Sainsbury's External Factor Analysis

This assignment delves into the external factors affecting Sainsbury's business performance. It examines how political policies, economic conditions, societal norms, and technological advancements influence Sainsbury's strengths and weaknesses. The analysis covers various aspects like taxation, inflation, consumer behavior, and digital marketing adoption. Understanding these external influences is crucial for Sainsbury's long-term sustainability and profitability.

BUSINESS &
BUSINESS
ENVIRONMENT

INTRODUCTION
Business environment is refer as an effective combination of external and internal factors
that influence a organisation's operating situation (Avramenko, 2012). Business environment can
cover different parts like suppliers and customers; its owner and competitions; enhancement in
technology; government activities and lows etc (Business Environment, 2017). Main purpose of
conducting this report is to analysis the importance of business environment for an organisation.
This assignment is based on three enterprise such as public, voluntary and private. In which
chosen organisation is Sainsbury Plc, National Audit Office and Cancer Research UK. The
whole file is based on Sainsbury Plc which is a second largest chain of supermarkets in the
United Kingdom. This project divided into different parts which cover types, scope and size of
organisations. Interrelationship between different departments of organisation and their link with
business objectives and structure is also include in this project. PESTLE and SWOT analysis of
company and their interconnection that effect on decision making process, it is also cover in this
study.
TASK 1
P1 Different types and purpose of organisations
Business environment means all of the external and internal factors that impact on
company's functions such as customers, employees, administration, business regulations, supply
and demand (Bovee, Thill and Raina, 2016). There are major three types of organisation such as
public, private and voluntary. All has their own purpose and motive to achieve better outcomes
within predetermined time period. All these types of organisations and their purpose are
determined as under:
Private organisation: It is a part of a nation's economic system that is operated by
companies and individuals, rather than the legal authority. Main purpose of the private company
is to make profit. Under this sector, chosen organisation is Sainsbury Plc which is a retailing
industry in the UK.
Purpose: Main purpose of Sainsbury Plc is to give great food at a fair price. Company
believe in being fair to their environment and suppliers.
Legal structure
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Sole proprietorship- It is identify as a simple business structure or framework which can
run by an individual is known as sole proprietorship.
Partnership- It is refers to an agreement or statement between two or more parties to start
an enterprises for a mutual purpose. They agrees in order to share profit/loss and burden of
ownership effectively.
Limited company- It is a type of incorporation that monitor the quantity of liability
undertaken by a enterprises for investment is called as limited company.
Legal structure of Sainsbury is limited company.
Public organisation: This is a type of enterprises that are operated and owned by the
authority and exist to give services for its citizens (Cavalcante, Kesting and Ulhøi, 2011). In this
sector chosen organisation is National Audit Office which is an independent parliamentary body
in the UK. Company is responsible or liable for auditing central government departments, non-
governmental public bodies and government agencies.
Purpose:
Main purpose of public sector is to give public services include governmental services
and public goods as the police, military, public education beside with health care and those
performing for the authority itself. Purpose of National Audit Office is to give an end-to-end
view of policy implementation, and produce reports.
Legal structure: Legal structure of the public organisation is classified into three parts which
are determined as under:
Local Government- This is identify as an administrative structure or framework of a
small geographical area including city, town and so on. Local government of the country have
only control and power over a particular region (Hair, 2015).
State government- This is another part of authority that makes laws and regulations for
state. Such type of government is liable and responsible for esteem the issues and local
requirement of a particular state.
Central Government- This is also a governmental authority that control and regulate
entire nation. All the powers about to allot authorities and duties have central government.
Central government maintain global negotiation and domestic security in an effective manner.
National Audit Office is a part of central government because in this roles and
responsibilities are allotted by the government.
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Voluntary sector: It is the duty and responsibility of social activity undertaken by an
enterprises that are non-governmental and non-profit organisations. In this sector, selected
organisation is Cancer Research UK which conduct research into the diagnosis, prevention and
treatment of disease.
Purpose:
Main purpose of voluntary sector or Cancer Research UK is to minimise the number of
human deaths from cancer.
Legal Structure
Trust- It does not require a membership because it is type of charity organisation which
is established and developed by a team. This structure also have entire duties and powers which
are undertaken into Trustee act.
Association- This is refer as a group of different members who are in agreement to
accomplish a mutual purpose or aim other than profit (Hamilton and Webster, 2015).
