Understanding the Business Environment and its Impact on Sainsbury

This report discusses the classification of business organizations, stakeholders, Porter's Five Forces model, and fiscal and monetary policies and their impact on Sainsbury, the second largest supermarket chain in the UK. It covers the importance of understanding competitor's strengths and weaknesses and making effective strategies. Desklib provides study material and solved assignments on these topics.

Understanding the
Business Environment

Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Task1............................................................................................................................................3
Types of Business organisation...................................................................................................3
Task 2...........................................................................................................................................4
Shareholder..................................................................................................................................4
Stakeholder..................................................................................................................................5
Stakeholder analysis....................................................................................................................5
Task 3...........................................................................................................................................6
Porter’s Five forces model...........................................................................................................6
Importance of Porter Five Forces................................................................................................6
Porter’s Five Forces.....................................................................................................................6
Task 4...........................................................................................................................................7
Fiscal policy in promoting economic growth..............................................................................7
Role of fiscal policy in economic development..........................................................................8
Monetary Policy...........................................................................................................................8
Role of monetary policy in economic development....................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business organisation may be referred as an entity which engages in various types of
commercial, industrial and professional activities in order generate profit. Profit maximisation is
the core purpose of any business entity. It describes how business will be being structured and
what are the resources needed to attain organisational goals (Stoyanova and Angelova, 2018).
This project report is based on Sainsbury, second largest supermarket chain in UK. This project
report will cover the classification of business organisation and brief introduction of shareholder,
stakeholder and shareholder analysis along with implementation in chosen organisation. Further,
it will cover the importance of Porter’s Five forces in selected organisation. At last it will cover
the application of fiscal and monetary policy in order to stimulate country’s economy.
TASK
Task1
Every company wants to earn more profit while staying competitive in market. They use various
strategies in order to remain sustainable in dynamic business market. It is needed to formulate
strategies that directs company’s resources towards attainment of objectives. Business may be
classified in many forms such as public company, private, partnership and limited liability
partnership. Following is the classification of business organisation.
Types of Business organisation
 Public sector business organisation – These types of business organisation are set up by
law and legislation in order to run services on behalf of government. They are controlled
and owned by government and takes all decision itself. It has separate legal entity from
their owners. They can sue or be sued same as other incorporated bodies. These
companies are setup for the welfare of public and to serve better service to society.
Government ensures that customers must not be exploited and to avoid duplication of
resources (Younsi and Nafla, 2019). By incorporating public companies, government
creates various opportunities to public such as creation of employment and aligns various
industries such as transportation links and electricity supply.
 Charitable business organisation –This type of organisation is controlled by public or
government and falls under category of NPO. It is also known as charity or foundation. It
may be based on religious, educational or social based activities. It is incorporated by

laws of country and operated according to prescribed legislation. Its main aim is to give
gifts or donated by an organisation to people for their welfare. The charity may be in
form of gifts, financial help or any kind of present. There are many NPOs in UK that
helps people in their need. This help may be of educational opportunity to poor students
or to provide food for hungry people. As many people around the world are under
poverty and for this reason they are unable to get educational facilities. But NPOs help
them with providing educational facilities that will aid them in career making. They also
work for poor people who are suffering from fatal disease or to those who are affected
due to natural calamities and natural disasters.
 Private sector companies – This type of companies is a part of economy which is run and
controlled by individuals. It encompasses with profit businesses and operate for the sake
of profit. It is totally different from public companies as they are controlled by
government and it is controlled by individuals. This core aim for this type of business
organisation is to make more money and for that reason it employs more employees.
Every business organisation wants to attract large customer base and for that, it lower
down prices to remain competitive. It consists of a larger portion as compare to public
sector. In public sector companies, government do not legally regulate but company have
to comply with all rules and regulations formulated by government.
Task 2
Shareholder
Shareholder may be defined as any party, company, institution or individual that holds at
least one share of company and have financial interest in company’s profits. Shareholders
have voting rights in company and if the share price increases, value of shareholder will
also be increased and vice versa. They prefer company’s management to take action in
order to increase share price and can enjoy higher profits in the form of dividend. The
investment that shareholders hold are liquid in nature and can be disposed for profit.
Shareholders buys company’s share in hope for its increment and can enjoy higer profit
by selling them at high price. He can sell entire investment or a part and can invest in
other company too.

