SWOT Analysis of Sainsbury's Business Strategy

The assignment provides a detailed analysis of Sainsbury's business strategy using the SWOT framework. It examines the company's strengths, such as its efficient supply chain management, weaknesses, like its high operational costs, opportunities for growth, and threats to its operations. The report also discusses the environmental factors, legal issues, and consequences that affect the organization's smooth functioning.

Internal positioning

Table of Contents
INTRODUCTION...........................................................................................................................1
Internal Position of Sainsburry's.................................................................................................1
Dealing with external factors......................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES:...............................................................................................................................7

INTRODUCTION
In order to develop existing products of organisation or for expansion, it is very essential
to know internal position of entity for sustainable growth in market. The following report is
based on Sainsbury's, which is one of the second largest chains of supermarkets in UK; it covers
16.9% of market share in retail sector. Many organisations use theoretical approaches of well-
known strategies to analyse internal position of business. Sainsburry's can use various
approaches like Porter's Five Forces Analysis and SWOT analysis for conducting this internal
analysis.
The marketing environment of any organisation in UK comprises two different levels
such as internal environment that consists of specific attributes within an organisation and
external environment, which consists of different variables outside the organisation. The research
paper will be revolving around tools used to analyse the internal position of Sainsburry's in order
to get complete report on internal position.
Internal Position of Sainsburry's
For an organisation, it is very important to understand strengths and weaknesses, which
can help in drawing more assets and developing strategies to grow well and sustain in the
market. Internal analysis is considered as one of the important tools for mapping different
situations to give special emphasis on unique abilities and threats for Sainsburry's (Azeez, W.,
2014). There are various ways used by this organisation to carry out internal analysis for formal
evaluation of the entity where it would apply SWOT Analysis and for identifying suppliers,
competitors etc. of business that has used Porter's Five Forces Analysis. The internal analysis of
Sainsburry's incorporates various measures that deliver strengths, weaknesses, opportunities and
threats by complete SWOT analysis. The data provided by conducting internal analysis of
organisation benefits in way to generate strategic plans for organisation to sustain in competitive
market environment (Bull, J.W., 2016).
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SWOT Analysis of Sainsburry's
Strengths
 It is one of the oldest and largest
supermarkets of UK with 15.8% market
share.
 This organisation has vast employees’
strength of 150000.
 The philosophy of business in an
organisation leads the market. This
organisation mainly focuses on helping
customers in living well at less price.
 Wholesale and retail banking of
organisation is very strong. Financial
division of retail sector of organisation
includes various number of wholesale
banking.
 Each division of store at Sainsburry's
shares around 30,000 products in
different categories with 20% as own
labelled products (Hammad, A., 2015).
Weaknesses
 Research by various analyst shows that
the prices of Sainsburry's are
comparatively higher than that of its
competitors.
 In the year 2017, this organisation has
experienced the annual decline in
profits of 8.2%, which is termed as
result of various factors that affects the
organisation.
 There is a strong competition in each
segment of the retail sector.
Opportunities
 The organisation can enter into new
emerging markets, which can do
partnership with help of joint ventures
for expansion in new markets.
 Sales can be boosted up by introducing
self-checkout machines in order to open
the stores for 24 hours.
 The organisation has option to grow
business in villages also, because time
has gone when individuals in villages
Threats
 Like all other supermarkets in UK,
Sainsburry's faces the similar threat of
strong and tough competition.
 Increase in globalisation can be a
challenge as well as an opportunity for
the organisation.
 There are various players in the retail
sector of UK like TESCO and ASDA
that offers products at discounted rates,
which can decrease the sales of an
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were opting to use non-branded
products.
 The company can further expand
business in emerging countries, which
can offer vast range and number of
labours at a low cost.
organisation.
Pricing Tactics of the organisation- The tactics used by the organisation for pricing is
totally based on providing its customers about “value of money” and accordingly, quality of
products is maintained by ensuring customer retention for its services. The organisation believes
in competitive pricing policy rather than price-cutting policy as this pricing strategy of an entity
provides a gain in the market share. According to product positioning, Sainsburry's take over
good command at price discrimination policy, thereby benefits the firm in obtaining the premium
price for products because it makes its own position in the high-end market (Jones and Hillier
2016). This entity provides 'value of money' as it offers basic and kids products at reasonable
prices with high quality. Thus, these are pricing tactics followed by organisation.
Sainsburry's is considered as best performer in retail sector of UK, gained 1.2% growth in
sales in recent quarters. There are low base prices for products which lead to fill the gap of base
and promoted prices. Adding to, organisation is cutting the incentives for shoppers in order to
make them wait for the deal of preferred choices and brands of the customers rather than just
satisfying the basic needs.
Profitability of Sainsburry's- With growing costs of products in retail sector, there have been
huge profits recorded for organisation. Sainsburry's is able to manage with suppliers in order to
cut down own cost for making profits and gaining market share (Leiber 2018). There are net
profits recorded for this organisation in different financial years, which are as follows:-
Year Net profit (in Millions)
2008-09 289
2009-10 585
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2010-11 640
2011-12 598
2012-13 602
2013-14 716
2014-15 166
2015-16 471
2016-17 377
Customer services of the organisation- The services offered to the customers has been
excellent in the years of its operations. The result of good customer services has been produced
by the striving phase as well as being passionate in satisfying the customers. Efforts were also
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Illustration 1: Profit generated by Sanisburry's
(Source: Profits for J Sainsbury plc in the United Kingdom (UK) from financial year 2008/2009
to 2016/2017, 2017)