Cancer Research UK is comes under the of charitable organisation.
Companies can expand their business operation in international marketplace by analyse
the international business environment and also evaluate motive and legal structure of other
nations and then businesses can enlarge their operations in successful manner.
P2 Size and scope of a range of different type of organisations
There are mainly three types of organisation which are explained as under with their full
details:
Private organisation:
Background details of the company: Sainsbury is a type of private organisation which was
established by John James Sainsbury in year 1869 at London, United Kingdom. It is a second
largest supermarket chain in the UK.
Products and services: Sainsbury specialise in dealing with hypermarket, super market,
convenience shop, super store, forecourt shop etc.
Size: In the Sainsbury, there are approximately 181,900 employees are working. Company has
1415 shops in all over the globe.
Scope: Different number of Sainsbury convenience and supermarket stores in the UK. Scope of
the business products and services are not only in United Kingdom but also in all over the globe
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(Karagiorgos, Drogalas and Giovanis, 2011).
Mission & Vision: Vision of the company is to be the most trusted retailer where large number
of person love to work and shop. Mission of the organisation is to make all our clients’ lives
easier every day by providing great quality and service at reasonable prices.
Objective: Main objective of company is to provide high and better quality service to clients
and also increase or give good financial return to stakeholders.
Organisational and legal structure: Organisational structure of the Sainsbury Plc is flat and
legal structure is a limited company (Kolk, 2016).
Stakeholders: In Sainsbury Plc, there are different stakeholders such as management,
shareholders, owners, employees customers etc.
Public organisation:
Background details of the company: Example of Public organisation is National Audit office
which was founded by the government on UK in 1983. Main roles and responsibility of
company is auditing the central government departments, government agencies etc.
Products and services: Company mainly specialise in inspections of account and give services
of auditing.
Size: In department of National Audit Office, Approximately 798 employees are working.
Scope: Company offer their services in different places such as UK and many other supreme
Audit ( Nishitani and et. al., 2012).
Mission & Vision: Vision and mission of the company is to promote good governance by
increasing transparent and accountability management in the public sector and they encourage
social responsibility.
Objective: Objective and motive of company is apply and create their knowledge and give high
performance.
Organisational and legal structure: Charitable organisation is a legal structure of the National
Audit Office. Organisational structure of the is non-profit (Osterwalder and Pigneur, 2010).
Stakeholders: In the organisation, there are some main stakeholder such as volunteers,
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employees and government.
Voluntary Organisation:
Background details of the company: Cancer Research UK is a type of voluntary sector
which was formed in 4 February 2002. It is a kind charitable organisation in London, United
Kingdom. Main focus of the company is on cancer research and health policy.
Products and services: Company mainly provide diagnosis of the disease and better treatment
services to the need people.
Size: Organisation have approximately 40,000 volunteers and 3,960 workers.
Scope: Company provide different services in various countries such as England, UK etc.
Mission & Vision: Mission of the company is to convey forward the day when entire cancers
are cured. Vision of the organisation is to be giving biggest level of compassionate and safe
care for patients (Osterwalder and Pigneur, 2010).
Objective: Objective of an organisation is to reduce the death number from cancer.
Organisational and legal structure: Legal structure of the company is central government.
Stakeholders: Main stakeholders of the company is Clients and political parties.
TASK 2
P3 Relationship between various functions of an organisational and their link to organisational
objectives and structure
In the Sainsbury, there are different departments are work in which some department and
their interrelationship is determined as under:
Human resource with marketing department
Human resource department's foremost roles is performance appraisal, recruitment,
training of employees, selection, development, workforce planning and giving compensation to
them (Pikka, Iskanius and Page, 2011). In Sainsbury, Marketing and Human resource department
intimately interrelated with each other because human resource function is responsible for
selecting the skilled and talented workforce with the assist of marketing department in way of
providing advertisement or promotion for vacant job position. For instance, selecting workers
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have proper talent regarding marketing tools and support to the Sainsbury for accomplishing its
goals and objectives of the different number of targeted audience.
Marketing with production department
Marketing sector analysis the customers' demands and needs and developing effective
plan for accomplishing as well as fulfilling those requirements. Sainsbury needs to enhance their
brand image in the marketplace (Pulver, 2012). Therefore, marketing department taking support
from production sector for making the best and accurate quality goods at minimum cost.
