Applied Corporate Strategy

APPLIED
CORPORATE
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
EXTERNAL ANALYSIS................................................................................................................1
PESTLE Analysis...................................................................................................................1
Porter's Five Forces Model.....................................................................................................5
INTERNAL ANALYSIS.................................................................................................................7
TOWS Analysis......................................................................................................................7
VRIO Analysis.......................................................................................................................8
SAF CRITERIA.............................................................................................................................10
Suitability.............................................................................................................................10
Acceptability.........................................................................................................................10
Feasibility.............................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Corporate Strategy refers to all the processes and procedures which are associated with
enhancing value of an organisation. In addition to this, this strategy provides the company with
enhanced advantages, along with effective competitive edge to succeed within the marketplace.
Thus, it is necessary to analyse the same within companies to fully understand its application.
Hence, in this context, the report below is based on Sainsbury's, which is one of the biggest
supermarket chains operating within the UK (Rugman and Verbeke, 2017). The report
emphasises on the merger between this organisation and Asda, which would be an appropriate
and effective aspect that would help in analysing the corporate strategy of the company. Thus,
the assignment includes an effective external analysis of Sainsbury's in order to identify several
strengths and weaknesses present for the company in its external environment, along with its
industrial attractiveness. Furthermore, the report is inclusive of a detailed internal analysis to
identify capabilities of the organisation, as well as its core competencies. In addition to this, SAF
criteria has been applied in the report to analyse the merger strategy adopted by Sainsbury's.
EXTERNAL ANALYSIS
PESTLE Analysis
For an organisation like Sainsbury's it is highly essential that an external analysis is
performed, which would allow assessment of all the external pointers, which influence the
organisation's working and strategies. For the same PESTLE Analysis is being used, which is an
appropriate framework to analyse all the factors within the external environment of an
organisation. Hence, this model is applied as under:
 Political Factors:
These factors undertake the overall political environment of a nation, which includes
political stability, regulations and reforms which shape up the working of a company within the
country. In relation to Sainsbury's, it has a huge market in the UK. This could be reflected by the
fact that the company has more than 2,300 convenience stores, as well as supermarkets within
the country (Sainsbury's Annual Report: 2019, 2020). Thus, it is required to work appropriately
in alignment with its political position. In the country, the political environment is not stable due
to the events of Brexit (Geckil and Anderson, 2016). It was officially declared on 31st January
2020 that the UK would be leaving European Union and currently it is undergoing the transition
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period. The implications of Brexit include rapidly changing policies, massive instability and
ineffective regulations which already has a serious effect on the retail industry. Currently, the
sector is conforming to the EU norms til the completion of the transition period, but after that
new legislations related to trade, supply and commerce would be imposed which might not be so
favourable for the industry and the company. The reason to support the same is that around 80%
of the food which is imported by the firm is through EU, which might have a heavy impact on
Sainsbury's after the trade negotiations, being one of the biggest retail companies in the UK
(Brexit: The aftermath for retail, 2020). This, this is a threat for Sainsbury's and would remain so
even after its merger with Asda.
 Economical Factors:
These factors are related towards the economic performance that is evident within a
country. Moreover, it takes into account factors like employment, population, inflation,
disposable income and so forth. Sainsbury's has one of the highest market shares within the UK,
which means that the economic performance of the country has a prominent impact on the same.
The whole country is suffering economic downfall from global recession as well as likelihood of
Brexit. This could be supported by several crucial data and information. As per several statistics,
the inflation rate of the UK has increased up to 1.8% in January, which reflects the decreasing
economy of the country that would directly impact the merger of both the companies (United
Kingdom Inflation Rate, 1989-2020, 2020). Moreover, the disposable income of the nation has
also decreased to around 351,816 GBP from about 353,688 within the second and third quarter
of last year as well (United Kingdom Households Disposable Income. 2020). This presents
major challenges for the company in order to provide its product at a higher price range.
Furthermore, another negative impact in relation to the same is that the trade ties with countries
within the EU has weakened due the events of this political impact. This further made it quite
complex for the organisation to operate at times of recession and inflation. This is a major threat
for Sainsbury's currently. However, the merger is likely to help this company as well as Asda in
relation to saving more than £1.5 billion, which will also ensure no price cuts for customers
(Asda overtakes Sainsbury's to become second largest supermarket, 2019).
 Social Factors:
All the social aspects, such as trends, customer preferences and likelihoods are included
within this factor. Within the UK market, there are several influencing aspects which leads to
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