Business and the Business Environment: A Case Study of Sainsbury's

This assignment delves into the complexities of the business environment by analyzing Sainsbury's, a leading UK supermarket chain. It explores the different types of organizations, Sainsbury's background, objectives, and services, and examines the relationship between organizational functions and structure. The study further analyzes Sainsbury's macro environment using PESTLE analysis and conducts a SWOT analysis to identify its strengths, weaknesses, opportunities, and threats. The impact of both macro and micro factors on Sainsbury's business objectives and decision-making is critically evaluated.

Business and the business environment
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Table of Contents
Introduction......................................................................................................................................4
Task 1...............................................................................................................................................5
P1. Explaining the different purposes and types of organisations: voluntary, public and private
sector and also the organisation’s legal structure.........................................................................5
P2: Explain in details the background, objective, the services and the Mission and Vision of
the company...............................................................................................................................14
M1 Analysing the link of scope, structure, and size of various different organisations with the
objectives of the business and services being offered by the company.....................................19
D1. Critically analyzing the complexities of organisational structure and interrelationship
between various organisation.....................................................................................................20
Task 2.............................................................................................................................................21
P3: Explain the relationship between different organizational functions and how they link to
organizational objectives and structure chosen for the purpose................................................21
M2: advantages and disadvantages of relation between function and impact of the organisation
....................................................................................................................................................23
Task 3.............................................................................................................................................24
P4. Identification of how macro environment of Sainsbury has a positive and negative effect
on operations of its business......................................................................................................24
M3. Analyzing Sainsbury's macro environment in details through application of PESTLE
analysis.......................................................................................................................................27
Task 4.............................................................................................................................................28
P5. Conducting internal and external analysis of Sainsbury’s for identifying its strength and
weaknesses.................................................................................................................................28
P6. Explanation of how strength and weaknesses of Sainsbury’s is related to external factors 30
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M4. Application of SWOT analysis for justifying its influence to Sainsbury in decision
making:.......................................................................................................................................31
D2. Critical evaluation of both macro and micro factors and their impact on Sainsbury’s
business objectives as well as decision making.........................................................................32
Conclusion.....................................................................................................................................33
References......................................................................................................................................34
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Introduction
Business and business environment of an organization depends upon how much and how
effectively an employee contributes to the organization, how they deal with different situations
and in what way they exploit their talents. Company’s overall growth is dependent on such
factors. Although there are many other things which can influence directly or indirectly a
company’s business like the performance of different cells, departments among the workers,
standard of the organization’s management procedure, relationship among the members of all the
departments. The assignment are going to focus on a particular organization named Sainsbury’s
which is diversified in various sectors like fuel, energy, banking, grocery.
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Task 1
P1. Explaining the different purposes and types of organisations: voluntary, public
and private sector and also the organisation’s legal structure
5

Public sector: The public sector includes the all the public and government controlled
enterprise; agencies and other entities of publicly funded which provides the public services,
goods and programs. Moreover, the public sector includes expansion ring of the organization,
having the government positioned at the centre which is followed by public enterprises and
agencies. The different types of organisations related to the public sector are:
● International
● National
● Regional and
● Local
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The legal structure of the public sector organisation:
● Vertical Structure: The agencies of government use this structure at each level. This
structure includes a department head or director at top of the managing the organisation.
It also includes the middle or lower level managers.
● Horizontal Structure: The horizontal structure of this sector uses lesser no. of layers
between the labour and management. According to Belás et al. (2015, p.95), this structure
also allows open communication between the layer of labour and management.
● Divisional Structure: This structure of the public sector separates the staffs or
employees by job geography or specialty.
● Matrix Structure: This structure of the public sector makes use of the system where the
relationship is established between the management and the employee as a matrix or grid.
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Private sector: The privately owned small business entity forms a part of the private sector.
This sector includes the diversity of partnerships, individuals and groups ranging from small
stores to conglomerates which are multinational. The organisation existing in this sector are sole
proprietorship business, partnership business, the business medium and small size, large
multinationals, trade unions and trade or professional associations. Private sector forms the part
of an organisation which is carried out by companies and individuals instead of the government.
Most of the organisation of private sector carries out their businesses with an intention of profit
earning.