Marketing department develop promotional scheme for promoting of products and services to
accomplish business objective and enhance organisational structure.
Organisational structure is refer as an activity of supervision, timing and task allotment
for the executing the business purpose. Sainsbury requires to be more flexible, efficient in
regards to attaining competitive advantage. Sainsbury follow flat organisation structure which is
identified as under:
Flat organisational structure: Flat organisational structure is follow by the Sainsbury in
their business which is also known as horizontal structure (Reed and et. al., 2013). Such kind of
structure indicates that there is no level between employees and managers due to which the
employees and top authorities can directly communicate with each other without facing any
disturbances. It brings motivation among employees to share their new and innovative ideas
directly to the top level management which indirectly brings advantages to company as well.
TASK 3
P3 Positive and negative impacts the macro environment has on business operations
PESTLE Analysis is identify as an best framework for the company to identify political,
economical, social, technological, environmental and legal situation of the country.
Political
Legal authority plays an essential role for business entity by imposing various policies
and regulations. It impacts the formulation or preparation of any product name. Government
policies make a high effect on the performance and profitability of Sainsbury (Reinhardt and
Stavins, 2010).
 Positive- This factor decrease sourcing cost in European nations. In this, energy
efficiency is more essential for achieving competitive benefits in actual market scenario.
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 Negative- European countries has Free trade policy that reduced a barrier or issue which
caused to big and difficult competition in marketplace. It is more difficult in order to take
initiate for Sainsbury without understanding the rules and legislation of other nations.
Economical
Economical factor also play an essential role in order to form effect on business business
activities of Sainsbury. It covers GDP, national income, etc.
 Positive- Sainsbury requires to work and perform in online industry for their clients
watch their deals and it supports to decrease cost as well as time.
 Negative- Sainsbury impacted by different plans and actions which are developed by
different challengers like discount pricing, cashback etc. It provides a negative effect on
their profitability and sales because clients want better quality of their money.
Social
Social factors covers different culture and norms of community that impact business of
Sainsbury. In this business mainly relay on on preference and lifestyle of clients.
 Positive- Sainsbury should develop quality product or services in their shops which is
profitable and essential for their business operations.
 Negative- Sainsbury provide quality goods to their clients with reasonable price. But all
over dependency on individual brand provide negative effect on business (Shigang,
2010). Because their competitors are providing different choice in product line for
maximising customer base.
Technological
Technological factor mainly connect with technology advancement in an enterprise. It
supports to enhance productivity of Sainsbury and make a better communication in an
enterprise. It is more necessary for organisation to apply advanced technology and tools in their
manufacturing processes.
 Positive- Sainsbury have to follow online marketing with purpose of attracting
customers as well as taking competitive benefits.
 Negative- There are different number of challengers who are applying new technology
which is impacting the brand image of Sainsbury in the market.
Environmental
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It covers the cultural responsibility and duty of an organisation in order to save resources.
Sainsbury needs to compliance with entire environmental laws as well as follow such
machineries in their processes of production that do not pollute and effect environment (Trevino
and Nelson, 2016).
 Positive- Sainsbury should apply friendly raw material via this, they can easily get
customer satisfaction and reliability.
 Negative- Under heavy rain, delay is happen in transportation. Via this, clients will not
acquire product or services on time to time and become a negative and direct effect on
Sainsbury.
Legal
Legal factors covers different laws and regulation which must be applied by all
organisation such as employment law, consumer protection act etc. Sainsbury needs to apply
entire the laws and legislation made by legal authority in order to operates its operations in
smooth manner.
 Positive- Sainsbury have to apply the rules and legislation made by legal authority. It
supports to make a brand image more strong in market (Van Vuuren, Roberts-Lombard
and Van Tonder, 2012).
 Negative- If Sainsbury will not apply regulations and legislation then they have to
addressed different disadvantage and it also create a negative effect on Sainsbury
reputation.
TASK 4
P5 Internal and external analysis of organisations in order to identify strength and weakness
Internal and external analysis of organisation is a part of SWOT analysis. It is more
essential and significant factor for the Sainsbury because it help in identifying of their strength,
weakness, threats and opportunities (Werther Jr and Chandler, 2010). Therefore, SWOT analysis
of the Sainsbury is determined as under:
Strengths Weaknesses
 Sainsbury has a large brand value
which is providing different products or
services with various requirements of
 Over dependency on advanced
brands ant out quality stock provide
a positive impact on their clients.
