Strategic Management Plan for Sainsbury's PLC

This report provides a strategic management plan for Sainsbury's PLC, including an internal and external analysis, PESTLE and SWOT analysis, evaluation of resources and capabilities, and strategic options for the organization.

Unit Number and Title Unit 32 – Business Strategy
Title Strategic Management Plan
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Table of Content
Introduction................................................................................................................................3
Part A: An internal and external analysis that provides a platform for strategic decision
making:.......................................................................................................................................4
1. PESTLE and SWOT of the organisation and an evaluation of the organisation’s
resources and capabilities.......................................................................................................4
PESTLE Analysis...................................................................................................................4
2. Competitive environment analysis using Porter’s Five Forces model...............................8
4. Valid strategies and tactical objectives to achieve overall strategic objectives...............11
Part B: On the basis of this analysis critically evaluate and justify strategic options for the
organisation:.............................................................................................................................13
1. Critical evaluation of the different types of strategic directions available to the
organisation..........................................................................................................................13
2. Justification and recommendation of the most appropriate growth platform/s and
strategies...............................................................................................................................13
3. Evaluate ways and means by which the chosen strategy/ies can be monitored in order to
ensure success......................................................................................................................14
5.0 Conclusions........................................................................................................................15
References................................................................................................................................16
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Introduction
Strategic Management refers to the action plan which has been formulated by the
organization strategically to provide them direction regarding their betterment (Abutabenjeh,
2021). Strategic management helps the organization to prepare a business strategy which
helps them to take several competitive news for the purpose of getting attention of their
customers and have a competitive advantage in the market by improving their performance
and achieving the goals and objectives of an organization. Strategic management is very
essential for any organization to be focused as it types and organization in various ways as it
helps them in identifying the macro as well as internal environment factors that has different
kind of impact on the business of an organization. Sainsbury’s PLC is UK based organization
which was founded in the year 1869 in London England. Sensor is the second largest chain of
supermarket in United Kingdom and has a great market share in this sector. This report
contains several frameworks which has their impact and influence on the external
environment of a business as well as internal environment of the business and the strategies
which helps the organization to overcome the situations of macro environmental factors stop
this report contains several Fame box models and concepts which helps to understand the
business strategy in effective manner and provide several ways to prepare an effective
strategy for Sainsbury’s.
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Part A: An internal and external analysis that provides a
platform for strategic decision making:
Overview of the organization:
Sainsbury is a large organization and attain a position of second largest supermarket all over
UK. The company was established in in 1869 and in the year 1922 the company as a team a
position of largest retailer of United Kingdom’s. In the year 2020 the company has recorded
2899. 3 crores GBP. Sainsbury’s was established in UK and continuous their operation to
generate more and more revenues from the country. It was not easy for Sainsbury’s to attend
this position as there are several competitors of the company in the market. Even it is not easy
for the company to maintain their situation in the market as competition is a continuous
process and Sainsbury’s has to face it on daily basis (Ahmedova, 2020). In order to retain the
position in the market sense requires a proper strategic management planning. The mission,
vision and objective of Sainsbury is given below:
Mission: The vision of Sainsbury’s to become a most trusted retailer of the market in which
people love to work and shop.
Vision: The mission of the organisation is to provide quality products and make available all
types of products under one roof.
Objectives: The Company has an objective to expand their business in international markets
also.
1. PESTLE and SWOT of the organisation and an evaluation of the
organisation’s resources and capabilities
Strategic management is a process in which management of the organisation is involved in a
continuous planning monitoring assessment and evaluation process for attaining the goals and
objectives of the organisation. Strategic management plays an important role in an
organisation in achieving their goals and objectives which requires a proper analysis of the
organisation for stock in order to analyse the environment of the organisation both internal as
well as external environment is to be analysed which includes pestle analysis for the purpose
of external analysis. The pestle analysis in order to achieve the mission and vision and
objectives of the organisation is provided below:
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PESTLE Analysis
 Political: Political environment is connected with the political issues related to the
government of the country in which the organization is operating. The decision which
has been taken by the government are not under the control of organizations and they
need to formulate their strategies in accordance to those decisions. These decisions
has create a political environment for business in the market. United Kingdom is a
country which has a good political stability but the uncertainty which are recently
facing by the environment of United Kingdom affects the business of Sainsbury’s.
Brexit has come with several uncertainty in the market and have serious consequences
on the business of the organization. Sainsbury's dependent on the European trade for
their supplies of goods and services which has affected by the decision of Brexit by
the government of United Kingdom (Bekhradinasab, 2020). It has result in increase in
prices of the products and services offered by the company which affects the profit
margin of the company as its cost of production has increased. Impact of brexit on the
organisation sainsbury they will not be able to provide low prices goods to their
customers which will affect their vision to provide all types of products under one
roof and mission of the company to make themselves a most trusted retailers.
