Global challenges and uncertainty is driven by opportunities

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Executive summary

In recent years the global challenges and uncertainty is driven by opportunities offered by technology, communications and the drive for development in both socially and financially thus it is critical for successful organisations to create and develop opportunities, manage innovation and also incorporate certain characteristics and behaviour in order to act as an entrepreneurial organisation. In this report, the evaluation was carried out to analyse how John Lewis John Lewis in Partnership particularly initial phases of the firm's online services, Ocado the online service that delivers Waitrose groceries and the online shopping (johnlewis.com) website development from the 2000 to 2010, appears to act in relation to: creating and developing opportunities, managing innovation and behaving as an entrepreneurial organisation.

John Lewis is one of UK's top ten retailer and was founded in 1864, joined the partnership was Waitrose supermarket, Greenbee/John Lewis Insurance and Partnership credit card. The main activities includes retailing goods and services to the customers including high quality items such as groceries, electronics, furniture, clothes, flowers and also financial services such as insurance and credit card services.

The innovative nature of employee-ownership business model adopted by John Lewis encourages entrepreneurial alertness which is one of characteristics which influence the creation and development of opportunity process which is enhanced by other factors including creativity and optimism personality traits, previous experience and knowledge and also social networks. The most common underlying process framework as searching for new opportunity, selecting the right opportunity, implementing ways of moving forward and capturing benefits assist organisations such as John Lewis to explore ways in which to manage innovation thus sustain competitive advantage. In today increasing competition in markets there is a need to create and maintain entrepreneurial organisations in order to survive and remain competitive. Key factors which enhance organisations to behave as an entrepreneurial include culture, strategy, structure, Innovation, Leadership and knowledge.

Introduction

The purpose of this report is to critically evaluate how John Lewis in Partnership particularly initial phases of the firm's online services, Ocado the online service that delivers Waitrose groceries and the online shopping (johnlewis.com) website development from the 2000 to 2010, appears to act in relation to: creating and developing opportunities, managing innovation and behaving as an entrepreneurial organisation. Firstly, this report will provide a brief introduction of John Lewis.

The rest of this report is structured as follows: Section 2 will depict characteristics that the organisation particularly John Lewis has which allows them to create and develop opportunity. In Section 3 will discuss about managing innovation. This is followed by section 4 will discuss about how John Lewis is behaving as an entrepreneurial organisation and Section 5 will conclude the report.

An overview of the company

John Lewis is an employee-owned organisation which was founded in 1864 in Oxford Street, London. Waitrose supermarket chain joined the partnership in 1937, and then followed shortly with Greenbee which is now called John Lewis Insurance and also partnership card. John Lewis is one of UK's top ten retailers, and has "31 John Lewis and 235 Waitrose supermarkets, an online and catalogue business, a direct services company, one production unit and a farm" and continues to grow at a rapid pace (John Lewis Partnership, 2010).

Company's main activities involves retailing goods and services to the customers including high quality items such as groceries, electronics, furniture, clothes, flowers and also financial services such as insurance and credit card services (John Lewis Partnership, 2010).

In addition, John Lewis was ranked as the 3rd biggest private company out of top 100 companies in 2008 (Times Online, 2008) and despite of the global crisis, in 2009 it was ranked 1st and also was voted as the 'Britain's favourite retailer' in 2010 UK Consumer Satisfaction Index from the Institute of Customer Service (ICS) (John Lewis Partnership, 2010). John Lewis Partnership argues to have a "visionary and successful way of doing business, boldly putting the happiness of Partners at the centre of everything it does" and is using 'Never Knowingly Undersold' slogan to promise its customers to sell the lowest price in the neighbourhood (John Lewis Partnership, 2010, John Lewis Partnership, 2010, Bloomberg, 2010).

Creating and Developing opportunity

In recent years the global challenges and uncertainty is driven by opportunities offered by technology, communications and the drive for development in both socially and financially (Timmons & Spinelli, 2009) and the "creation of successful businesses follows a successful opportunity development process" (Ardichvili et al., 2003).

What is opportunity?

Opportunity is described as "something identified in a moment of insight that is the result of accidental discovery" (Bessat & Tidd, 2009), a business idea of an unexploited project or potential project of a business (Bessat & Tidd, 2009, Santarelli, 2006). Opportunity process develops over time that may have a chance to meet the need or interest of the market through combined creative resources for delivering of superior value (Schumper, 1934 as cited by Ardichvili et al., 2003)).

However, Gaglio and Katz (2001) argue that it is a "cognitive process that can involve mental simulation and counterfactual thinking" which emerges from entrepreneur. Conversely, the process related opportunity has been viewed as a creative process (Hills et al., 1999), involving creativity (Ardichvili et al., 2003), or even as a special case of problem solving (Harper, 2008).

