Contemporary Management Issues in Sainsbury: Drivers of Change and Strategic Decision Making

This report discusses the drivers of change and their impact on strategic decision making in Sainsbury, a multinational retail company. It covers PESTEL analysis, Porter's Five Forces model, challenges related to strategic decision making, and evaluation of factors impacting strategic decision making. It also provides recommendations for improving response potency to fresh changes.

Contemporary
management issues

Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Drivers of change and their impact on strategic decision making...............................................3
Porter’s Five forces model...........................................................................................................5
Challenges related to strategic decision.......................................................................................6
Drivers to change.........................................................................................................................6
Company respond to drivers........................................................................................................7
Evaluation of factors which impacts strategic decision making..................................................8
Respond towards change.............................................................................................................9
Recommendation for organisation to improve its response......................................................10
Recommendation how responses could be enhanced................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Management can be referred to the optimal manner of attaining organisational objectives, goals
and targets by engaging with appropriate management functions (Helmold, 2019). It outlines
various activities which contributes in fulfilment of objectives. Planning, organising, staffing and
controlling are some crucial function of management. In simple words, it can be depicted as the
coordination of various organisational tasks in such a manner that helps in accomplishing targets
within time span period. This project report is based on Sainsbury, a multinational retail based
company. In recent scenario, company owns Argos and this results in increased sales after
connecting with Argos. In addition to that, company emphasise on cost saving methods by which
it can lower down operational cost and offer best possible price to its customers. This project
report will cover change drivers and their impact on strategic decision making. Further, it will
also cover recommendation to company in order to heighten their response potency in relation to
fresh changes.
TASK
Drivers of change and their impact on strategic decision making
Driver of change can be considered as an effective approach which is formed by organisation in
order to accomplish objectives effectively and efficiently. This approach majorly focuses on
interplay of various factors such as political, social, technological and many more that supports
management in order to enhance organisational productivity by monitoring and controlling all
elements of business environment. Along with this, large number of organisational change exist
such as technological development, resources, customers. Globalisation and KPI. There are
specific reasons behind implementation of change that affects functioning of company. In
relation to Sainsbury, internal and external drivers forms factors that demands change
management in its operations. In order to better understand factors. PESTEL analysis is
discussed below. Political factors- Within UK, consumer and political debts are very high and that creates
challenge for company to sustain positive performance. While conducting management
practices, Sainsbury faces issue of intense government debts which creates high pressure
on company in operating business. It negatively impacts on company as it could lead to
risk of financial crisis.

 Economic factors- In present scenario, it has been analysed that globalisation has created
major challenge in managing organisation. It is because it provides an open platform to
all size and type of business whether small, medium or large. This creates pressure on
company to frame strategies in order to remain competitive in market. Thus, it is needed
to reduce competition which creates challenge for company through formulation of
competitive edge in market. Immense competition negatively impacts on functioning of
profitability and diminish overall efficiency. Social factors- This factor affects functioning of Sainsbury in diverse way and consist of
various market trends which causes alteration in needs and wants of customers. Rapid
change in taste and preference of customer creates challenge for company to deal with
such issues. In addition to that, company needs to engage with CSR activities and must
make decision in an ethical way. In order to deal with this issue, company needs to
analyse market research and based on that create insight for further decision making.
With market analysis, company can able to identify needs and wants of customers and
how their expectation can be met. Changing social behaviour affects various practices of
company and in decision making. Technological factors- This factor relates to technological advancement and
digitalisation within business organisation. UK is an advanced technological nation and
this positively impacts on operations of company in terms of low production cost. By
lowering down overall production cost, company can offer best prices to its customers.
Within UK, Sainsbury can opt latest technology in its logistics, marketing and in other
operational activities so as to enhance efficiency. Adding to this, company have opted
online delivery facility by which customer can place order and gets product delivered
right too their place. Legal factors- While operating business in a nation, it is needed to adhere with ample
number of rules and regulations. It is needed for company to comply with all laws and
legislations in order to avoid penalties. As Sainsbury operates in various counties and it
faces issue of different legislations from government (Laszlo and Zhexembayeva, 2017).
Every country has different legislations and company have to operate within laws. For
example, introduction of Sugar tax, company have to make changes in its existing

