Sainsbury's Strategic Analysis

This assignment tasks students with analyzing Sainsbury's position within its business environment. It requires an assessment of the company's strategic focus, a comparison to non-profit organizations like the NHS and Oxfam, and consideration of the broader environmental changes impacting all three entities.

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
P1. Identification of purposes of different types of organizations..............................................1
P2. Size and scope of different types of organizations................................................................3
P3 Interrelationship between different functions within organization........................................4
P4 Impact of Macro environment on Sainsbury organization.....................................................6
P5 Sainsbury's internal and external analysis..............................................................................9
P6 Interrelationship of external environment and Internal environment of Sainsbury.............10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment comprises of different internal and external factors which affect
strategic business decision making. In today's changing environment, organizations are a vital
part of society as they generate employment for the community and can be seen as an important
source of economic growth. Organizations come in many sizes, forms, types and operate in
different environment. It fulfil desires of shareholders, government and many individuals as they
both pursue the same goal. Every organization has certain role or purpose or vision which it
tends to fulfil with the help of human resources and thereby, generating profit for themselves,
economy and individuals as well.
For the purpose of this report, three different organizations are taken into consideration so
as to define different roles and types of organisations as well as the way how they affect
environment in which they operate. The companies focuses on how their size and scope affects
the decision making in the organisation. The companies internal and external factors affects the
strategy of organisation. The Sainsbury's located in UK, founded in year 1869 is a retail store of
supermarket facilitating supply of groceries and essential items (Grundvåg, Larsen and Young,
2013). The founder John James Sainsbury has a vision of making the company amongst top
discounted market operating in UK. The NHS on other hand is a public company owned by
government of UK provides health care facilities at nominal or no charges to people of United
Kingdom. The health care system operates independently and is accountable to the government
as it is a major source of revenue for the government. The voluntarily operating unit Oxfam is a
non-profit organization headquarters in England was formed in 1942
P1. Identification of purposes of different types of organizations
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(Source: Sainsbury Plc, 2017)
Public Organizations
These organizations are owned and operated under the surveillance of government. These
companies are funded by government and are exclusively or partially under control of
government. The NHS is owned and funded by government of UK and operates in Northern
Ireland, England, Wales and Scotland. They are exclusively responsible for providing quality
health care facilities to communities, society and individuals so as to effectively use public
resources (Chandler, Hikino, and Chandler, 2009).. The purpose of NHS is to provide free of cost
health services to needy and poor people. It focuses on rendering routine health check-ups,
emergency treatments, sole treatments, etc. to people irrespective of their financial condition in
and across UK. The national healthcare system being a government entity has low to nil focus on
profit as it is created for the benefit of general public. Thus, main objective of NHS is to render
healthy services as and when needed to the public regardless of their wealth or status in society.
Private Organizations
These companies are owned by a group of partners or solely by a person whose main
motive is to earn profit and increase its shareholder’s wealth in the long run. These companies
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Illustration 1: Purpose of Public and Private Sectors

are legally formed under the laws and their shares are not listed publicly. Sainsbury, a chain of
retail stores is a private company owned by John James Sainsbury. Company has more than 700
convenience shops and 600 stores of supermarkets acquiring a total space of 22,819,000 square
feet. It also operates cafes under the name, Sainsbury Cafe and has a fuel chain selling petrol and
diesel both incorporated in and around the supermarket locations. Company has generated
revenue of £26.224 billion last year and is listed on the London stock exchange. The sole motive
of Sainsbury is to generate wealth for its shareholders and investors thereby, reducing debt
amount for company (Grundvåg, Larsen and Young, 2013).
