PESTEL Analysis of Sainsbury's

External Environment
Research and Analysis
Portfolio

Table of Contents
INTRODUCTION ......................................................................................................................................3
MAIN BODY .............................................................................................................................................3
PESTEL analysis of Sainsbury's ............................................................................................................3
CONCLUSION ..........................................................................................................................................5
REFRENCES .............................................................................................................................................6

INTRODUCTION
External environment factors effect business organisations and make a significant
contribution to the growth or failure of a business. PESTEL analysis is a framework which
analyses chief external factors impacting an organisation. This report includes PESTEL analysis
of British retail firm Sainsbury's which is a member of FTSE 100 Index.
MAIN BODY
PESTEL analysis of Sainsbury's
Sainabury's is a UK based retail firm which was formed in the year 1869 and currently
headquartered in London, England UK. The company has gained exceptional success since its
formation and is the second largest retail chain in UK.
 Political Factors: The main political factor affecting Sainsbury's are the political
relations between Qatar and UK. This is because the largest shareholders of the company
is state owned investment fund of Qatar (Qatari shareholders uneasy over Sainsbury's Home
Retail Group bid, 2016).
Positive Effect: The positive political relations between Qatar and UK are helpful for the
company as it encourages economical investment in the company by Qatar government.
Negative Effect: The dispute between Qatar and middle eastern nations such as Saudi
Arab have indirect negative impact ion the respective firm as it effects British governments
relation with the country.
 Economical Factors: Economical impact of the Brexit deal has high influence on
Sainabury's (Thompson and McLarney, 2017).
Positive Effect: The Brexit deal aims to improve conditions of UK based businesses
which is helpful for Sainabury's.
Negative Effect: Implementation of Brexit has increased EU tariffs, which is negative for
the company as it imports various products from EU.
 Social Factors: The rise in demand of organic food is the main social factor affecting
Sainsbury's.
Positive Effect: This social trend provides the company opportunity to offer organic
products and gain consumers.
Negative Effect: The negative effect of rise in demand of organic food is decrease in sale
of inorganic food items offered by the company.
 Technological Factors: Development in the field of AI and automation ha influence on
daily activities of the firm.
Positive Effect: The respective organisation can use AI and automation to reduce labour
costs and increase profitability.
Negative Effect: Utilisation of AI and automation technology requires the respective
firm to make high initial investment for training employees.
 Environmental Factors: Sainabury has introduced waste reduction programmes by
connecting with food charities to reduce food wastage (Tesco, Sainsbury’s & Waitrose
pledge to halve food waste by 2030, 2019).
Positive Effect: This has enhanced positive and environment friendly brand image of the
company.
Negative Effect: This programme has increased costs of Sainsbury's (Just, 2020).
 Legal Factors: Regulatory approvals from the government effect daily decision making
at Sainabury's.