Organisational Strategy for Sainsbury's: SWOT, PESTLE Analysis and Future Strategic Options

This report analyzes the current strategic position of Sainsbury's through SWOT and PESTLE analysis, and considers future strategic options using Porter's Generic Strategies. It discusses the strengths, weaknesses, opportunities, and threats of the company, and the political, economic, social, technological, legal, and environmental factors affecting it. The report suggests a mix of differentiation focus and differentiation strategy as the best suitable strategy for Sainsbury's. The subject is Organisational Strategy, and the course code is BMA6104. The report is relevant for students studying business management or related courses in any college or university.

Organisational Strategy

Abstract
The organizational strategies are road, map out to achieve organizational goals.
Sainsbury's is the second largest chain supermarket company in the UK and their current
strategical positioning is working for some aspect and needs to change in some. Their SWOT
analysis implied, strenghts as their constant growth and expansion and good promotional
strategies, and future opportunities as rural areas development and demand for supermarkets.
Growing cost expense has become their weakness and lack in technological advancement as their
threat. As for PESTLE there are many factors that affect the company in terms external
environment, they should be careful and make strategies in accordance to that. Through Porter's
generic strategies the best suitable strategy would be a mix of differentiation focus and
differentiation strategy.

TABLE OF CONTENT
INTRODUCTION ..........................................................................................................................4
MAIN BODY...................................................................................................................................4
Current Strategic Position............................................................................................................4
Consideration of Future Strategic Options..................................................................................9
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Organizational strategy is a planned road a company map out to reach their goals. These
strategies are setailed steps that needs to be compeleted in order to reach organizational
objectives. The set strategies could be made to reach different goals like, reaching brand
awarness and creating brand image, increase sales to gain profit, introduce new product to the
market or any other set goals and objectives. Organizational strategies helps in effective goal
settings and a specific goal deciciding becomes easier. In case, the planned strategies does not
work as intended then it could be modified or be dropped by the organization so it does not cause
any more harm.
Sainsbury's is the second largest chain of supermarkets in the United Kingdom. In the
folloeing report, strategical analysis of Sainsbury's would be discussed considering both internal
and external factors and consideration of future strategy would be done.
MAIN BODY
Current Strategic Position
Sainsbury's is a chain of supermarkets providing products from groceries, clothings,
homewares to electricals and much more. In order to understand their strategical positioning
considering both internal and external factors an analysis of SWOT and PESTLE is done below:
SWOT Analysis -
 Strenghts: Strenghts are the areas of business factors that company has upper hand over
their competitors. Sainsbury's was a small grocery store which later exoanded into
convenience store and than became chains of supermarkets. Company has achieved right
expansion move and over that, their vision of helping customer live well at low cost has
attracted and reatined many customers from all segments of income. Although they have
a reputation of providing products at low costs they also have branded and expensive
products too that helps them retaining higher income segment (Puyt, and et.al, 2020).
They also aim to have innovative promotional strategies to pitch brand against the
competitors. Also, their innovative strategy to track shopping behaviour of consumer
through provided coupons set them aside from other competitors in the market.
 Weaknesses: Weaknesses is an area where company needs improvement. Sainsbury's
still face challenge from brand switching of consumers and now with growing number of

competitors in the market and the risk of online retailers they find it difficult to sustain in
the market with just existing strategies. Additionally, the growing cost of expenses is
making profit to sustain. The technological advancement in the market which requires
more resources is adding expences to the cost, which in future can make company's
sustaintion in the market difficult. Sainsbury's is trying to cut down costs and lower the
prices of products then competitors but it is not helpful in sustaintion of the company.
 Opportunities: Opportunities are upcoming situations or circumstances that companies
can capitalize (Křupka, Kantorová, and Haile, 2018). Building IT softwares even after
added expenses could give better results to them. Furthermore, the biggest opportunities
they have is the growth and expansion opportunities in the rural areas. Gone those days
where supermarkets were only limited to the urban areas, the new era has demands
beyond traditional expectations of growing these businesses in such areas. Sainsbury's
can target this new market and make a name in the local rural market which will further
strenghten their presence in the United Kingdom and world. They can also start
Illustration 1: SWOT Analysis
(Source: How to Complete a Personal SWOT Analysis, 2017)