Voluntary Organizations
These community segments are evolved to fulfil a certain social purpose with no profit
motive. These organizations are formed by either group of people or individuals whose aim is to
serve the society and do not require any legal formalities to start its operations. Their focus is to
develop the society by providing education, health and safety, eradication of poverty, etc. Oxfam
is a leading business unit in the UK which focuses on eradication of poverty worldwide and
providing relief to areas affected with natural disasters such as floods, earthquakes, etc. It is a
non-profit organization which emphasizes on people's right
 to sustainable resources
 to basic amenities
 to secure and safe living
 to information
 to recognition
The organization has keen motive of eradication of poverty and believes that it can be
avoided by certain human and political measures. Company has provided certain reliefs at the
time of global situation with a motive to eradicate economic crisis, provide essential amenities,
right to livelihood and economic justice.
P2. Size and scope of different types of organizations
Every organization has a target to operate so as to fulfil its goals. The goals define the
size and scope of operations that business will fulfil. Every company has certain emphasizes on
its operations whether it is publicly owned or private enterprise or a charitable trust. The
companies decides its size and scope based on the operations it performs.
Sainsbury PLC:
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The size and scope of any business is governed by its goals and objectives. If the business
firm has a big target, it needs to have a huge investment in size so as to meet objective.
Company has around 2 lakhs of employees serving the organization. The founder John James
Sainsbury has a vision of making the company amongst top discounted market operating in UK
Company has earned £26.224 billion revenue in the year 2017 and has a total of £642 million
operating income at the end of year 2017 (Business Environment, 2017)
National Health care System:
NHS or National Health Service is a public health aid system of the United Kingdom. It
is a service system based in England whose main focus is to create greater well-being of the
people irrespective of their wealth. The children and youth form the most vulnerable group of
society whose health is main concern for the country. The NHS being the only system of health
aid needs to build a strong community of active staff who provides aid as and when needed to
any place or in any situation. The main motive of NHS is to improve the health of the general
public in UK. The NHS is responsible for creating employment for a large group of people all
over UK.
Currently employing more than 14 lakhs of employees providing facilities regarding
treatments and checkups (Chandler, Hikino and Chandler, 2009). The workforce in 2015-1016
was around 1.6 million with a budget of £136.7 billion. NHS is owned and funded by the
government and operates in four areas of UK - Northern Ireland, England, Wales and Scotland.
The scope of the organization is to render services free of charge to residents of UK for regular
health care treatments though the dentistry departments has certain charges in all the four sectors
of NHS. The NHS on other hand is a public company owned by government of UK provides
health care facilities at nominal or no charges to people of United Kingdom. The health care
system operates independently and is accountable to the government as it is a major source of
revenue for the government.
Oxfam:
The aim of this organization is to render charity to the sectors which are poverty trodden
and helps to remove powerlessness through various programs and services. Their focus is to
develop the society by providing education, health ans safety, eradication of poverty etc.
Headquarters in England the organization provides services to worldwide people helping and
resolving their problems with a mission of providing livelihood and resources essential for living
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a good life.
The company operates through various shops located globally which sells fair trade and
donated items since 1948. It has around 1200 stores providing fair-trade items and necessary
products which includes CD's, books, instruments, food and toys which will enhance their life.
Ts scope is fulfilled by providing basic amenities to the needful and the fund is raised by various
contributors in and around UK.
P3 Interrelationship between different functions within organization.
The structure of organization depends upon the various services and roles they aim to
serve. Sainsbury being a leading retail sector has collaborated with Oxfam for recycling
operations which include 9 million clothing donation. Sainsbury had a market share of 17%
which strives to attain its vision aimed towards the most trusted retailer where pupil love to shop
and work. It has a mission to be the best one serving customer's with exclusive quality of food
products at a reasonable rate.
Organization Structure of Sainsbury's:
The structure of company is hierarchical in nature as there are series of functions to be
performed and each level needs to be controlled. Every level is manged by the above level
manger or senior authority. At Sainsbury the senior mangers are responsible for the activities of
the line mangers and the functions of sales executives are manged by line mangers.
Online Platform:
The company has a huge platform for selling food and other products online. The
facilities such as order online and pick-up at store is also available at Sainsbury Online (Business
Environment, 2017).