 Economic: Economic factors of external environment also have a high impact on the
business and cost of operations of Sainsbury’s as the company is highly dependent on
these economic factors. Sainsbury's uses road based trips deliver their products from
one place to another all over UK and the rising cost of fuels in the country has
increase the cost of operations of the organization. This increasing cost will results in
increasing cost of the product which as a fact the competition in the market as the
products of Sainsbury can be more costly for their customers as compared to their
competitors. If the company decide to sale in the competitive rate then will have low
profit margin which is not good for the growth of the organization. Apart from this
there are various other economic factors such as rising of salaries increasing
competition and many more which affects the business of Sainsbury’s in United
Kingdom in various manners. This rising of salaries and increasing competition in the
market of United Kingdom will affect the cost of the products in the organisation and
will have its impact on the organisation mission vision and objectives. Is this
economic factor will put its impact on the cost of production and the organisation will
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not be able to provide quality product to their customers at cheap rates which will
result in decline of customers in the company.
 Social: The social trends of the society define the behaviour of customer in the
location in which the organization is operating. It has been analysed that Sainsbury’s
earn most of their revenue from the sale of fast food items at their outlets. There is an
increase trend of healthy conscious diet the consumers which has affect the sale of
fast food items (Bryson and George, 2020). This health conscious trend has increased
the sale of cell is an organic shakes all over the world and became a global trend
which is strongly affect the business of Sainsbury’s in UK. In order to sustain in the
market we should analyze the social trends of the society which can affect their
business and start offering those products in their stores to maintain their position in
the market. Increase trend of shopping under one room in the society will help
sainsbury to accomplish their mission vision and objectives as they also have a vision
to provide all types of products under one roof to their customers.
 Technology: Sainsbury's has recently introduced in e-commerce store which help the
company to offer tech friendly services to their customers. This techno friendly
services will help the company to provide better experiences to their customers and
provide an improved analytical system which is based on data information. This big
data analysis helps Sainsbury to target their customers in efficient manner and
increase their sales by enhancing their marketing techniques. The big data analysis in
technology will help the organisation to reach more and more people and expand their
business in the international market also which is the objective of Sainsbury’s.
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 Legal: There are several legislations which are applicable on an organization. To
have an effective operations in the country it is essential to follow these legislations
by the company. As sense worries is also a supermarket organization which deals in
several types of products and services required to follow several legislations such as
food safety legislations and others. Sainsbury's show to formulate their decision-
making in such a manner that they can follow the legislation which are applicable on
them to avoid the government intervention in the organization (Crespo Hervás, Prado-
Gascó and González-Serrano, 2020).
 Environment: With the increase concern of Eco friendly nature among the society it
is essential for an organization fulfill environmental conditions. It has been observed
that Sainsbury’s produces a high level of carbon emission from there organization
which needs to be solve by the company in order to get customer demands in the long
run the company can get negative publicity among the customers for offering products
which has a negative impact on the environment.
SWOT Analysis
In order to analyse the internal environment of an organization it is essential to
analyze the strength and weakness of the organization. SWOT analysis can be used by an
organization in order to analyze their strengths and weakness which is given below in respect
of Sainsbury’s:
Strengths Weaknesses
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 The biggest strength of Sainsbury’s
is that they have taken right
expansion moves and deal in the
limited range of products in order to
expand the brand to convenience
stores.
 The company has used innovative
promotion strategies in order to
attract more and more customers and
gain competitive advantage from
their competitive brands like Tesco
the issues several coupons to the
customers which retain them with
the organisation.
 The nectar royalty card scheme is
the best innovative scheme which
helps the company to retain their
customers with them.
 In spite of having so much
promotional activities and retention
strategies the company is facing high
brand switching in the market which
makes it challenging for the
organisation to retain their
customers.
 Low margin in the retail business
has decrease the profitability of the
organisation which affect the growth
of the company.
Opportunities Threats
 Increase of bulk Buying trends in
rural areas create a great opportunity
for sensory to establish their
business in rural areas and even it
has also been observed that there is
an increase trend of branded
products in rural areas which
provide growth of the supermarket
culture in those areas which is a
great opportunity for Sainsbury’s.
 High threat of competitors in the
market effects the profitability and
effectiveness of strategies of
Sainsbury’s in the market.