products. This makes it more complex for company to make changes in its products as it
is time consuming and costly process.
 Environmental factors- There are various environmental factors which affects
functioning of Sainsbury. The first aspect relates to plastic usage in supermarkets has
been prohibited and waste generated from plastic can harm environment. Hence, both
factors adversely affects functioning of company and diminish brand equity. It is needed
to frame strategies which contributes in making company more efficient and profitable.
Porter’s Five forces model
This model is used to analyse effectiveness of business by analysing various forces that
may impact company’s operations. It is important to analyse strengths and weaknesses of
competitors so that strategic decision can be made in order to gain competitive advantage.
In context to Sainsbury, it applies this framework so as to analyse attractiveness of retail
industry along with operating business. All the forces of Porter’s five forces are discussed
below. Threat of new entrant- In retail business, threat of new entrant is very low as it is
controlled by massive players. It states that immense competition with its existing
customers restricts new entrant to involve in retail business which result in low threat of
new entrant. In addition to that, new venture needs huge capital to be invested and
comply with various regulations which is time consuming and expensive too. Threat of substitutes- In retail industry, this force is widely manifested by many retail
commodities and company faces intense competition from its rivals. They also provide
food substitutes and non-food commodities which makes it complex for company to
survive. Bargaining power of buyers- In retail industry, customers have high bargaining power as
they owe access to opt another company. The switching cost is very low and customer
have access to multiple choice of similar products which are offered by its rivals. For
example, if the cost of a commodity rises then customer seeks another brand which offers
similar product but al low price. Bargaining power of suppliers- in retail industry, the bargaining power of suppliers is
generally low as company opts that supplier which offers quality raw material at

minimum price. It would be beneficial for customer too as company can offer better price
compared to its competitors (Martinez-Contreras and et al., 2022).
 Competitive rivalry- Retail industry is immense competitive as big supermarkets operates
in merger strategy. For example, Walmart owned Asda which negatively impacts on
share market of organisations involving Sainsbury. Due to intense competition, company
faces high competitive rivalry and Sainsbury has to cut down its prices which affects its
profitability.
Challenges related to strategic decision
Change driver can be referred to various pressure that shapes changes within organisation
and involves services, culture, strategy and plans. Some of the common drivers which
relates to change process are principles, capabilities, mission and vision having motive to
solve different problems related to enterprise. Adding to this, merger and change in
intrinsic process as well as social change are two crucial factors that relates to process of
change management. Habits, norms and expectation are some resistant which relates to
change and creates internal problem within organisation. From the Sainsbury point of
view, it has been observed that capabilities of organisation leads to organisational change
driver and it is being evaluated that an organisation having strong capabilities then it
means it is more focused on solving issues and in leading change. It is imperative for
company to frame policies that drives workforce towards attainment of goals. Company
analyse root cause of problem and solves by taking suggestion from professionals in
order to solve issue in a better way.
Drivers to change
The term driving forces can be referred to various set of values that contributes in
promoting change within organisation. Some of examples of driving forces are
environmental and social factors. In relation to Sainsbury, change and acquisition are two
crucial internal factors which makes it complex to make change.
Supermarket and grocery deals in retail industry makes market more competitive.
The management officers of Sainsbury is planning to expand its business operation so
that it can render quality products to its customers. So, buying decision of Argos is an
appropriate decision taken by company as it increase customers. By analysing both
factors, it has been evaluated that they significantly impact on company’s operation. It

also defines that company can bring down its overall cost of production by which it can
offer better price to its customers. Whereas buying decision of Argos identifies that
decision are induced by management which impacts on managerial plans of company. So
it is needed for company to monitor environment of both areas as it contributes in
framing of better policies which relates to business growth.
Company respond to drivers
Sales factor may be considered as crucial factor for establishment which impacts on new
stores that assist in analysing various factor related to market environment (Moktadir, and
et al.,2018). In relation to Sainsbury, it is important for company to frame effective
strategies so that competitive advantage can be taken and can effectively respond to
drivers. Following are some factors that helps company in overcoming from drivers of
change.
 To make settlement- Company is engaging in retail business and offer essential
goods to customers. It has been analysed that sales of company is high as most of
the products comes from European Union. So management is planning to admit in
formulation of a new contract so as to get a settlement deal. Company have form
some factors such as to analysation competitive market in order to better
understand needs and wants of customers. Adding to this, having understanding
of environment, company frames policies before entering into agreement so as
roles and responsibilities are not impacted.
 Availability of stock- Some other response to trade with some restricted factors in
enterprise is availability of stock. Company centres on those commodity which
are high in demand and have high market share. It helps management in ordering
process and store manager can place order whenever stock level goes below. In
addition to that, change in demand diminish demand of products and company
monitor all activities so that corrective action can be taken.
 Quick decision making- It is one of the important element that contribute in
responding to drivers and needs to take corrective decision so that competitive
advantage can be taken. The buying decision of Argos is one of the crucial
decision taken by company as it helps in increasing customer base and it can
generate higher profit

