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PESTLE Analysis of the Retail Sector

   

Added on  2021-02-21

17 Pages5350 Words194 Views
CORPORATESTRATEGY

Table of ContentsINTRODUCTION...........................................................................................................................1EXTERNAL ANALYSIS................................................................................................................1PESTLE Analysis...................................................................................................................1Porter's Five Forces Analysis.................................................................................................4INTERNAL ANALYSIS.................................................................................................................5TOWS Analysis......................................................................................................................5Value Chain Analysis.............................................................................................................7VRIO Analysis.......................................................................................................................7EVALUATION................................................................................................................................9Suitability...............................................................................................................................9Acceptability.........................................................................................................................10Feasibility.............................................................................................................................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13APPENDICES...............................................................................................................................14Ansoff Matrix.......................................................................................................................14

INTRODUCTIONCorporate Strategy refers to all the activities and actions taken by an organisation in orderto effectively achieve one's own objectives as well as appropriately establish competitiveadvantage within the marketplace (Lozano, 2015). It helps in provision of a competent directionin ways which is essential in order to enhance the scope of the firm's success. The report below isbased on Sainsbury's, which is one of the biggest and the most reputed retain organisationswithin the UK. The report emphasises on a detailed industry-based external analysis and a briefapplication of Porter's Five Forces Model to determine industrial attractiveness. Moreover, it alsocovers internal analysis in order to determine competence within the organisational resources.EXTERNAL ANALYSISPESTLE AnalysisThis analysis is utilised in order to effectively assess the impact of externalenvironmental pointers on an industry in order to identify external opportunities or threatsprevailing within the market. Below is the PESTLE Analysis of the retail sector of the UnitedKingdom.Political Factors:These factors encompasses aspects like political stability, regulations and other elementsthat have an impact on the functioning of an industry. Retail sector within the UK has been quiteat boom ever since, seeing that it is dominated by several retail supermarkets like Sainsbury's andAsda. However, quite recently, due to severe political instability within the nation, the retailsector of the country have suffered a massive breakdown in sales and profitability. This is due tothe changes in policies after the uncertainty of separation of UK from the European Union. Thisis because organisations selling their products to EU would be required to conform with EUstandards. Moreover, due to the loss of influence on several EU policies and standards, retailersare experienced with several threats associated with political uncertainty. This threat is likely toprevail within the industry, even if organisations decide to merge or acquire within the market.Economical Factors:Within the UK, the retail sector is a dominant private sector employer with annual salesmore than £358 Billion (The future of retail, 2019). However, due to the uncertainty of the UKleaving the European Union, the market is likely to fade as a result of economic downfall and1

decline in the value of Pound. Moreover, there is also a rise in the inflation rate within themarketplace. As a result of the same, sales growth of the retail sector this year has declined to0.5%, which is quite threatening to the industry in the future (UK retailers suffer weaker salesdue to Brexit uncertainty, 2019). However, still, there is a tiny opportunity within the industrywhich exists despite of such economic threats, which are mergers and acquisitions. Both theseaspects would provide business to strengthen their financial base, along with share each other'sfinancial resources, that would help them subside in a troubled market.Social Factors:These factors are associated with the social trends shaping up a certain industry (Rao andTilt, 2016). Within the UK, as far as the retail sector is concerned, customers are tend to changetheir buying habits due to high inflation along with decline in value of pound.Illustration 1: Consumer Spending in the United Kingdom(Source: United Kingdom Consumer Spending, 2019)Surprisingly, as far as the consumer spending is concerned, due to inflation and otherrelatable factors, this aspect has witnessed a rise this year, despite of lower sales growth in theretail sector (Rugman and Verbeke, 2017). This factor could be an advantage for the retail sectorwithin the UK, as its businesses could provide quality products at affordable prices, which wouldensure a consistent growth and preference in the market and could be an opportunity for theoverall industry as a whole.Technological Factors:2

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