Financial Performance and Management Techniques of Sainsbury's plc

ACCOUNTING AND
FINANCE

Table of Contents
EXECUTIVE SUMMARY...................................................................................................3
INTRODUCTION...............................................................................................................3
MAIN BODY.......................................................................................................................3
Part (a) Analysis of financial performance and position.................................................3
Part (b) Management and financial management techniques.....................................10
CONCLUSION.................................................................................................................15
APPENDICES..................................................................................................................16
REFERENCES................................................................................................................20

EXECUTIVE SUMMARY
The project report summarise about financial performance of Sainsbury's plc so
that they small manufacturer can decide about whether they should make transaction
with them or not. In order to make it suitable, different kinds of ratios are calculated
which shows that company's financial performance is not so effective. In addition, the
report abstracts about different number of techniques of management and financial
accounting that are widely used by manager of Sainsbury's plc.
INTRODUCTION
The term accounting and finance play a significant role in aspect of proper
management of monetary resources of companies. Accounting can be defined as a way
of recording financial transactions in systematic manner for a particular time period
(Cleary and Quinn, 2016). If companies records their transactions in an effective then it
becomes easier for them to focus on better utilisation of available financial resources.
The aim of project report is demonstrate understanding about benefits to suppliers
because of merger. The project report is based on Sainsbury's plc financial analysis so
that small companies can take decision about whether they should enter in business
with them or not. The project report is categorised into two parts A & B. The part A
covers about CORE analysis of Sainsbury company. As well as part B includes
information regards to various techniques of management and financial accounting.
MAIN BODY
Part (a) Analysis of financial performance and position.
An analysis of Sainsbury's plc by help of core analysis.
Macro environment analysis- In order to do an effective macro environment analysis
there is a technique which is PESTLE analysis technique. In the context of above
Sainsbury company, it is done below:
PESTLE analysis-
Political factor- This factor is related to the political condition of a nation, relation of a
country with others and many more. It can impact to business entities in both positive

and negative manner. Sainsbury plc can be affected from this if political condition in UK
will not stable. This is so because they will not be able to do business with other
countries in the case of unstable political condition.
Economical factor- Under this factor various types of economical elements are included
such as interest rate, inflation rate and many more. These aspects can affect company's
performance. It is so because if interest rate will be lower in the market of UK, then this
will be easier for above company to acquire funds at low cost.
Social factor- It is related with different social aspects like people' s like dislike, culture,
tradition and many more. This becomes essential for companies to follow all these
aspects of any nation. Such as for Sainsbury company, it is crucial to them to offer
product and services in accordance of culture and religion of a country in which they are
operating.
Technological factor- It is one of the key factor for companies because technology is
upgrading day by day. This becomes essential for business entities to adopt new and
advanced techniques in their operations and activities. Like for above company, it is
essential to apply new techniques so that they may attract more number of customers.
Legal factor- This becomes essential for businesses to implement various kinds of rules,
regulations and legislation to protect rights of employees & customers. Such as for
Sainsbury plc, it is necessary for them to apply different legislation like equal payment
law for employees.
Environmental factor- This is aligned with environmental condition of any nation. It is not
under control of a business entity. For example if in UK, environmental situation is not
suitable then this may affect business of Sainsbury company.

Micro environment analysis- In order to do this analysis, SWOT analysis is essential
which is done below in such manner:
Strength-
 Innovative promotional strategies- Sainsbury plc has innovative strategies in
order to do promotion of different kinds of products and services.
 This company has more then 600 supermarkets and 800 convenience stores all
around the United Kingdom.
Weakness-
 Brand switching- Similar as the above stores, Sainsbury plc also face issue of
brand switching. Due to this, number of customers of this company has been
decreased in an effective manner.
 Lower margin- This is a main weakness for this company as their operating costs
are increasing and due to it level of margin is decreasing.
Opportunity-
 Growth in villages- Sainsbury plc has an opportunity to expand business in the
rural areas so that market share can be increase.
 In addition, self check out machines can also help to above company for opening
stores 24 hours.
Threats:
 Competition- It is one of the main threat for above company as they are facing
tough competition from other stores such as ASDA, Waitorse etc.
 As well as increased level of globalization also a main threat for this company.
CORE analysis:

Context- The Sainsbury's plc is third largest chain of supermarket in United Kingdom
and their share in supermarket sector is of 15.3%. This company was founded in year
1869 by John James Sainsbury. The ownership of company is public limited and there
are about 1415 shops in entire United Kingdom. As per the published information in
year 2018, there are about 186900 employees in different stores of United Kingdom
(About Sainsbury's plc, 2019).
Overview- The above Sainsbury's plc is one of the leading food retailer in United
Kingdom and it is registered with LSE and FTSE 100. The company produces and sales
a vital range of products such as food product, clothing and daily using commodities.
The company operates in supermarket field and face tough competition from others
such as Tesco, Morrisons and many more. In order to gain higher value of profitability,
this company merged with ASDA which can be beneficial for external stakeholders.
Ratio- In the aspect of better financial analysis of companies performance, the ratio
analysis play a key role. It is so because by help of calculating and analysis different
number of ratios, this becomes easier to companies in finding strengths and
weaknesses. As per it, their managers prepare and formulae strategies. As well as
stakeholders get aware about actual financial position of companies and accordingly
make investment. In the aspect of above Sainsbury's plc, ratio analysis is done below
that is as follows:
1. Profitability ratio:
 Gross profit ratio-
2016 2017 2018 2019
Gross profit
ratio
6.19% 6.23% 6.61% 6.92%