Stores:
The company has around 1400 convenience shops and supermarket stores which deals in
products for routine purposes. In 2011-2012, the organization opened 19 new supermarket stores,
28 extensions and 73 convenience stores, equivalent to 1.4 million sq ft of gross new space.
Bank:
The company had another subsidiary which provides finances to the retail chain as well
as insurance policies, credit card facilities and loans to various individuals since 1997 (Iskanius,
Page and Anbuudayasankar, 2010). It combines the shopping experience and banking by offering
customers great products at fair prices; while consistently rewarding them for choosing
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Sainsbury's, for their finance and shopping needs.
Fuel:
Sainsbury has also integrated its business in Energy department offering petrol and diesel
outside their supermarket location. It launched its first store in 2011 which provide energy
efficiency advice to people thereby simplifying energy tariffs.
(Source: Sainsbury Plc, 2017)
The Sainsbury had an effective control over all the activities of the stores which enhances the
performance of the company. The company focuses on management of various functions of
company which influences the organizational structure of the company. The company is now
striving to achieve greater brand positioning in the market by increasing its areas of operations.
Employee relationship amongst different functional department increases and maintain
cooperation which helps in fulfilling organizational goals and objectives of Sainsbury (Business
Environment, 2017). The senior most mangers at the top of hierarchy is responsible for
managing each and every aspect of the employees working under him by delegating authority
and responsibility to mange the supermarket thereby coordinating with different departments as
well.
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Illustration 2: Sainsbury's Organization Structure

P4 Impact of Macro environment on Sainsbury organization.
The macro environment of Sainsbury comprises of all the external factors which affects
the organization's decision-making process and company has no control over it.
(Source: Sainsbury Plc, 2017)
Political:
Sainsbury operates globally and thereby is affected by the various laws and legislation of
different country which affects its performance and overall profitability. The increase rate of
globalization has both opportunities and challenges for Sainsbury which implies excessive
competition and quality of service. The UK's political environment has enhanced the export and
import facilities for the company (Daft, Murphy, and Willmott, 2010). The negative impact of
political environment on Sainsbury has brought inconsistency to the store thereby affecting
employees and their coordination withing organization.
Economical:
The UK economic imbalance due to inflation has affected the operations of Sainsbury.
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Illustration 3: PESTLE Analysis

The slowdown of economy has increased the rate of employee turnover and inflation in food
prices which decreased the profit margin of Sainsbury. The financial crisis has affected the
growth aspect of Sainsbury. Sainsbury should emphasize on expansion into new emerging
markets and therefore globalization of Sainsbury's operations will enable it to well-manage the
risks associated with the economic slowdown.
Social:
There are many social and cultural changes taking place in the UK at present which may
have a high level of impact upon the performance of retail store. Sainsbury has major portion of
its earning from society as a retail store and thus is responsible to return the same value to the
society inform of protecting the norms, values and culture and safeguarding the interest of
customers. Sainsbury is now incorporating female staff which has benefited the society and
company (Gouldson, and Sullivan, 2013). One of the marketing themes of Sainsbury being
‘Cook and Save' promotes easy to cook products thereby allowing the customers to make their
household budgets stretch further. The founder John James Sainsbury has a vision of making the
company amongst top discounted market operating in UK.
Technological:
The developments of technology had a great impact on Sainsbury Plc. The growing use
of internet has opened new doors for Sainsbury Plc to use websites and mobile Apps for online
purchasing of its products (Hubka and Eder, 2012). The advancement of technology has
magnificent growth potential as the expand the areas of operations for the company. The
company uses self checkout machines which has eradicated long ques for payment purpose. The
use of wireless devices, mobile application and RFID technology has provided significant aid in
the operations of Sainsbury.
