Business Strategy for Sainsbury: PESTLE, SWOT, VRIO, Stakeholder and Porter's Five Forces Analysis

Unit 32- Business
Strategy
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Table of Content
Introduction p
Part A: An internal and external analysis that provides a platform
for strategic decision making: p-
p
1. PESTLE and SWOT of the organisation and an evaluation of the
organisation’s resources and capabilities p
2. Competitive environment analysis using Porter’s Five Forces model
p
3. Identification and justification of the organisation’s existing and/or potential
competitive advantage p
4. Valid strategies and tactical objectives to achieve overall strategic
objectives p
Part B: On the basis of this analysis critically evaluate and justify
strategic options for the organisation: p-p
1. Critical evaluation of the different types of strategic directions available to
the organisation p
2. Justification and recommendation of the most appropriate growth platform/s
and strategies p
3. Evaluate ways and means by which the chosen strategy/ies can be
monitored in order to ensure success p
5.0 Conclusions p
References p
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Introduction
Business strategy is described as amalgamation of all the activities performed and decisions
taken by organisations in accomplishing organisational goals as well as secure differentiated
competitive position in market (Arief, Mulyadi and Liriwati, 2021). It is essential for
organisations as it helps them to establish direction in achieving pre-determined goals. Main motive
behind strategy implementation is to clarify a vision which provides direction to employees.
Strategic management plan is prepared in order to set clear vision and organisational objectives as
well as to communicate them to employees. For better understanding of business strategies and
strategic planning, Sainsbury company is taken into consideration. Sainsbury is second largest
supermarket chain in UK. Company majorly deals in groceries and was established in 1829. it has its
headquarter in London, United Kingdom. Vision statement of Sainsbury summarises that it want to
be trusted retailer company whereby people willingly come to shop a variety of products. Mission
statements of Sainsbury is to provide quality products to their customers and become first choice of
consumers for a diversified range of products. Objective of Sainsbury is to offer excellent quality
food to their customers at affordable prices. Through this, their main aim is to increase their sales by
15% as well as their profitability level.
This project delves into evaluation of impact and influence of macro environment in framing
business strategies. This also highlights capabilities and internal environment of chosen organisation
that influence its decisions in a broader sense. It also comprises of Porter's five forces which helps to
evaluate market competitiveness. It also highlights discussion about varied theories and concepts
which help organisation in assessing their strategic planning.
Part A: An internal and external analysis that provides a platform
for strategic decision making:
1. PESTLE and SWOT of the organisation and an evaluation of the
organisation’s resources and capabilities
In order to analyse the impact of external macro environment on strategy formulation and
implementation, PESTLE analysis is performed by managers of Sainsbury. It is beneficial for
organisation in order to identify varied strengths and weaknesses in order to identify their impact on
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macro external environment (Braun, Latham and Cannatelli, 2019). All the factors of PESTLE
analysis in relevance to Sainsbury are discussed below: Political factors comprises of varied regulations framed by government, administrative
systems and political stability of a country (Cao, Chen and Lee, 2022). In UK, after Brexit
agreement which mark the exit of United Kingdom from European Union affects businesses
adversely. Top management of Sainsbury have to close down various establishments in
European Union which led to decrease in customer base as well as revenue. In order to
expand, managers should evaluate political conditions of country in which its want to
expand its activities. Economic factors encompasses of rising GDP rates, increase in inflation rate and
unemployment practices. Due to global lockdown, unemployment increases rapidly in UK.
Sainsbury's operations also suffered because of decrease in purchasing power of UK citizens.
Managers of Sainsbury are planning to expand their business, they can take this
unemployment as an opportunity. As they can get workers and employees on low cost as
well as they can use their resources in other activities. Social factors includes lifestyle, attitude, and perceptions of people of a specified country.
UK citizens are aware of their health regimes and prefers healthy food supplements.
Managers of Sainsbury can use this as opportunity for expanding their business to bring
healthy and organic food items in market. Technological factors comprises of new advancement in technology and how these can
affect businesses in a nation. UK is one of the leading technological advanced country which
supports business houses with new innovations. Managers of Sainsbury can take this
opportunity in flourishing its business further with the help of digital channels and social
networking sites. Legal factors comprises of varied laws in relation to employees, consumers and external
parties framed by government for organisations (Chelliah and Swamy, 2018). In UK,
various employment laws, equality act and health & safety regulations are framed by
government which are applied by managers of Sainsbury in their business operations. This
helps them to create a positive brand image and avoid any expensive litigation.
 Environmental factors comprises of pollution as well as carbon along with other harmful
gases from vehicles and industries of a specified nation. In UK, government is very strict in
maintaining pollution and carbon levels in country. Sainsbury's mangers has initiated many
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programs that help in reduction of plastic waste and carbon emission. This helps them to
fulfil their corporate social responsibility and enhance their brand image.
SWOT analysis is performed by managers of Sainsbury for assessing their internal
environment of organisation that help them to grab opportunities and minimizes risks. All the factors
of SWOT analysis in accordance with Sainsbury are underneath:
Strengths Relies on customer feedbacks-
Managers of Sainsbury are greatly relied
on customer feedbacks by maintaining
effective customer relationship
management. Effective online presence- Sainsbury
have effective online presence through
their official websites and promotions
through social media sites.
Weaknesses
 Keeping low margins- Managers of
Sainsbury has adopted concept of
providing low cost products to their
customers in order to increase their
revenue and stay ahead of their
competitors.
 Low switching costs- Sainsbury is facing
decrease in the number of their
customers die to low switching cost in
retail industry.
Opportunities Global expansion- Top management of
Sainsbury wants to expand its business
in more countries, this poses as an
opportunity in the era of globalisation. Identify latest market trends- Top
management of Sainsbury can bring
differentiations in their products by
scanning latest market trends effectively.
Threats
 Increased competition- Sainsbury is
facing cut-throat competition in UK
market which led to decrease in
customer base.
 Global lockdown- Rising up of corona
pandemic is a threat for almost every
business house. Sainsbury is also trying
to move out from this.
VRIO analysis is performed in order to asses varied resources and capabilities that an
organisation have to gain competitive advantage in market (Halpern, 2018). It aids managers of
Sainsbury in identifying their resources which can help them to expand their business further. Varied
elements of VRIO analysis are as under:
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Resources and
capabilities
Valuable Rare Inimitable Organised Competitive
implication
Customer
relationship
management
Yes No Competitive parity
Product quality Yes Yes No Temporary
competitive
advantage
Research and
development
department
Yes Yes Yes No Unused competitive
advantage
Distribution
network
Yes Yes Yes Yes Sustainable
competitive
advantage
Valuable resources are those which is used by managers of Sainsbury to increase
effectiveness of their business operations. In relation to valuable resources of Sainsbury is as follows:
 Customer relationship management is valuable resource of Sainsbury as they heavily relies
on their feedbacks for modifying their products and services.
 Sainsbury provides high quality products to their customers at reasonable prices in order to
win their loyalty towards their brand.
 Sainsbury has effective research & development department which performs extensive
search of varied market trends in order to develop their products and services efficiently.
 Sainsbury has excellent distribution network which helps it to reach to its large customer
base.
Rare resource are those which provides an opportunity of developing differential strategies
which are not readily available to their competitors (Jansson, 2020). Rare resources in accordance
with Sainsbury are as follows:
 Sainsbury provides one of the best quality products to their customers by collaborating with
efficient suppliers who provides them raw materials.
 With the help of effective research & development department, Sainsbury can gain accurate
insights into market which helps them to gain competitive advantage.
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