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Business Environment Analysis of Sainsbury PLC

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Added on 2024/06/28

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This report examines the business environment of Sainsbury PLC, a leading UK retailer. It explores the differences between public, private, and social enterprises, analyzes the micro and macro environmental forces impacting Sainsbury, and assesses the significance of these forces on the organization, market sector, and industry level. The report also delves into stakeholder analysis, identifying key stakeholders and their requirements, and appraises the effectiveness of Sainsbury's responses to policy actions taken by these stakeholders.

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BUSINESS THE BUSINESS ENVIRONMENT
ASS 2
1

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Executive summary
In this report Sainsbury is the enterprise that has been considered whose overview has been
highlighted. Difference between public, private and social enterprise is considered in the study
along with different business structure. Pestle analysis and microenvironment of the enterprise
has been discussed. Porters five model is used and stakeholders’ analysis has been performed in
the report.
2

Table of Contents
Introduction......................................................................................................................................4
2: Demonstrate an understanding of the nature of the environment that organisations operate in. 5
3: Illustrate and explain the impact of environmental forces on organisations at a micro and
macro level.......................................................................................................................................6
4: Assesses the significance of impact of environmental forces at an organisation, market sector
or industry level............................................................................................................................... 9
5: Demonstrate an understanding of requirements of a variety of stakeholders to chosen
organisation....................................................................................................................................10
6: Measure and appraise the effectiveness of the responses of organisations to policy actions
taken by key stakeholders.............................................................................................................. 12
Conclusion..................................................................................................................................... 13
Reference list................................................................................................................................. 14
3

Introduction
Business environment deals with both external and internal factors of business so that they can
control their business issues. Sainsbury PLC is the enterprise that will be considered in the
report. Discussion based on public, private, and social enterprise will be performed along with
different business structure in the public sectors. Relation between macro and micro factors of
Sainsbury will be considered. Stakeholders process analysis and key strategies that the
organization has considered to decrease business issues will be highlighted in this report.
Sainsbury Plc is the third largest retail industry in UK community. John James Sainsbury has
founded it in the year 1869. Net income of the organization is 518 million pound in the year
2018 and headquarter is present in London (Sainsburys.co.uk, 2019).
4

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2: Demonstrate an understanding of the nature of the environment that organisations
operate in
Public enterprise sectors
This organization owned by state and it is controlled by using public authority. Government set
different laws for the public sector for welfare of the community and government operate the
business by using taxes. For example, British Council is the public organization that guides UK
to improve their cultural relation and educational opportunities (Britishcouncil.org, 2019).
Private enterprise sectors
Individual sets private sectors and entrepreneurs have intention to make profit while executing
the business. They follow government business laws and regulation in order to decrease the
chance of chaotic attitude and governmental penalties. For example: Greenergy is the enterprise
in UK that sells fuel and green concept in order to make their environment green in nature
(Greenergy.com, 2019).
Social enterprise sectors
This organization applies different commercial strategies to increase improvement in social,
financial, and environmental well being. Profit of these sectors is used to improve lifestyle of
people and to handle social issues (Ridley-Duff and Bull, 2015). For example, Integrated care 24
is the social enterprise that is highly concerned about health condition of UK community.
Different structure of private sectors is as follows:
1. Perfect (Pure) Competition
It is a theoretical market structure in which enterprise tries their level best to sell identical
product, market share plays no role on price and buyers have perfect information about the
enterprise past present and future.
2. Imperfect (Monopolistic) Competition
In this section, organization used to sell dissimilar goods that adversely affects perfect
competitive market scenario. Bellini et al. (2016) opine that imperfect competition deals with
real life scenario and share market play a vital role in pricing strategy of the enterprise.
3. Oligopoly
As asserted by Ashkenas et al. (2015), oligopoly market is the market where only few firms are
dominated. Therefore, this market provides less scope to new businesses to establish it in
competitive market.
5