Stakeholder
It may be defined as an individual, company or a group of individuals who is impacted by
the results of a business project. They have interest in company’s success. They play a
crucial role in defining success for company as they can positively or negatively impact
company’s performance. Their support is needed for existence of project. They can be
either employees or customers. Shareholder and stakeholder are not similar as one is
having company’s portion and one have interest in company’s performance.
Stakeholder analysis
It may be referred as a process of identifying people before starting of project such as
grouping them according to their skills and knowledge along with determining how
effectively they can be used for completion of project (Sjostrom, 2019).
In case of Sainsbury, stakeholder analysis if classified below.
 High Power, High Interest –These are most important stakeholder and it is needed
to keep them happy and places them at high priority.
 High Power, Low Interest – These type of stakeholders have high power and also
need t keep them satisfied but they have low interest in company’s project so
management can turn them off with over communication because of lack of
interest.
 Low power, High Interest – This type of people must be informed and regularly
checked and make sure that they are not facing problems.

 Low power, Low interest – This type of people should be informed periodically
and do not communicate on a regular basis.
Task 3
Porter’s Five forces model
It is one of the simplest and powerful tool that can be used to identify main sources of
competition in company’s industry or sector. If company understand various about
various forces that affects business operations directly or indirectly. It will help Sainsbury
in enhancing productivity and efficiency. This framework was propounded by Michael
Porter in 1979. Sainsbury uses this framework in order to remain competitive in malret
by altering strategies.
Importance of Porter Five Forces
It is important to do competitor research in order to analyse its strength and weaknesses>
It is a crucial part of marketing strategy. It enables Sainsbury in determining competitor’s
strengths and weaknesses and will help in taking decision regarding what should be
avoided. This model will help in understanding current trends of market and to allows
company to become flexible so that it can fit in customer’s demand. It allows company to
go further and look at specific aspects in order to formulate effective strategy. Company
can take effective decision to overcome its weaknesses that are responsible for low
profitability.
Porter’s Five Forces
 Competition in Industry – It is conducting while examining market and it enables
companies in identifying who are its customers and what are their offering and are their
product different from own company. It helps Sainsbury in identifying its competitor’s
history along with how it can affect its operations. It allows management in altering their
marketing strategy in order to bring efficiency in company.
 Potential of new entrants – Whenever a new company enters in same industry it have the
ability to affect company’s operations. In case of Sainsbury, investmenyt is the entry

barrier in entering to this industry and it becomes difficult to operate business in front of
well known companies like Sainsbury. There is minimum risk of entering in this industry
due to high capital requirement.
 Bargaining power of suppliers – Suppliers have the ability to lower down or increase
profitability of company as if the number of suppliers are high then company may switch
to other alternative who is offering similar material (Andriof and Waddock, 2017). In
case of Sainsbury, there are numerous suppliers that offers supplies at cheaper price. It
has two advantages; first company can earn more profit by choosing supplier who is
offering better quality products at lowest price. While on other hand, in regulates supply
chain of company and it cannot be interrupted because of multiple suppliers.
 Bargaining power of customers – Customers have the power to affect price of products.
As Sainsbury have large customer base and they have power to reduce price of product. If
they find competitive prices they may choose other alternative. They have power to bring
down price of products. So it is needed to consider how many buyers are there in market
and what cost it would take to switch to another company.
 Threat of substitute product –It is human tendency to buy better quality of products but
by paying minimum amount (Kujala and Sachs, 2019). So it is needed to set effective
pricing strategy that will attract larger audience. Sainsbury provides discounts to its
customers on various occasions in order to catch customer.
By all the above forces, company take effective decision that will drive it towards
attainment of objectives. This will help company in making marketing strategies by
understanding competitor’s strengths and weakness as well as to avoid activities which
lower down company’s performance. It will also help in understanding customer needs
and wants and to provide with such a product which would fix expectation gaps of
consumers.
Task 4
Fiscal policy in promoting economic growth
 Fiscal policy may be defined as use of government spending and taxation in order
to influence economy (Hansen, 2018). This policy is used to provide strong as
well as sustainable growth along with reduce poverty. The role of fiscal policy
came into prominence during economic crisis and this helps in jumping and

