Business and the Business Environment: Overview of UK Retail Industry and Internal Departments of Sainsbury

This report provides an overview of the UK retail industry and internal departments of Sainsbury, including their interconnection and impact analysis. It also includes PESTLE and SWOT analysis to monitor external factors and their impact on the business. Course code and college/university not mentioned.

BUSINESS AND THE
BUSINESS
ENVIRONMENT UNIT 1

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Introduction over the UK retail industry.....................................................................................1
Discussing over the three types of organizations in the market..................................................2
Business functions in Sainsbury along with creation of company chart to identify
interconnection between different functions...............................................................................4
Analyzing work of various internal departments for Sainsbury in order to achieve set goal....5
Impact analysis of various business structures............................................................................6
PESTLE analysis to monitor positive and negative impacts of external factors along with its
impact on business......................................................................................................................7
SWOT analysis:..........................................................................................................................9
Impact of micro and macro factors that affect the growth of the Sainsbury company.............10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment has been prepared by combining two specific words such as
business and environment. According to the concept of business, it has been evaluated that it is
an activity in order to acquire profits with the help of buying and selling of goods and services.
And environment states that all the internal as well as external factors surrounding by the people
are considered for the involvement into the business actions. This actually represent a set of
circumstances or conditions which affects and influences the functioning of the enterprise within
the outer environment (Kasim, Haracic and Haracic, 2018). It consists of certain features such as
it is dynamic in nature, different from country to country along with based upon inter
dependence conceptualization. It is significant to study as it helps to develop broad strategies in
order to make sure on the aspect of sustainability.
This report will elaborate the concepts related to business environment by describing
overview of the UK retail industry in general, evaluating different types of companies, business
functions, the ways in which internal departments work together to meet objectives along with
their impact analysis. Apart from this, the study will also highlight concepts by discussing
PESTLE, SWOT and their critical evaluation by considering both micro and macro
environmental factors.
MAIN BODY
Introduction over the UK retail industry
Retail is a type of business which deals under which the sellers sell their products and
services to their consumers according to their requirements and desires into most appropriate
manner. It consists of various retail stores according to which the retail business enterprise
primarily deals with sales volume in competition with other business entities. The retail industry
plays a vital role in the economy of the United Kingdom as it comprise 5.5% of the UK's overall
gross domestic products in recent year along with 9.5% of the overall employees of the UK in
previous years. This particular sector provides livelihood to various people which is around three
million people (Grenčíková, Kordoš and Sokol, 2019). Although with the introduction of
pandemic situation, the retail sector have faced prolonged period of turbulence.
There are various factors which affects the whole industry includes the customer
behaviour towards the business entities, increased level of internet shopping trends and
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challenges regarding economic conditions plays a primary role in order to change the ways
through which retailers operate and engage with their consumers. The pandemic situation does
impacts the sales volume which lead towards the store closure as well in some locations.
According to the data which has been collected through local data company has been found that
20% of retail premises were vacant in 2020 and hence a lot of people also become redundant
because of the stores' closure (Brotspies and Weinstein, 2019). Thus, now government are
adopting certain strategies and work upon the industry by promoting investment for skills and
productivity expansion, better coordinate with public policies along with protects the United
Kingdom single market area.
Discussing over the three types of organizations in the market
Profit Non-profit NGO's
Purpose It is set in order to
generate profits and
usually operate in the
private sector which
means that they are
closely-held by
individuals or grouped
entities. The revenue
that is being generated
by these
establishments is
usually reinvested into
the business again to
ensure its sustenance
and remaining profits
distributed among
business investors.
There primary purpose
is other than just
gaining profits. The
firms work for public
benefits rather than
private profits
(Rădulescu and et.al.,
2020). The profits
never gets distributed
among their members.
They generally operate
into religious,
educational and
scientific sectors.
Their purpose is also
providing services that
are beneficial for the
society. It usually
involved development
based projects and
receive funds through
state funding.
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Legal structure This can be of sole
proprietorship,
partnership and
limited companies.
It consists of private
limited companies are
generally referred as
small privately held
business entities
whose liabilities are
limited by shares. This
has small number of
shareholders and the
shares are not publicly
traded.
This involves the
public limited
companies which are
subject to minimum
capital requirements.
Size These are generally
large sized enterprises
because they highly
focused towards the
profit maximization
activities.
They are usually
referred to small to
medium-sized
establishments as their
focus is towards the
betterment of the
society as well rather
than just over the
profit generation.
