Impact of Macro and Micro Environment on Sainsbury

UNIT:32
BUSINESS STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Impact of macro environment on organization......................................................................3
Impact of micro environment on organization.......................................................................7
Porter five forces....................................................................................................................9
Strategic management plan...................................................................................................12
Increasing quality of products as well as services................................................................14
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................18

INTRODUCTION
Business strategy is predominately the mixture of all decisions which are been taken by
organizations as well as actions and activities performed by them for accomplishing long as well
as short term goals. Sainsbury is primarily the renowned supermarket chain and retail
organization, being established in 1869 by John James. Sainsbury and headquartered in London,
UK.
This report gives a brief about impact of macro environment on organization, impact of
micro environment on organization, Porter five forces and strategic management plan.
MAIN BODY
Impact of macro environment on organization
Micro environment is basically the business environment which consist of various factors
as well as components that exists within the organization and hence impacts the overall
performance of organization. Macro environment on the other hand, are external factors which
influences the functioning of organizations externally and thus affects their decision making.
PESTEL analysis
PESTEL analysis is basically the framework which helps the organizations to recognize
the various external factors which have a great impact on their operations as well as functioning.
The major reason behind using PESTEL analysis for assessing macro-environment is that this
tool will help in taking effective decisions regarding various factors which are impacting
organization in negative way (Lozano, 2018).
Political factors
The major political factors consists of tax rate, government stability, corruption rate,
government policies etc. which has affected the operations of Sainsbury to a high extent.
Positive effect
Since the emergence of Brexit in UK, the tax has reduced from around 45.6% to nearly
34.2% which has affected the operations of Sainsbury to high extent. Due to this reduction in the
tax rate, it has become easier for the company to trade their goods as well as services as much
low rate (Amoako and Dartey-Baah, 2020). Thus, this has eventually saved the company from
high trade restrictions over international trade (Mohelska and Sokolova, 2016).
Negative

Due to the termination of UK from EU, there has been the frequent change in government
which has given rise to political instability in the country. Due to this high political instability,
there has been high corruption rate in UK and this has affected the company in negative way.
Due to high corruption rate, it has become difficult for the company to comply to various
policies and market their products (Brewster, 2017).
Economic factors
The various economic factors consist of exchange rate, economic growth, disposable
income, unemployment rate etc. which has impacted the business of Sainsbury to high extent.
Positive effect
Due to the impact of Brexit, interest rates in country has been reduced from around
56.3% to more than 43.6% which has been beneficial for the company (Sanaei and Sobhani,
2018). Due to decrease in the interest rates, it has become easier for company to borrow funds
and take loans for various purposes like diversification, product development etc. Besides this,
because of the decrease in the interest rates, company can now easily take the loans for its
various activities at effective rate. (Ardley and McIntosh, 2019).
Negative effect
According to the report of 2019, unemployment rates in UK has increased from 32.5% to
more than 56.7% due to the frequent change in government as well as corruption rate (Mohelska
and Sokolova, 2016). This has poses a great challenge for Sainsbury. Due to the high rates of
unemployment, company generally has faced the problem in hiring talented staff as well as
skilled employees for the organization. This high unemployment rate has compelled the
company to outsource the other agencies for recruiting and this has increased their overall
expense (Remane and et. al.,2017).
Social factors
Population growth, health consciousness, lifestyle, culture, age distribution all
encompasses the social factors that have affected operations of Sainsbury
Positive effect
Nowadays, more and more people have become health conscious and looks for the food
items which are healthier as well as organic. This has provided a great opportunity for company
and has been advantageous for it. Due to growing awareness of people for leading healthier life,

sales of the organic food of the company has eventually increased (Schaltegger, Hansen and
Lüdeke-Freund, 2016).
Negative effect
Due to the increase in growth rate of population, a large number of people does not
resemble in their culture and beliefs and thus have a diverse population. This has impacted
Sainsbury in negative way. Due to varying beliefs as well as culture of people, it sometimes
becomes difficult for the company to follow these beliefs (Pramanik, Maiti and Maiti, 2018).
Technological factors
The various technological factors which has affected the operations of Sainsbury to a
great extent. This consists of automation level, technological innovations, R&D activities, online
power of consumers etc.
Positive impact
Since the advent of advanced technology, people have become more and more aware of
the technology and thus looks for the innovative products. The emergence of various advanced
technologies like data analytics, Artificial intelligence has allowed Sainsbury to manage teir
operations effectively and thus have simplified their work (Amoako and Dartey-Baah, 2020).
Negative effect
The emergence of technology has also affected Sainsbury in highly negative way. And
thus somehow compromised their security. Due to the emergence of wide range of technologies,
various security as well as privacy issues has arisen to high extent. Nowadays, hackers can easily
hack the computer systems of organizations and steal the confidential information like details of
customers, credit card details etc. This has eventually impacted Sainsbury in negative way and
due to this, the threat of privacy as well as security has increased. (Lozano, 2018).
Environmental factors
The major environmental factors encompasses weather, climatic change, environmental
policies etc.
Positive effect
The flexible environmental policies of UK has impacted the company in highly positive
way and thus have enabled them to contribute towards sustainability. Due to the growing
awareness of people towards safer environment, company has increased its contribution towards

sustainability to high level ans this has eventually increased the goodwill of company among
consumers. This has also enhanced their brand reputation (Trevisan, 2016).
Negative effect
The most important challenge which company is facing is increasing demand of the
consumers for reducing amount of waste. Today more and more people demand for the minimal
waste supermarkets which has somewhat impacted the operations of Sainsbury to a great extent
(Morelli, 2018).
Legal factors
The major legal factors consists of patents, discrimination laws, copyrights, health as well
as safety laws etc.
Positive effect
The positive legal policies witin various countries in which Sainsbury operates generally
poses a positive impact on the company. For example- the most recent policy being established
by Food retailing Commission reduced the prices of fuels to more than £1.12. This eventually
impact the operations of company in great way and thus reduced their overall expenses of trading
their goods through numerous transport system (Nayak, Bhattacharyya and Krishnamoorthy,
2019).
Negative effect
As company operates in more than one country thus it remain exposed to various
changing legislation as well as rules and thus somewhere impacts them in negative way. Due to
its operation in wide number of countries, company has to remain aware about the constantly
changing laws and legislation which sometimes becomes difficult for them (Sanaei and Sobhani,
2018).
M1 Analysis of macro environment
The macro environment basically helps the organizations to assess the various external
factors which impacts their overall operations and thus helps them to take effective strategic
decisions. The macro environment mainly considers various factors like political, environmental,
economical, legal factors etc which impacts the business environment of organization to high
extent (Braun, Latham and Cannatelli, 2019). For example- where on one hand, the advent of
emerging technologies like AI has made it easier for company to manage their complex work in