Evaluation of factors which impacts strategic decision making
To impact the operations of the organisation, there are some first-hand drivers of change
in the relation of Sainsbury's which are social as well as environmental factors. On the one side,
the pestle analysis was discussed which states that there is a high threat of bargaining powers of
buyers and the substitute products along with the social changes which is mandatory for the firm
so as to respond to the needs or requirements of the customers (Gupta, R. and Shukla, A., 2020).
On the basis of the perceptions of the customer base, the organisation has to provide goods and
services to increase their name worth in the market. This creation of change is taken from this
driver as it is multi-faceted because of the variedness of customers of the firm. There are some
changes which is affiliated to the technologies utilized, price and promotions offered, products
sold and the experience offered by the overall customer service which will come from the social
factor's pressure. If the firm is responding to the needs of the customers in an efficient way, they
can gain their market portion and can attain more sales operations in the company to gain a
competitive edge in the market.
While on the other side, there are some factors which is related to the environment and are
discussed under the pestle analysis that shows an important role in the encouragement of changes
in all the sectors of the organisation. As there is no exception of food industry in the retail
market, with a necessity that they have to focus on the company's sustainability which is a part of
their corporate social responsibility and it is needed for them to make improvements in their
operations regularly (Daft and Marcic, 2016). It is important for the firm to be active in the
involvement of the process of sustainability as because of three different reasons. The first
reason is that as it is connected to the factors of the social changes and bargaining power of
customers because of the environmentally conscious target base which generally select those
businesses who have an active sustainability profile (Nelson and et al.,2016). The another reason
is that sustainability programs makes sure that the respective company satisfies the legal
requirements which is framed by the legislative system of the country as in the relation of the
environment. The last reason is that the sustainability is mandatory for the firm because of the
extremely competing market in the food industry. If Sainsbury has set broad standards of
sustainability, they can turn into leader of the industry and can promote the pleasing
environmental changes in the different establishment.

The nature of change which is motivated by the driver of the environmental change is
more structural as compared to others as it includes that the company has to perform their daily-
routine activities in such a manner which helps in reducing of the environmental inputs as well as
waste. Hence, the modification in the structure strategies and culture along with the supplier’s
choice of the firm may be required to remain sustainable in the competitory market.
Respond towards change
The major problem organisation face is that the administration of Argos has to deal with various
different factors. There are also uncertainties which arise with the merging process. Company's
decision making is impacted because the business have to make many changes regarding to the
business environment. Business environment is engaged with seasonal factors which is directly
related to sales growth.
From last few years, the company has been responding to environmental and social factors in the
best possible way. To deal with social changes Sainsbury's is making their efforts to progress by
diversifying their product portfolio after identifying their consumer's need. The company has
also established their online store which helped them to serve more customers and to make a
wider potential-customer base. To enhance the shopping experience of the different market
segments the company have introduced self-scan technology which made the checkout system
smooth for customers (Beynon-Davies, 2021). Company made all these changes according to the
requirements of their target customer base and by considering the interest of customers in
different products and services. Therefore, it is understood that the company is following
different business strategies and making finer judgement for improving sales and growth of the
company and to respond to the social changes. Most of the changes Sainsbury's make is made by
targeting younger generation. The number of older demographics in the country in increasing
and the company should also concentrate on capturing the older demographics who may be not
comfortable with technological advancements and have different requirements. This can help the
company to capture more customers and it will help company to grow.
For environmental changes, the company is making rapid progress as compare to its competitors
in the market. The company has increased the number of sustainable suppliers and has integrated
sustainability in their organisational structure. Sainsbury's made some alterations in their
operations to reduce the emission and waste they produce. The company has made a different