These are micro
organizations as they
do not focus towards
the profit margins and
highly work for the
betterment of the
society.
Scope The scope is specific
in nature.
Scope is based upon
the services that are
being offered.
Scope of non-profit
organizations are
completely for the
advancement of the
society.
Mission They have a mission
to achieve their goals
whether they are
socially conscious or
not.
They have a mission
towards providing
right kind of services
to their clients.
Reaching to their
maximum to get
certain changes within
the society functions.
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Vision To describe company
primary purpose.
Shared belief to
achieve objectives by
promoting general
benefits as well.
Work towards creating
better place by
providing every
possible facilities to
every citizen.
Business objectives Their business goal is
profit generation.
Business goal here
refers to combination
of both which involves
profit and society
benefits.
They have objectives
regarding the
betterment of the outer
environment.
Business functions in Sainsbury along with creation of company chart to identify
interconnection between different functions
Business functions are referred to as high level of grouping within the organization
which illustrate their capabilities and processes in effectual manner in order to describe their
workings. These make sure that the company runs properly and does well for their consumers,
leaders, shareholders and employees. In order to discuss the major business functions of the
Sainsbury which includes Marketing and sales, Finance, Human resource and Production
departments (Berman and Dalzell-Payne, 2018). Each department plays individual role in a way
which illustrate that they work interrelated and interdependent upon each other. The Sainsbury
distribute their tasks and responsibilities into diversified functions or departments in order to
allow for organizational effectiveness and efficiency. The managing director of Sainsbury
company execute new policies and strategies to be followed by different departments. The HR
department select skilled workers who can work efficiently in order to increase the production
rate by supplying good quality food to the consumers. The finance department lays out budgets
to keep low cost of the products to increase marketing and sales. The marketing manager
regulate the price and packaging of the products to keep customers attracted to earn profits.
Organizational chart of the Sainsbury company
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Analyzing work of various internal departments for Sainsbury in order to achieve set goal
Salisbury has set internal departments in order to achieve business objectives which are
important for proper growth of the company and to meet with demands of the consumers.
Various departments such as finance, marketing and production work together to make the
company achieve great heights by expanding its business further. To meet with demands of the
consumers the marketing and human resource department work together by producing food
products with low calorific value according to demands and also delivering of good quality
organic food with minimum price value to the consumers with a well- managed services with a
skilled set of employees who helps in proper packaging of the products with innovative ideas to
attract more customers and leads to increase in sales along with dealing with queries of the
consumers (Wessel and et.al., 2021). As a result of this the company can compete easily with its
competitors.
The production and the finance department work together to produce the required amount food
products in large amounts by using large amount of raw materials to meet the requirements of
consumers for this the finance department of Sainsbury helps in providing the required funds for
the raw material by creating proper budget criteria required to meet expenses of various products
(Ul-Hameed and et.al., 2019). This helps in overcoming the problem of shortage of raw
materials and funds which can be faced by the company. The target to produce according to the
needs of the consumers is achieved and increases the sales food products.
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The production department also rely on the human resource department which keeps a check on
the working efficiency of the workers, more skilled workers will work faster to produce more
products and thus result in the growth of the company.
The marketing and advertising department of the company helps each other by advertising and
presenting the products to make them more attracting by using slogans for low calorific food
items this will increase the marketing of the products.
The organizational structure of the Sainsbury is very wide and follows Matrix structure because
of the high number of the consumers and large scale of production of food and grocery products.
To meet the large scale production the Sainsbury hire skilled and efficient workers which is
linked with good human resource management and production rate of the company which also
increases the management expenses of the workers and leads to higher salaries for the
management department and considered as disadvantage for the company (Maotwanyane and
Pretorius, 2018). The finance and the marketing department of the company have gained high
success rates by keeping price low and providing best services along with increasing sale
through online marketing by and delivering services through Uber eats and well finance
structure is adopted by the share capital and serving many customers by facilitating more sale of
products through opening new stores. This has proved to be good opportunity and seen as an
advantage for the company in increasing demand for products. The company can many
opportunities for the employees and encourage them by efficiently using their capabilities and
choose new employees accordingly this is seen as a disadvantage as it creates a factor of
jealously and lead to staff shortage thus affecting the manufacturing growth of the company.
