Business Strategy Analysis

This report discusses about the analysis of various internal and external environment factor and capabilities of Sainsbury. This report also throw light on macro environment that affects the performance of company. This report also evaluates its competitive force by using porter's Five Force model. At last this report prepares a strategies planning of Sainsbury by using various ranges of models and concepts, theories.

Business Strategy

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................1
LO1..................................................................................................................................................1
P1 Pestle Analysis .......................................................................................................................1
LO2..................................................................................................................................................3
P2 Swot analysis..........................................................................................................................3
LO3..................................................................................................................................................1
P3 Analysis of Sainsbury's strategy using its competitive position.............................................1
LO4..................................................................................................................................................3
P4 Strategic management plan for Sainsbury..............................................................................3
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
Business strategy is the planed action and moves or decision of the company in order to
attract large customer base and gain competition advantage in the industry. In this report
Sainsbury has been taken as organisation which is leading retailer of groceries in UK with the
largest chain in supermarket. It was founded by John James Sainsbury in 1869 in Holborn,
London, United Kingdom. This report discusses about the analysis of various internal and
external environment factor and capabilities of Sainsbury. This report also throw light on macro
environment that affects the performance of company. This report also evaluates its competitive
force by using porter's Five Force model. At last this report prepares a strategies planning of
Sainsbury by using various ranges of models and concepts, theories.
LO1
P1 Pestle Analysis
Pestle Analysis is the evaluation and analysis of all external environmental factor that
impact performance of Sainsbury. This analysis is mostly done by the company at the time of
launching a new product or product line to understand various factor that operates in
environment. The Pestle Analysis of Sainsbury is as follows:
Political Factor: It includes the policy of the government such as Political stability or instability,
tax policy that might impact the decision-making and functioning of organization
(Venkatachalam, 2018). UK is facing political instability due to Brexit as the UK decided to
leave European union as a result it impacts the import of the Sainsbury Company. It also leads to
increase in cost of imported product which at the end passed to the customer. The inflation rate
also increase that leads to unemployment, increase in debt thus decreasing the purchasing power
of the customer. The company can use various marketing mix or tools to influence the customer
in order to ensure continuous spending for gaining maximum profit. So, as the company operates
its business in UK it had to undertake political instability while making strategies for achieving
its objectives.
Economical Factor: It includes various factors such as interest rate, unemployment rate, tax
rates and exchange rate that help in determining performance of economy. This factor has
adversely affected the functioning of Sainsbury due to stagnation or slows down of economic
development. There is high inflation rate, employment rate and decrease in consumer spending
and the value of pound in the economy. The increase price of fuel had also affected the company

as it’s mainly dependent on road transport for delivery of its product across UK. That has
resulted in increased cost of product and hence decreases the profit margin of Sainsbury
Company. So, the company needs to expand its business in new market and should not much
depend on road transport.
Social factor: This factor helps in determining the custom, values and belief of the population in
which the company operates its business (Gause, 2016). It is also useful in identifying the
population trends such as lifestyle and career attitude, age and income distribution and emphasis
on health and safety. The customer taste and preference changes contiguously so the marketer of
company needs to identify the needs of the customer and satisfy in the best possible way.
Customers around the globe and in UK also are more conscious about their health and thus prefer
healthy diet. Sainsbury has to change its fast food menu by including various other option such
as organic food and salad. Company should also promote fair trade movement of product as
nowadays customer is more interested to know from where the food has come. Thus, it can be
stated that social factor help Sainsbury in attracting large number of customers.
Technology factor: This factor refers to the pertaining technology and update technology that is
used by the company to decrease the cost of product. It includes level of innovation, research and
development, technology awareness among the market and technological changes. Customer in
present business environment prefers online shopping more so the company has updated its
technology by selling its product online. Thus, it gives ease and comfort to its customers by
delivering the product at their doorsteps. Sainsbury by introducing e-commerce store enable the
company to cater tech friendly generation. The company by advancement in its analytics can
build accurate model that will helpful in estimating the sales of the company by minimizing
waste and maximizing profit. Thus, the development in technological will help the company in
bring economy of scale and will increase profitability.
Legal Factor: This factor includes certain rules and regulation that the company needs to follow
while operating its business (Aithal, 2017). Some of them may overlap political factor such as
employment law, discriminative laws, consumer protection law and health and safety laws. The
company has to consider these laws in its operation for successful and ethical trading. Sainsbury
is affected by legal factor as the government has introduced tax on advertisement for fatty and
highly processed food. It restricts the functioning of Sainsbury from conduction promotional
activities and marketing of fatty foods. Thus, the company needs to modify its product such as

