J Sainsbury's plc Business Environment Analysis

This project report provides an analysis of the business environment of J Sainsbury's plc, a profit organization. The report explores the company's purpose and role in serving society by offering healthy food products. It also discusses how the business operates globally and uses technology to increase customer satisfaction and overall profitability. Through SWOT analysis, it is concluded that J Sainsbury's plc has opportunities for entering new markets and managing macro environment factors like political, economic, social, technological, environmental, and legal impacts on its operational performance.

Business and Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Different types and purpose of organizations...................................................................3
P2) Size and scope of organizations.......................................................................................5
P3) Relationship between different organizational functions................................................7
TASK 2..........................................................................................................................................10
P4. Internal and external analysis of Sainsbury's and positive and negative impact of Macro-
environment factors..............................................................................................................10
P5. PESTLE ANALYSIS.....................................................................................................11
P6 Interrelation of macro-environment factors with strengths and weaknesses of Sainsbury's.
..............................................................................................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business environment comprises of all the external and internal environmental factors
affecting business. Company which is selected for this report is Sainsbury's which is the second
largest supermarket chain in United Kingdom. Sainsbury's was established in 1869 as a
partnership between John James and his wife Mary Ann. In the year 1992, J Sainsbury was
incorporated as private limited company and named as J. Sainsbury Limited. It carries 16.9%
market share of the supermarket sector. The report will outline the different types and purposes
of organisation like public, private and voluntary sectors and their legal structures. Further it
outlines the size and scope of different type of organisation. The report will go to explain the
relationship between different organisational functions and how they interlinked with
organisational goals and objectives. The project report will outline the Swot and pestle analysis
of Sainsbury's and will identify its positive and negative impact of macro environment upon the
business. Lastly it will showcase the strengths and weakness interrelate with external macro
factors.
TASK 1
P1 Different types and purpose of organizations.
The various types and purpose of private, public and voluntary organisation are as follows:
Private Organization-
Private Organizations are a part of private sector of the economy. Private companies are
operated by individual persons and they are not controlled by the government. Main purpose of
private organization is to maximise their profit.
SAINSBURY- It belongs to retail industry. It is one of the top chain of many supermarkets. It is
founded in 1869.
Purpose- Main purpose of Sainsbury is to deliver high quality of products and services at
a fair price. To make continuous improvements in the delivery mechanism of the services. And
to increase the profits by opening new stores.
Objectives- Various objectives of Sainsbury are-
 To provide better shopping experience to customers.
 Provide better returns to shareholders of the company.
 Fulfilling all the responsibilities of the company towards environment and society.

Goods and Services- Sainsbury deals in different products like, Supermarkets, Convenience
stores, Superstores etc. In year 2018, Sainsbury owns 1423 grocery stores out of which, 815 are
Sainsbury 's convenience stores.
Legal Structure-
 Audit committee of the company is responsible for maintaining the internal controls. To
provide the relevant information to the shareholders of the company.
 Remuneration committee is responsible for developing and reviewing policy related with
remuneration.
 Nomination committee of Sainsbury reviews the knowledge, skills of the Board and of
other committees.
 Corporate responsibility committee reviews the strategy related with social responsibility
(Saebi, 2017).
ASDA- It is a retail company that deals in grocery products, financial services etc.
Purpose- The main purpose of Asda is to provide the best quality of goods and services
which will be affordable by existing as well as potential customers.
Objectives- Objectives of Asda are-
 To reduce the use of packaging of the products of the company by 25% till 2020.
 To become a value retailer of the country so that, it can meet out the expectations of
customers.
 Making available all its products locally.
Products and services- Company deals in Grocery items, it also provides financial
services. It provides more than 30,000 different products at various stores of the company. In
January 2019, the company owns nearly 341 stores that provides refreshment facility to
customers.
Legal Structure-
 Audit committee is responsible for looking all the matters related with internal controls.
 Governance committee is responsible for recruiting and managing board members.
Remuneration committee helps the Board in fulfilling the responsibilities in respect of
remuneration.
Public Organization-

Public organizations are the part of public sector of the economy. Public sector is the part
of economy that is controlled by state. Public organization provide services for the benefit of
whole society.
National Health Service (NHS)
Purpose- Purpose of company is to set the priorities and direction of the NHS and to improve
health and care outcomes for people in England
Objectives- Main objective of the company is to improve the health and care outcome of
patients.
Products and Services- Emergency health services, GP services, mental health services, sexual
health services
Legal Structure-
 Advisory Board helps the chief Executive, and Board on issues related with strategies.
Audit committee reviews the audit functions.
 Internal control committee is responsible for reviewing the effectiveness of audit.
Voluntary Organization-
Voluntary organisation is set up by a group of persons they act as volunteers to achieve a
predetermined objective. Common example of voluntary organization are professional
associations, trade associations etc.
Oxfam- It is a non-governmental organization. It focuses on reduction of poverty.
Purpose- The main purpose is to innovate new solutions to remove injustice and poverty.
Helps the peoples in creating a secure future.
Objectives- Main objective is to provide peoples better life. To help the women to reduce
violence against them.
Products and Services- Mainly focuses on overcoming the reasons of famine. Focuses on
providing justice, education, livelihood and gender equality to peoples.
Legal Structure- Finance committee is responsible for budgeting, risk management etc.
Public engagement committee ensures the engagement of organization with Oxfam members.
Remuneration committee helps the Board in reviewing the remuneration terms.
P2) Size and scope of organizations.
Scope and Size

