1.1 Political * Increase in business rates affect stores * International trade rules dictate who can be traded with * Current economic climate affecting EU * Cheaper labour through back to work scheme * Minimum wage rise will equal higher staff costs| 1.2 Economic * UK has been in a recession since 2009 * Economic downturn, high inflation and slump in spending equal a drop in profits * Retail closures and continued online boom * Reduced availability of loans to businesses * PDI (personal disposable income) is at its lowest since the slump in the 90’s – reduction in ‘luxury’ purchases * Rising raw materials (inc. fruit) and staffing costs| 1.3 Social / Cultural * People are time-poor and need things more quickly/easily * Commerce is continuing to shift online * Consumers are more environmentally aware and ethical trading is now expected * Views on using cheap labour * Cultural attitudes (e.g. attitude to bathing in UK Vs. India)| 1.4 Technological * Increased access to the internet and to ‘social recommendations’ * Services and products can be offered globally thanks to the internet * Boom in Smartphone usage and increased access to Wi-Fi means that commerce is expected to be 24/7 – the sensory experience is lost as High Street declines * Advancement in production techniques and transport lead to efficiencies and a more effective supply chain * New technologies enabling alternative marcomms (e.g. Sensory)| 1.5 Legal / Regulatory * Environmental laws for manufacturing * Health & Safety laws * Developments in consumer law * Global trade agreements/restrictions * Laws on product testing| 1.6 Environmental * Climate change affecting farming and the production of raw materials * Growing pressure to become more eco-friendly - openness about environmental views and policies is expected (Lush are at the forefront here but don’t necessarily communicate this effectively * Fairtrade trademark well recognised and received – helps support USP * Pressure to reduce waste (inc. packaging) and emissions – 6 production sites worldwide currently|
Fig 1 - PESTLE Analysis – external analysis
Fig 2 - McKinsey 7s – internal analysis
| Strategy: (hard)Evidence of strategy to engage staff & strengthen relationships with customers.Strategy to develop international sales in rest of the worldClear strategy for the immediate term communicated well and fully understood by staff| Structure: (hard)Flat management structure means that senior managers are involved in day-to-day running of the business| Systems: (hard)Regular review of manufacturing, quality and supply chain processesto ensure ethical practices.Established distribution channels | Skills: (soft)Fairly young business but strong backgroundStrong sales staff who can effectively communicate benefits of productsInnovation | Staff: (soft)Harmonious/happy workforceLoyalty & passion for the company Respect for brand Lack of focus on future directionGlobal business – cultural differences| Style: (soft)Young trendy companyEvidence of strong internal commsOpen, innovative and friendlyStrong leadership style with big focus on working together | Shared Values: (soft)Clearly defined brand values equal a shared sense of purposeEvidence of strong internal commsHistory/reputation of innovationPassion for products & customers|
| Threat of new Entrants/Competitors… (high risk)Established distribution channelsStrong brand identityDiverse product range for female bathroom productsMarket is cheap and easy to enter – products could potentially be made at home and sold online| Supplier bargaining power (med risk)Lush set strict requirements for suppliers and therefore the list of suppliers chosen are a veryselect group due to Lush’s ethical standpoint. Therefore supplier bargaining power is quite high. It is worth noting that suppliers could potentiallybe dependent on Lush too...