offering organic food, less fat food to the customers. The government has also levied sugar tax
that means the company have to reduce the content of sugar in its all drinks. If it does not follow
the rules or laws in its operation it had to pay fines or penalty that will reduce the brand image
and profit margin of the company. So, the company needs to compile with such legislation and
have to ensure various employment law, discriminative law, health and safety of its employee
and customer.
Environmental factor: This factor is also important for a company as nowadays consumer are
more aware of the effect of organization that is caused to the environment. As the resource in the
environment are limited and scare so the company should effectively use this resource. This help
in analysis of various environmental factors such as climate change and weather. Sainsbury has
use various method for sustainability of environment by using recycle material in its packaging.
It has also reduced the emission of carbon and wastage in its operation thus helping in protection
of environment and thus saving the lives of people. Thus, it can be stated that the company by
considering various factor is able to increase its brand image and customer loyalty.
LO2
P2 Swot analysis
Swot Analysis help in evaluation of market position of the company and help in
development of strategies plan by identifying it opportunity and threats in the given market. It
includes both internal and external factor of the environment that impact on the functioning of
Sainsbury. The factor that the company has some control or can changed them is known as
internal factors and the factor that are outside the control of company are external factor. The
Swot Analysis of Sainsbury is as follows:
Strength: It describes the things in which the company excel or that differentiate it from other
competitors in the markets(Shahba and et.al., 2017). The company by using its strength can
expand its market share and gain competitive advantages in the market. Thus, by identifying
strength the company can effectively achieve its objectives and goals.
Quality products: Sainsbury is known for providing quality product to its customer thus its
strength lies in providing differentiates food while maintaining the quality of product and
services. Thus, the focus of the company is to provide quality product at reasonable price to its
customers.

Skilled employee: The employees of Sainsbury are high qualified and knowledgeable and the
company also focus to provide quality training to its employee. Therefore, it helps the company
in retention and increasing the loyalty of the customer by providing superior services to its
customers.
Diversified investment: Sainsbury has diversified its investment that not only helps the
company in minimizing its risk but also help in maintaining the quality. The company by
expanding its product line offers wide varieties of option to its customers to choose among.
Diversified portfolio helps the company to cater the needs of different group of customers and
expand its market share.
Innovation promotional strategies: One of the strength of Sainsbury lies in its promotional
strategies as the company has use various innovative strategies to influence the customer to
prefer their product in comparison to competitor.
Weakness: This factor describes the company weak point or the point where it needs to improve
itself. It is negative attribute that needs to be improved in order to gain competitive advantage in
the market. Some of the weaknesses of Sainsbury are as follows:
Single market operations: Company depends on UK market for its sales which has limited its
business growth. Economical condition of UK is also not good it is suffering from inflation rate,
reduction in consumer spending that has affect the profit margin and sale of the company. Thus,
Sainsbury should expand its business across the globe to increase its sale and gain benefit from
other economy
Competition: Sainsbury is facing high competition in retail sector as there are many competitors
that are selling product at lower price as compared the Sainsbury price. Thus, company has lower
its price to attract customer that has resulted in low profit margin.
Reduction in customer loyalty: In order to gain competitive advantage Sainsbury has reduced
its price of product but it has also affected in its value perception. The company is not able to re
tend its customer loyalty and the customers are switching brand. Thus, the company should use
various strategies and loyalty program to build trust of customers.
Opportunity: It is the situation that may put the company at advantages position so its external
factor of environment that cannot be controlled by the company (Steffen, 2017). Sainsbury has
following opportunity to expand its business and achieve objective of the company.

