Sainsbury's Business Environment

This report analyzes Sainsbury's business environment, examining its competitive landscape using Porter's Five Forces framework, evaluating the strengths and weaknesses of its primary and supportive activities within Porter's Value Chain, and discussing how Sainsbury can leverage information technology and innovation to improve business processes and enhance its competitive positioning.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
Introduction of Sainsbury............................................................................................................3
Competitive environment of Sainsbury by Porter's five forces analysis.....................................5
Analyze any two primary and two supportive activities in porter's value chain and evaluate the
weakness and strength of it.........................................................................................................7
How business can deploy Information technology and use innovation ideas to improve
business processes and enhance competitive positioning...........................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment includes the internal and external factors that influence business. It
provides the proper guideline in order to implement the strategies (Laudon and Traver, 2016).
This report is based on Sainsbury company. It is the largest supermarket retailer in the UK. It
will provide the information about the organization. It will discuss primary and supportive
activities in porter's value chain and evaluate the weakness and strength of it. This report will
explain the impact of information technology.
Introduction of Sainsbury.
Sainsbury is the second largest chain of supermarket in UK having 16.9% of the
supermarket sector. It was founded by John James Sainsbury in 1869. It became the largest
retailer of groceries in 1922 (Hair and et.al., 2015). This company is spited into three division
Sainsbury's Argos, Sainsbury's Bank and Sainsbury supermarket Ltd. With that this company
also has interest in property. The largest overall shareholders is the Qatar investment authority,
sovereign wealth fund of Qatar, which has 21.99% shares of company. Sainsbury produce crisps,
biscuit, porridge, chocolate pouches, fruit, vegetable, meat, fish, dairy products, frozen, food
cupboard, health and beauty etc.
Business Strategies of Sainsbury.
Vision of Sainsbury is to be the most trusted retailer where employee love to work and
people love to shop. For achieving this company put its consumers at the heart of everything they
do and invest in the store. With that their channels and customers are offering the best
possibilities to make shopping experience better. Customers are at the heart of Sainsbury
business ans future and success of the business is depended on the services what they need.
Company value the health, environment, sourcing, their colleagues and community. There are
three business strategy on which Sainsbury is focusing.
Be There for Customers: Customers experience in opportunity to enhance the revenue
of company. Concentrated on customer experience decrease the churn and increase the profit.
Experience of customers impact the all areas of business. Without customers business does not
exist. It is important to make customer satisfied and happy by providing them better services and
goods. With that they are improving the customer experience. For this they re creating a clear
customer experience vision (Sarfaraz and et.al., 2018). They are offering the best service by
communicating with them via various sources such as mobile apps, online site, messaging.

Company is creating an emotional connection with customers for delivering them better
experience.
Great Product and Services at Fair Prices: one of the business strategy Sainsbury is to
pricing the product properly. Pricing the product fairly and correctly increase the sells and build
the foundation for the business. It generally involves the key factors such as target customers,
tracking how the other companies are changing, analyse and identify the relationship between
price and quality. Pricing product at lower cost may be disastrous impact on bottom line of
business. For this company is focusing on pricing which is relevant for both customers and
organisation.
Engaging Colleagues: Employees are the crucial assets for the business. Sainsbury is
focusing the strategy to engage colleagues more towards business. For this company is prioritize
the teamwork in order to make part of the performance management. With that they are also
concentrated on pinpointing the issues. Professional social relationship mare interactive,
symbiotic and more direct communication help to interact them with each other (Sacchetti and
Tortia, 2018). They are providing the co workers incentives, compensation and benefits for
improving their work and engaging them more.
Product and service of Sainsbury: This retailer company is the largest food retailers with
over 800 convenience stores, 600 supermarkets, 250000 online orders every week. The range,
quality and provenance of food sets apart from the other super market. For this they are investing
the in a three years programmes to update and upgrade their 3000 own brand products. Sainsbury
deliver the product such as fruits and vegetable, meat and fish, bakery products, milk products,
frozen, food cupboard, heath and beauty, baby and toddler, home ware and electrical, drink, beer,
wine and spirits etc.
Competitive environment of Sainsbury by Porter's five forces analysis.
Porter five force is a framework analyze competition in business. It determines the
competitive intensity and the attractiveness of business in terms of revenue and profitability. It
discovers the weakness and strength of business. This framework can be applied to any segment
of the economy in order to search attractiveness and profitability (de Oliveira and et.al.,). Porter's
five forces are competition in the market, power of customers, power of suppliers, thereat of
substitute products and potential of new entrants in the market.