globalization fron initial point to make a strong image in the international market which
have several opportunities for businesses like Sainsbury's.
 Threats: Threats are factors that can be a barrier for the growth of a company. The
global pandemic of Covid19 has affected the company badly, they had to shut many of
their stores across UK and faced fall in revenue. Globalization has become a big threat to
Sainsbury's as they could not caught up to the trend when the other competitors did which
made them lose a lot of loyal customers. The competitors have developed technologies
which could attract customers and match the g;obal digitalization trend. They are also
expanding in different countries. Also, the laws and regualtions of other nations presented
a threat to company's expansion plans and legality.
PESTLE Analysis -
 Political: The United Kingdom has decided to leave the European Union which will
greatly affect the Sainsbury's. This move that was dubbed to “Brexit” will result in
increase in import cost which will affect affordability and increase the cost of foreign
goods and services. Thier vision of low cost availability of products to customer will be
very difficukt to retain and they will have to ensure that consumers continue spending as
much as possible. Also, the government and consumer debts had been high and can really
impact the attitudes of customers which could put presure on the company. Sainsbury's
have sustained in the market for over a century and exposed themselves to various
political situiation and they did not only sustain in the market but also gained profit
which is in their side.
 Economic: Economic factors within a country are their current economic condition and
their availability of economic resources. In last few years the prices of fuel is rising
rapidly and for more years those only seems to be increasing. Even for retail companies
this will rise their expenses and affect their final profit. Also, with rising expenses for
everyone the salary expectations of employees is also rising which will further adds to
their expenses on human resources thus, reduce overall profit. In UK economy there are
many companies having supermarket chains inckuding Asda, Tesco, Morisons and
several other countries that put pressure on Sainsbury's for constant innovation while
adding to the expenses.

 Social: Consumers are becoming more aware about their environment and constantly
trying to improve their lifestyle in order to create a sustainable environment, and to add
on that the pandemic has made them aware about the importance of physical and mental
health, hence, they are focusing more on healthy food habits (Clark, and et.al, 2021).
They prefer more organic food and incorprating healthy dietary changes to their daily
lifestyle and habits. Sainsbury's ha sto track those demands and needs to induce this
change to their success. Additionally, they are also becoming more conscious about
where their food comes from. They have decided to start an initiative to pay extra for
food and drinks to support farmer's guarntee to be granted fairer price of products.
 Technological: New innovation and technological advancement are allowing companies
around the world to know more about their datas and business operation with the use of
Illustration 2: PESTLE Analysis
(Source: Macro-environmental scanning or PESTEL,
2020)

Artificial Intelligence and big data. This advancement in analytics can help a company
like Sainsbury's to know more about company and the customer's purchase behaviour to
make changes in the operations of the company. They have also opted for online
shopping services which have seen some clashes in the scenario but in long term it will
be best for their revenue generation as people mostly rely on window shopping now a
days.
 Legal: In order to operate in a market, a company must follow all the laws and
regualtions of the nation they exist in. They should carefully evalute the laws in nation
they are entering and follow all those instructions and legalities as mentioned by them.
Legal ramifications after the Brexit economy will also be a major legal factor that could
affect the company's operations (Oraman, and et.al, 2018). Other legal factors like
regulatory approval, discrimination law, anti-trust law in retain industry, Copyright,
Intellectual property law, patents are something organiztion should be aware about. Most
importantly, consumer protection laws, employment Law, health and safety law and data
protection laws are vital information for an organization and Sainsbury's should always
be aware about it.
 Environmental: Existing in an environment that is heavly affected by huge indutries and
their waste, it is social responsibility of an organisation to payback to the nature (Jones,
and Comfort, 2020). There are also many laws that are made to protect the nature and
company should be aware about their duties. Supermarket chains are creating large
number carbon footprint which is destroying the nature and should be held responsible.
Sainsbury's is also responsible for contributing in that and must find ways to reduce the
production of carbon footprints. Additionally, plastic waste is the main reason for the
creation of carbon footprint and pollution is general, as a supermarket there is no way the
company is avoiding usage of plastic as a whole but they must reduce it (Ayoub, and
et.al, 2020).
Consideration of Future Strategic Options
There are many factors both internal and external tht are affecting the oprations of
Sainsbury's. They have been affected by huge loss during the pandemic and their strategies are

not working as they liked. Porter's Generic Strategies can help it identify and solve the problem
and help the company to come out stronger.
Porter's Generic Strategies
According to Porter's generic strategies there are three strategies that any company can
opt for solving their issues and reach planned goals. These strategies are driven after identifying
the internal and external and competitive factors affecting the company and its working. The
three strategies are discussed below:
 Cost Leadership Strategy: Porter's generic strategies is to gain competitive advantages
against other companies. In this strategy porter suggest the company to focus on a larger
market, where potential customers are huge in numbers so that they can increase their
Illustration 3: Porter's Generic Strategies
(Source: Porter's Generic Strategies and how to use them, 2017)

