PESTLE Analysis of Sainsbury: Doc
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Added on 2021-01-02
PESTLE Analysis of Sainsbury: Doc
Added on 2021-01-02
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Corporate Strategy
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................2MAIN BODY...................................................................................................................................31. Business environment and industry attractiveness based on Pestle and porter's 5 forcemodel...........................................................................................................................................32. Unique capabilities of company to have competitive advantage............................................63. Evaluating recent business strategy the company undertook using the three SAFe tests.......8CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................11
INTRODUCTIONThe report consists of merger of Sainsbury and Asda and corporate strategy adopted bySainsbury to merge Asda as well as after effects of the merger where it gets influenced byvarious political, legal aspects. Corporate strategy is the group of strategies used by companiesto either merge, acquire, takeover and amalgamation for the purpose of increasing their marketshare, decreasing their competition, to have operational synergies, t increase their sales, toachieve economies of scale etc. In this report the study will be conducting on merger of Asda andSainsbury and their after effect and strategies used and outcome of the deal. Sainsbury is one ofthe largest supermarket chain in UK which offers food products, groceries etc. whereas Asda isalso a chain of supermarket and subsidiary of Walmart and offer products at cheap price. Thestudy shows how Sanisbury proposed a merger to Asda and the deal was failure or a success. Thestudy further shows the pestle analysis and porter's 5 force model and capabilities that companymust have to gain competitive advantage.TASK 11. Business environment and industry attractiveness based on Pestle and porter's five force modelAsda and Sainsbury are two retailer super market chain and got merged. Sainsbury was thecompany who merged Asda ans it was a horizontal merger as both the companies was operatingin the same line of business. The merger of Sainsbury and Asda focuses on The pestle analysis ofthe following case is as follows -Political factors – The political factors that can affect the deal of Asda and Sainsbury is thegovernment intervention in the deal as the government officials thinks that the deal will not leadto decrease in competition but increase in prices for the customers (Sullivan, 2016). The otherconcern of regulatory body is that the deal would affect suppliers and will threaten customer'schoice as goods and services of the company will be provided by the merged company at highprices. The merger of Sainsbury and Asda will be affected by the trade policies of the UKgovernment which are very rigid. The other factor that will affect the merger of Sainsbury andAsda positively are tax benefits as merger will lead to tax savings of the company. 1
Economic factors – After the merger of Asda and Sainsbury the positive affect that will work iscreation of employment opportunities. As the company merged it will need employees that willdecrease unemployment in the country and will create innovation and creativity and companywill achieve economies of scale. The other economic factor that affect the company is that Asdabefore merger used to offer very less items to its customers therefore after merger it mightincrease the quantity of products to offer. The other economic factor which acts in the favour ofthe merger is that both the companies are consumer focused and that way can be attractive to allthe customer demographics after merger.Social factors – The merger of Sainsbury and Asda will affect society and as well as smallcompanies and retailers at a large stake. The merger will provide economies of scale to thecompanies as well as operational synergies which will lead to expansion in the market and willincrease their market share and sales and that will lead to increase in competition for the othercompetitors and also will lead to price rise which will affect the customers on a large scale. Withincrease in competition the customers would not be benefited but will be in loss.Technological factor – Sainsbury was always number one in technology updation and it iscompany's positive and strong point but still after the merger the challenge was to maketechnology available to the customers which can be easily accessible (Porter's five forces, 2018).Still the technology factors was not a problem for this merger deal and the companies managed itwith continuous technology updation and innovation.Environmental factor -The environmental factors affecting the merger of Sainsbury and Asdanegatively as the company is damaging the environment. The company is pressurizing farmersand producers to sell their product at a cheap rate and which is harming farmers as well ashealthy environment of the county. Due to this reason the National Farmers Union assessed thewhole merger and makes sure the fairness of supply chain from farmers to company andcompany to customers.Legal factor –There are number of legal factors that can be a threat to this deal. Among these,the recent factor that can affect the deal would be Brexit. The other factor that can affect the dealis CMA as to overlook the effect of price and competition. The other hurdle would be EUcompetition law which does not give a power to single firm to be in a dominant position tocontrol significant market share.Porters-five-forces- model for Asda and Sainsbury merger2
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