Analysis of Global Business and Strategy: A Case Study of Sainsbury plc

This report analyzes the global business practices and strategies of Sainsbury plc, the third largest supermarket chain in the UK. It includes an internal and external analysis, Porter's five forces model, and recommendations for expanding in international markets. The report highlights the company's strengths, weaknesses, opportunities, and threats, as well as the impact of political, economic, social, technological, legal, and environmental factors. The analysis aims to help the company gain a competitive advantage in the market.

Global Business and
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
Brief background to the chosen organization..............................................................................3
Internal and external analysis......................................................................................................3
Porter’s five force model to understand market forces and to gain competitive advantage.......6
Recommendation.........................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
With the increase in globalization, global business practices have become a common
phenomena which help the companies to expand their business internationally. This helps them
in accessing many benefits like increase in market share, creating a strong brand image,
attracting a large number of customers towards their services or products, building their
significance in global market etc. The companies need to formulate their strategies in such a way
which helps them to expand efficiently in the international markets so that a competitive
advantage can be gained (Anwar, 2019). In this report Sainsbury plc is taken which is the third
largest supermarket chain in UK with its headquarters in London. In this report the internal and
external analysis of the company will be done along with identification of company's sustainable
competitive advantage in the market. Further recommendations are given so that the company
can formulate such strategies which will help it in dealing in the international market.
Brief background to the chosen organization
Sainsbury plc is a UK based supermarket chain which was established by John James
Sainsbury in 1869 in London. The company is the third largest supermarket chain in UK which
provides its customers with consumer goods like groceries, food etc. which are of highest
quality. The company offers its products at low prices through its more than 1400 stores in UK
which helps it in gaining a competitive edge in the market. The company is facing high
competition in the market due to presence of discount grocers like Aldi and Lidl who offer their
products to customers at cheaper rates. For saving the costs Sainsbury is trying to cut jobs so that
the operations can be streamlined and costs of about £500 million can be saved.
Internal and external analysis
A company needs to analyze the internal and external environmental factors which affect
the operations of the business and also affects its competitiveness in the market. Internal analysis
helps the company in determining the internal factors that can be controlled and changed by the
management (Bos, Pendleton and Toms, 2013). These factors help the company in analyzing its
strengths and weaknesses along with potential opportunities and threats in the market. SWOT
analysis of Sainsbury is given as follows :

Strengths
 The company has strong relations with
its customers which helps the company
to increase its sales.
 The company has a strong brand image
in the market.
 The company is able to provide quality
products to its customers at low prices.
Weaknesses
 The company is weak at forecasting
demand in the market.
 The company invests less in R&D
which means it is weak at innovating its
policies.
 The company has to face high
employee turnover ratio.
Opportunities
 The company can open its branches in
unexplored markets as globalisation
helps the company to expand
internationally.
 The company can attract new
customers from online channel.
Threats
 Increasing competition from discount
grocers like Aldi and Lidl.
 Increasing costs of imports of raw
materials increases company costs.
Apart from SWOT the company can use PESTLE which is a strategic management tool
and helps in analyzing the external environmental factors which affects the company policies and
its effectiveness in the market. PESTLE for Sainsbury is given as follows : Political factors : These are the government rules and regulations that exist in a country
and affects businesses like trade tariffs, taxation etc. The political conditions of UK are
stable which means that the rules and regulations are not changed often which is a
positive factor for Sainsbury's growth as it can work within the same set of policies and
strategies. However, the uncertainty of Brexit can have a negative impact on the
supermarket as the imports of raw materials from EU will become expensive. This way it
can be seen that political factors play an important role in the operations of the company
(Ayers and Odegaard, 2017). Economic factors : These are related to the economic conditions of a country like rate of
unemployment, GDP rate etc. In UK the unemployment rates are low which means that
the company has to pay higher pay to its employees which increases company costs.