made by the government sector to enhance the quality of customer service in retail sector (Katz
and Louw 2016). There is a strategy followed by the organisation that is Customer Service
Excellence Standard (CSE) which includes effective provision for services, the efficient staff
members and empowering individuals to ensure the consistency in excellent customer services
by the organisation. Organisation also provides the home delivery services, where the customers
can place the order of various goods either online or with the help of telephone. Over 200
ventures of Sainsbury's provide this facility to its customers with the average three quarters of
population of UK has been availing the benefit of home delivery.
Promotional methods- Promotion methods are those methods which allows an organisation to
connect with its audience in various ways. Sainsbury's uses the traditional method of promotion
which includes utilising the television, radio and billboards in order to promote the products.
Operating method- Organisation method of operation supports the sustainable goals of
development of the country as it fulfils the social responsibility towards the country and puts
much emphasis on ending poverty and inequality. The organisation also writes each employee's
job description after giving the targets to its employees which is an efficient way to manage the
performance (Leiber and Harvey 2018). With the help of operating method, the organisation
aims at three main values of the organisation which are:
 The organisation offers variety of products and services at reasonable prices.
 The colleagues at the organisation makes the difference in working style of the
organisation from the other retailers.
 The entity is always there for its customers, in order to help them at every step.
Dealing with external factors
PESTLE Analysis of Sainsbury's
Political factors- Sainsbury's is a leading retailer in UK and Ireland, therefore there are
plenty of political factors which influence the working of Sainsbury's. Increase in the
globalisation can be an opportunity as well as a threat to organisation. It is a challenge in such a
way that the organisation gave to face the competition against unknown forces in order to
identify the source of various products with economical as well as quality value. There has been
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a decrease in corporation tax which was 30% a few years back but now its 28%. therefore, with
low corporation tax, Sainsbury's would have saved a huge amount just like the other big
organisations in the industry (Punjaisri and Wilson 2017).
Economical factors- One of the major economical aspect that might can affect the organisation
is rise in the prices of fuels. Rising cost can affect the supply chain of the organisation which can
lead an increase in product prices and can decrease the customer base for the organisation. The
ongoing global food crisis can also increase the cost of products. Credit crunch, which is the
most evident factor can affect the working of big organisations. It can even have a great impact
on the total sales of the organisation as customers have the less purchasing power can lead to a
cut in purchase of more luxury products as they will wisely spend their hard earned money and
luxury products are considered as one of the good source of income for Sainsbury's. This factor
impacts directly on the sales, as the customers will purchase less and there would be less profit
for the organisation.
Social Factors- There has been an increasing social trend in healthier foods among the people of
UK, so in order to cope up with that social trend, Sainsbury's have to look out for to keep its
customer base healthy (Sivalingam, R., 2015). There is a wide range of retailers in UK, so if
customers is unsatisfied by the services offered by Sainsbury's, they can switch the retailer as