Impact analysis of various business structures
Impact analysis is important for various business in order to predict the nature of the competitors
or other problems like fall in selling which can lead to downfall of the Sainsbury company so to
overcome this various recovery strategies are needed to be formulated. An organization follows
and puts various strategies that must be followed in proper and efficient way in order to face any
future consequences that can lead to downfall of the organization (Kunin, Rumyantseva and
Tarutko, 2018). Sainsbury follows a complete impact analysis in order to keep the customers
attracted and make timely changes in its policies that to compete with the competitors like Tesco
which is also retail company.
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Matrix mix organization
The Sainsbury company has adopted Matrix organization structure which different management
posts. The proper management between different executives help in giving a well managed
finance budget to facilitate easy money flow. Healthy and meaningful conversations among
different departments like finance, human resource, product and marketing is very helpful to
deal with demands and needs of the consumers. A well understanding of the Sainsbury
company's strategies and its role in fresh and good quality of food products should be
maintained. Various tools to analyze the harmful effects of disasters which can affect the
companys production rate along with disrupting the demographic of the country can have
adverse effect on the company. All these data should be presented in the chart or diagram to
understand the damage caused by any disaster (Monteiro, Hopkins and e Melo, 2020). The
Sainsbury focuses on providing the products to the consumers with a motive to expand its
business. Each department works interconnected manner to achieve the set goal. The executive
department of Sainsbury works jointly with finance department to execute new policies to bring
changes in organization in order to keep the production value high which is achieved with the
help of finance department who provides the budget to keep the low cost value low of the
products to by forming a definite finance structure for the company this in turn supports the
production department to large amount food products at low cost with proper packaging and
keeping good quality food products. The human resource department of Sainsbury functions in
hiring and selecting the skilled workers for the company which can work to meet the high
production value for the production depatment. This interconnection of different departments of
the Sainsbury company makes it to achieve the set goals which are providing the best quality
food products to the consumers by keeping the value low which is maintained by a planned
finance structure to compete with its competitors.
PESTLE analysis to monitor positive and negative impacts of external factors along with its
impact on business.
The PESTLE analysis for Sainsbury will help to understand various factors which have direct
impact in determining the company’s progress rate in the business world.
Political factor- The company being situated in London raises many political barriers for it due
to the separation of UK from the European Union (Brexit) (Hurrelmann and et.al., 2019). This
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will lead in the increment in the product prices due to more money used in transporting and
importing of raw materials and will have a negative impact on the company as the number of the
consumers will decline and decline in the products' sale.
Economic factor- Since the company operates in various parts of the UK and need to provide its
services through loading by road transport which require to meet the high cost of the fuel to
provide the products to customers on time this will directly affect the low cost pricing strategy
laid by the company. This has a negative impact on the company objective of delivering low
cost good quality products to the consumers.
Social factor- After the COVID people have become more health conscious and this leads to
intake of healthy and organic food which Sainsbury major task to provide good quality food to
its consumers and the company has made changes to produce less calorific and gluten free
organic products, so they the consumers feel safe about their health (Voi and Sainsbury, 2019).
The food products should also be favorable to eat according to the climate change. This will
have a positive impact in developing trust among the consumers and more customers will be
interested in buying the organic products.
Technological factor- With very range of network the company has adopted the method of
selling the product through E commerce and also uses digital banking to manage large data of
the employees. This helps in dealing with customers needs online and the company can also
adopt more modern use of technology to understand the need of the products through proper
demographical analyzation of the consumers.
Legal factor- due to the separation of UK from European Union it is very important to regulate
changes in its strategies for smooth and successful running of the company. Any changes made
in the policies regarding the consumers demand should be implemented on time to avoid the loss
of shares in the market.
Environmental factor- since the company deals with selling of products which use plastics for
packing and poor management of waste products will lead to environmental pollution by
increasing the carbon emission and air pollution by petrol, diesel. To avoid this the company
should focus on maintain pollution free environment by using paper for packaging and to
accelerate the growth of the company.
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SWOT analysis:
SWOT analysis allow company to analyse their strength and weakness and allow them to
catch opportunity that revolve around company. This tool help company to understand threats
that might impact company and its stability, there are four important parts of the SWOT
analysis, these are:
Strength: The biggest strength of the Sainsbury company is that it is the largest retail business
in UK as well as it also listed on the London Stock Exchange being a public company it is very
famous among the public. The feedbacks or reviews of this organization helps in attracting the
customers towards the company as the exiting customers are highly satisfied from this company,
and they also provide high quality products to its customers (GURL, 2017). Sainsbury also uses
unique strategies for the promotion which makes them unique from other companies in the
market. This company maintains the good relations with the customers on social sites. It has
large variety of products and of every segment like expensive products and also the cheap
products. These are the strengths of Sainsbury which help them to remain as a market leader in
UK.
