Business Strategy: Analysis of Macro Environment and Internal Capabilities

BUSINESS STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Mission of Sainsbury...................................................................................................................3
Vision of Sainsbury.....................................................................................................................3
Objectives of Sainsbury...............................................................................................................3
P1. Analysis of impact and influence of macro environment on company.................................3
P 2 Use of appropriate framework for analysing the internal environment and capabilities......6
P3 Porter’s five forces.................................................................................................................8
P4 Use of theories for strategic directions.................................................................................10
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
The study is on business strategy of organisation and the factors affecting the strategy.
Business strategy is the decision-making of an organisation affected by various factors and
formed by the management. The organisation taken for case study is Sainsbury. Sainsbury is a
retail organisation in UK which is a FMCG company dealing in grocery and food products.
Mission, vision and objectives of the company have been talked about. The study has conducted
an assessment of macro-economic factors with PESTLE analysis of the company. It does a study
of the internal factors with analysis of strengths and weaknesses of the company. Porter’s five
forces has been applied and evaluation of competitive forces has been done. The theories and
models being applied for understanding the strategy direction has been done.
Mission of Sainsbury
Sainsbury has a mission to build on its strong brand heritage and image for quality and
innovative products and provide value to customers on making shopping convenient (Coelho and
et.al., 2020).
Vision of Sainsbury
The vision is to be the trusted retailer, where people can work and also shop. This involves
harnessing talent, creative employees for improving on customer service.
Objectives of Sainsbury
 Sainsbury will strive for gaining the numero uno spot in FMCG industry.
 Sainsbury wants to increase on customer value for their purchase and do more customer
engagement activities.
 Sainsbury shall provide its shareholders with good financial returns.
 Sainsbury wants to achieve sustainability in business.
P1. Analysis of impact and influence of macro environment on company
External environment is dynamic in nature as there are continuous changes that impact on
growth and development of company. Pestle model helps in understanding different factors that
influence organisation strategy and operation such as political, social, economic, technological
and environment. The manager of Sainsbury have effectively monitored external environmental

changes thereby plan appropriate strategies that could be used to motivate them to work hard for
benefits of organisation. Thereby the way external environment has impacted Sainsbury can be
illustrated as follows:
PESTLE ANALYSIS
Political factors: Sainsbury has been affected by the instability in UK governments in the past
decade. The changing of governments affects the policy making of the company. Long term
decisions are affected in corporate strategy with change in governments. Also, Brexit has cast
uncertainties in the business environment as Sainsbury has markets in other arts of Europe too.
The imports and exports of the company get affected with increase in tariff rates. Good relation
with western nations has worked for the benefit of the company with more product sale and
increase in revenues. There has been political support for retailers with less interest rate in
lending as they are one of the largest recruiters in the country. This has helped retailers in
business expansion (Perera, 2017).
Economic factors: Inflation rate increase has casted a decline in the revenues. Sainsbury has to
spend more on material acquisition but as it has policy of low pricing, it has to compensate on
the profits by a part. Increase in purchasing power has suited the requirements of product sale in
quantity as now people are able to purchase more and the customer segment has also enlarged
due to it. Change in currency rates also works sometimes in favour and sometimes not in import
and export of products. In current situation, the economy has been affected adversely due to
pandemic, however with increase in vaccination the economy operations are back on track and
revenues have also been generated by use of e-commerce. Sainsbury has doubled the capacity of
its online sales from 2020.
Social factor: Social preferences and taste of people are ever changing in nature with availability
of alternative options in external environment. Sainsbury has always pay emphasising on
understanding changing customers wants in order to find alternative method that could be used to
meet their expectancy. So, that they choose to be part of it rather than other enterprise operating
in retail sector. Likewise in recent scenario most of the consumer has become more and more
concerned about their health and well being that has Force Company such as Sainsbury to launch
organic products range in order to meet customer’s expectancy (Yuan and et.al., 2020).
Furthermore, it has understood that people mainly selecting online shopping or home delivery of
products and services. Thus, it has influence Sainsbury to provide option to people to select

