Porter’s Five Force Analysis Model and Value Chain analysis

Management Information
and Technology

Table of Contents
INTRODUCTION...............................................................................................................................3
Porter’s Five Force Analysis Model..................................................................................................4
Porter’s Value Chain analysis............................................................................................................7
Reflection........................................................................................................................................11
REFERENCES..................................................................................................................................13

INTRODUCTION
About Sainsbury
Sainsbury company is a public limited company that operates its business in retail industry
was founded in 1869, 151 years ago by John James Sainsbury in Holborn, London, United
Kingdom. It raises meets its capital requirement by listing its stock on London stock
exchange to offer to public for subscription. It is second largest chain of supermarket that
operates its business in UK with market share of approx. 16.0% (Hunt and Wheeler, 2017). It
operates its business in retail industry offering wide varieties of options to its customers from
clothing, food, electronic equipment’s to various financial services. Company to expand its
market share, profitability and satisfy needs of customers effective divided its operation into
three division: Sainsbury Banks, Sainsburys Argos and Sainsburys supermarket. In 1922
largest Sainsburys was one of the largest retailers but Tesco and Asda two competitors
overtook Sainsbury in 1995 but it regains second market position in January 2014. Sainsburys
has generated 29.007 billion of revenue and net income approx. 219 million in 2019 (Woo,
2018). There are 116400 employees in the company that operates various functioned for
achievement of common objectives. Head office of Sainsburys is situated in Holborn circus,
Sainsburys support centre. It has approx. 1415 stores that offers products in hypermarket,
supermarket and convince shop to attract large number of customers for achievement of
firm’s objectives.
History of Sainsburys
It was first started by John James Sainsburys and his wife as a retailer of fresh food in 1869,
but then they decided to expand business by introducing groceries products such as sugar and
tea. John Sainsbury's was able to increases its profitability and sales by satisfying basic
requirement of customers and using innovative marketing strategies. It stated that company
provide qualitative products at lower price to attract new customers. John Sainsburys to gain
differentiate position in use another strategy that is a high cast iron board to identify
Sainsburys store from a distance. Dairy, bacon, cooked meats are various department in each
shop of Sainsburys and it also provides few cars to provide delivery of products to customers
at their doorsteps. But in 1928 John Sainsburys died and there are 128 shops and his wish was
to keep shop well lit so his brother John Benjamin Sainsburys decide to run with partnership
with his father (Gemfair and Summit, 2018). The firm grew and maintain its leadership
position by maintaining cleanness in stores and quality of products and services of company.

But in 2016 it was taken over by Home retailer group for £1.4bn and expand its multi-
channel strategies, online presence to meet continuous changing needs of customers. Many
job were also cut and reorganized in 2016 by Sainsburys to reduce cost of production. Thus,
it grows and develop its business by reconstructing multi-channel to remove weakness of
decline of business in 1992- 1998 that result in reducing number of job in company.
Product and services
Sainsburys deals in varieties of product and services to satisfy needs of each and every
customer in the industry for achievement of company objectives. It provides product ranging
from home, personal care, food, electronic to financial services to cater needs of each
individual in the society with number of retail shop in UK. It also offers such products and
services through its own website to attract wide number of customers at reasonable cost.
Porter’s Five Force Analysis Model
Porter five forces refers as the business analysis model which supports to analyse
intensity of competition and its profitability in certain organization. It is profitable tool which
is basically used by several organization when they initiate new business or enter into
emerging market (Wee, 2017). This model states that competition not only occurs through
competitors but also it is dependent on fives forces such as threat of new entrants, bargaining
power of suppliers, bargaining power of buyers, threats of substitute products or services and
existing rivalry industry. These forces define level of competition and its profitability of an
organization. Sainsbury is a super market company which offers wide variety products to
customers across the world. Sainsbury applies porter’s five forces model to know about level
of competitions and its profitability in company. It is described below:
Power of buyers (High):
Sainsbury is supermarket company which offers wide variety products i.e. food item
and non-food item. As similar products are offered by other supermarket companies such as
Tesco, Asda, Aldi and Morrisons at related costs. So, Sainsbury’s customers bargaining
power becomes high due to availability of others organization which offers similar product
on different price range. Additionally, it becomes easy for customers to switch Sainsbury’s
company to another rival when they offer product at high price. Prices of product decreases
due to similar products as result it enhances customer’s power to select between competitor
offer in similar price range.