Business Environmental Analysis of Sainsbury's: A Comprehensive Study

This report provides a comprehensive analysis of the business environment of Sainsbury's, a leading UK supermarket chain. It examines the relationship between organizational functions, structure, and objectives, and explores the impact of the macro environment on the company's operations. The report also conducts an internal and external analysis to identify strengths, weaknesses, opportunities, and threats, and examines how these factors interrelate with the macro environment. The analysis provides valuable insights into the decision-making process of Sainsbury's and highlights key areas for improvement.

Business Environmental Analysis of Sainsbury’s
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Table of Contents
Introduction......................................................................................................................................3
P3 Explain the relationship between different organizational functions and how they link to
organizational objectives and structure [D1]...................................................................................4
P4 indentify the positive and negative impacts of the macro environment have upon business
operations of Sainsbury’s. [D2]...................................................................................................6
P5 Conduct internal and external analysis of Sainsbury’s in order to identify strengths and
weaknesses [D2]..........................................................................................................................8
P6 Explain how strengths and weaknesses interrelate with external and external macro factors
[D2]..............................................................................................................................................8
Conclusion.....................................................................................................................................10
References......................................................................................................................................11
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Introduction
Current UK economy is highly influenced by the revenue of retail industry. The retail industry is
rapidly changing with the introduction of robotic and drone technology. The Government of
United Kingdom has implemented Consumer Rights Act 2015 to protect the retail industry
(Deloitte United Kingdom, 2018). Presently, Sainsbury’s is gradually expanding their business in
the hypermarkets and supermarkets as the largest wine and food retailers. John James and Marry
Ann jointly founded Sainsbury’s in 1869 as a partnership business. Sainsbury’s is providing
more than 90,000 products in over 1400 stores and with more than 162,000 employees in all over
the country. The aim of the report is to describe organizational structure and functions of
Sainsbury’s and mingling it with the organizational objectives. The analysis and interrelationship
between macro and micro environment is to present the business environment of Sainsbury’s
(Sainsbury's Living Archive, 2018).
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P3 Explain the relationship between different organizational functions and how they link to
organizational objectives and structure [D1]
Organizational functions
The organizational functions are operated by different department of an organization.
Organizational functions of Sainsbury’s are divided among four different sections. Each and
every organizational function is interrelated with each other.
Human Resource Department
According to Keegan et al. (2012), HRM department is the core section of every organization.
The main responsibilities of this department are to abide by the HR policies in order to oversee
the recruitment and selection process, resource collection, and training and development program
of Sainsbury’s. Employee motivation and satisfaction relies on this department. This department
provides efficient and eligible employee to every department and provides necessary training and
development program to the employees.
Marketing Department
The renowned scholars Piercy and Evans, (2014) commented that prime organizational function
is done by marketing department. Marketing plan of Sainsbury’s is overlooked by marketing
department. However, the market research report enables the organization to get information
about current market trend and customer demand. This department provides the necessary
information to the finance and operating department.
Finance Department
From the viewpoint of Walker, (2014), the budget making is the prime organizational function.
The finance department of Sainsbury’s investigates the market research report to get the details
idea about current financial market and create a suitable budget to beat the market risk.
Production and Operation Department
Brown et al., (2013) stated that product design and manufacturing is operated by this department.
Therefore, plan to deliver the product to the suppliers and customer at right place and time. This
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function of Sainsbury’s depends on the market research report of the marketing department and
budget report of finance department.
Organizational Structure of Sainsbury’s
Base of the business world is to select a specific organizational structure to start up a company.
The Hierarchical organizational structure is commonly used in several organizations. Sainsbury’s
is no exceptional. This organizational structure follows the classical management system to
operate the organization. Sainsbury’s organizational structure is set up with a Board and
committee. The board is governed by the Chairman David Tuler (since 2019). The CEO Mike
Coupe (since 2014) executed the business strategy with the consent of the board.
Figure 1: Organizational Board
(Source: About.sainsburys.co.uk. 2018a).
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Objectives of Sainsbury’s
The objective of Sainsbury’s is to become the most trusted retailer in the international retail
industry. The aim of Sainsbury’s is to gain customer retention investing their colleagues,
channels and stores providing the best shopping experiences. According to recent speech of CEO
Mike Coupe, customers are the heart of their business which can bring future growth and
success.
