Innovation Strategy for Sainsbury: SWOT, VRIO, PESTLE and Porter's Five Forces Analysis

This report analyzes the internal and external environment of Sainsbury, a successful retail firm, using SWOT, VRIO, PESTLE, and Porter's Five Forces analysis. It discusses the importance of innovation strategy in achieving competitiveness and success in the industry. The report also evaluates the political, economic, social, technological, legal, and environmental factors affecting Sainsbury's operations. It concludes with an analysis of the competitive forces within the retail industry.

STRATEGY, ENTERPRISE
AND INNOVATION

TABLE OF CONTENTS
INTRODUCTION.....................................................................................................................................3
MAIN BODY.............................................................................................................................................3
Explaining internal environment.............................................................................................................3
Explaining external environment.............................................................................................................6
Analyzing competitive forces within the industry...................................................................................7
CONCLUSION..........................................................................................................................................9
REFERENCES........................................................................................................................................11

INTRODUCTION
Innovation strategy is related with conductive creative practices in business that can help
in achieving competiveness for gaining success in sector. In the recent time, there is requirement
to develop effective strategy so that higher profitability and sustainability to succeed in industry
can become possible. The current report is based on Sainsbury which is one of the successful
firm operating in retail sector. In the present time retail sector is growing in rapid speed which
requires firm to largely concentrate on ascertaining internal & external factors so that effectual
innovative strategy can be developed. The current report will involve SWOT and VRIO for
assessing capabilities and resources. Present study will pay attention on determining external
factors through conducting PESTLE evaluation. Industry analysis by applying porters five forces
will be involved in present study.
MAIN BODY
Explaining internal environment
Internal environment is associated with the scenario in which all resources, skills, etc. are
gathered to produce products or services. It becomes essential to analyze the internal
environment by applying suitable technique so that appropriate formulation of strategy can
become possible.
SWOT analysis
It is one of the significant approach utilized for analyzing internal environment of
business so that strengths, weaknesses, opportunities and threats can be identified. SWOT
evaluation of Sainsbury can help in assessing crucial information so that strategic decision can be
made.
Strengths
 The crucial strength that is helping Sainsbury to obtain benefits is its effective planning
for expansion moves. The specified company has given major emphasis on inclining its
effectiveness to operate in market that provides higher profitability (Song, Wang and
Zhu, 2018).

 The specific firm has effective marketing and promotional strategy which is helping it to
cover all type of customer. It is helpful in inclining market share of company which is
one of the significant benefits.
 There is availability of experienced leadership team that is providing assistance in
increasing internal capabilities to cope up with prevailing situations.
Weaknesses
 Inflation in food prices has forced company to use higher charging strategy to maintain
standards of retail sector that has adverse impact on firm (SWOT Analysis, 2021).
Growing cost is declining profit margin that is hampering liquidity position of sector.
 There is factor impacting the company in negative manner is brand switching which is
affecting availability of skilled employees.
Opportunities
 Emergence of social media & digital marketing practice has allowed firm to attract firm
trough utilizing ecommerce platform (Casañ, Alier and Llorens, 2021).
 Partnership, joint venture, etc. options are available for the company for inclining scale of
operational practices.
Threats
 Level of competition has increased due to enhancing number of rivalry in sector which is
one of the biggest threat for the firm.
 There is major influence from ecommerce platform is inclining which is increasing brand
switching behavior of customers that has adverse effect on company.
VRIO analysis
This technique is taken into practice to analyze resources and capabilities which will be
beneficial for Sainsbury to pay attention on evaluating its internal environment.
Resources\
capabilities
Value Rare Imitation Organization Competitive
advantages
Opportunity
for brand
yes No Easily imitate
by similar
Yes Not
permanent

extension operators in
industry
competitive
advantages
Sales force
and channel
management
Yes No Can be
imitate yes
Sustainable
competitive
advantages
Brand
positioning
Yes No Easily
imitable by
competitors
Yes firm has
positioned on
the basis of
consume
behavior
Temporary
competitive
advantages
Brand
awareness
Yes Yes No Yes Sustainable
competitive
benefit
Supply chain
network
flexibility
Yes Yes Yes Yes Not effective
benefit but
contributing
in business
running
Ability to
attract talent
Yes Yes No Yes Strong
competitive
advantage
Compliance
with legal &
regulatory
obligation
Yes No Easily imitate
by
competitors
No Non critical
element
From the above presented VRIO analysis of Sainsbury it can be specified that there are
several resources and capabilities within internal environment of company which require firm to
pay attention on grabbing distinct opportunities (Shtal and et.al., 2018.). Valuable, rare, imitate
and organization are the four components that allows to check the capabilities that can provide
Sainsbury competitive advantages so that higher profitability & sustainability and effectiveness
can be derived.

