To hover at the range of $90mn per year

Financial Implications

Key Timers appointment, Recruitment of top talents, Finance Needed : $.5 million THROUGH CASH AND DEBT PR applications, Lobbying for better tariffs, Virtual Customer Service, 9.5 New Suppliers, VALUE IN $ Million

Non-Financial Implications as a Whole Partners are taken care of Supply chain management is not affected as much by BREXIT Ensure sustainability even though threatened by new trends Diversity of ethnics will be able to lead to bigger share of the market by penetrating into different consumer types

CONCLUSION Low Cost RAPID EXECUTION All strategies will done with lower cost, bringing higher impact and rapid execution, to ensure sustainability of business High Impact