Legal:
The various legislative aspects affects the Sainsbury banks and energy departments
thereby creating regulations on procurement of fuels and distribution of loans. The government
has imposed a new tax on advertising of food products which has affected Sainsbury and its
profitability (Carlton and Perloff, 2015). The minimum wage policy levied Sustainability of
Sainsbury to maintain its market position and market share at current economic climate of UK is
continuously challenged by its competitors which is creating a competitive environment for
company. The company has a major impact from the environment in which it operates thereby
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affecting by UK government has bound the company to provide specific wages to its staff which
affects the profit numbers. Sainsbury's is required to maintain different types of legal laws which
include consumer laws, competition laws, employment laws and health and safety laws to
safeguard the interest of its stakeholders.
Environmental:
Sainsbury focus on reduction of carbon footprint by its processes so as to protect the
environment from global warming. Sainsbury has taken another initiative towards environment
by reusing waste, recycling waste and reduction of waste generated by its production activities.
The company focuses on preservation of natural resources by limiting its use and recycling as
much as possible (Hubka and Eder, 2012).
P5 Sainsbury's internal and external analysis.
The organizations internal environment has many factors which affects its strategic
decision making. To analyze different factors SWOT analysis is carried out which evaluate
Sainsbury's strength, weakness, opportunity and threat forces (Hilton and Platt, 2013). The
internal and external analysis will help Sainsbury to identify various areas which will produce
profits and monitor the region which affects its decision-making.
(Source: Sainsbury Plc, 2017)
Strength:
The product ranges of Sainsbury provide quality as well as taste which is a key strength
which enhances consumers to buy its products. In 2010, the company won Quality Food Award
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Illustration 4: SWOT Analysis

witnessing the high range of products and their tastes as compared to its competitors (Daft,
Murphy, and Willmott, 2010). The human resource of the company is effective and making
impact on the customer satisfaction that can be achieved by providing effective great feel to them
that can make impact and increase in the customers in the company.
Weakness:
The company's biggest weakness point towards no plans for expansion of its services and
product range globally. The company only operates in UK (Iskanius, Page and Anbuudayasankar,
2010). Its online services are slow and problematic as in the case of 2008 when the company
needs to shut down its services for 2 days due to technical issues which has affected its profit and
overall goodwill. The store interior of Sainsbury is not so inspiring which also affects its overall
sales and revenue margins.
Opportunity:
The company has an opportunity to expand its market globally and brings in new variety
of products to capture market share. Sainsbury should focus on strengthening its brand image
and brand positioning by effective management and coordination between different departments.
The company can use bio fuel for production purposes as it has a huge growth advantage
(Chandler, Hikino, and Chandler, 2009). As the demand for healthier and low fat products is
increasing, Sainsbury has an advantage to increase production of its healthier food range so as to
meet the growing demand.
Threat:
The economic imbalances are main threat for Sainsbury as recession in country will lead
to decrease in purchasing power of consumers which will impact profit margin of company as
sales will reduce. The increasing competition is another major threat faced by Sainsbury such as
Tesco, ASDA, Aldi Morrison etc (Hubka and Eder, 2012). which are cheaper retailers in the
same segment. The rise in Labor legislation and increasing cost margins also affect company's
net profit.
P6 Interrelationship of external environment and Internal environment of Sainsbury.