Expansion: Company has an opportunity to expand its business in domestic as well as in
international markets. Sainsbury mainly operates its business in UK it needs to expand its
business across nation in order to compete with other leading competitor in the market. Company
by joint venture or partnership with other company can explore new markets of emerging
companies.
Online selling; Sainsbury is able to increase its sales and profit margin by offering customer
shopping through online.
Organic food: As nowadays customer are more concerned about their health and want organic
food in their diet. Sainsbury is successful in satisfying the needs of the customers by launching
new product line or by offering organic foods.
Analytical technology: Sainsbury by the use of various updates analytical technology can be
helpful for company to come under the sight of customers. This will result in the opportunity for
increase is sales as well as improvement in the brand image of the company.
Technology: Sainsbury by updating its technology can bring economic of scale thereby reducing
the cost of product and increasing profit margin. It can also make use of self checkout machine
thus offering 24 hours service to its customer that help in increasing sale of the company.
Threats: Company does not have control over such factor and it adversely affects the
functioning of the company (Pandya, 2017). It may cause damage or put the company into
danger situation so this needs to be considered before launching of new product or business
expansion. Sainsbury has following threats:
Brexit: Due to Brexit UK economic is facing slow economy growth rate, the value of pound
have decreased thus reducing the purchasing of the customer. So the company has to suffer a lot
from Brexit the challenge is to influence the customer to buy their products.
Intensive competition: Sainsbury is facing tough competition like all other super market chain
in UK. It is facing competition particularly from two discounters such as ALDI and LIDI as they
are offering their product at lower price at the same time offering better quality to its customers.
Globalisation: It is an opportunity as well as threats for the company as due to globalization it
can expand its business across the globe but at the same time the competition had also increased.
Thus, the company should also expand its business across the nation in order to gain competitive
advantage and protect its company from threats of increasing competition.

LO3
P3 Analysis of Sainsbury's strategy using its competitive position
Sainsbury has been able to meet its business strategies and competitive advantage in the
market. Porter's five force model is a management tool used to analyse the impact of business
position and competitive rivalry of Sainsbury UK. A detailed analysis of Porter's five forces is
discussed below.
Competitive Rivalry: The first of Porter\s five forces is competition in the industry. It refers to
the number of competitors and its ability to give competition. If the competitors are larger with
the relevant product and services then it offers lesser power to the company as suppliers and
buyers seek competitors to offer a better deal (Gans and Ryall, 2017). On the other hand, if
competition is low, the company has the power to charge higher prices to achieve higher sales
and profits. There is a lot of competition in the retail market and Sainsbury faces intense
competition from big four supermarkets, that is, Asda, Tesco and Morrisons that provides similar
products at similar price that makes switching cost low and customers can easily switch to
competitors. All this has led to cut throat competition. Apart from this, Sainsbury faces
competition from German stores such as Aldi and Lidl that offers discounts up-to 40% which has
affected the Sainsbury market share. Which has forced Sainsbury to merge with Asda to survive
this cut throat competition. So, Sainsbury has to come up with the other business strategies to
retain its market share and position by bringing differentiated products which are attractive to the
customers.
Threat of new entrants: An organizations power is affected by the force of new entrant in the
market. The less time and money is cost the competitors to enter the market, a more established
organization's position is weakened (Kaiser, El Arbi and Ahlemann, 2015). The threat of new
entrant in Sainsbury is medium this is because Sainsbury is an established company and it is not
easy for the new brand to compete with it and attain the same level of trust and recognition. Also,
the most of the grocery market share is captured by big four supermarkets and there is intense
competition with other small supermarkets which make it difficult for the new entrant to prosper.
Apart from this, any new entrant have to provide a very high quality of product at a low prices to
attract new customers which is difficult for the new entrant to cope with the cost of
establishment. Also, the intense competition in the UK food retail market has made it
unattractive at the moment which deters further entry. The business strategy of Sainsbury

regarding customer satisfaction, retention and welfare of the stakeholders is fulfilled. Overall it
can be said that currently there is low scope of new entrants in the market to give a competition
to Sainsbury.