there is wide choice for them. Therefore, the organisation gives proper to their staff members in
order to be friendlier with the customers so that they can attract more of customers based on the
services provides and there cab be an increase in sales as well.
Technological factors- For the retailers like Sainsbury's it is very important to use right
technology in the absolute manner. There are plenty things in the big organisations like checkout
systems and inventory management which can't be done manually. Therefore, to cope with the
various activities at the organisation, Sainsbury's all over the country have been constantly
upgrading the technology like introducing self-checkout systems, upgrading to more efficiently
scanning the checkouts, computerised stock controlling etc. having computerised systems means
there are less human efforts & errors with less of paper work. One of the great technological
advantage includes the online shopping facility, if used in the appropriate manner, it can be a
good source of profit maximisation.
Environmental factors- Reduction in carbon footprints has impacted many of the big
organisations including Sainsbury's. The organisation can put a lot of emphasis in reduction of
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carbon footprints and have proved that the entity is not involved in increasing environmental
pollution. To accomplish it more, the organisation have to out more efforts towards the green
issue.
Legal factors- The organisation has been covered up with many of the legal issues including
national minimum wage policy, alcohol selling age etc. (Katz and Louw 2016). For the smooth
functioning of the organisation, it has to follow these laws and if failed to do so then there are
some consequences which the entity has to bear.
CONCLUSION
The main purpose of the organisation is to generate higher profits. In order to fulfil this
objective, organisation uses various techniques to asses the strengths, weaknesses, opportunities
and threats. These techniques give a clear picture of the areas to improved by the organisation
and analyses the areas in which the organisation is excelling. The report is all about the efficient
use of techniques which can be proved as a great advantage to develop the strategies for the
organisation.
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REFERENCES:
Azeez, W., 2014. Capital Investment Appraisal in Retail Business Management: Sainsbury's as a
Case Study.
Bull, J.W. et.al.., 2016. Strengths, Weaknesses, Opportunities and Threats: A SWOT analysis of
the ecosystem services framework. Ecosystem Services. 17, pp.99-111.
Hammad, A., 2015. Strategic Change and Its Management to Expand Business Through
Implementation of Models: A Case Study of Boots UK.
Jones, P., Comfort, D. and Hillier, D., 2016. Materiality in corporate sustainability reporting
within UK retailing. Journal of Public Affairs. 16(1), pp.81-90.
Katz, B.R. et.al., 2016. Alignment of internal and external business and innovation domains.
South African Journal of Industrial Engineering. 27(1), pp.61-74.
Leiber, T. et.al., 2018. Bridging theory and practice of impact evaluation of quality management
in higher education institutions: a SWOT analysis. European Journal of Higher Education.
pp.1-15.
Punjaisri, K. and Wilson, A., 2017. The role of internal branding in the delivery of employee
brand promise. In Advances in Corporate Branding. (pp. 91-108). Palgrave Macmillan,
London.
Sivalingam, R., 2015. Strategic Management. Industry Analysis, Strategic Drift and Re-
Strategizing.
Online
Profits for J Sainsbury plc in the United Kingdom (UK) from financial year 2008/2009 to
2016/2017, before and after tax (in million GBP). 2017. [Online]. Available through:
<https://www.statista.com/statistics/386446/sainsburys-profits-united-kingdom-uk/>
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