Analysis of Corporate Strategy

APPLIED CORPORATE
STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................2
QUESTION 1 : External analysis....................................................................................................2
QUESTION 2 : Internal analysis.....................................................................................................5
QUESTION 3 : Strategy evaluation................................................................................................9
REFERENCES..............................................................................................................................12
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INTRODUCTION
Sainsbury group plc is the largest retail super market chain of UK. The company deals in
clothing, home ware, garden and groceries which helps them in gaining synergy (Masic, and
Yeomans, 2017). This report will highlight about merger of Sainsbury with Asda stores. They
both are operating in same industry that is retail. Also, they both are competitors by strategy of
merging they able to work together for attaining success and profitability. This report will
analyse external as well as internal factors. Also, this will lay emphasis on strategic evaluation
through SAF model.
QUESTION 1 : External analysis
PESTLE Analysis
Political factors
Debt on government – In UK, the debt rate on customers as well as government is very
high. There is a high threat of customers which directly impacts on conditions of business. The
Sainsbury group plc for keeping their business continually undertake these market conditions.
Brexit – In the year 2016, Britain has voted for leaving European union (EU). The
political and economic conditions both were impacted on many businesses including Sainsbury.
After Brexit, there is an opportunity for company for their business expansion but due to decline
in spending power of company the outcomes were not matching with the expectations.
Economic factors
High inflation and unemployment – The economic factors affects a lot to retail sector
in UK. The product demand of Sainsbury declines due to rise in unemployment which lead to
decline in production of food. Thus, it is an opportunity for company like Sainsbury to expand
their business in emerging markets.
Decline of monetary value – After Brexit, the value of pound sterling lowers down
against dollar (Hopkin, 2018). This impact a huge threat of financial uncertainty for hiking up
price of dollar by takeover of Argos with Sainsbury.
Socio cultural factors
Cook and Save – The increase in trend of women work force prevails an opportunity for
Sainsbury group to market their easy to cook products. The company promotes their products by
a marketing tag line “Cook and Save”. These products provide costumer convenient in cooking
as well as budget friendly.
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Online sales – The retail supermarket company Sainsbury group plc is following the
trend of online sales to supply their products to the final customer through official websites. But
there is a threat to company as there is increase in cyber crimes which affects their sales from the
fraudulent activities.
Technological factors
Digital services – Sainsbury is adopting in the phase of digital revolution by operating
their business through online shopping site & click and collect service. Capturing the opportunity
of recent trend of digitalisation company is attaining success over 80% and also there orders after
application of digital gadgets increases nearly 20% annually.
Online platform – The company is executing huge orders through their online websites
but their staff is not well trained to handle the malfunctioning of computers and to avoid cyber
crimes. Thus, it is a huge threat for Sainsbury to suffer losses from malfunctioning activities.
Legal factors
Advertising banned rules – Sainsbury is facing high threat from decline in sales die to
restrictions among promotions and marketing efforts. The government of UK ban advertisements
of high fat, salt & sugar (HFSS) drinks and food products for under 16 children all over UK. This
rule affect their sales and customer base.
Sugar tax – The UK government, levied a tax that is “Sugar Tax” to reduce 20% content
in sugar drinks by the year 2020. Thus, it impacts supermarket a lot but it is an opportunity for
Sainsbury to launch sugar content drinks with minimum sugar content. This will help them in
attain political support and also they will able to gain health conscious customers.
Environmental factors
Paper and recyclable packaging – There is a trend of recyclable packaging prevailing
under environmental conscious individuals to demand packaging which is environment friendly
and recycled materials. Sainsbury has a strong opportunity to follow the prevailing trend for
brining the first mover advantage and to gain attraction of individuals towards environment
friendly activities.
Zero waste super market – Sainsbury is executing their efforts in “Reduce, Reuse,
Recycle” approach to manage efficiently in managing, recycling waste and packing. But they are
facing huge threat from introduction of Zero waste super markets in UK which is Food. Love in
Totnes which is gaining more attraction rather than Sainsbury.
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