Weaknesses: Sainsbury has very few margins for surviving in the highly competitive market
this company is reducing the margin day by day to attract more number of customers. The sales
price of the products has been declined due to the pandemic by which it has incurred much loss
in the company. Sainsbury regularly organizes the programs and promotions but still it faces
much difficulty in retaining the customers (Teoli, Sanvictores and An, 2019). It has many
products which are expensive because of which fewer customers are getting attracted. There is
instability in the financial situation of the Sainsbury organization as it is facing huge loses from
past 2 years which has lead to decrease in annual revenue and profit of the past years.
Opportunity: every business organization look for opportunity to boost their speed and become
stable, these allow company to remain updated and competitive in the market. Sainsbury is one
of those company who look for opportunity to capture market, this company focus on betterment
and try to improve their weaker part. With improvement in poor supply chain, Sainsbury have
opportunity to enter new market and explore untapped area of growth. Sainsbury need to have
powerful supply chain to make their expansion process successful.
Threat: every business organization face threat that impact their overall strategy and positioning
in the market, biggest threat faced by almost every business is from competitors who are ready
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to provide neck to neck competition. Sainsbury face huge competition from their competitors,
this company have neck to neck competition with retail giant, Tesco and Unilever. It is very
clear that both companies have wide range of product which cover every demand of the
customer (Sarsby, 2016). Sainsbury’s opportunity it steal by these competitor and impacted their
process and positioning. Competitors of Sainsbury and their movement in the market allow them
to provide heavy competition, sometimes it become threat for company to manage their position
in the market.
Impact of micro and macro factors that affect the growth of the Sainsbury company
Every organization has various functions to perform from attracting the customers to compete
with the competitors which are directly affected by various micro and macro factors of that
organization.
Micro factors of Sainsbury company
Sainsburry micro factors include sellers, customers and competitors. Since the supply chain of
the company is directly connected with need of fulfilling the customers need of getting the
products on time it is weakness of the Sainsbury company as it has over 800 supply stores to sell
goods but the shortage in amounts of the suppliers directly brings down the success rate of the
Sainsbury company (Fabeil, Pazim and Langgat, 2020). In order to overcome this situation the
company should focus on increasing the workforce of the organization. The low cost of the
company's product is the strong part of the company in competing with its competitors like
Uniliver since it allows the customers to purchase same products in good quality with low cost
from the company. This helps the Sainsbury company to keep high customer numbers to further
upgrade production rate.
Macro factors of Sainsbury company
the pandemic has adversely affected the production rate of the company and also disturbed the
finance structure of producing low cost products due the economic factor which require high
price to meet the cost of the transportation of products to various stores in UK (Voss and et.al.,
2019). Due to restriction s on trade the company cannot carry out transport and as a result faced
downfall in products sale and the prices of the products increased (Diez-Martin, Blanco-
Gonzalez and Prado-Roman, 2019). To overcome this problem the Sainsbury should focus on
implementing its strategies and carry out more promotional activities of the products and should
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implement innovative ideas like discount or sale on expensive products to increase sale of the
products.
The idea of selling fresh meet and healthy food products is an advantage for the Sainsbury
company as due to COVID are more interested in eating healthy food and fresh food with low
calorific value (Kapetanios, Price and Young, 2018). This Social factor will facilitate in
marketing more food items with low cost and the company expand its business further to
overcome the pandemic crises.
CONCLUSION
From the above report it can be concluded that for a successful running of the business
there a joint effort that is put by different departments of the organization like finance, HR, IT,
and production which work interrelated and efficiently to regulate new policies and changes that
are required to meet any future disruptive consequences that can have adverse effect on the
overall organization. Support from the executive helps in formulation of these policies by
analyzing the SWOT and PESTLE factors of the organization. There are various types of
organization like profit, non-profit and NGOs who have different motives like to support society
in services, focusing on gaining profits in private sector. The evaluation of micro and macro
factors helps in overcoming the weaknesses and measuring the strengths of the organization to
increase its market value and keep the customers attracted and bring changes to become more
successful. Further the impact analysis of any business structure helps to follow the recovery
policies that are important to overcome any loss due to unpredictated disruptive loss.
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Organization charts,2022-2022.[Online]. Accessed through
<https://www.tutor2u.net/business/reference/organisation-charts>
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