Link among organizational functions, structure and objective
The organizational functions of Sainsbury’s are completely supervised by the governance bodies.
The audit committee reviews the financial functions. They basically maintain the smooth and
relationship with the shareholders including the internal risk management. Monitoring over the
appropriate use of corporate laws and regulations is also depended on this audit committee.
Divisional management and operating board and audit committee jointly control the risk
management of Sainsbury’s under the UK Corporate Governance Code and Companies Act
2006.
P4 identify the positive and negative impacts of the macro environment have upon business
operations of Sainsbury’s. [D2]
PESTLE Factors Positive Impacts Negative impacts
Political  Political stability
 Brexit and its
restriction
 Frequent changes in
Government
policies
(About.sainsburys.
co.uk. 2018b).
Current political stability
safeguards Sainsbury’s to
spread their business.
Frequent changes in the
Government policies
affecting the organization
to control the costing of
resource material and
supply chain.
The Brexit affected the
profit margin of
Sainsbury’s.
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Economic  Unstable exchange
rates
 Economic growth
declined
 Rising labor costs
 Resource materials
Cut down the quantity of
waste material and
recycling process reducing
the manufacturing costs.
Unstable exchange rates
are affecting the
negotiations with
Sainsbury’s suppliers.
Rising labor cost and
resource material cost
lowering the profit
margin.
Socio-cultural  Out dated trend of
product design
 Employment
facility
Stores are providing the
job opportunities to the
local residents.
The poor market research
report pulling the
company to gain the
customer satisfaction.
Gap between product
design and price is
reducing the customer
retention
Technological  Advanced
technology and
Automation
 Drone delivery and
robotics
introduction
 Influencing of
Social sites
Advertising on the social
sites effectively increasing
the selling point, because
this advertisement is
creating the brand image of
Sainsbury’s e-commerce
facility has its positive
impact to gain profit
margin.
Drone delivery and
robotics cuts down the
delivery time, but rises the
cyber attack and operation
instability.
Environmental  Recycling of waste
material
 Sustainable CSR
 Supply chain
management
Recycling of waste
material and rain water
harvesting positive towards
climate change
CSR improving the
customer relationship
(About.sainsburys.co.uk.
2018c).
Recycling process
maximizing the energy
efficiency and rising the
cost
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Legal  Current
employment law
 Modern slavery
Act for employee
satisfaction
Sainsbury’s provides
necessary training to the
supplier adopting modern
slavery Act
The ethical resourcing
pushing up the price of
their products.
Table 2: PESTEL analysis of Sainsbury’s
(Source: Created by Author)
P5 Conduct internal and external analysis of Sainsbury’s in order to identify strengths and
weaknesses [D2]
Strengths Weaknesses
 Sainsbury’s spreads business over 70
countries with more than 162,000
employees
 3dr largest retailer and reducing the
carbon emission and waste materials
(FATRICIA n.d.)
 The business is expanded to energy,
finance and clothing industry
 Gap between product quality and price
which is responsible to decrease
customer retention
 High and tough competition market
 8.2% decrease in the annual report
 Uncertainty as a result of Brexit
Opportunities Threats
 Entry into several emerging markets
like India, Russia, China, Turkey,
Brazil and Others.
 Low labor cost in the emerging market
 Positive use of Modern Slavery Act
 Strong competitors like ASDA, Tesco
plc, ALDI, Morrison and others.
 Changing market trend and demand
 Poor market research report
Table 2: SWOT analysis of Sainsbury’s
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Source: Created by Author
The technological attachment of Sainsbury’s is enhancing the Customer Relationship
Management (CRM). The customer service section actively put their special focus on the
positive and negative feedbacks, grievances, complaints, demands and suggestion of the
customers from several social media. Active and positive response towards the negative
feedbacks, complaints and grievances put the positive impact to the customer. These also help
the organization to find out their faults and follies. The strategic planning enables the
management team to cut down the weaknesses and convert the threats and weaknesses into
strengths and opportunities.
