Corporate Strategy: Analysis of Sainsbury's Business Environment

This report analyzes the business environment of Sainsbury, the largest and renowned supermarket retail organization, through PESTLE and SWOT analyses. It examines the impact of political, economic, social, technological, legal, and environmental factors on Sainsbury's strategy. The report also evaluates the feasibility and suitability of Sainsbury's carbon emission reduction strategy.

corporate strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
PESTLE ..........................................................................................................................................3
Porters Five Forces .........................................................................................................................4
Internal analysis...............................................................................................................................6
Strategy Evaluation..........................................................................................................................9
CONCLUSION..............................................................................................................................10
REFRENCES.................................................................................................................................12

INTRODUCTION
Corporate strategy can be defined as actions taken by business unit to accomplish its
goal. Companies plan to utilise their resources well so that they can work better and can gain
competitive advantage. Corporate strategy mainly provides strategic directions to organizations
for attaining competitive advantage and establishment of brand in market. The main purpose of
this report is to analyse business environment of Sainsbury (Todorov and et.al., 2018)..
Sainsbury is the largest and renowned supermarket retail organization that is formed in the year
1869 by John James Sainsbury and its headquartered is in London, U.K. This organization is
currently present in more than 49 countries and mainly deals in various subsidiaries like Bank,
cafe, Fuel, energy. Present report conducts pestle and Swot analyses of business to understand its
positon in market.
PESTLE
Sainsbury is the big firm that has more than 1500 stores globally. One of the major
positive point of Sainsbury is that it has strong brand reputation which make it successful in
market. Its strategies help the business in gaining competitive advantage. Aim of Sainsbury is to
provide high quality satisfactory goods and services to global consumers and raise their
satisfaction level.
Political Factor
As UK has existed the European union, there will be certain level of implication over the
entire market (Hussan and et.al., 2020). Now new trade laws and agreements are formed and this
has reduced profit of business unit. Many businesses failed to sustain in market in such
condition. As companies are not allowed to import goods or export it that has badly affected
trade activities hence revenue of Sainsbury got down.
Government of UK is very supportive and making such laws that may help companies to
grow well in international market. It is providing financial support and making laws in favour of
business that encourage sales of retail firm to great extent. Political stability supports industry in
conducting operations with pre-defined norms.
Economic Factor
Fuel prices are increasing with rapid speed that has affected value of currency to great
extent. This has reduced profit margin of Sainsbury because transportation cost has been
increased. High employment rate in country is very helpful as people have adequate income

sources and they are contributing well in improving per capita income. Hence purchasing power
of people are high that boosts sales. That helps Sainsbury in gaining success in market.
Social Factor
Buying decision of consumers is influenced by culture of people. If culture restrict people
to consume particular product then individual do not buy it, this culture affects the sales of
Sainsbury hence firm always ensures to take care of believe of these people and offering them
goods accordingly so that they buy it. Lifestyle also influence buying decision of people,
consumers like to have high quality goods and for that they are ready to pay more. Sainsbury is
meeting this expectation that help business in gaining success in market.
Technological Factor
Sainsbury is using POS machine and other advance technologies that help in raising
operational efficiency and minimising mistakes at workplace. By using these techniques
Sainsbury has become able to provide immediate services to consumers globally. On other hand
implementation of new technology is very costly that somehow affect profit of business to great
extent.
Legal Factor
Changing government laws creates difficulties for Sainsbury outlets , if government is
making changes in wages laws then it would be necessary to make changes in operations by
Sainsbury that would be problematic for firm (McGrice and Porter, 2017). As sugar tax was
introduced that has affected sales of drink products badly.
Environmental Factor
In the recent time consumers are more conscious about using eco-friendly products that
has affected sales of some products of Sainsbury. Use of recycling process supported the firm in
minimising wastage hence overall net profit is increased.
Porters Five Forces
This is the framework that helps in analysing factors that are creating problem to business
unit or influencing its performance in market.
Threat of new entrants
Sainsbury being a large global firm needs not to be threaten by new entrants as new
companies cannot create completion for it. Sainsbury is working well in retail market and has
high level of investment. This is difficult for same new business to create pressure for it