Stakeholder’s Analysis
In order to prepare an effective business strategy requires to analyze their stakeholders in
effective manner. The stakeholder analysis of Sainsbury’s is given below:
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Employees: Employees are those stakeholders of the organization who are responsible to
provide products and services to the customers and are liable for the generation of prophets in
the organization. According to stakeholder analysis employees are considered as monitor of
the organization who are responsible to monitor the essential operations of working. In case
of Sainsbury’s the employees are very essential is there help the organization to retain their
customers with them and monitor that all the operations are fulfilled in effective manner.
Suppliers: Suppliers are those persons of an organization who have some kind of interest and
the organization in terms of their goods to be supplied for further selling. Supplies are liable
to provide each and every product which has been sold in the Sainsbury’s organization and in
absence of suppliers the organization is unable to carry out their businesses. In order to have
good suppliers to offer quality products to the customers the Sainsbury should keep their
suppliers satisfied. According to stakeholder analysis the suppliers are that part of the
stakeholder which should be kept satisfied by the organization.
Government: Every firm is liable to pay some amount of their profits to the government
inform of Taxes for operating their business in that country. They are also considered as the
stakeholder of the organization as they also have some interest in monetary terms in the
organization. According to stakeholder analysis Sainsbury’s should work towards the
government to manage this stakeholders carefully to achieve success of the organization
(Barbosa, Castañeda-Ayarza, and Ferreira, 2020).
Customers: Customers are the most important part of an organization as they provide revenue
and profitability to them. According to stakeholder analysis the customers are those
stakeholders of an organization which needs to be satisfied all the time and company e works
in such a manner that they can keep their customers satisfied. To maintain the position in the
market Sainsbury’s all the focus to satisfy the needs and wants of their customers and provide
their services and products according to them only. This helps the organization to get more
profitability from which they can run their business successfully.
VRIO analysis for analysing the strategically competence:-
VRIO Analysis helps an organization to analyze their strategic competence in the market.
This analysis helps the Sainsbury to understand their organization’s strategic management
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Valuable: The position of second largest supermarket chain has provided Sainsbury’s
with a reputed image in the supermarket industry which creates a great value among their
customers.
Rare: The service or product which makes the Sainsbury’s there from their
competitor is that they provide a large variety of items with several fast food counters to their
customers under one roof only. This rarity help the organization to keep in the competition
with another organization in the market of UK (Rashid, Ali, and Hossain, 2020).
Inimitability: Although the products and services which are offered by the
supermarket Sainsbury can be offered by any other person but the services they offers time to
time are inimitable for their competitors.
Organizations: Sainsbury's has a good organization and provide varieties of their
products and services to their customers which attracts more and more customers towards the
stores of Sainsbury’s.
Value Chain Analysis of Sainsbury’s:
Value chain and places of Sainsbury’s include several activities which are conducted
by the organisation in order to operate their business effectively. This value chain given by
Porters is divided into two activities that are primary activities and secondary activities which
are explained below:
Primary activities: The primary activities of value chain analysis in sainsburys include
inbound logistics which has provided to develop a good relations with the suppliers. The
second one is operations which includes the analyzation of operational activities in the
organisation Sainsbury’s. The next one is outbound logistics which are related to the
customers and according to this it is the most important activity of an organisation and should
have a particular importance to their out bond value chain. Then next value chain is related to
the marketing and sales and it is essential for an organisation to have an effective as well as
wise integrated marketing activities in Sainsbury’s. And the last activity in the primary
activities are the services which are provided by the organisation. The Sainsbury’s has
involved in pre-sales as well as post sales services to their customers so that they can weld a
trust of their customers in the market.
Secondary analysis: Secondary activities include form infrastructure human resource
Management technology development procurement and many more. It is essential for an
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organisation to have a good infrastructure of the form which includes quality management
accounting legal matters and many more. Human resources are the most important resource
of the organisation and it is essential for the organisation to take care of the selecting
recruiting rewarding performance management and training. With the increased use of
technology in the modern world the organisation should adopt the amended technology in
their organisation to achieve success in the market
2. Competitive environment analysis using Porter’s Five Forces
model
Porter’s Five Forces Model:- Threat of new entrant:
With low regulations in the market the company has higher threat of new entrants in the
retail sector which requires a proper strategy of the organization in order to maintain their
position. In order to compete with this new entrance the company focuses on their no pricing
strategy which helps them to attract more and more customers (Rashid, Ali, and Hossain,
2020).
 Threat to substitute:
Sainsbury’s deals in varieties of products in which they offers several products to their
clients that are either substitute of other products which are sold by the company. The
company offers both butter and marketing to the customers which are substitute to each other.
Hence, the threat of substitute products is a relevant for the company like Sainsbury’s.