However, the purchasing power of the customers in UK is high which is beneficial for the
company as it can offer them with products at profitable prices. Social factors : These are related with the type of people living in the country their
demographics, religion, culture, standard of living etc. In UK the demand of consumer
products is increasing with the increase in population which is a positive factor for the
company as it deals in consumer products. Also the company offers one-stop shopping
opportunity to people which increases the sales of the company (Choi, 2015).
 Technological factors : These are the factors related to the rate at which R&D is done in
the country and also the technological advancement of the country. UK is a highly
technologically advanced nation which means that Sainsbury can have an easier and
cheap access to technology through which it can improve its internal processes. This will
help the company in decreasing the company costs so that it can offer quality products to
customers at lower prices. However, due to technological advancements all the other
competitors are also innovating new techniques in order to attract a large number of
customers which decreases the market share of the company. Legal factors : These are the laws related to companies in the country which determine
the legal framework in which the company have to operate. In UK strict laws are present
for companies so as to determine their employment policies which means that the
company has to strictly adhere to these laws so that the effect of company policies do not
harm the interest of any of the concerned stakeholders. Sainsbury follows CSR policies
which helps it to grow sustainable in the market along with ensuring benefits for all its
stakeholders (DaSilva and Trkman, 2014).
 Environmental factors : These are the factors related to the physical environment of the
country like terrain, climate, water availability etc. Sainsbury use the policy of 'Reduce,
Reuse and Recycle' which helps the company in reducing waste in the environment
which helps the company in gaining support from the government and customers and it
can grow sustainable in the competitive environment. Also the CSR policies followed by
the company helps it to perform its social and environmental responsibilities efficiently.
All the above factors need to be analyzed by the company so that it can work efficiently
both in the local and international market and can also grow and develop sustain ably. These
factors also help the companies in expanding successfully in the market and also attract

customers by offering them with goods and services as per their needs and wants. The analysis of
these factors help the company in analyzing its internal strengths which can be further
strengthened by the company whereas the weaknesses need to be reduced. These can be done by
changing company policies so that company can become competitive in the market. The threats
and opportunities on the other hand helps the company in achieving a competitive advantage in
the market. The opportunities must be grabbed by the company whereas threats must be dealt
with so that it can continue to exist in the market competitively (Elg and et. al., 2012).
The companies during their expansion in other markets like in international markets can
conduct PESTLE analysis so that they can have an idea about the external environmental factors
which will affect the functions of the business. This will help the companies to adjust their
policies and strategies in such a way that the negative effects of these factors can be reduced and
the positive factors can be used for the advantage of the company.
Porter’s five force model to understand market forces and to gain competitive advantage
Five forces model was introduced by Michael Porter. It undertakes five different approaches
to understand the impact of different forces in the market. In the present scenario, Sainsbury is
utilizing Porter five forces to understand the whole market due to which it is easy for them to
gain competitive advantage in market. For better understanding total forces within context of
respective organization is mention as below: Threats of new entrants- In the context of retail organization, large number of major
players already exists in market. Retail industry is also increasing with rapid speed, so
many new organization are also attracted to invest in retail industry. But in context of
Sainsbury and retail industry the force of new entrants is low because management is
more focused towards innovation and low price strategy for its products. So it creates
challenges for the other organization to compete with Sainsbury product. Moreover,
with such a competitive advantage it is easy for management to enhance the top position
in market (Glowik, 2017). Bargaining power of suppliers- All the major players in the retail industry such as
Sainsbury, Tesco etc. are buying their products from different suppliers. Therefore, for
those products like cosmetic, beauty products and personal care products, suppliers are
dominant in position they are able to reduce the prices of raw-materials. The approach
of bargain power of supplier in context of overall retail industry is low. Sainsbury is also