products and services through office website of company and get it deliver at their door steps
without wastage of much time. So, company by effective adapting itself with changes that are
happening in external environment is able to build and retained strong market share in retail
sector of United Kingdom.
Technological factor: In external environment there are numerous development and growth in
technology so that more qualitative, quick services can be rendered to customers for fulfilment of
their requirements. With impact of covid-19, most of the companies have shifted their business
from offline to online so that customers can easily buy products while staying safe and secure at
home. Sainsbury has also started making use of digital marketing to generate awareness of
company among maximum number of people so that it can enjoy higher market share and profit
margin. Such as it has started making use of social media like instragram, facebook, twitter and
official website to connect with customers and influence them to make its products and services
so that it can earn higher profitability (Moktadir and et.al., 2020). Moreover, technology
advancement has also helped Sainsbury in providing online payment services to customers thus
they need not have to stand in long queue to make payment and get their orders. While
continuous changes in technology and their adaptation has become somewhat expensive for
company as lot of money is spend but it has helped in making the process more easier and
quicker. Thus Sainsbury is able to expand its market share and gain competitive advantages.
Environmental factor: With increase number of pollution and wastage of resources it has
become essential for company to undertake steps related to protection of environment and
making optimum use of available resources. Sainsbury is large organisation so it in order to
maintained good relationship with customers has invested money in CSR activities so that some
benefits can be enjoyed by the society. It has also ensured that it make optimum use of available
resources so that maximum value can be delivered to customers in limited time frame and
company can generate sufficient revenue. Furthermore, it has make aware employees to reduce
the total wastage or that higher value can be provided to people for satisfying their wants
(Moktadir and et.al., 2020).
Legal factor: Government of United Kingdom is responsible for formulating all legal laws that
need to be followed by company while operating its function so that no harm or disadvantages
can be caused to any individuals in any circumstances. Sainsbury in order to promote its business
for longer time frame has abided to all legal laws such as health and safety, employment and

discriminative and pay wages. So, through abiding to the law company is able to make each and
every individual happy and satisfied to work for growth and development of firm. It has also
followed ethical and moral practices such as providing equal opportunities to all individuals to
grow and developed their existing skills and capabilities. Thus it has helped in improving their
performance, making them motivated to accept the changes and helps company in achievements
of its end objectives in retail industry.
Therefore, Pestle analysis helps in understanding different factors that impact on company
performance and productivity and the way Sainsbury have effectively cope up with them to
retained huge market share.
P 2 Use of appropriate framework for analysing the internal environment and capabilities
For the business to be successful it is very essential that company analyse its internal
environment in proper and effective manner (Barbosa, de Oliveira and Santos, 2018). This is
pertaining to the fact that in case the internal capabilities of the company are not good then this
will affect the working efficiency of the company. Hence as a result of this it is possible that
operations of the company are not being undertaken and proper and effective manner. Hence for
this Sainsbury undertakes the use of SWOT analysis. The SWOT analysis is a model which
assists Sainsbury in evaluating their strength and weaknesses along with the opportunities and
threats present within the external environment affecting the business.
Strength
The key strength of Sainsbury is that it has a
good employee within the company. Hence
this will provide a better and effective working
environment to Sainsbury which will result in
better working of the company.
In addition to this also have an excellent
branding and advertising which in attracting
more of the consumers.
Along with this another key strength of
Sainsbury is that it also sponsors different
types of events. When the company sponsor
Weakness
The major weakness of Sainsbury is that it has
a low margin food business. Hence this affects
the property ability of the company to a great
extent.
In addition to this the growing cost can also be
a major weakness of Sainsbury. This is
pertaining to the fact that the growing cost may
result in decrease in the profit margin.
Moreover in addition to this the rising food
prices over the world also have impacted the
Sainsbury with their selling price. This is