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The legal structure of the private sector organisation:
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Voluntary sector:
Voluntary sector generally consists of the organisation which includes the purpose of benefiting
and enriching the society. This sector of an organisation often carries out its business operations
without any motive of earning the profit or little earning of profit. The Voluntary sector carries
out is business without any intervention from the government. Unlike other sectors such as
private where the return and the generation of the earning are emphasized, the profit raised or
money earned by this sector of an organisation is normally invested back. According to Fleisher
et al. (2015, p.25), the money or profit earned in this sector is invested back to the organisation
itself or to the community. In voluntary sector, there are various types of organisation involved
such as charities, organisations of social welfare and betterment. This sector organisation
includes various foundations, groups of advocacy, organisations which are faith-based,
recreational sports and groups of the community.
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The legal structure of the voluntary sector:
The rules followed in the voluntary sector are made out in the constitution, the small part of
which is adopted in the legal structure. The voluntary sector consists of three legal structures:
● Unincorporated Association: This legal structure of the voluntary sector is followed by
small groups having goals of short-term, low income and membership. This structure of
the sector does not have any intention of employing staff or acquiring property. This legal
structure is cheap and quick for setting up.
● Trusts: This legal structure is basically set up for managing the property and money for
the purpose that is clearly defined. This structure of the sector forms the relationship
which is formal between 3 parties: the property and money donor, the trustees and
individuals who benefit from this structure. Setting up a trust is cheaper and can be set up
quickly.
● Limited companies: This structure of the voluntary sector is becoming popular. Its
structure of the voluntary sector consists of groups who are involved in the management
of staff, contract, funding of large amounts and also land.
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The purpose of the organisation belonging to different sectors:
The purpose of the different sectors such as the public, private and voluntary sector of an
organisation is the development of the market, development of the product for maintaining good
relationships with the customers. The purpose also includes maintaining a survival strategy by
the organisation. The other purpose of the various sectors of an organisation includes positioning
and branding of the services or products and also the extension of branding and building of brand
for including the sale of the organisation's product.
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P2: Explain in details the background, objective, the services and the Mission and
Vision of the company
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Background
According to Orozco and Tarhini, (2015, p.1), the Sainsbury was established in 1869 as a
partnership business when John Sainsbury and Mary Ann opened the shop at Holborn in London.
They started the retail shop of fresh food and later turned in to the packing of sugar and tea
packaging. The philosophy of Sainsbury was to sell the product at lower price. The tragedy with
the shop of Sainsbury was that every shop in the Inlistburg was similar in the look thus an iron
casted nameplate was attached to the shop of Sainsbury. The name of the shop was then visible
from the distance easily. The delivery system of the packaged goods added extra convenience to
the shop without affecting the rivals of the Sainsbury. In the year 1922, the retail shop was
registered under the government of UK as a private limited company and became a largest
leading group of grocery shop of that era Nikolopoulos et al. (2014, p.204).
On the same time, each shop was having a section of fresh meat, hams, dairy, kinds of bacon and
poultry. In the year 1903, James borrowed the grocer branch of 12 Kingsland on the high street
of Dalston. The home delivery system at that time was poor because of the fewer introductions
of the car and traveling scope. In April 2018 Sainsbury proposed Walmart about the merging of
Asda, the merging of these two companies could form the United Kingdom's largest company of
supermarket. In February of 2018 the recent market, the shareholder of Sainsbury was the overall
Sovereign of Qatar. Almost 21.99% of the Sainsbury was held by the Qatar investment company.
The company is now listed on the London stock exchange under FTSE 100 index.
Objective
The objective of Sainsbury is to serve their customer with the best product and services
whenever and where they require. The Sainsbury had adopted various strategic sustainability
ideas for serving the better environment to the community for the conservation of the economic
and social environment for gaining long-term benefits in the future. The company aims at
serving the customer a good quality product for their wellbeing at the fair rate. The Sainsbury
propose the other grocery retailer in terms of expanding its business and reaching the customer in
different ways and strategy (Cham et al. 2017, p.45).
Product and service they supply
According to Belás et al. (2015, p.95), the process of Sainsbury flows different illumination in
the stages of the various stocks and the operation of product delivery which is chosen by the
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customer form the retail market. In the initial stage, the company holds the inventory of the
goods and raw resources which is held for the purpose of being used by the company for
business. The name of term Wesupply was introduced to manage the stock of the company; the
implementation of Resupply was made by the IBM.