4. Monopoly
Single seller characterizes this market structure and seller does not face any kind of competition,
as entrepreneur is sole seller of goods in the market.
5. Laws of Supply and Demand
Laws of supply deal with the quantity of goods and price of goods is directly related with market
share rate (Bellini et al., 2016). On the other hand, laws of demand state that customers demand
is to decrease price of goods in order to fulfil their demand.
In case of Sainsbury, this organization is exit within imperfect competition as it sells different
goods and follows UK government laws and regulation such as Company Act 2006 in order to
decrease taxation error (Sainsburys.co.uk, 2019).
3: Illustrate and explain the impact of environmental forces on organisations at a micro
and macro level
Micro and macro environment of Sainsbury in UK
Strength
In UK, it serves about 90 million customers in a week that improves their share market up to
16% (ft.com, 2019). It won Quality Food Award in the year 2010 that attracts more customers
from the international community and it guides them to raise their oral advertisement rate.
Sainsbury follows consumer law of UK that guides them to eliminate illegal activities of their
business (Sainsburys.co.uk, 2019).
Weakness
At present, this organization has no extension plan due to which it faces stiff competition from
their competitors. Technical issues in the year 2015 adversely affect their online service
(Sainsburys.co.uk, 2019). In order to manage this issue, Sainsbury is focus on technological
factor that is computerised check out procedure and prepares back up plan so that they can
decrease complex issues based on online shopping service.
Opportunity
Sainsbury has introduced lower fat food in order to decrease obesity and cardiovascular disease.
It has 169 stores that guides them to deliver 100,000 orders in a week (Sainsburys.co.uk, 2019).
In order to decrease pricing issues, they strictly follows price of fuel in UK so that they can
maintain their maturity phase without any hindrance.
Threats
6

After Brexit, UK is presently facing recession issue (BBC News, 2019). National minimum wage
regulation has been implemented by the enterprise to manage labour cost threat. Most
importantly, the threat that the enterprise is facing in recent days is stiff competition from their
competitors such as Aldi, Tesco, Lidl and Morrison (Sainsburys.co.uk, 2019).
PESTLE analysis of Sainsbury
Figure 1: PESTLE analysis
(Source: Marttunen et al., 2017)
Factors Analysis
Political Globalisation factor has improved
Sainsbury’s business opportunity in
international market. Presence of proactive
government and political stable situation in
UK allows the enterprise to establish their
business in UK society (The Economic
Times, 2019)
Economical Rising cost of fuel in UK is one of the most
important factors that affect pricing strategy
of enterprise. Presence of large population
7

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guides the organization to sell diverse range
of product. Improvement of FDI (Foreign
Direct investment) rate guides the company
to raise their profit margin (ft.com, 2019).
Social Sainsbury is involved with raising funds,
charity, arrange social activities, and sponsor
games in order to improve their responsibility
for society.
Technological Technological improvement factor in UK
allows Sainsbury to improve their online
shopping facilities. It has been observed that
this enterprise has focused on computerised
check out means in order to decrease the rate
of human errors and therefore, it creates a
positive impact on their business activities.
Legal This organization follows rules and
regulation of UK government such as
competition laws, health and safety laws,
legal laws and so on so that they can decrease
discrimination issues, employees’ salary
issue and therefore, it guides them to manage
all their business issues according to its
priority.
Environmental UK government is giving pressure to well
established organization to follow reduce,
recycle and reuse approach in order to make
their environment friendly in nature (BBC
News, 2019). In case of Sainsbury, they are
trying their level best to decrease their carbon
8

footprint operation so that they can bring
green approach in their business policies.
Table 1: PESTLE analysis
(Source: Sainsburys.co.uk, 2019)
4: Assesses the significance of impact of environmental forces at an organisation, market
sector or industry level
Figure 2: Porter's five forces
(Source: Burns. and Dewhurst, 2016)
Threats of new entrants
As per viewpoint of Burns and Dewhurst (2016), threats of new entrant brings innovation in
service and senior team try their level best to reduce overall cost of the product in order to attract
more customers from community. In order to improve innovativeness in Sainsbury service and
product, senior team has spent more money on their research and development. This organization
all time tries their level best to serve standard quality product in front of customers so that they
can discourage new players in the retail industry.
9