Bargaining Power of Suppliers: It refers to how easily suppliers can drive the cost of input. It is
affected by number of suppliers, switching cost to the company. Supermarket suppliers usually
have low bargaining power because of existence of many suppliers in the market, hence non-
complaint suppliers can be switched with another (Porter and Kramer, 2019). The same goes
with Sainsbury as its suppliers has low bargaining power due to the presence of lot of suppliers,
with less differentiation and low switching cost. Sainsbury is an important customer to suppliers
as company's profit is tried to that of suppliers. Therefore, suppliers have to provide reasonable
pricing. So, it can be said that suppliers get good price for the products and it cannot negotiate
with the retail giants as suppliers are paid higher than the market rates. Therefore, this makes
bargaining power of suppliers a weaker force in the industry.
Bargaining Power of buyers: It refers to the ability of the customers to drive the prices. Small
and powerful customer base means more negotiating power of buyers and higher and
independent customers means less negotiating power of buyers (Roper and Hodari, 2015). In
case of Sainsbury, the bargaining power of the buyers is high, this is because of the availability
of others supermarkets or competitors such as Asda, Tesco etc. due to which they have less
switching cost which gives buyers to choose from rival offers. The strategy of selling products at
lower price or cheaper rates than the competitors have been beneficial to the consumers which
helped the company in gaining more retail market share. In UK customers are more loyal to
prices rather than a brand which is why customers are moving to other competitors away from
big four. Hence, bargaining power of buyers have played a significant role in Sainsbury's market
positioning.
Threat of substitution: Substitute goods or services that can be used against company's product
is a threat to the company. Companies selling products and services having no substitute can
enjoy the power to increase price and work with favourable terms and conditions and when close
substitutes are present, it weakens the company's power to increase price (Murphy Ewan, 2018).
The threat of substitute is high for both grocery and non-grocery items. This is because
Sainsbury's foods substitute can come from other small retailers which offers not just food but
other non-food items such as clothing, furniture, electronics etc. These retailers can attract large
customers as these shops are present on every street and consumers do not like going to
supermarket for few things. The strategy to compete with substitute has not given any proper
result even though Sainsbury is selling its products at lower price than its substitutes.

LO4
P4 Strategic management plan for Sainsbury
Strategic Management Plan
COMPANY OVERVIEW
J Sainsbury plc trading as Sainsbury is the largest chain of supermarket in UK selling
products of varied range from food and clothing to electronics and home products with home
delivery service.
MISSION AND VISION
Sainsbury mission statement is to be consumers first choice for food and delivering
products of high quality and great service at a competitive cost through working faster, simpler
and together. Its vision is to be the most trusted retailer where people love to shop and work by
providing best shopping experience.
ANALYSIS
Environmental analysis of Sainsbury will help in knowing the impact of internal and
external factors on organizations strategies and current position of the organization and the key
areas that require immediate attention.
EXTERNAL FACTORS
Political factors: Due to the emergence of globalization in UK, the number of competitors in
the retail market have increased and the market share of all the existing companies got affected.
But this will change after implementation of BREXIT (Jurevicius Ovidijus, 2013). According to
this policy, UK will not be having relaxed trade policy with other European Union countries
and market competition of Sainsbury will decrease. But the cost of imported products will
increase from these countries.
Economic factors: This factor has severely impacted the functioning of the organization
because of slow down in economic development. The increase in the price of the fuel has also
affected the company which has resulted in increase cost of production and increase in price or
low profit margin.
Social factors: The increasing health consciousness of the people of UK has influenced the
Sainsbury to produce products that are healthy and organic which will satisfy the consumers
need. Nowadays, customers are more interested in knowing from where the food has come from

and what techniques have been used while producing it.
Technological factors: Sainsbury has introduced its e-commerce store to cater to the needs of
its consumers. Sainsbury needs to advance its analytics system to build more accurate model
which will help in estimating the sales and production requirements by taking into account the
external factors. Thus, development in technology will help Sainsbury in bringing economies of
scale and increase profitability.
Legal factors: Introduction of tax on advertisement of fatty and highly processed food has
affected Sainsbury by restricting from conducting promotional and marketing activities related
to fatty food products which arises the need to modify the company products. Modification in
the product will require complete market research along with successful implementation of
laws.
Environmental factors: Sainsbury is currently facing the trend of environmentally conscious
consumers with the demand of using practices such as paper packaging, use of recycled
materials and zero waste supermarkets. It has started working on these practices and opened
zero waste super market.
INTERNAL FACTORS
Strength: Sainsbury is the largest retailer in UK having strength of over 150,000 workforce
having wide range of products and after the takeover of Argos has also increased its product
portfolio. It has a strong market share and consistent profitability.
Weakness: UK is the major market of Sainsbury and providing products with high quality,
influenced it to increase its prices which has caused its customers to move to its competitors.
There is stiff competition within every segment of the retail sector (Reymen and et.al, 2015).
Other than production cost, Sainsbury has to spend on shopping experience for higher income
segment which in turn increases cost.
Opportunities: Sainsbury has opportunity in two major areas, that is, online global presence
and increase in use of technology and analytics. Self check out system can help Sainsbury to
open its stores 24 hours without any hassle which will boost its sales. Also, using analytics will
help in predicting the future sales and trends to carry out a decision.
Threats: With increasing globalization has impacted the opportunity to Sainsbury by bringing
intense competition and increase in price of imported products because of BREXIT.
OBJECTIVES