Sainsbury and Asda- Before merger of Sainsbury and Asda, grocery market is denominated by
Asda, Sainsbury, Tesco and Morrisons etc. After merger, Sainsbury is giving a tough
competition to its nearest competitor Tesco. The merger of Sainsbury with Asda has resulted in
creation of a biggest grocery company in terms of market share. The deal between the company
is to have total 2800 stores with 330,000 employees, and market share in United Kingdom will
be approx. 31.4%.
Competitive Analysis- Sainsbury is making continuous innovations in its business so that,
it can improve the performance of food business. Grocery and online stores of company are
helping in the growth of company. Company is taking competitive advantage against its
competitors like, Argos. Company is competing with its competitors by improving the products
through reduction in the use of salt (Kozubíková, 2017).
Stakeholders- Major stakeholders of Sainsbury are employees, local community that is
suppliers and other partners, Government agencies, customers, and distributors etc.
Asda-
Size and scope- Asda has its operations in U.K. It belongs to retail industry. It is one of
the top brand in supermarket. Asda has total 339 superstores, 206 supermarkets, 32 supercentres
and total 631 retail stores of Asda in year 2017 that is before merger with Sainsbury.
As per the investigation of CMA in year 2018, after the merger of Sainsbury and Asda the total
number of stores will be more than 2800 in United Kingdom.
Competitive Analysis- Top competitors of Asda are Tesco, Amazon, Waitrose etc. Asda
follows low pricing strategy to compete with its competitors. Company is focussing on
differentiation strategy so that, it can provide improved quality products and services to
customers. Asda is also focusing on cost leadership by providing goods at low price to customers
as compared to its competitors.
Stakeholders- Customers, suppliers, government and other private companies are
stakeholders of Asda.
National health service-
Scope and size- NHS is being engaged in employing 161,415; 84,000 and 66,000 people
respectively.

Stakeholders- Board members, staff, volunteers, community, partners, suppliers, owners
of local business and many more
Oxfam-
Size and scope- It focuses on helping the people to overcome poverty. Company is
working with other agencies and partners for providing services in more than 90 countries
(Ojala, 2016).
Stakeholders-Main stakeholders are volunteers, supporters, coalitions, government etc.
Franchising- It is a type of agreement in which, franchisor who is the owner of a brand
allows a franchisee to use the brand name against some payment. Registration is compulsory.
Franchising is regulated by different regulations. Training and development is provided by the
franchisor to the franchisee. Whole process of business is controlled by the franchisor.
Joint Venture- It is an agreement between two or more companies to start a new venture
for producing goods or service.
Licensing – Under licensing, licensor provides the right to licensee to use his intellectual
property against a royalty. In case of licensing there is no need of registration. Licensor can
control the intellectual property use but licensor cannot control the business of licensee.
Joint Venture can be for a specific purpose or for a long period.
P3) Relationship between different organizational functions.
Marketing and finance- Finance department of Sainsbury provides important information
regarding the budget, cost in monetary terms to Marketing department while developing a
marketing plan. Whenever company makes decision of developing a new product finance
department helps in evaluating the need of investment. Finance department also needed
information regarding marketing inputs that is provided by marketing department. Financial
managers understand the functions of the marketing department, they can create a mutually
beneficial and profitable relationship that can assist company in achieving its objectives.
Marketing and Human Resource department- Marketing department of Sainsbury helps the
Human Resource department in identifying the need of personnel. It also collaborates in
developing job description, developing incentive mechanism, training programs for new
employees. Marketing department of company conducts research to identify the need of new

candidates in the company. Through marketing, effective human resource can be hired in
organization that can help them in achieving the objectives.
Marketing and production- Marketing department of Sainsbury helps production department in
conducting research for development of a new product. It also helps the production department
in forecasting the customer demands and in developing new promotional strategy for promoting
new products and services of Sainsbury. production and marketing work together on new
products. Production can tell marketing what it takes to produce the item, and how adding
features changes price/production time. They work together to create a product that both the
market wants, and they are able to efficiently produce. This helps them in achieving business
objectives.
Organizational Structure of Sainsbury-
Figure 1 Organization structure
Source: (Functional Organizational Structure, 2015)
Organizational structure of the organization explains the way in which various activity are
perform to achieve objectives. It follows functional organisational structure.