(Holmes, 2020). New entrants have poor knowledge and experience and also they have no
capability to sustain in changing market situations. Hence Sainsbury cannot get affected by new
business.
Power of supplier
Retail industry is very large but number of suppliers are low. Hence they have more
power. Sainsbury has power to negotiate with suppliers so that it can get best quality material in
its supermarket outlets. This helps business in raising profit by minimising cost. Sainsbury buys
material from all its trusted suppliers at lower rates which supports business in offering final
goods to them at affordable prices hence people like to have its products and services. Due to
large number of suppliers, the company can have the very well opportunities to stitch to other
one which is more efficient by prevision them as comparability better margin (Wilton, 2016). In
order to have proper elimination of risk company is proper focus over product differential
strategy which is helpful in attractiveness in more customer.
Power of buyers
The bargaining power of the buyers of Sainsbury is generally high through it has product
differentiated that helps firm in meeting needs of wide range of consumers. But still if customers
are dissatisfied with goods and services of Sainsbury then they will not buy it and move to other
retail outlet that would create problem to business unit hence buyers can influence the activity
and performance of Sainsbury to great extent.
Threat of Substitutes
Substitute products create moderate threat to Sainsbury (Davies and et.al., 2017).
Primark and Debenhams provides various food and non-food items that are easily available to
consumers. But consumers that are satisfied with existing products of Sainsbury will not move
there but if people have positive experience towards substitude products then they will buy these
item. In such condition sales of Sainsbury may get affected to great extent.
Rivalry among the firm.
Competitors are creating huge pressure on business unit, as ALDI, Tesco are the biggest
competitor of business unit. Sainsbury is offering discounts to consumers and trying to retain
them in business. Though it is in the second position hence it needs not to worry with
competition but still Sainsbury is working continuously to do well so that consumers retain in
firm and enterprise can gain competitive advantage in market (Hernández and Garcia, 2018). .

Internal analysis.
The tool as internal analysis termed out as to internally assess the enterprise, formulate,
execute and evaluate the strategic plan to accomplish the primary objective of enterprise and also
supports to gain competitive advancement (Steiss, 2019). However, Sainsbury is leading firm
that is taking steps to merge business activities with ASDA.
Resources- The strength and limitation of several resources are defined in the following context
as are-:
Human resources- It is strength of Sainsbury. If the employees of these two leading enterprise
work with one another can aids to generate more sales. This can helps to enhance innovation by
brining up the innovative ideas (Drobyazko, Okulich-Kazarin and Marova, 2019). Employees are
taken as shareholder to entity and joint venture would be beneficial Sainsbury as this results to
earn more dividend.
Financial resources- It is another resource that plays the vital role in order to gain success
within business enterprise. Sainsbury is the leading firm and this generates the cost saving of
0.10% till the end of 2022. With use of execution of plan of action the entity can able to raise
profit with 20%. Also, ASDA has competitive position within market and the share proposition
is high within the geographical location. It has been found out that Sainbury has total profit
before tax in the year 2018 was 990 million and operating profit was 7500 million. This is one of
the adequate funds and makes the unique point.
Physical resources- This entity has limited physical resources such as machines, labour capital,
technical advancement. Therefore, this is weakness to enterprise.
Intangible resource- Brand image of Sainsbury and ASDA both are good that creates the
positive image in mind of consumers (Bratton and Boak, 2020). Therefore, this is strength of
organisation.
Tangible resources- Sainsbury is the entity that has good investment within market and also has
strong rate of return. This has adequate cash of availability that assist enterprise to manage
operations.
Competences-
With the use of VRIO analysis the entity can analyse internal position. With the use of
model the entity can help to investigate the capabilities. It can assist the entity to take the right
action to gain the success.

Capabilities Valuable Rare Imitable Organization
Market
reputation
Yes Yes Yes yes
Leaders
working
Yes Yes No No
Brand
awareness
Yes Yes No Yes
Customer
rating high
Yes Yes Yes Yes
Better product
and services
Yes Yes yes No
One of the effective capabilities of the Sainsbury is high rating of the customers. Thus,
consumer are quite satisfied with product and services of enterprise. It aids to gain competitive
advancement within market. Therefore, the another advancement of Sainbury is Brand
awareness, this entity is strong brand image and this leads to gain large amount of the
profitability. Thus, employees of the enterprise take the effective research and development
process to carter the needs and wants of customers (Bratton and Boak, 2020). On the the other
hand, Sainsbury has effective market reputation, this aids to attract the customer towards the
entity. It results to undertake better structure of capital and effective future investment by
undertaking better effective priorities towards capital allocation. Therefore, leading working is
not impressive of this enterprise (Ortega-Altamirano and et.al., 2018)

(Misbah and Mahboob, 2017). The leader of the entity is not taking the effective steps towards to
carrying out business activities. Due to ineffective working of leads affects the brand image of
enterprise. So, this can be stated that leader working has the moderate competency rate. On the
other hand, Sainsbury has moderate rate of competency in product and services. With help of
providing the quality and organic product the entity can able to build the better competitive
advancement in market. This can also leads to streamlines the business performance.
TWOS MATRIX
This is defined as analysis that aids to undertake the internal and external analysis of the
industry. Therefore, this is outlined as below contexted manner as-:
TWOS MATRIX Threats
 Enhancement in
competition.
 Higher handling cost of
raw materials.
Opportunities
 Enhancement in
demand of consumers
due to organic
ingredients.
Weakness
 Limited handling
capacity.
 Ineffective leader
working.
 Lack of brand
awareness.
W-T
 Reduce price.
 Use technical
advancement to
enhance quality.
W-O
 By increasing supply.
 Effective research and
development over
products.
Strength
 To launch new product
and services.
 High customer rating.
S-T
The use of Maxi-mini strategy
that must be use as strength to
minimise threats.
S-T
The use of Maxi-mini strategy
aids to minimise the weakness
and reduce threats.