Bargaining power of suppliers
Organization buy raw material from multiple suppliers and suppliers who are in dominant
position sell raw material in perfect price that creates a positive effect on enterprise pricing
strategy. In case of Sainsbury, senior team maintains good relation with their third party
manufacturers. Moreover, they need to follow bargaining power strategy of Nike and Wal-Mart
so that they can get right amount of raw materials as per their requirement (Sainsburys.co.uk,
2019).
Bargaining Power of Buyers
Buyers want to buy best product with minimum price as possible (Allen et al., 2016). Sainsbury
provide discounts and offers during special occasion, season so that they can maintain their
production and sales streamline.
Threats of substitute service and products
When a service and product meets similar service users needs in different ways, than a enterprise
suffers in their profitability margin (Allen et al., 2016). Sainsbury follows switching cost
approach so that they can offer right price against their service and this strategy allows it to
manage stiff competition rate.
Rivalry among existing competitors
Presence of rivalry in existing market always compel the company to lowers down their product
and service price and they have to maintain outstanding product standard to compete in better
way. In case of Sainsbury, they identify their competitors’ strategy and change their service and
product in order to consider their game changing trends. Production and operation manager of
the enterprise often takes suggestion from experts so that they can maintain unique feature in
their business activity (Sainsburys.co.uk, 2019).
5: Demonstrate an understanding of requirements of a variety of stakeholders to chosen
organisation
Stakeholders’ analysis process
As asserted by Allen et al. (2016), stakeholders analysis is an essential technique that current
organisation uses in order to identify their stakeholders and analyse their needs. It has been
observed that Stakeholders management is the first step that guides the enterprise to win support
from stakeholders.
Stakeholders of Sainsbury
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Suppliers, business partners, and distributors
Business partners of Sainsbury have the ability to take decision against their business issues.
Suppliers and distributors provide right raw material to the enterprise in order to decrease
wastage issues (Sainsburys.co.uk, 2019).
Employees
Sainsbury provide benefits and incentives to their employees in order to keep their employees all
time motivated. Acceptable working hours and perfect pay scale is provided by the organisation
to their employees in order to make their working environment perfect.
Customers
Service users are prime stakeholders for the enterprise. Sainsbury set their product price as per
customers needs and modifies their business strategy in order to attract more users from the
community.
Local community and government of UK
Sainsbury strictly follows rules and regulation of UK government so that they can decrease
illegal activities and it raises transparency in their business. They follows Company Act 2006,
working time Regulation 1998, UK labour law and so on to decrease taxation error, local parties
chaotic attitude and penalty issues (Ashkenas et al., 2015).
Stakeholder mapping
Identifying:
Current engagement objectives are prepared by the recent demands of internal and external
stakeholders. Brainstorming action is considered by the enterprise that is learning from past,
creative thinking, highly aware about the social issues and increment in service diversity.
Analysing
Sainsbury uses analysis tool so that they can visualize complex attitude in their business.
Mapping
Senior team add expertise, willingness, and value in their criteria chart to decrease business
issues as per its priority. The senior team of organisation follows sample mapping so that they
can manage their business issues by considering their past example (Sainsburys.co.uk, 2019).
Enterprise keeps updated information about the employees and customers. Sainsbury mostly
manage all-important criteria of suppliers, distributors, and business partners. They keep minimal
contact with local authority and they anticipate and meet needs of government.
11

Prioritising:
Senior team engage right stakeholder in their business so that they can save both money and
time.
12
Keep information completely Manage most thoroughly
Regular minimal Contact Anticipate and meet needs
 Customers
 Employees
 Government of UK Local authority
 Suppliers
 Business partners
 Distributors
Figure 3: Stakeholders mapping