Size and scope
As per Cham et al. (2017, p.45), the supermarket of Sainsbury was positioned in the process of
providing service to the customer. The physical look out f the element of Sainsbury was queued
accordingly as per the function performed by the company. The market is designed in a position
and structure that the customer would be able to visualize every section and end up to the cash
section. The initial structure which is visible is the query services are required by the customer in
the initials stage. The fresh food is the everyday align of the people which could be encountered
by the customer in the Sainsbury market in the second stage. The supermarket is structured in a
way that everything is in the eyesight of the customer. The company focuses on the strategy of
the business which is vital for the development of the company. The everyday fresh listing of the
retailer and supplier is made for the record of new addition and achievement by the Sainsbury.
The strategy of the business is stated as the five pillars (Betzold et al. 2018, p.87).
● The Sainsbury knows there customer better than other
● The service would be provided to the customer when and where required by them.
● The offering of product and services to the customer a fair price.
● The efficiency of the management and employees marks the differences
● The values of the Sainsbury make the company different from another retail shop.
Sainsbury vision and Mission
According to Barlow, (2015, p.278), the Sainsbury treat their customer as the heart of their
business. The growth and future success are depended on the anticipation of delivering the best
to them whenever needed. The Sainsbury visualise the fulfilment of the values and the
commitments made by the company regarding the rendering of good services to the customer
and their communities. The company had strategies for various sustainability plans and stated the
community to make them believe how and when the ideas of sustainability would have an impact
on the economy. The Sainsbury emphasised on providing the better quality services to their
customer for their wellbeing.
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M1 Analysing the link of scope, structure, and size of various different organisations
with the objectives of the business and services being offered by the company
According to Betzold et al. (2018, p.87), the relationship between the scope, and structural size
of the business of the organisation and its object becomes transparent when the strategy of the
company is in place. The structure of the organisation defines the achievement of the objectives.
The size of the Sainsbury would identify the capacity of the service could be provided by them to
the customer. The size defines the monetary and legal structure of the company by which the
company operates in a systematic manner. The company would thus allocate the responsibility of
the management, by which the decision could be taken if the individual work or the group
efficiency shows the better performance in the business operation.
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D1. Critically analysing the complexities of organisational structure and
interrelationship between various organisation
Disadvantages and Advantages of Divisional Structure: In this business structure, the
division is made by the line of product or geographically or by area of marketing. This structure
includes teams of accountants, the team sales and team development and research. This provides
an advantage in responding to the customers quickly who needs help. This structure's
disadvantage is there might arise lots of effort which is redundant and division competition can
also take place.
Disadvantages and Advantages of Matrix structure: The structure of matrix of an
organisation has no command chain. The staff works in the group, which they organise and
develop. The staffs of the organisation can change groups according to their interest area or an
area where they are required. This is a disadvantage of this structure is lead to creating
frustration and confusion to the employee because the reporting line is unclear. On the other
hand, this structure helps in increasing the skills and involvement of the employees.
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Task 2
P3: Explain the relationship between different organizational functions and how they link to
organizational objectives and structure chosen for the purpose.
The main functions of an organisation are marketing, production, sales, research, and
development etc. In order to perform as an organisation, all these sections of the organisation
work as a workforce combination Johnson et al. (2017, p.68). The size and functions of the retail
company are the deciding key factor in deciding the functional components of the company.
Sainsbury's organisational structure falls under the Tall category, as it has a higher order in the
hierarchy chart.
Operational Strategy
The operational strategy of this company is clearly visible in its Management of Stores. The
stores are the place, where the transactions with the consumers happen for the company. Each of
its stores is a tiny part of the whole operational structure of the company. Therefore, all the
employees in each of its store are trained well by the company beforehand. The company
practices the latest policies of Human Resource Management to develop the workforce of the
company.
Marketing Segment
In a retail-chain company, the marketing department holds a greater importance than the other
section (Barrick et al. 2015, p.123). In the history, the company has managed to grow as it paid
special attention to its marketing segment. The company is a Public Limited Company (PLC),
and its business is managed and operated by individuals. In order to promote the company, the
marketing department takes the help of different media such as televisions, radio, and newspaper.
Apart from this the department also takes the help of social media platforms such as Twitter. It
also announces the promotional offers and offers of discount through these platforms. The media
strategy helps the company to increase its customer base. The company also takes proper care to
retain its existing customers.