performing their work at global level due to which better relations are developed with
multiple suppliers. Moreover, the power of supplier is also controlled by organization to
manage the supply of raw-material. It governs that management is able to enhance their
work with high quality because they are dominant in position. Bargaining power of buyers- Buyers are demanding a lot of their products in the
present scenario. This determines that the demand of products is changing because of
dynamic needs. The approach of bargaining power of buyers is high. Therefore, to deal
with customers management of Sainsbury is offering discounts and other offers in order
to increase customer base for products. On the other side, the demand of products is
increased only is organization satisfies the needs of customers. Therefore, management
is more focused to deal with bargain power as it helps to increase profits for
organization (Phadermrod, Crowder and Wills, 2019). Threat of substitute products and services- When the products or services are different
from each other but they both perform similar work or method to satisfy the same needs
of customers. Industry in the present scenario, retail industry is facing too much
challenge to deal with substitute products. Power of substitute products is moderate in
retail industry. This governs it is mandatory for the organization to formulate effective
strategy such as product oriented and customer approach. This assist management to
sustain customers for longer period. Rivalry among the existing competitors- If the rival organizations are more and
dominant in position than it is difficult for management to complete their work as per
management and market conditions. This governs that large number of operations are
performed by management of Sainsbury. So in order to manage them management aids
to gain sustainable differentiation in market. Further, the rivalry power in retail industry
is moderate. So to gain competitive advantage Sainsbury focuses on generating
collaborative environment in organization.
VRIO analysis of Sainsbury
Resources Valuable Rare Imitable Organization
Financial
resources
Sainsbury earn
huge profits so it
works as a
Financial aspects
of organization
are not rare
It is complex for
other
organization to
Monetary
related
resources are

positive factor to
generate and add
more value in its
products.
because other
companies are
also financially
strong.
earn similar
profits as per
Sainsbury. So
finance aspect is
also imitable.
utilized by
organization to
capture high
market.
Food products Food and
beverage
products are
offered by
organization to
generate their
positive value in
market.
Local foods
offered by
Sainsbury are
best in quality it
works as rare
perspective for
them.
All food items
which are
provided by
Sainsbury are
best in quality so
it work as
imitable for
them.
Profits as well
as goodwill
are both
increasing by
management
through
offering high
end quality
products to
customers.
Recommendation Management style- There are different management and leadership style is present in the
market that leads organization to generate effective strategy according to the available
resources and market opportunities. This determines that there are various task are
performed by management so with effective styles this is easy for management to generate
better strategy for organization (Rachapila and Jansirisak, 2013). Implementation of technology- In the present scenario, technology is one of the major tool
that leads Sainsbury to gain more benefits in the market. With the proper technological
aspect it is easy for management to complete their work in minimum time period. Along
with this most of the consumers among developed countries are purchasing products form
online tools. So it works as positive factor for organization.
 360 degree tool- With the implement of various tools and techniques it is easy for
management to complete their work effectively. The specific tool for Sainsbury is to
implement 360 tool it leads management to focus on all products and services from all
perspective that are sold by organization or offer to customers. Like cost is one of the crucial
product for customers. So with the tool of 360 management is able to analyze fixed as well

as variable cost that leads management to decide the actual prices of products (Rugman and
Verbeke, 2017).
CONCLUSION
From the above report it can be concluded that for all the organizations to remain
competitive in the market it is important to analyze the internal and external factors that affect
the existence of the business. Along with their the company needs to formulate such strategies
which will help it in enhancing its internal capabilities and capabilities so that the company can
gain a competitive advantage in the market. Further for being sustainable in the market the
company can use Porter's generic model so that it can offer its products and services to the
customers at competitive prices which will help the company in attracting large number of
customers and achieving its goals and objectives on time.

REFERENCES
Books and Journals
Anwar, J., 2019. Business strategy and organizational performance: measures and
relationships (Doctoral dissertation, COMSATS Institute of Information Technology,
Islamabad).
Ayers, J.B. and Odegaard, M.A., 2017. Retail supply chain management. CRC Press.
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corporate performance: Evidence from the UK. Managerial Ownership and Corporate
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Choi, P., 2015. Immigration as Business Strategy: Simplifying American Immigration Law in a
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Elg, U. and et. al., 2012. Market-driving strategy implementation through global supplier
relationships. Industrial Marketing Management, 41(6), pp.919-928.
Glowik, M., 2017. Global strategy in the service industries: dynamics, analysis, growth. Taylor
& Francis.
Phadermrod, B., Crowder, R.M. and Wills, G.B., 2019. Importance-performance analysis based
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Rachapila, T. and Jansirisak, S., 2013. Using Porter’s Five Forces Model for analysing the
competitive environment of Thailand’s sweet corn industry. International Journal of
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Rugman, A.M. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.
Scott, W.R. and Davis, G.F., 2015. Organizations and organizing: Rational, natural and open
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Singhal, S. and et. al., 2013. An evaluative model for city competitiveness: Application to UK
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