P6 Explain how strengths and weaknesses interrelate with external and external macro
factors [D2]
Töpfer (2013) pointed out that, the internal and external analysis is interdependent to each other.
However, SWOT analysis of Sainsbury’s directly with macro factors of the country. Political
stability in United Kingdom enhances the business expansion and increases market share.
Entrance into several emerging markets raises the sales of Sainsbury’s. Recycling process
reduces the resource costs and gained consumer favor. Poor market research report is lowering
the selling point and product demand in the competitive market. Frequent changes of exchange
rates are affecting the economic condition of Sainsbury’s. The management committee minutely
investigates this analysis in order to determine the planning process.
Influencing the decision-making process
According to Addison et al., (2013), the analysis of macro and micro environment provides the
necessary information to the management team of Sainsbury’s. This information enables them to
precede the decision-making process. Decision making process requires the details about market
trend and demand to set their strategic planning. The market research report of the marketing
department is the backbone of final decision-making process. Pestle analysis provides current
condition of the country to which is essential to establish a suitable marketing plan. On the other
hand, SWOT analysis enables Sainsbury’s to investigate over their own strengths and weakness
and to grab the available opportunities to gain better profit margin. Sainsbury’s decision making
process is initiated by the Audit Committee and supervised by CEO.
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Conclusion
The report is about the business environment of Sainsbury’s Plc. The first part of the report
described the details about Sainsbury’s corporate governance along with organizational structure
and functions. Second part discusses pestle and SWOT analysis in order to find out different
aspects of current business environment. Last part depicted the importance of macro and micro
environment to influence Sainsbury’s decision-making process. The business environment of
Sainsbury requires modification in their market research report to enhance their business
strategy.
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References
About.sainsburys.co.uk. (2018a). Corporate governance. [online] Available at:
https://about.sainsburys.co.uk/about-us/corporate-governance [Accessed 15 Mar. 2018].
About.sainsburys.co.uk. (2018b). Standing up to modern slavery. [online] Available at:
https://www.about.sainsburys.co.uk/making-a-difference/our-values/our-stories/2017/standing-
up-to-modern-slavery [Accessed 15 Mar. 2018].
About.sainsburys.co.uk. (2018c). Environment. [online] Available at:
https://about.sainsburys.co.uk/making-a-difference/environment [Accessed 15 Mar. 2018].
Addison, P.F., Rumpff, L., Bau, S.S., Carey, J.M., Chee, Y.E., Jarrad, F.C., McBride, M.F. and
Burgman, M.A., 2013. Practical solutions for making models indispensable in conservation
decision‐making. Diversity and Distributions, 19(5-6), pp.490-502.
Brown, S., Blackmon, K., Cousins, P. and Maylor, H., 2013. Operations management: policy,
practice and performance improvement. Routledge.
Deloitte United Kingdom. (2018). Retail Trends 2018. [online] Available at:
https://www2.deloitte.com/uk/en/pages/consumer-business/articles/retail-trends.html [Accessed
15 Mar. 2018].
FATRICIA, R.S., 2016. SWOT analysis of Sainsbury’s supermarket. [pdf] Available at: <
https://online-journal.unja.ac.id/index.php/mankeu/article/view/3232/2427> [Accessed 15 Mar.
2018].
Keegan, A., Huemann, M. and Turner, J.R., 2012. Beyond the line: exploring the HRM
responsibilities of line managers, project managers and the HRM department in four project-
oriented companies in the Netherlands, Austria, the UK and the USA. The International Journal
of Human Resource Management, 23(15), pp.3085-3104.
Piercy, N. and Evans, M., 2014. Managing marketing information (rle marketing) (Vol. 17).
Routledge.
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Sainsbury's Living Archive. (2018). Our Story - Sainsbury’s History 1869 to 1900 | Sainsbury's
Archive. [online] Available at: http://www.sainsburyslivingarchive.co.uk/collections/sainsburys-
heritage/sainsburys-humble-beginnings-1869-1900 [Accessed 15 Mar. 2018].
Töpfer, L.M., 2013. The role of retail identity in corporate crisis management: The case of the
2013 horsemeat scandal.
Walker, A., 2014. Eric Sainsbury, 16 December 1925 to 11 March 2014.
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