production. Production in bulk will help them to reduce the cost of materials used during
the process and that will support them to reduce the price of the final goods. Through this
strategy they will be able to pitch to the customers their low cost products and attract
those potential customers which were not purchasing due to high pricing. Though, he
suggests that the prices should be charges as the idustry avergae which will also allow
them to increase their revenue (Bajpai, and Adhikari, 2018). He also suggests that market
share should be increased so it could be avail in lower prices while the profit still would
be reasonable due to reduced costs. The ultimate goal of companies who opt for this
option is to become leader in the industry in terms of cost. To opt this strategy the
company should have access to needed capital to invest in technologies which will bring
down the cost, they should also be efficient logistics and sustainable way to cut cost
below other competitors.
 Differentiation Strategy: As the name suggests, this strategy implies the difference in
the same product the company could provide the market. Differentiation strategy
implicate that company should provide a product/service that is unique to others. Even if
the cost is not average but those product's quality makes up for it and make the potential
customers to purchase it. In this trategy according to Porter, the brand should be focusing
on a larger market, where the number of consumers are huge and more demand could be
produced from them. There is a huge risk in this strategy but if excuted correctly it can
create huge revenue. For a company to opt for this options they need to have good
research and development to innovate new plans. Research would help them identify the
need generating in the market and fill those gaps with innovations and sustainablity. They
should also have the ability to deliver those high-quality products in the huge market.
And to promnote and target those large markets an effective sales and marketing team is
a must to make the market understand baput the benefits they offer in that product and
service. Companies opting for this options are the ones who want to sustain and expand
their business with their high-quality products and services.
 The Focus Strategy: The focus strategy implies that the company should only be
focusing on a niche markets and understand its dynamic to retain. This strategy is
sometimes seprated as two different strategy, Cost Focus or Differentiation Focus. Cost
focus strategy implies to decrease the production cost while focusing on a particular

small market to become leader in terms of cost in that particular market only. In
differentiation focus, Porter implies that, the company should focus of innovation of
unique product which gives best quality for its price, focusing on a particular niche
market in order to sustain and create revenue and also create brand value which will
make the customers to retain as loyal ones (Aziri, and Zeqiri, 2020). Untimately, the
focus strategy implies that the company should give some benefit to the market in order
to be successful, they should add something extra that could be given to the market, it
could be something that reduces the cost of help to create a unique experience for the
consumers. The focus market will have much less competitors and would be able to
satisfy the customers more effectively. The companies focus on one market or smal
market segment since they do not have enough resources to compete in a large market
where other competitors are much more resourced than the brand and it would be harder
to sustain there even without any competitors.
Above points discussed the different strategical option Porter suggested that could be
used by Sainsbury's to improve their business operations. They were already working on a
strategy similar to cost leadership where they targeted a larger market and produced products on
low costs (NINGSIH, Majid, and Fielnanda, 2021). This did work for them but it was not enough
for them to sustain in that. The option of cost focus will also not be effective as it will only
reduce their market then the present one and it will not create emough revenue to cover the loss.
Further, the differentiation cost will make them create unique product or service for a niche
market, which will again shrink their present market, yet the value for product will help them
sustain for short time period and will help them create brand reputation and retain loyal
customers. The initial stage of strategy could be used as differentiation focused and steadily help
them to cover even larger market through adopting differntiation strategy as whole.
The combination of these two strategy will be a mirror effect of how the company
actually grew but it will be much quicker and effective. The brand will be able to sustain their
previous market and add even more customers by providing products that are unique to the
market and the competitors won't be able to caught up if the products/services are different from
any other companies which will be a better strategy for long term life of the organization in the
industry.

CONCLUSION
In conslusion of this report, the meaning of organizational strategy was defined as the
planned map that helps an organization to reach their goals. To understand present strategy of
Sainsbury's considering both internal and external factors a SWOT and PESTLE analysis was
done in which it was found that the pandemic affected the company's revenue and they could not
cop-up with the new digitalization and innovations that their competitors opt for. For considering
different strategical options, Porter's Generic Strategies was discussed in detail and most suitable
was recommended to Sainsbury's. A combination of differentiation focus and differntiation was
suggested to them to cop with the loss, sustain more loyal customers and than expand while
providing unique and quality products to the market and eleminating there competitors.

REFERENCES
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Bajpai, H. and Adhikari, A., 2018. Retailing in Emerging Markets. In Strategic Marketing Issues
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Clark, S. D., and et.al, 2021. Dietary Patterns Derived from UK Supermarket Transaction Data
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Puyt, R., and et.al, 2020. Origins of SWOT Analysis. In Academy of Management Proceedings
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