Opportunity Development Process

The opportunity develops into a business concept and then grows into a business model, followed by identification of the market need and also potential benefits, value and the required resources (Ardichvili et al., 2003). As opportunity process continue to develop, a full business plan emerge which depicts risk factors that may affect the cash flow and the plan execution. Therefore, it is important for the entrepreneur to have necessary skills and ability to identify and select the right opportunities for the organisation to grow as opportunity development process lead to a successful business formation (Ardichvili et al., 2003).

Business opportunities are identified by entrepreneurs in order to create and deliver value for stakeholders in prospective ventures (Ardichvili et al., 2003). As previously discussed, the successful business creation follows the successful process of business opportunity. Ardichvili (2003) reported that the process of opportunity development is "cyclical and iterative" which has various stages that might lead to further opportunities creation or amendment to the existing version. These stages may 'overlap and interact' to each other include opportunity development, identification and evaluation in terms of resources and market need.

The core process of opportunity creation and development that lead to business formation include "entrepreneurial alertness, information asymmetry and prior knowledge, social networks, personality traits, including optimism and self-efficacy, and creativity; and type of opportunity itself" (Ardichvili et al., 2003). As it can be seen on figure 1, the theoretical structure of the opportunity development process which depicts various stages of the process model. 848

Fig. 1 Opportunity identification and development theory model (Ardichvili et al., 2003)

As previously discussed, entrepreneurial alertness is one of characteristics which influence the creation and development of opportunity process. However, this is likely to be enhanced by the coincidence of other factors including creativity and optimism personality traits, previous experience and knowledge and also social networks (Ardichvili et al., 2003). In the case of John Lewis, the employee-ownership business model encourages entrepreneurial alertness of its employee who are also co-owner of the business as the profit made by the business is shared among the partners thus every employee take a certain type of responsibility to ensure business success (John Lewis Partnership, 2010).

In 2000, John Lewis in Partnership recognised the opportunity of using internet for shopping thus create and launch an online shopping including WaitroseDeliver the online grocery service and partnered with Ocado, the online service to deliver Waitrose groceries to the UK homes free of charge. John Lewis was the first UK retailer to offer its online customers free delivery which attracted more customers to shop online. At the onset John Lewis wanted to provide its customers the easy way to shop thus identified an opportunity for an online shopping.

This entrepreneurial alertness has influenced the creation and development of John Lewis online shopping including WaitroseDelivery which offers customers the online grocery services. The online business for John Lewis has been a key area of success with a rapid expansion and development of multichannel and online operation which showed an increase of £100 million in sales for the first three months after the launch (John Lewis Partnership, 2010).

Managing Innovation

What is Innovation?

Innovation is the process of 'turning opportunity into new ideas'(Tidd & Bessant, 2009) for the purpose of satisfying customers demand by developing something new or making changes to the products or services and adding value to customers and businesses by creating opportunity of growth, profit and sustain its competition in marketplace (O'Sullivan & Dooley, 2009).

Innovation management

As previously discussed innovation as the core renewal process within an organisation, refreshing what is offers the world and how it creates and delivers that offering. The most common underlying process framework as shown in figure 1, assist organisations such as John Lewis to explore ways in which to manage innovation thus sustain competitive advantage.

Fig. 2 Innovation process model

At the onset, innovation management process model begins with the emphasis on searching which involves an organisation to look for relevant signals which illustrate threats and opportunities for change. In the case of John Lewis, it always monitors things which threats business and take it as an opportunity for business growth. For example as internet expand rapidly and more customers using internet as a means of day to day activities such as do shopping or search for information thus becomes more effective way for means of making profits and satisfying customers need.

John Lewis took this opportunity as a signal for a change and focused their search for using internet as an opportunity for innovation thus came up with many ideas including an idea of launching an online shopping site Johnlewis.com and waitrosedeliver. John Lewis selected this idea and decided to respond to the need of its customers by providing an alternative and easy way to traditional shopping.

In the year 2000, John Lewis implement the opportunity of launching an online shopping site particularly WaitroseDeliver and went into partnership with Ocado to deliver online shopping to its customers free of charge. This attracted more customers to shop online on WaitroseDeliver website as it was more convenient for them and also added value to their services as delivery is provided for free thus this sustain competitive advantage as the customer were getting quality products and services (John Lewis Partnership, 2010).

This process captured the value for the innovations as John Lewis sales were topped up by £100 million for the first three month after the online site launch (MT and Management Today magazine, 2010). As the way of sustaining competitive advantage and as competition increasing rapidly within its competitors, John Lewis has now implemented its 'Never knowingly undersold' slogan to its online shopping customers (MT Management Today, 2010).