Threat of New Entrants: in retail new em tarts bring the innovation, new products and
methods and new challenges such as reducing cost, pricing strategy, providing new value
propositions that put the company in pressure. Company has to face all the challenges and has to
make an effective and attractive barriers to cure it competitive edge. Sainsbury can tackle the
threats of new entreats by building the economies of scale due to this it can able to less the fixed
cost per unit. By innovation the new service and products for customers to rebound the and for
making their new costumers base. Cresting abilities and capabilities and s\pending more money
in research and development. New entries are less interested entering in the dynamic market
where company like Sainsbury defining the standard regulatory.
Bargaining Power of Buyers: Buyers are demanding more. People want to buy the best
thing with the best quality at lower prices. This situation put the company in pressure. One side
organization has to earn profit and other side they also have to price the product lower and
reasonable (Özbilgin and Vassilopoulou, 2018). The smaller the customer base the higher the
bargaining power of them. It makes higher possibilities to increase offers and discount. Company
can manage the bargaining power of customers by creating the large customer base. This can
assist company in two ways. First it will give the opportunity to company in order to streamline
its production and sale process. Second it will decrease the bargaining power of the buyers. By
introducing the new products can help to decrease the defection of exiting consumers of
company and its competitors. Continuously innovating new products. Customers always demand
discount and new products. If Sainsbury rapidly produce new product so it can limit the
bargaining power of consumers.
Bargaining Power of Suppliers: All the companies in retail sector buy their raw
material from various suppliers. Suppliers who are in domination position can reduce the margin
of company. In customer service sectors powerful supplier sue their negotiating power for
pricing higher in retail field (Grochla and Szyperski, 2018). Higher supplier bargaining power
lower the overall profitability of retail. Company can overcome this by creating the strong and
efficient chain supply with various suppliers. Developing the dedicated suppliers whose business
depends on the company. By experimenting and making different designs of products so that if
suppliers hike their price they can switch to another suppliers.
Rivalry among the existing competitors: if competition between the rivalry is intense
then it would reduce the price and decrease the overall profit and revenue of company. It can

change the overall long term profitability and productivity of company. Sainsbury can overcome
this by making the scale due to this it can compete better in the market. By creating the
sustanibily differentiation with that company can partnership or collaborate with competitors to
enhance the market size than compete in small market. It will bring more options to company.
Threats of Substitute services and products: when new product and service is introduced
in the market consumer can switch their interest. With this similar customer demands, needs and
wants in different way can influence the profitability of company. For example iPad, laptops are
threat for personal computer, google drive and Dropbox is threat for hardware drives. The threat
of substitute products and service is large if goods and products are different, valued and unique
from present offering products (Ahmed and et.al., 2018). Company can tackle the threat of
substitute by increasing the switching costs for the public. Being service oriented than just the
product oriented. With this understanding the core needs and demands of customers can help to
achieve the business objectives.
By identifying and analysing the five competitive forces of Sainsbury can help to
understand what can impact the profitability of the company. With the help of this framework
company can identify the current market trends and according to that it can make or develop the
strategies. It makes company to exploit the opportunities according to current trends. This tool
assist company in order to take decision like to enter a market or not, how to price goods and
services, with whom company can build partnership, who are the toughest competitor in the
market. By identifying all the hurdle of business Sainsbury can easily implement its strategies.
Analyse any two primary and two supportive activities in porter's value chain and evaluate the
weakness and strength of it.
Porter's value chain: this chain analyse the business management concept. It was
developed by Michael Porter. It is collection of activities which is performed by companies to
build values for its customers. It leads to competitive advantage and create the profitability for
company. This value chain is focused on the activities and system with consumers rather than
depending on department and accounting expense categories. It connects the activity and system
to each other and identify the effects on profits and costs (Bryson, 2018). It is based on the
process view of organization, manufacturing of organization as a system and transformation
processes and output, consumption of resources such as labour, money, materials, buildings,
equipment, management and administration. In porter's chain value operations, inbound

logistics, outbound logistics, services, marketing and sales are categorised as primary activity.
Supporting activities includes human resource management, technological development and
infrastructure, procurement.
Primary Activity: These activities includes those that are directly related to product and service
that is important to run business properly and selling the goods and services.
Operations: It is an area where designing, controlling, process of production,
redesigning business operations in the production of service and goods occur. It includes the
responsibility to verify the business operations are effective or not in terms of using the resources
which is needed to deliver the productive services to customers (Echeverri, 2018). Operations are
concerns with supervising, planning, organizing, in the terms of manufacturing, production of
services. This management operates entire production system that concert s inputs such as
energy, raw materials, labour in outputs like goods and service.
Service: Business services are related to economic services. Company build the service
system in term to provide valuable service and goods to consumers. Good service is delivered
from accountable service provider and with close connection with external and internal service
suppliers. Successful business service also depend up on IT service for example external website
where products of company are placed to buy for customers. A better service is depended up on
the servers, network devices, application and storage gear. With that it required mapping that
show the components which include database servers, routers, switches, application server, web
server etc.
Supportive Activities: These activities are directly related to infrastructure, procurement, human
resource management and technical development.
Technical development: it is also known as research and technological development. It
includes the innovation which develops the new products and services, improve exiting services
and products. The first step of technical development is to produce the potential new services and
production process(Petruzzelli And et.al., 2018). It helps company produce new products with
industrial scientists by applying the correct strategies. Nowadays customer demand new and
unique products. For this company is expending more in research and technical development so
that they can provide service according to interest, demand and needs of customers.
Human Resource Management: This activity manage the staff, employees and whole
organization and implement the strategies to gain competitive advantage. It enhances the