Distribution and logistics department- It is responsible for performing all the activities that are
related with movement and distribution of goods of the company at different levels of supply
chain. Like wholesaler to retailer etc. It performs functions like, processing the orders,
transportation etc.
Stores department- It is responsible for receiving the goods in the warehouse, performing
inspection of the products, handling the movement of goods, maintaining the records related with
stock of company.
Marketing department- It collaborates with other departments of Sainsbury. It is responsible for
conducting market research to determine the demand of goods. Helps in promoting the goods.
Merchandising department- It is responsible for making available the products at various stores
of the company. And it also determines the need of products in individual stores (Tchamyou,
2017).
Organizational Structure of ASDA
Figure 2 Organization structure
Source: (Hierarchical Organizational Structure, 2017)
Senior management makes all critical decisions, which are then passed down
through subsidiary levels of management. If someone at the bottom of this
organizational pyramid wants to make a decision, they pass the request up
through the chain of command for approval, for which a decision will
eventually be returned. A hierarchical structure operates well when there are
few products that are sold in high volume, so that tight control can be
maintained over the design, quality, production, and distribution of goods.

Administrative department is responsible for looking functions related with finance, public
relations etc. (Tukker, 2017).
TASK 2
P4. Positive and negative impact of Macro-environment factors.
Political Factor- The United Kingdom political relations with Qatar is impacting Sainsbury's.
The Qatar investment authority, the sovereign wealth fund holds 26% stakes. It affects the
management operations of Sainsbury's. Bureaucracy and interference of government in
Sainsbury's plc (What is PESTLE Analysis? A Tool for Business Analysis, 2018). Trade
regulations and tariffs prohibits the Sainsbury's plc from doing expansion.
Positive impact- The political stability in United States in helpful in expanding market share of
Sainsbury's plc.
Negative impact- The rate of debts on government and on Sainsbury's consumer is very high and
have directly impacting the purchasing behaviour of Consumers of retail industry.
Economical Factor- The economic slow down and high inflation rate is impacting Sainsbury's
in manufacturing process of food products. There is efficiency in financial markets which is
helpful in increasing capital of Sainsbury's plc. The Sainsbury's plc has advantage of
growing consumer service sectors in order to enhance food products offer-ability.
Positive impact- This create an opportunity for Sainsbury's to expand its market share in to new
emerging markets.
Negative impact- The rampant unemployment leads to decrease the production activities of
Sainsbury's food products. There is decreasing demand of food products of Sainsbury due to
high prices on food products.
Social Factor- The Sainsbury's is serving society by facilitating their consumers by providing
products under one roof. The demand pattern of certain product is growing rapidly. (Oriesek
and Schwarz, 2016). Entrepreneurship spirit and broader mind of society is helpful in
promoting Sainsbury's plc.
Positive impact- Sainsbury's has marketing tag-line which is to Cook and save. This is helpful in
attracting large number of customers towards their food products and eventually it increases
the brand value of Sainsbury's plc.

Negative impact- If company is not engaged in following the social attitude and beliefs of
consumers than the brand value of firm can go down.
Technological Factor- The continuous improvement in technology of Sainsbury's makes the
availability of food products online. The food delivery is expanding increasingly of
Sainsbury's. This technology gives comfortability in offering products to consumers of
Sainsbury's plc and leads towards increasing customer satisfaction.
Positive impact- The improvement in technology facilitates online availability of Sainsbury's
food products. This results in increase in sale of Sainsbury's food products by 25%.
Negative impact- Advancing technology is increasing unemployment rate in area.
Environmental Factor- The Sainsbury's is taking initiatives in order to reduce the operational
wastage and recycling process. The Sainsbury's has sustainability plan of making world Eco-
friendly (Hamilton and Webster, 2018). Waste management in consumer sector is an
obligation to Sainsbury's plc. The Sainsbury's shows support towards renewable energy
through recycling its products.
Positive impact- The Sainsbury's deals in food beverages and that can easily be decomposed.
They are taking fair initiatives towards it. Through reducing operational wastage, it will
helpful to increase Sainsbury's efficiency.
Negative impact- The Sainsbury's has targets in order to reduce operational carbon emissions by
30 %. The employees of Sainsbury's are under pressure in order to achieve those specified
targets.
Legal Factor – The polices, code of conducts and laws made by government influence
Sainsbury's performance. The Anti trust law in retail industry and copyrights and patents
laws restrict Sainsbury plc from expansion.
Positive impact- This results in improving organisational standards and it is helpful in
maintaining management of Sainsbury's plc systematically. Data protection Act is helpful in
maintaining data secrecy of Sainsbury's plc.
Negative impact- The consumers’ laws like Health and safety Act 1972 restricts sale of Cold
drinks in Sainsbury's plc supermarkets. While doing expansion of Sainsbury's business they
are prohibited by the laws of business.