 To overcome the competition from substitute products in the market.
 To meet the increasing demand for healthy and organic products.
 To overcome the rising import cost.
TANGIBLE AND TACTICAL STRATEGIES
 Sainsbury should focus more on its quality which will influence buyers to purchase its
product at a lower price compared to substitute products.
 It should also focus on differentiating its products from its competitors which will make
buyers to see the product unique and stops them from switching to substitute products
that so not provide these unique benefits. It can provide unique benefits by
understanding its customers needs which can be done through market research.
 It should also implement plans to attract more customers towards it healthy and organic
products by letting customers know about the technology used and source of material.
 Sainsbury cannot neglect or substitute the increasing fuel cost but it can compensate it
by reducing the cost of other material or input or overall production process because
impact of BREXIT is an uncertain event for which a tangible plan is required.
 Adopting and integrating the latest technology will help in increasing its sales and future
growth. Sainsbury should adopt advanced technology to make the process easy going
and hassle free such self checkout system, easy billing etc.
MEASURE AND EVALUATE PERFORMANCE
After implementation of new strategies, it is the responsibility of the organization to
evaluate and measure its performance whether is is going in the right direction or not and
comparing it with the set standards and if any deviations are found, corrective actions are taken
to reduce such deviations and achieve the objectives. Also, plan should be flexible enough to
make changes in it with the change in preferences. Timely analysis of the plan is required to
overcome the challenges.
CONCLUSION
It can be summarized from above that there are both positive and negative impact of
environmental factors on an organization and it is the responsibility of the organization to
identify its impact at the right time to take corrective steps to survive, grow and take competitive
advantage. In order to face the challenge it is better to form a strategic business plan and move

according to it and make changes as and when required. Also, always carry out a plan based on
the company's mission and vision in order to achieve organizations.

REFERENCES
Books and Journals
Aithal, P. S., 2017. Company Analysis–The Beginning Step for Scholarly
Research. International Journal of Case Studies in Business, IT and Education
(IJCSBE). 1(1). pp.1-18.
Gans, J. and Ryall, M. D., 2017. Value capture theory: A strategic management review. Strategic
Management Journal. 38(1). pp.17-41.
Gause, R., 2016. UCF Research Guides: Business Research--Industry Analysis: PESTLE
Analysis.
Kaiser, M. G., El Arbi, F. and Ahlemann, F., 2015. Successful project portfolio management
beyond project selection techniques: Understanding the role of structural
alignment. International Journal of Project Management. 33(1). pp.126-139.
Pandya, S., 2017. Improving the learning and developmental potential of SWOT analysis:
introducing the LISA framework. Strategic Direction.33(3). pp.12-14.
Porter, M. E. and Kramer, M. R., 2019. Creating shared value. In Managing sustainable
business (pp. 323-346). Springer, Dordrecht.
Reymen, I. M. and et.al, 2015. Understanding dynamics of strategic decision making in venture
creation: a process study of effectuation and causation. Strategic entrepreneurship
journal. 9(4). pp.351-379.
Roper, A. and Hodari, D., 2015. Strategy tools: Contextual factors impacting use and
usefulness. Tourism Management. 51. pp.1-12.
Shahba, S.and et.al., 2017. Application of multi-attribute decision-making methods in SWOT
analysis of mine waste management (case study: Sirjan's Golgohar iron mine,
Iran). Resources Policy. 51. pp.67-76.
Steffen, B., 2017. The physics of software tools: SWOT analysis and vision. International
Journal on Software Tools for Technology Transfer. 19(1). pp.1-7.
Venkatachalam, A. M., 2018. Identifying dynamics of growth in a competitive and transitioning
lighting industry using PESTLE and SWOT analysis.
Online
Jurevicius Ovidijus, 2013. Strategic Management & Strategic Planning Process. [Online]
Available Through: <https://strategicmanagementinsight.com/topics/strategic-planning-
process.html>.
Murphy Ewan, 2018. Sainsbury J Plc Porter Five Forces Analysis. [Online] Available Through:
<https://www.essay48.com/term-paper/9094-Sainsbury-J-Plc-Porter-Five-Forces>.