6: Measure and appraise the effectiveness of the responses of organisations to policy actions
taken by key stakeholders
Specific actions to meet the needs of stakeholders along with its effectiveness
Action 1: Implementation of organic foods in their business
In order to attract more diet conscious customers, increment of healthier food in their business
provides greater business opportunity and it guides the enterprise to keep social trends. In order
to bring innovation in their business, Sainsbury spends huge money in their research and
development sector to raise their sustainable development in business.
Action 2: Apprenticeship scheme to support British agricultural sector
Sainsbury invest huge sum of money in their Big data project so that they can generate
innovative techniques for their farmers and therefore, they can get right quality of raw materials
from their suppliers. Moreover, Sainsbury Development Group tries their level best to decrease
farm related threats in order to serve quality product in front of their customers
(Sainsburys.co.uk, 2019).
Action 3: Collaborate with World Cocoa foundation and Ethical trading initiatives
Fair Development Fund is prepared by the enterprise so that they can address global challenges
that retail industries are facing in recent days. Sainsbury believes that collaboration is the only
strategy that can guide recent enterprise to face global challenges and therefore, it participate in
Ethical trading activities, World Cocoa foundation to provide detail idea about globalisation
challenges in front of international community. This strategy brings transparency in their
business in front of stakeholders (Sainsburys.co.uk, 2019).
13

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Conclusion
Senior team of Sainsbury try their level best to decrease their product price and they also wants
to introduce new product that will be perfect for modern economic condition of UK. Different
example and definition of public, private and social sector has been explained in the report.
Relation between macro and micro factors of Sainsbury has been considered. In order to
globalisation challenges, it collaborates with international funding activities. Customers are the
prime stakeholder for the organisation.
14

Reference list
Sainsburys.co.uk. 2019. [online] Available at:
https://www.about.sainsburys.co.uk/~/media/Files/S/Sainsburys/documents/making-a-
difference/sourcing-for-sustainable-development-update-2018.pdf [Accessed 5 Jun. 2019].
Allen, R.W., Porter, L.W. and Angle, H.L., 2016. Organizational influence processes.
Routledge.
Ashkenas, R., Ulrich, D., Jick, T. and Kerr, S., 2015. The boundaryless organization: Breaking
the chains of organizational structure. John Wiley & Sons.
BBC News. 2019. UK Politics - BBC News. [online] Available at:
https://www.bbc.com/news/politics [Accessed 5 Jun. 2019].
Bellini, C.G.P., Pereira, R.D.C.D.F. and Becker, J.L., 2016. Organizational structure and
enterprise systems implementation: Theoretical measures and a benchmark for customer
teams. Information Technology & People, 29(3), pp.527-555.
Britishcouncil.org. 2019. How we are run | British Council. [online] Available at:
https://www.britishcouncil.org/about-us/how-we-are-run [Accessed 5 Jun. 2019].
Burns, P. and Dewhurst, J. eds., 2016. Small business and entrepreneurship. Macmillan
International Higher Education.
ft.com 2019. 41 charts that explain the UK economy. [online] Available at:
https://ig.ft.com/sites/numbers/economies/uk/ [Accessed 5 Jun. 2019].
Greenergy.com. 2019. Greenergy • The leading national provider of road fuel. [online]
Available at: https://www.greenergy.com/ [Accessed 5 Jun. 2019].
Marttunen, M., Lienert, J. and Belton, V., 2017. Structuring problems for Multi-Criteria Decision
Analysis in practice: A literature review of method combinations. European Journal of
Operational Research, 263(1), pp.1-17.
Ridley-Duff, R. and Bull, M., 2015. Understanding social enterprise: Theory and practice. Sage.
Sainsburys.co.uk. 2019. Sainsbury's. [online] Available at: https://www.sainsburys.co.uk/
[Accessed 5 Jun. 2019].
The Economic Times. 2019. Definition of Imperfect Competition | What is Imperfect
Competition ? Imperfect Competition Meaning - The Economic Times. [online] Available at:
https://economictimes.indiatimes.com/definition/imperfect-competition [Accessed 5 Jun. 2019].
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Business Environment Analysis of Sainsbury PLC

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