P5. Internal external analysis
SWOT Analysis
Strengths
 Sainsbury's is the second largest Supermarket chain in United Kingdom. Sainsbury's has
600 supermarkets and over 800 convenience store. Sainsbury's has 150,000 employee
strengths.
 Sainsbury's has excellent brand value in the market. Sainsbury's do advertising across the
United Kingdom through TVCs, Print advertisement and Online campaigns.
 Each store of Sainsbury's typically shares around 30000 lines. The Sainsbury's has listed
on the London stock exchange and FTSE index.
Weaknesses
 The rising food prices all over the world is impacting selling price of Sainsbury's and
costs higher prices of food products.
 There is stiff competition within every segment of the Retail Industry in United
Kingdom.
Opportunities The Sainsbury's has an opportunity to enter in the new markets of emerging companies
through joint venture and partnership in order to explore the new markets like China,
Japan, India and many more. (Strength, Weakness, Opportunity, and Threat (SWOT)
Analysis, 2019).
 The Sainsbury's can grab the opportunity through facilitating their customers by placing
self-checkout machines in the opening stores in order to boost the sales.
 The Sainsbury's has an opportunity to expand its business in growing economies like
Asia and Africa.
Threats
 Sainsbury's has threat of high competition with leading Food industry sector competitors.
 Increasing globalisation presents a challenge for Sainsbury's plc.
P6 Interrelation of macro-environment factors with strengths and weaknesses of Sainsbury's.
Political factor – The political stability in United Kingdom becomes the strength of
Sainsbury's which is helpful in expanding their business. Sainsbury's has open up 600

supermarkets and over 800 convenience store it’s just due to political stability in United
Kingdom. Political factors like Trade regulations and tariffs in retail industry act as a barrier for
Sainsbury's plc and restricts it from doing expansion, this becomes a weakness for Sainsbury's
plc.
Economical factor- The economic slowdown and high inflation rate is results in
Sainsbury's weakness which is raising food prices and higher selling price of Sainsbury's food
products. The stiff competition within the retail industry is arisen due to Economic factor
(Laudon and Traver, 2016). High Labour costs impacts the productivity of Sainsbury's and
influence the company in negative terms and as result it becomes weakness for Sainsbury's plc.
Decrease in rate of labour or inflation rate can act as a strength for the company.
Social factor- The Sainsbury's social factor is to serve society by facilitating their
consumers by providing products under one roof. This results in strength of the Company which
is Sainsbury's is the United Kingdom second largest supermarket chain (Prajogo, 2016).
Entrepreneurship spirit and broader nature of society is helpful in increasing market share of
Sainsbury's plc and it is a strength of Sainsbury's plc. If company is not addressing to the belief,
values and thoughts of consumer then it can act as weakness.
Technological factor- The online food products delivery of Sainsbury plc is results in
strength of the Sainsbury plc which is customer satisfaction and increasing brand image in the
market. Technological diffusion is really helpful for Sainsbury's plc and become a strength by
providing block-chain facility to the consumers. This leads Sainsbury's plc towards the
profitability. Not making use of advancing technology can act as a weakness for the company.
Environmental factor- Reducing operational wastage and recycling process of
Sainsbury's is helpful in increasing overall efficiency of the organisation which results in
Company's strength which is Sainsbury's shares are around 3000. This leads to increase the
market share of Sainsbury's and the brand image. Occurrence of high recycling cost can become
a weakness for Sainsbury's plc in terms of increasing prices of food products.
Legal factor- The consumers’ laws like Health and Safety Act 1972 results in company's
weakness which is its restrict the Company from selling cold drinks and eventually it increases
the competition in the market of food retailer industry (Kozubíková, Homolka and Kristalas,
2017). The strict legislation and polices of government controls the organisation management
perspective. It influences the Sainsbury's plc company performance and becomes a weakness.

Company is following the various measures of health and safety law which act as strength for
firm.
CONCLUSION
The conclusion can be drawn from this project report of Business and the business
environment is that every organisation has its own purpose and role for doing the business
whether it is a profit organisation or a non-profit organisation. The J Sainsbury's plc purpose is to
serve the society by offering healthy food products. The conclusion can be made that J
Sainsbury's plc has wider scope and it covers its business overall the globe. Through
technological advancement they are now selling their products from online delivery. This leads
to increase the customer satisfaction and overall profitability of J Sainsbury's plc. Through
SWOT analysis it can be conclude that J Sainsbury plc has a great opportunity in terms to enter
into the new markets of emerging companies. It can be concluded that macro environment
factors like political, economic, social, technological environmental and legal impacts the J
Sainsbury's plc operational performance.

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