With help of obtained information from applying both the evaluating tools of micro
environment Sainsbury can formulate effective innovative resources. It can as well contribute in
identifying lacking areas so that effectual improvement may be exerted to get strong capabilities
for optimum utilization of resources in effectual pattern.
Explaining external environment
PESTLE evaluation is associated with assessing political, economic, social, technological, legal
and environmental. External business environment is considered to be uncontrollable which
needs firm to highly concentrate on ascertaining information in turn greater productive decision
can be formulated. Sainsbury can apply PESTLE for deriving information for recognizing
limitations in turn actions for enhancing opportunity can be implemented
Political factors
There are several political aspects which are required to be determined as has both
positive & negative influence on operational practices of business (PESTLE factors, 2021).
Sainsbury operates in both domestic and global platform thus get affected from number of
elements. Brexit, pandemic, political stability of country, tax & tariff, policies, etc. play crucial
role in impacting smooth functioning of Sainsbury. It becomes essential for the specified firm to
pay attention on involving these aspects while strategy formulation.
Economical factors
GDP, unemployment, inflation, purchasing power, saving, interest, etc. are few
economical elements that has major influence on business practices of Sainsbury. The
purchasing power of workers in UK is one of the primary factor that can influence Sainsbury in
positive manner. To become successful to current competitive environment due to inclination of
increasing number of supermarket Sainsbury to focus on complying with these elements.
Social factors
There are number of aspects that are included in social factors such as changing market
trend due to consumer behavior, cultural norm, attitude, perception, demographic aspects like
age, gender, etc. Sainsbury is second largest supermarket company operating in retail sector
which deals with large number of customers. The diverse range of targeted audience leads to

result in continuous change in trend of market. It requires specified firm to highly concentrate on
developing effectual practices
Technological Factors
Technology is one of the significant factor that permits frim to gain success in effective
pattern. For having effective processing having advanced technology and innovative strategy to
coordinate with circumstances (Perera, 2017). Sainsbury has given crucial focus on adopting
advanced technology in order to boost performance. There is various innovative action taken by
specified frim for having effective functioning. On the basis of this, it can be said that
technological factor is positively influencing functioning of as emergence of digitalization has
allowed enterprise to connect with larger market share.
Legal factors
Government rules & regulations, industrial standards regrading quality, access
&utilization of resources, etc. are some of the legal aspects that are required to be adhered by
company for having leading position in sector. Sainsbury is effectively coordinating such
legislation and rules for gaining competitiveness in order to avoid irrelevant aspect so that
success can be derived. It permits company to avoid irrelevant aspect that can hamper growth &
development of company.
Environmental factors
There are several resources that Sainsbury utilizes for completing its business transaction
so that higher capabilities to get customer satisfaction can be derived. It becomes essential for
the firm to decline rate of pollution, waste, etc. in respect to incline good ecofriendly practices.
It lies in corporate social responsibility of Sainsbury that is successfully accomplished by it
From the above evaluation it can be articulated that these all factor has significant
influence on business functioning so that effective measure for grabbing higher opportunities can
be exerted by Sainsbury.
Analyzing competitive forces within the industry
To formulate effective strategy in order to get ability to cope up with prevailing situation
becomes essential to pay attention on having depth insights related to sector (Kun, Yuenan and