performance of employees and focusing on the policies and systems. Human resource
management is responsible for employee recruitment, employee benefit design, performance
appraisal, rewarding, training and development. It hires the candidates who are skilled, well
knowledges, qualified for particular post. HRM specialize training, recruiting, recruiting
specialist, employee relation and benefits, hire and fine top talent. Employee relation deals with
policies, in manner of discrimination, harassment, bully, providing equal opportunity. Training
and development program help company to develop the efficiency, potential and needed knees in
employees.
Strength and Weakness of Sainsbury.
Strengths: Sainsbury is the oldest and largest supermarket in the United Kingdom. With that is
third largest super market chain in UK with 15.8% market share. It has more than 1400 grocery
store which employs more than 150000 people. It has the strongest experienced leadership team.
Company is listed on the FTSE and London Stock Exchange with this it also sponsors several
events like Paralympics. Company has more than 600 supermarkets and 800 convenience stores
in UK with excellent branding and adverting. It has around 30000 lines stock of which 20% are
own label goods (Mitchell and Berlan, 2018).
Weakness: according to many surveys due to higher price of Sainsbury has lost the offered for
similar products in the competitor market. In 2017 company reveal its profit which is around
8.2% decline the annual profits. This is due to contributory factors. During the Brexit company
faced the uncertain difficulties.
How business can deploy Information technology and use innovation ideas to improve business
processes and enhance competitive positioning.
Information technology is related to software and hardware which businesses used to
operate and manage their business process. It includes the storing information about stock
control nun suing databases. It assists company in order to reach more potential customers,
streamline operations, improve efficiency, minimize cost, maximize profits, develop the potential
relationship with customers with that it support the better relationship with important
partnership.
Nowadays businesses are heavily depends on the technology. Telecommunication has
improved the online payment options which help company to provide instant service to their
customers. Debit and credit card payment at retail stores managed the telecommunication in

order to operate reliably and smoothly. Information technology gave the opportunity to work
outside from the office (Omar and et.al., 2015). There are some use of information technology
which supported Sainsbury to improve its business and enhance the competitive positioning in
the market.
Online Advertising: The main advantage of information technology in business is to
advertise their products and service with the help of internet. Every company has its website in
the google that contain the advertisement. These sites are provided to customers with feature of
single click of mouse or ouch the screen people are able to find the information for the company
and its products ad service as well. With that company is able to communicate with their
customer all over the world without having to pay amount of additional advertisement cost.
These advertisements can benefit the company from lager volume of traffic and increase the
chance of taking advantage of their service and goods.
Online Shopping and Money Transfers: bill payment, online shopping and fund
transfers can be done easily by information technology. By allowing people to obtain service and
product from any phone, computers and tablet from home made easier to shop. Sainsbury started
many online store because online shopping has become so prominent. In addition, fund transfer
help inventors to manage and track their investment. With this company is providing the online
billing options to their customers that help them to draw their funds from designed account. This
ensure that customer can not avoid the late payment.
Flexible Work Options: the development of smartphone, laptop and tablets have
allowed working from anywhere. Technology assist company to become free from travel.
Employees has greater opportunity o work from home with this eliminate the daycare cost.
Travel can not be avoided in business, now business professional are able to catch their business
while traveling on airplane or train. Now information can be given or provided form anywhere
with its remarkable speed (Bouckaert, Peters and Verhoest, 2016). With that technology assist
company to store and maintain its physical and online data properly. IT applications supported
company to minimize its file amount. Hard drive are enough to store all the data. Cloud storage
services such as one drive, google drive replaced the physical storage device competently.
Improve Customer Service: the main goal of business is to provide better customer
service. To stay in business it is required serving customers well and on time. Serving the
demands and needs of customers make them happy and satisfied. It includes the understanding

what consumers wants and what kind of demand they have. For this company can use the
technology to improve the customer service. With the help of technology company can get
information and data of customer through online survey and website cookies. With that company
can create its website for business and get feed backs and reviews. Company can also use the
electronic mail as well for giving information about the deals and discount.
Increase in Production: technology is fast, effective and efficient than human labour. It
enhances the production activities. It increases the manufacturing of products with less time and
efficiency. By using the technology in production process company can increase its output and
able to deliver service to customer on time. With that technology help human resource
management to recruit experienced candidates because with experienced employees company
would not able to increase its productivity.
Information technology assist company via different ways to increase its efficiency,
productivity in competitive market.
CONCLUSION
From the above study it has been concluded that business environment helped
organisation to identify the opportunity in the market. With help of various business strategies
company obtained competitive advantage. By applying Business strategies such as better
customer service, good product service and employee engagement company has managed its
reputation and image in the market. Information technology increased the customer satisfaction
and enhanced the revenue of company.

REFERENCES
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Online
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