The strength and weaknesses of Sainsbury is influenced by the external environment
which affects the strategic decision making of the organization (Hubka and Eder, 2012).. The
company's strength and weakness affects the immediate environment in which it operates but the
macro environment factors are external to the company and affects entire geographic territory of
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the company. If Sainsbury has a particular strength, the management should take a note about it
and implement strategies to enhance the strength factor (Carlton and Perloff, 2015). On the other
hand, managers should have a crucial contact with the weaknesses of company so as to eliminate
it effectively. Sainsbury has a specific potential of producing healthy and low fat food products
which requires specific resources, the government has levied restrictions on extraction of specific
resources which affects the company to strengthen its position in that segment. Thus the external
environment impacts the strength of Sainsbury by imposing restrictions to expand. The use of
analysis has helped Sainsbury to identify its core competencies and management should work
towards it to achieve market share (Stuart and et.al., 2010). . The company has large base of
loyal customers and position in market which open doors to expand in new markets. The
company has an effective product differentiation as they market a lot of food and non-food
products as well as follows a price differentiation technique to grab consumers. The company's
immediate environment is responsible for its success in the long run as it has weaknesses and
opportunities but need talented mangers so as to make the most out of it. The external
environment has influenced its activities as the changes are uncontrollable by the organizations
personnel and thus affects the profitability ratio of Sainsbury. The company should enhance its
competitive advantage thereby positioning its brand through advertisement d increasing attention
of customers by providing quality food products. The internet based shopping service provided
by Sainsbury which allows 88% of the UK household customers to shop conveniently has
emerged as the success point for the company (Kohonen, 2012). Sainsbury should continuously
evaluate its prices against its competitors so as to achieve competitive advantage over rivalry
firm Sustainability of Sainsbury to maintain its market position and market share at current
economic climate of UK is continuously challenged by its competitors which is creating a
competitive environment for company. The company has a major impact from the environment
in which it operates thereby affecting s. Thus evaluation of external forces with the internal
strength and weaknesses of Sainsbury will give the right decision-making prospects so as to gain
success over others (Stuart and et.al., 2010).
CONCLUSION
The report conclude that the success of organization depends on the various functions it
performs to satisfy customers and stakeholders who are main source of business. The financial
performance of a company affects its working which ultimately affect the profit earned by the
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business. Whether the company is public, private or a charity based institution they all have one
single motive that is to provide quality service to the society or community in which they are
operating. Sainsbury being a private firm works for profit motive thereby operating on legal
terms, serving customers best food products and quality service which has shaped its image in
the market as one of the best supermarket serving people. Sustainability of Sainsbury to maintain
its market position and market share at current economic climate of UK is continuously
challenged by its competitors which is creating a competitive environment for company. The
company has a major impact from the environment in which it operates thereby affecting its
scope of operations. Since it is a private company with a sole motive to make profit, needs to
ascertain its environment changes so as to enhance its overall productivity. The report also shows
how the focus of Sainsbury is different from the NHS and Oxfam organization though operating
in the same environment and affected by similar changes.
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REFERENCES
Book and Journals
Carlton, D. W. and Perloff, J. M., 2015. Modern industrial organization. Pearson Higher Ed.
Chandler, A. D., Hikino, T. and Chandler, A. D., 2009. Scale and scope: The dynamics of
industrial capitalism. Harvard University Press.
Daft, R.L., Murphy, J. and Willmott, H., 2010. Organization theory and design. Cengage
learning EMEA.
Gouldson, A. and Sullivan, R., 2013. Long-term corporate climate change targets: What could
they deliver?. Environmental science & policy. 27. pp.1-10.
Grundvåg, S. G., Larsen, T. A. and Young, J. A., 2013. The value of line-caught and other
attributes: An exploration of price premiums for chilled fish in UK supermarkets. Marine
Policy. 38. pp.41-44.
Hilton, R. W. and Platt, D. E., 2013. Managerial accounting: creating value in a dynamic
business environment. McGraw-Hill Education.
Hubka, V. and Eder, W. E., 2012. Design science: introduction to the needs, scope and
organization of engineering design knowledge. Springer Science & Business Media.
Iskanius, P., Page, T. and Anbuudayasankar, S. P., 2010. The traditional industry sector in the
changing business environment–a case study of the Finnish steel product industry.
International Journal of Electronic Customer Relationship Management. 4(4). pp.395-
414.
Kohonen, T., 2012. Self-organization and associative memory. 8th Ed. Springer Science &
Business Media.
Stuart, M. A. C., and et.al., 2010. Emerging applications of stimuli-responsive polymer materials.
Nature materials. 9(2). p.101.
Online
Business Environment. 2017. [Online]. Available through:
<http://download.nos.org/srsec319new/319EL3.pdf>
Sainsbury Plc. 2017. [Online]. Available through:
<http://www.annualreports.com/HostedData/AnnualReportArchive/j/LSE_GB0767628_2
015.pdf>
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