stepped into financial support. Whenever policymakers wants to influence
country’s economy, there are two frameworks and tools: fiscal and monetary
policy. There are some of the fiscal rules of UK government which are explained
as follows:
 Debt must be on course to fall as a share of national income in the three years'
time.
 The current budget must be in surplus in the 3rd year of the forecast period.
 The public sector of UK net investment must be below the 3% of GDP on average
over the certain forecast time period.
The set targets of government debt is for the debt to be falling as a given percentage of
gross domestic product by the third year of OBR's forecast. As the government is targeting the
measure of its underlying debt that is excluded from the Bank of England's debt.
Role of fiscal policy in economic development
 To mobilise resources – This is the main aim of fiscal policy is to mobilise resources in
underdeveloped countries in public as well as in private companies.
 To accelerate growth – It helps in increasing the economic growth by elevating rate of
investment in both public and private sector –
 To provide more employment opportunities – Population grows rapidly in many
countries and the aim of fiscal policy is to make high doses of expenses which can be
used in creation of employment opportunities.
The fiscal policy of UK involves targets of government debts and evaluation of
government borrowing. It also spending caps for the sake of welfare and investment
spending plans for government. In case of more spending of expenditure, government of
UK it relies on current budget and states that the current budget should be in balance of
third year of OBRs forecast. The welfare cap involves of spending and on roads and
buildings and capped at 3%.
Monetary Policy
They are the set of actions that are available to a nation’s central bank in order to achieve
sustainable growth by adjusting money supply (Kudrin and Knobel, 2017). The monetary

policy of UK is the low and stable inflation which is good for the UK's economy and it is
the major monetary policy aim which also support the government's other economic aims
fr the employment and growth. Sometimes, in the short term, they need to maintain the
balance in the low inflation with the full support to the economic growth and jobs.
Role of monetary policy in economic development
 Adjustment between demand and supply of money – This policy helps underdeveloped
countries in making them developed by controlling fluctuation activities. It can be done
my making adjustment between demand for and supply of money.
 Price stability – Underdeveloped countries faces many challenges and issues and inflation
is one of them. It has been analysed that inflationary devalues domestic currency and
The key bank of England's key duties as the central bank of UK is the conduct of the
monetary policy. The main role of the bank is to deliver the price stability by setting the short
term interest rates in the economy. The average inflation since the end of 2006 is just 2.2% so the
monetary policy has been pretty successful in attaining the main objectives of the economy.
CONCLUSION
From the above project report, it was concluded that there are many types of business
organisation having aim to earn profit or render services to society in form of charity and
donation. Public company is owned and controlled by government and private company is
controlled by individuals. Shareholders are owners of capital whereas stakeholders have interest
in company’s success and performance. It is needed to analyse competitor’s strengths and
weakness which help Sainsbury in making effective strategies. Fiscal and monetary policy plays
a crucial role in uplifting country’s economy by adjusting supply of money or by controlling tax
rates.

REFERENCES
Books and Journals
Andriof, J. and Waddock, S., 2017. Unfolding stakeholder engagement. In Unfolding stakeholder
thinking (pp. 19-42). Routledge.
Ford, J.B., 2020. Competitive advantage. In The Routledge Companion to Strategic
Marketing (pp. 141-150). Routledge.
Hansen, A.H., 2018. Monetary theory and fiscal policy. Pickle Partners Publishing.
Kudrin, A. and Knobel, A., 2017. Fiscal policy as a source of economic growth. VOPROSY
ECONOMIKI, 10.
Kujala, J. and Sachs, S., 2019. The CHAPTER14 Practice of Stakeholder Engagement1. The
Cambridge handbook of stakeholder theory, p.227.
Sjostrom, W.K., 2019. Business Organizations: A Transactional Approach. Wolters Kluwer.
Stoyanova, T. and Angelova, M., 2018, June. Impact of the internal factors on the
competitiveness of business organizations. In 2018 International Conference on High
Technology for Sustainable Development (HiTech) (pp. 1-3). IEEE.
Younsi, M. and Nafla, A., 2019. Financial stability, monetary policy, and economic growth:
Panel data evidence from developed and developing countries. Journal of the Knowledge
Economy, 10(1), pp.238-260.