department to make their business more sustainable. The main aim of the department is to look
after the impact that company’s operations is making on the environment and they also
concentrate on educational events and employees behavioural change. All these changes
company made proved that the company is responding in the best way to tackle environmental
changes. Sainsbury's response or efforts are up to the standards set by the industry. More
improvement can be done by the company by evaluating employee’s behavioural changes and by
making products which foster ozone friendly products. The company should also try to make
their operations less power consuming, by introducing new technology and minimising the
energy waste the company can take a huge step towards sustainable practice (Alanzi, 2018).
By understanding above factors it is identified that there are different factors which are related to
businesses. The changes in company like delivering brand value, saving or investing and
delivery of a product are some steps taken by the company to deliver right value. Change can be
a long and time consuming process and it is important for organisations to improve their market
share and to create a broader distribution channels for the company. The company can increase
their goodwill by tracking all the changing factors and environment in a proper way.
Recommendation for organisation to improve its response
CEO of Sainsbury Mike Coupe claims that acquisition of Argos is a significant decision taken by
Company and there would be a proof that supermarket chain would be increased. Company is
recommended that it have to frame effective management policies of both organisation and align
with its workforce so as to attain objectives. Following are some recommendation that company
should opt in order to enhance efficiency.
 Analysation of market- The behaviour, taste and preference of customers are
rapidly changing and it becomes difficult for company to analyse market so that it
can understand what customers are seeking for and how their expectation can be
met. As customers looks for convenient way of shopping and company offers
online delivery by which customers can place order and get it delivered to their
palace.
 Engagement of technology- Technology helps company in making work easier
and brings down production cost. By opting latest technology, company can
collect data of its customers and creates insights in order to take decision. With

collected data, company can analyse customer buying pattern, behaviour and
taste.
External factor related recommendation
By analysing various perspectives of management, it has been analysed that
models plays an important role in implementing and managing change. In relation
to Sainsbury, it has to bring change in its operational function so that it can
maximise efficiency. Following are some recommendation to external factors that
company may opt.
 Increase in operational efficiency- Supply chain of company is too wide and
with this company can source its products from more than 70 countries. Company
emphasise on quality, quantity and standards so that customers can get quality
product. If company increase operational efficiency, then it could bring down
production cost and this result in enhancement of overall cost and thus improves
overall efficiency (Laguna, M., Mielniczuk, E. and Gorgievski, M.J., 2021). Operational
efficiency of company is important as it aids in enhancing brand equity of firm.
 Setting up of key targets- Retail industry is too broad and it is needed for
company to set up key targets so that employees can be aware about their roles
and responsibilities that they have to perform. The rationale behind key target
market is supply chain of Sainsbury and operates in different countries due to
which it becomes knotty to present at right time. On the other hand, market size
creates challenge for company to remain competitive in market. Key targets
facilitates in guiding workforce as well as drives company towards fulfilment of
objectives in a time frame period.
 Multiple channel- The core recommendation is that retailers are learning new
business methods in order to approach more customers. This defines that single
channel of trade is not enough to enhance profitability. For example, due to
COVID-19, it impacts negatively to those organisation who only relies on single
trade channel. Many small companies have to end up their operation due to
unavailability of working capital and they rely on single trade channel. After
pandemic, companies have setup online platform on which they can trade their
business.

By analysing above strategic responses, it has been explicit that implementation
of recommendation help company in making changes so that it can gain
competitive advantage. But there are various factors that restrict implementation
change such as poor employee engagement and inability to adopt changes. So, in
order to effective implement change Kurt Lewin change model is used. This
model helps company in enhancing proficiency of company’s operation.
Following are stages of Lewin change model.
 Unfreeze- The first stage in this model is unfreeze in which company is prepare to
bring changes. Due to Brexit, company is compelled to use this model. This step
can be done so as to negotiate delivery schedule with food suppliers. This will
help company in connecting with new one and its effectiveness can be enhanced
by framing backup plan in order to search for distinct alternatives.
 Change- It is the second step of change management model and it can eb referred
as initiating difference within management so as to control supplies cost. With
this, company can lower down its operational cost and enjoy higher profit. The
cost of supplies can be controlled by communicating with its internal as well as
external stakeholders. The main stakeholders of company are customers,
employees and suppliers.
 Refreeze- Once changes are initiated, the its time to refreeze. In relation to
Sainsbury, short term agreements are formed and it supports in defining updated
managerial procedures in order to educate employees. In this stage, employees
became comfortable with changes.
Recommendation how responses could be enhanced
 Understanding change process- It is recommended to management of Sainsbury
to understand change process so that it can deal with dynamic business
environment. It has been evaluated that no two change initiative are same and
many businesses follow change management process.
 Effective communication- it is important for company to implement change so
that its effectiveness can be enhanced. With effective communication among
employees, it helps company in managing change and leads to better efficiency.

Managers must clearly communicate change and how they can be benefit to
organisation.
CONCLUSION
From the above project report, it was concluded that company faces various management issues
while operating its business. On daily basis, there are various issues that company faces that may
negatively impact on company’s operation. This project report highlights strategic responses in
relation to Sainsbury which responds to change driver. In addition to that, several
recommendations are discussed in this report in order to effectively communicate and implement
change. There are various key dynamic forces which enhances performance of company. At last
it covers different strategic decisions such as acquisition and drivers of change in relation to
chosen company

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