Strategy Evaluation
Strategy can be evaluated by using SFA analyses tool, this tool describes suitability,
feasibility and acceptability of strategy that implemented by firm.
Suitability
Sainsbury is concentrating on reducing carbon emission; this is the great efforts towards
CSR. Each company is responsible to fulfil its responsibility towards environment, economy and
sociality. Efforts to reduce carbon emission is the great strategy of Sainsbury because it creates
opportunity for firm as raise its brand image and help firm in generating more sales. In the recent
time competition is very high , as many big brand such as Tesco etc. are creating threats to the
business, this high competition affect sustainability of business unit as well. In this condition if
Sainsbury is using carbon emission strategy then it will reduce its cost and also will raise demand
as well. Hence, in the current situation this strategy fits perfectly (FATRICIA, 2016). This will
help the organization in gaining competitive advantage. Sainsbury is the leading firm that has
strong financial position. By using carbon emission strategy Sainsbury can strength its strength
as this will boost consumers and will encourage them to buy company’s products that would
generate more sales hence profitability of enterprise will be improved. Fulfilling CSR
responsibility will open new opportunity for the enterprise and will support it in growing well in
retail sector. One of the major threats that is faced by Sainsbury is high competition. This threat
can be overcome by using this strategy. Because this will encourage profit and will increase
demand. Working on carbon emission strategy is helpful to Sainsbury in reducing wastage and
utilizing resources in proper manner so that environment can also be kept protected. Hence, this
is helpful in minimizing cost of firm hence entity can achieve its profit target easily. Hence, it
can be said that carbon emission strategy of business is suitable for the Sainsbury.
Feasibility
This aspect of SFA model explains the feasibility of strategy towards implementation. As
Sainsbury is working towards reducing carbon emission strategy where it is making changes in
its operational practices to minimize wastage of natural resources so that environment can be
protected. This strategy can get fund from investors because this will raise demand of firm and
investors like to invest in firm that is working on CSR activities (Rastogi and Trivedi, 2016).
Sainsbury is the big firm and having all the required resources to work on this strategy
effectively. As it has to make changes in its operational process and for that it requires funds.

Sainsbury has adequate funds to manage this strategy, apart from this it has skilled human
resources who are working for making this strategy successful. But Sainsbury needs to make
people aware about its CSR efforts so that they take more interest in company’s products and
make their mind to buy it (Yudiono, Wilopo and Iqbal, 2019). This is essential for each firm to
make efforts towards atmosphere hence competitors need to adopt this approach as well.
Sainsbury is giving training to all its staff so that they understand the requirement of changes and
accept these modifications effectively. This aids business in gaining success in market (Strategy
Evaluation SFA –analysis, 2020).
Acceptability
This is third most important aspect of SFA model, this describes whether people have
acceptability of strategy or not. Sainsbury has many stakeholders and they are getting affected by
each strategy of Sainsbury (Achinas and et.al., 2019). This element of framework explains the
expected outcome of performance. If enterprise is getting positive outcome that means it is
acceptable but if it is unable to meet stakeholder requirements that means it is not acceptable.
Investors are the major stakeholder of Sainsbury; they will accept this strategy because they can
get more return over investment because it is going to boost sales. Employees are another
stakeholder, they will accept this strategy because this will help firm to grow and as firm is
growing then workers will get more promotion opportunities, dividend etc. Suppliers will also
accept this strategy because they will get continuous order from firm. Carbon emission strategy
of Sainsbury will be accepted by local community because this will help them in keeping
atmosphere protected and clean. Consumers like to buy products of that firm that is fulfilling its
CSR responsibilities and carbon emission is the great effort towards it. Hence this tactic is able
to meet expectations of all stakeholders that is beneficial for the firms and will generate positive
results. Though, it increases risk of Sainsbury because cost of firm will be increased but with the
profit generated by business this cost can be managed properly.
CONCLUSION
From the above file it can be concluded that Corporate strategy mainly provides the
strategic directions to the organizations for attaining competitive advantage and for establishing
position in market (Perera, 2017). The company is transiency to have proper level of
identification over more level of environment friendly and serious consideration s which have
the minimization the ecological damages by their operation. It has the development of these

forces , the company have the proper level of sustainable developments along with
differentiation which can have proper level of collaborationist for increasing market capsular. It
results to undertake better structure of capital and effective future investment by undertaking
better effective priorities towards capital allocation. Working on carbon emission strategy is
helpful to Sainsbury in reducing wastage and utilizing resources in proper manner so that
environment can also be kept protected. Hence this is helpful in minimizing cost of firm hence
entity can achieve its profit target easily. Suppliers will also accept this strategy because they
will get continuous order from firm. Carbon emission strategy of Sainsbury will be accepted by
local community because tit will help them in keeping atmosphere protected and clean.

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