Function of Production
In comparison with the other retail chain, Sainsbury’s has a larger source of third parties that
provide it with the products in its retail stores. Apart from this, it maintains some of its own firms
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and production line for the supply of a number of goods such as organic Chicken, baked beans,
tomato ketchup etc. that it sells under its own brand name. According to Collings (2014, p.256),
an organisation can grow by expanding the range of the products and services it offers to the
consumer. Sainsbury’s has always upgraded its range of products according to the market
demand.
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M2: advantages and disadvantages of relation between function and impact of the
organisation
Overall, the company has benefitted from the interlinking of its organisational functions to the
organisational structure of the company. As a result of this, the workload is relatively low on the
operational departments of the retailer. These sections can do their jobs, by following a set of
predetermined rules and regulations. On the other hand, it becomes really difficult for them to
take a decision at the advent of an emergency, as they are not authorised by the upper
organisational structure of Sainsbury’s. Therefore, it takes a longer period to take a decision,
and this delay has the potential to aggravate and worsen the damage to the company.
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Task 3
P4. Identification of how macro environment of Sainsbury has a positive and
negative effect on operations of its business
Political ● Recently in UK, it has been found that
government debts as well as consumer
debts are very high. This have an
impact on the performance of
Sainsbury.
● Due to high debts, the attitude of
customers have a highly impact. This
creates a huge pressure on the business
condition of Sainsbury.
● Increased globalization in UK has
created both challenges and chances
for Sainsbury.
● Economical ● UK faced a higher unemployment rate
as well as inflation rate in price of
food in the year 2016. This affects
Sainsbury significantly.
● Higher price of food has decreased the
demand of Sainsbury’s product which
in turn decreased the food production.
● Lifting costs of fuels in 2016 have
affected the Sainsbury in huge amount.
The impact has mainly occurred in the
supply concatenation which has
decreased monetary value.
● Recognition crunch is an important
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economical factor that has affected
Sainsbury by decreasing overall gross
revenue.
Social ● With the increase of social awareness
on importance of leading a healthy
life, having a healthy diet, public is
attracted more on Sainsbury’s
products.
● In the age of rapid growth of retail
sectors, Sainsbury’s increase in
revenue generation has been affected a
little bit by other retail sectors. To
counter this Sainsbury’s needed to
create a perfect and unique customer
management skill.
● An organization’s surroundings can
play an important role in company
growth and business. Sainsbury’s need
to be engaged in various social
activities, provide financial help for
different causes in order to promote
itself as well as the relationship with
society.
Technological ● Sainsbury’s need to focus whether
technologies like stock estimations,
computerized monitoring are being
used properly to ensure the long term
benefit.
Legal ● Legal issues can overturn a company’s
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progress. Sainsbury’s is highly
concerned of this.
Environmental ● In order to avoid being categorized as
an industry that has detrimental effects
on environment, Sainsbury’s focused
on enriching the surroundings with
trees, managing pollution.
Table 1: PESTLE Analysis of Sainsbury
(Source: Sainsburys.co.uk, 2018)
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M3. Analyzing Sainsbury's macro environment in details through application of
PESTLE analysis
Through PESTLE Analysis, evident of Sainsbury’s political, economic, social, technological,
environmental as well as legal factors can be gathered. In relation to this analysis, the macro
environment of the company has been effectively analysed that gives an overall idea about
company’s operation in the market of UK. According to Drucker (2017, p.25), the political
factors have effectively highlighted that it is necessary for Sainsbury to take relevant steps so
that those factors does not affects its business. The economical as well as social factors have
been analysed which has been found to have a significant impact on company’s performance.
The legal factors have to be followed by Sainsbury to make their operational performance better
than that of its competitors.
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Task 4
P5. Conducting internal and external analysis of Sainsbury’s for identifying its
strength and weaknesses
Strength:
● Sainsbury is one among the four
chains of supermarket in UK.
● It total strength in context to
employees is over 150,000 people.
● Sainsbury is known for its highly
experienced team in context to
leadership.
● Sainsbury is well known for its
brilliant branding as well as
advertisement capabilities.
● Across UK, Sainsbury has over 550
supermarkets as well as 350
convenience stores.
● It is well known for diversified
business along with strong share in the
UK market.
● Differentiated proposition of food
which is of great quality.