Behaving as an entrepreneurial organisation

This section will discuss how organisations are behaving as an entrepreneurial, firstly in this section a description of an entrepreneurial organisation will be provided along with its characteristics. This will follow with a brief evaluation into how does John Lewis is behaving as an entrepreneurial organisation.

What is an entrepreneurial organisation?

Entrepreneurs "do new things" {{542 Jelinek,M. 1995}} and usually creates and restructure the organization in order to build something of which has a recognized value around perceived opportunities(Bessat& Tidd, 2009) whilst organization "signals control, order, and stable replication of the past {{542 Jelinek,M. 1995}}. Entrepreneurial organisations have certain characteristics and behaviour which differentiate them with traditional organisations (Timmons& Spinelli, 2009, Glenn et al., 2008).

Characteristics of Entrepreneurial organisation

Timmons and Spinelli (2009) argues that entrepreneurial characteristics and behaviours involves "commitment and determination, opportunity obsession, tolerance of risk, ambiguity and uncertainty, creativity, self reliance and ability to adapt and motivation to excel" (Timmons& Spinelli, 2009). However, the key characteristics of entrepreneurial organisation are "McClelland's need for achievement, calculated risk taker, high internal locus of control, creativity, innovative, need for autonomy, ambiguity tolerance, vision and self efficacy" (Ardichvili et al., 2003, Bessat & Tidd, 2009, Couger et al., 1990).

In today increasing competition in markets there is a need to create and maintain innovative organisations in order to eliminate factors affecting good ideas to get through (Tidd& Bessant, 2009). Key factors which enhance organisations to behave as an entrepreneurial include culture, strategy, structure, Innovation, Leadership and knowledge.

Entrepreneurial conditions which may affect changes to become one and opportunities to be put into practice. For example, John Lewis put emphasis on people as the most important issue which influence the entire process of becoming an entrepreneurial organisation, motivation and communication were also identified as important to John Lewis, the timing of what they did was the key as was the vision of the company was also important.

John Lewis leaders inspires and encourage junior staff who was also co-owner to question the status quo and look for new ways of doing things, create vision and take more risks, for example recently, John Lewis came up with an idea of launching smaller grocery shops and now are in trial with Boots, Shell and Welcome break (the motorway service) to offer consumers toiletries and healthy food as 'food for now' and 'food for later' lines (John Lewis Partnership, 2010).

Entrepreneurial Behaviour

The entrepreneurial behaviors has given John Lewis the real opportunity to improve customer service, efficiency, innovation and staff performance and also helped John Lewis to success and retain competitive advantage over its competitors by finding new ways of doing things and gaps in the market. For example, John Lewis has seen a gap in retail markets for Leicester and Cardiff and now open new store in Leicester and Cardiff and also planned to expand into Channel Islands with acquisition of two supermarkets in Guernsey and three in Jersey.

All permanent staff of John Lewis are partners and co-owner of the business, thus they take equal responsibility of ensuring the company's success knowing that profit gained are shared among each partners. This motivates and encourages them to be alert all the time, share their expertise and knowledge among each team members, elect team leader who will represent the team to the council and put the innovative ideas forward.

Thus, the easy communication flow between junior staff to senior level management of John Lewis makes it easy for managing and communicating changes, innovation and also taking the market disruptive ideas to the forefront. The vision of John Lewis is to inspire motivation employee, understand the current position of the company and have the desire to make it more efficient.

The employee-owned business model created a dynamic culture where the entrepreneurial behavior thrived as employees are taking own initiatives, have a freedom of providing a constructive feedback about the certain process, product or service such as "what customers are saying", search for innovation, ways of cutting cost in order to increase profit and look for market gaps which might provide new revenue or disrupt competitors. These entrepreneurial behaviours gave John Lewis the competitive advantage over its competitors and continue to grow despite of the economy downturn.

Conclusion

This report provide a critical analysis of John Lewis using theories in terms of creating and developing opportunities, managing innovation and behaving as an entrepreneurial organisation. The finding of this report depicts key issues which enhances the organisations in keeping up with today's changing pace in technology and entrepreneurial characteristics such as culture, strategy, structure, Innovation, Leadership and shared knowledge.

Entrepreneurs recognise and identify opportunities order to create and deliver value for both customers and stakeholders in prospective ventures. The most common framework which assists organisations such as John Lewis to explore ways in which to manage innovation thus sustains competitive advantage is through searching for new ideas and opportunity, selecting relevant ideas for innovation, implementing these ideas into practice and capture benefits through implementing new opportunities. Timmons and Spinelli (2009) illustrates themes of entrepreneurial characteristics and behaviours including commitment and determination, opportunity obsession, tolerance of risk, ambiguity and uncertainty, creativity, self reliance and ability to adapt and also motivation to excel.

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