Contemporary Businesses Environment

CONTEMPORARY BUSINESSES ENVIRONMENT

Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
LITERATURE REVIEW................................................................................................................3
SWOT ANALYSES....................................................................................................................3
PESTLE ANALYSES.................................................................................................................4
TASK 2............................................................................................................................................6
BREXIT AND ITS IMPACTS........................................................................................................6
REFERENCES..............................................................................................................................11

INTRODUCTION
Sainsbury is the second largest chain of supermarket in the United Kingdom holding more
than 15% share of supermarket sector . The company was being founded by John James
Sainsbury in the year 1869 as a shop in London. Sainsbury became the largest supermarket chain
in 1922. Sainsbury was the largest supermarket chain until 1995 when Tesco overtook it to
become the market leader. In this report we have considered the internal as well as external
factors of the Sainsbury using SWOT and PESTLE analyses that influences the business
environment in the UK. There is also a brief review about how the company is affected by the
Brexit situations and what are the future impacts on the company in which there is a whole
explanation about the problems and obstacles the company will face and what are the advantage
the company might have due to Brexit.
TASK 1
LITERATURE REVIEW
This is a brief discussion about how Sainsbury is affected by the internal and external
environment:
SWOT ANALYSES
STRENGTH
According to the author, Sainsbury offers a wide variety of product and services which include
clothing, food, financial services, toys, stationary, homeware and cookware so this vast portfolio
of product and services acts as one of the major strength for Sainsbury. The company uses
excellent marketing strategies to promote its products and a strong and experienced workforce
dedicated toward working makes the company very competitive in the market. The author also
stated that Sainsbury is known for its quality product and this strength has created a strong
goodwill among the customers. The company has been consistent with its performance and has a
strong balance sheet.
WEAKNESS
As per the author Sainsbury is starting to lose its market share in the previous years due to
excessive competition and high debt levels leading to decline in the profitability. The company
main competitions are Tesco, ASDA and Morrisons which has led to cut in the profit margins of

Sainsbury. The author stated that low margin are especially shown in the area of food business
for Sainsbury. The company average investment in research and development is lower than its
other competitors especially Tesco and the author added that Sainsbury has not been very good
at forecasting the future opportunities regarding rise in the demand, this has led to high inventory
days compared to other player in the market.
OPPORTUNITIES
In accordance with the author Sainsbury has emerged with some opportunities in recent time.
The new taxation policy of the government provided company's like Sainsbury with ways to
increase their profitability. The author also stated that the government agreement has led to new
market being available to Sainsbury, the company can explore these market to increase its
market share. In this ever changing technological environment the company also have the
opportunities to use online websites to reach the consumers all over the world with just a mouse
click. The author also added that the inflation rates are low so the company has the chance to
improve its cash flow position.
THREATS
The author stated that Sainsbury have a threat to the existing with the new regulations under the
Paris agreement. The demand for highly profitable products are seasonal and any unlikely event
during any of these season can affect the company's profitability in the future. The new
technological changes in the environment can disrupts the working of Sainsbury. The author
added that since Sainsbury is a multi national company the laws and regulation of different
countries must be followed or serious penalties will be face by Sainsbury. The company also
posses threats from the local distributors if they gave a high influence over the local customers.
Rising prices of raw material are also a problem to Sainsbury profitability.
PESTLE ANALYSES
POLITICAL FACTORS
As per the view if the author the major political factors affecting Sainsbury are the current
government debts and the consumer debts are too high. It is becoming very difficult for
Sainsbury to survive under these unstable political conditions. The author further added that the
UK political relations with Qatar has also impacted the Sainsbury profitability and the current