Yingxue, 2021). There are various methods that can be used by company for evaluating
competitive forces prevailing with sector.
Porters five forces Analysis
It is widely utilizing model by various organization irrespective of their scale of operation. It
allows to gain insights regarding attractiveness, intensity, etc. of particular industry. This
permits frim to gain sufficient information regarding five forces that majorly contribute in
decision for having leading position in sector. These forces are as follows:
Threat of new entrants
In the current era, retail industry is growing with rapid speed which has enabled number
of new players to participate in sector (Analyzing Competitiveness Using Porter's Five Forces
Model, 2021). It is one of the crucial force that has negative impact on Sainsbury has switching
power of targeted audience is low. It results in easily losing of customers due to new players
arriving in industry. In the retail sector easily new entrance is possible which is hampering
process of company in adverse manner. Sainsbury has ability to innovative new products &
services that allows to retain customer for longer duration which is helping firm to overcome
such stated challenges.
Bargaining power of suppliers
Sainsbury as being one of the international organization has number supplier for having
raw material for providing products to customers. Higher the number of suppliers has lower
power to bargain the margin which does not affect business processing and vice versa
(JATMIKO and et.al., 2021). Sainsbury has higher number of suppliers which has declined
their bargaining power and resulted into gaining capability to meet market forces. For not being
dependent on few suppliers the company pay attention on dealing with suppliers so that
significant functioning can be achieved.
Bargaining power of buyers
Taste & preferences of customer keeps on changing which require firm to pay attention
on adopting innovative practices so that meeting clients demand can become possible. Sainsbury
has get major pressure from customer to comply with changing market forces in effectual

manner for having profitability in major run. Sainsbury’s customer has higher bargaining power
which needs firm to look into practices like offering discount, suitable pricing strategy, etc. it
allows firm to attract & retain larger number of customers for having economies of scale via
maintaining profitability & sustainability.
Threat from substitute products
There are various firms that offers products whose features and ability to provide
satisfaction is similar to the specified company. These products are referred as substitutes that
creates threat to revenue generating capacity of firm. To be successful in current competitive
environment Sainsbury uses innovative strategy that does not allow firm to overcome this force
of industry. Threats of substitute for Sainsbury in retail sector is less due to its capacity of
implementing innovative strategies it as well pay attention on understanding need of clients,
offering customer oriented services, etc.
Rivalry among the exiting plays
It is crucial force as it drives down prices & affect overall profitability of sector. For
overcoming its impact which is obtaining by Sainsbury to certain extent few course of action are
taken by firm. It includes building sustainable differentiation, collaborating with competitors,
etc.
Game theory is as well one of effective strategy that is used to assess information
regarding industrial factors. It helps in ascertaining strategies that are capable of dealing with
competitive situations. Sainsbury is one of the international organization that operates on larger
scale and uses this theory to analyze the course of action necessary for coordinating with
prevailing situations. There are number of situation which can be effectively deal with executing
game theory as allows to get information via analyzing economic scenarios. It leads to accept
structure that is capable of coping up with existing industrial circumstances. This tends to result
in formulating strategic decision which has higher profitability & sustainability.
CONCLUSION
From the above report it can be summarized that innovative strategy is crucial for
deriving ability to deal with business environment. It permits to have significant capabilities to

develop differentiation, etc. that results in competitiveness. The current report has involved
SWOT and VRIO analysis for analyzing internal environment. Recent study has given emphasis
on conducting external environment evaluation by conducting PESTLE analysis so that relevant
information can be derived. for analyzing competitive forces of retail industry porter five forces
model has been applied which has allowed to assess competitiveness and attractiveness of sector.

REFERENCES
Books and journals
Casañ, M. J., Alier, M. and Llorens, A., 2021. A Collaborative Learning Activity to Analyze the
Sustainability of an Innovation Using PESTLE. Sustainability. 13(16). p.8756.
JATMIKO, B. and et.al., 2021. Strategies for MSMEs to Achieve Sustainable Competitive
Advantage: The SWOT Analysis Method. The Journal of Asian Finance, Economics
and Business.8(3). pp.505-51
Kun, Q., Yuenan, L. and Yingxue, L., 2021. Analysis of Dandong 99 strawberry market
competitiveness Based on Porter's five forces model. In E3S Web of Conferences (Vol.
253, p. 03058). EDP Sciences.
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Shtal, T. and et.al., 2018. Methods of analysis of the external environment of business
Song, Y., Wang, H. and Zhu, M., 2018. Sustainable strategy for corporate governance based on
the sentiment analysis of financial reports with CSR. Financial Innovation. 4(1). pp.1-
14.5. activities.
Online
Analyzing Competitiveness Using Porter's Five Forces Model. 2021. [Online]. Available
through: https://www.mindtools.com/pages/article/newTMC_08.htm>
PESTLE factors. 2021. [Online]. https://www.cipd.co.uk/knowledge/strategy/organisational-
development/pestle-analysis-factsheet
SWOT Analysis. 2021. [Online]. Available through:
<https://www.mindtools.com/pages/article/newTMC_05.htm>