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clients.
 Company operates approximately 600
grocery store and over 800
comfortableness stores across United
Kingdom.
 Business has a vast range of products
which supports to attract large number
of clients customers to their shops.
 Improvement of technology maximise
brand value of Sainsbury in the market.
 Sainsbury have inexperienced and
unknowledgeable workforce so
that, business can-not fulfil needs to
their customers.
 Sainsbury has poor ineffective
supply chain, so that company can’t
deliver quality product or services
at entire locations.
 Company is not applying advanced
and unique techniques which could
rescue their time as well as money.
Opportunities Threats
 Company has connectivity in different
nations, which supports to enlarge of
their business operations and activities
all over the globe.
 Sainsbury requires to increase
customer's satisfaction level so that,
actual clients could attract towards
business.
 With the assist of effective brand
awareness an enterprise could come in
innovative market segments which will
essential for them.
 Business has opportunity or possibility
for enlarging business in Africa, Asia
country etc.
 Rules and legislation of different
nations across the globe may impact
on business operations of
Sainsbury. As this would be
reducing cost of the operational
process.
 Business has a vast brand image
and goodwill so there may be
danger because of their over
dependence on out of quality
products.
 Increasing economic process,
presents a big situation as well as an
chances to Sainsbury's.
Influence of SWOT analysis in decision making process
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SWOT analysis supports business administrator in taking more effective determination
and make enhancement in the fields where needed (Wirtz, Schilke and Ullrich, 2010). It carry
benefits on the strength of a Sainsbury which assist in enhancing brand image of a company. It
supports to enterprises in setting business objectives and developing strategies for accomplishing
them. It also pull to grab the possibility so that business could achieve their vision and mission.
In context to Sainsbury, it may reduce their weak points by applying digitalisation which attracts
large number of clients, hire new staff members which may support to achieve satisfaction in
their client.
P6 Strengths and weakness interrelated with external macro factors for the company
External factors of Sainsbury are interrelated with the weakness and strength of an
organisation. It is determined in detail manner which are identified as under:
Political factor
Political factor covers policies, rules and legislation made by legal authority which make
effects on business weakness and strength. Strength- When Sainsbury apples entire the rules and legislation as well as pay tax time
to time then it develop a positive image and reputation of organisation as compare to
other organisation.
 Weakness- When Sainsbury is not pay tax time to time then they cognizance authorities
pressure and develop a factor of weakness for Sainsbury.
Economical Factor
Country's Economical condition make a big effect on business activities of Sainsbury.
This factor covers inflation and deflation, national income and many other. Strength- When a nation go via a deflation situation then prices of products are reduce
and clients purchase more products then consumption of Sainsbury is increases
automatically, it is show strength of a company.
 Weakness- When inflation rate of country is arise then price of products become
maximum. It become show a weakness of Sainsbury because maximum prices show low
demand is a mark of down profitability for organisations (Wirtz, Schilke and Ullrich,
2010).
Social factors
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Social factors covers norms and culture of society and buying behaviour of customers or
society. Thus, it may show a strong as well as weak point of Sainsbury. Strength- When Sainsbury apply society culture then it supports to maximise demand of
goods and become a strong point of an organisation which maximise sustainability as
well as profitability.
 Weakness- If Sainsbury does not apply climate and culture of community and not
encourages on client's demand then decrease profitability and become a weak point of a
company.
Technological factors
Technological factor is mainly linked with advanced technology. When Sainsbury have
change technology then it supports to run and operate their business operations much faster and
smoother. Strength- It identify as a strong point of Sainsbury in order to to sale their goods on
digital marketing which supports to get large client support.
 Weakness- If Sainsbury applying usefulness technology then it maximise production cost
and become business weakness.
CONCLUSION
From the above mentioned data it can be summarised that business environment
containing various influencing factors which includes internal as well as external that will bring
huge impact on the sustainability and profitability of an organisation irrespective of the fact
whether small, medium or large. For this, management is required to analysis such influencing
factors through conducting SWOT and PESTLE analysis along with the contribution of different
departments in accomplishment of business goals.
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REFERENCES
Books and Journals
Online
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Business Environment. 2017. [Online]. Available
through:<https://www.slideshare.net/NikhilSoares/business-environment-
featuresmeaningimportanceobjectives-porters-model>
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