● Employees are highly diversified and
are a great place to work.
Weakness:
● Rise in the price of food across the
world prior to globalization has
affected the sales of Sainsbury.
● Due to rise in the food price,
Sainsbury was forced to sell its
product at higher prices.
● A stiff competition has occurred in
every segment of the sector which has
created a significant negative impact
on Sainsbury.
● Operating market of Sainsbury is
single.
● Lower margin in relation to their
business of selling food.
● In 2008, the online service related to
shopping has been suspended for 2
years. This is due to proficient jobs.
Opportunities:
● Sainsbury’s has a very good
opportunity of growing its business in
e commerce sector.
Threats:
● There is always a challenge for
Sainsbury’s to survive in the field of
retailing and banking.
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● It has a chance of growing and
expanding its banking sector.
● Sainsbury’s adopted latest and
developed technologies that help in
customer relationship management
effectively.
● There is a growing opportunity of
expanding the business of the
company outside UK.
● The organization’s recently launched
food products which are low in
cholesterol, sugar; omega 6 fatty acid
can attract zillions of customers.
● There is also a possibility of working
in various other sectors in
collaboration with other reputed
organizations.
● Current scenario of economy in UK
poses serious threat on company’s
growth.
● Recession which currently embraces
UK can impact on overall business,
revenue growth of the company.
Table 2: SWOT Analysis of Sainsbury
(Source: Sainsburys.co.uk, 2018)
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P6. Explanation of how strength and weaknesses of Sainsbury’s is related to
external factors
Sainsbury’s business and growth depends upon its strength and weaknesses which in turn
dependent upon various factors that interferes with company’s business, administration and
development. According to Belás et al. (2015, p.95), these factors are generally generated from
political or social issues. According to Savrul et al. (2014, p.35), there may be some
environmental factors also. Sainsbury’s maintain all the rules and laws related to company
regulation and business process. It keeps a good relationship with the government and provides
help whenever needed. Sainsbury’s also keep a good rapport with various social organizations,
work on numerous social activities, and help the society whenever required. It also keeps a track
of other companies’ activities, where these companies are actually focusing, in which industries
they are diversifying so that it can get a general view of market trend. Environmental factors,
climate changing also have an impact on overall growth.
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M4. Application of SWOT analysis for justifying its influence to Sainsbury in
decision making:
Sainsbury’s possess some salient features that can be regarded as key factors for accelerating
business and expansion of the organization outside UK. Conducting a SWOT analysis, it can be
easily stated that Sainsbury’s should sustain all the strengths it has within it and apply them to
the fullest. Like its diversified sectors, various food products, strong e commerce business,
energy sectors which play an important role in surviving in the competitive market (Pearson,
2017, p. 23). Sainsbury’s should also try to get rid of all its weaknesses which had slowed down
the organization’s growth and affect in many ways. All these things need to be taken into
account for company’s benefit.
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D2. Critical evaluation of both macro and micro factors and their impact on
Sainsbury’s business objectives as well as decision making
Sainsbury’s micro environment as well as macro environment which depicts its internal
environment as well as external environment is considered to have a significant impact on its
business objectives as well as decision making. According to Cull et al. (2015, p.357), it benefits
the organization in the following factors:
Investors: As investors are the main source of Sainsbury’s financial resources, change in their
interest has an effect on company’s financial policy decisions.
Employees: as employees have a significant impact on the overall performance of the company,
they have a direct impact on business objectives as well as decision making of Sainsbury.
Customers: Usually customers change their needs and preferences. Change in their perception
towards a product in relation to taste and preferences affect the company's performance a lot
(Moroni et al. 2015, p.2199). The policies related to Sainsbury’s product and services are being
affected by the change in the trend of customer’s tastes and preferences. This brings up economic
changes in the organizations.
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Conclusion
From the overall discussion, it can be concluded that for a success of an organization there are
several factors that matters. In this study, different factor that affects business of Sainsbury is
discussed elaborately. The study explained Sainsbury’s positive and negative factors that have a
significant impact on its business in relation to its internal as well as external environment. This
study also highlights the strengths, weaknesses, opportunities as well as threats of Sainsbury as
well as PESTLE analysis through which it is analysed how those analysis have an impact on
company’s decision making. Internal and external environment analysis helps the organization to
make effective decision in relation to its business as well as helps the organization to attain its
goals at present and in future.
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