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 Bargaining power of buyers:
Availability of large number of buyers in the market as increase the bargaining power of
buyers as they have a large number of competitors of the company in the market and in case
of any ups and downs in the organization they can switch over their supermarket brand. This
has shown that Sainsbury’s facing high bargaining power of buyers in the market of United
Kingdom.
 Bargaining powers of suppliers:
Sainsbury’s deals with numerous number of suppliers in the market and have varieties of
option to switch from one supplier to another. Hence, Sainsbury’s has low bargaining power
of their suppliers in the market of UK.
 Rivalries or Competitions:
Sainsbury has various existing competitors in the market which creates high competition
and affects the profitability of the company. The competitors like Tesco and ideal and many
more have a great impact on the customers and can result in switching of their customers to
another brand.
Porter's five Force model helps to identify the various strengths and weaknesses of the
five forces which has help the organisation to analyse competitive environment. The
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strengths and weaknesses which are analysed with the help of porter's five Force model are
given below:
Strengths:
Threat of new entrant: The strength of the organisation is that they are dealing in the retail
sector and have a proper strategy
Threat to substitute: Being a retail organisation the biggest strength of sensory is the deal in
several varieties of products even have substitute of their own products and their
organisation.
Bargaining power of buyers: Reputation of second largest supermarket chain of United
Kingdom is a greatest strength for Sainsbury’s for the bargaining power of buyers.
Bargaining powers of suppliers: Large number of suppliers available in the market having
varieties of products and services is a great strength for Sainsbury’s
Rivalries or Competitions: Loyal customers of the company is the greatest strength for them
to fight with their rivalry.
Weaknesses:
Threat of new entrant: No pricing strategy of the company can be a weakness in front of new
entrants for the organisation.
Threat to substitute: Threat of substitute is irrelevant for or Sainsbury’s and that is the reason
they have no weakness in the threat of substitute.
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Bargaining power of buyers: Large number of competitors in the market is a great weakness
for the company.
Bargaining powers of suppliers: Non availability of product the customer wants can be a
weakness for the company.
Rivalries or Competitions: Having a large competitors in the market creates a great rivalry for
the company.
3. Identification and justification of the organisation’s existing and/or
potential competitive advantage
Internal environment are the environment of business which can be controlled by an
organization and helps them in their strategic decision-making. It is essential to analyze their
internal environment as the organization should know what is going on in inside of their
organization to formulate effective strategies (Ketchen Jr and Craighead, 2020). There are
several framework which are given by authors in order to analyse the internal environment of
an organization. This models also helps Sainsbury’s to provide appropriate framework for
analysing their internal environment and capabilities so that they can formulate their effective
strategies accordingly. Analysis and McKinsey 7-S are some of the efficient frameworks
which are used by the organization for internal environment analysis. These frameworks are
explained below:
McKinsey 7-S
The 7s which has been given by McKinsey helped the sensory organization to analyze
their internal environment which are given below:
Strategy: Strategies are the action plan which helps the organization to identify their
ups and downs and take effective actions for them. Sensory has a unique strategy which helps
them to attain a second largest position in the market.
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System: Sainsbury's is a second largest chain of super market of United Kingdom
which is operating with an effective operating system in their organization such as e-
commerce facilities effective billing system and many more (Mikhno, Koval and Ternavskyi,
2020).
Structure: Sainsbury follows effective organizational structure which helps the
company identify the roles and responsibilities of the employees and they are able to perform
their duties effectively.
Styles: This S of the framework refers to the leadership styles followed in the
organization. Sainsbury's has effective leaders in which they follows great leadership styles
and patterns which helps their workers to be motivated enough to provide their services in
innovative and effective manner.
Staff and skills: Sainsbury’s always focus to keep their staff well maintained by
providing them several varieties of training related to the services they need to provide to
their customers. This training will help the staff to increase their skills for their further
development.
Shared Values: Sainsbury's has provided several shared values to the general public
which helps them to develop a positive as well as effective workplace such as sources with
integrity and respect for our environment living their lives and many more.
4. Valid strategies and tactical objectives to achieve overall strategic
objectives
Sainsbury's is operating in a competitive market where they have a large competition
and in order to manage this competition and survive in the market the company requires to
analyze their macro environment in effective manner. This analysis of macro environment
will help the organization to take strategic decisions in the organization and formulate an
effective business strategy. The Pestle analysis helps to understand the political economic and
social legal and environmental factors which has various impact on the business of
Sainsbury’s. Sainsbury's provides several types of products and services to their customers
with the help of a supermarket chain and has a specialty that it offers the products to the
customers under one roof who are interested in bulk buying (Guven, 2020). In order to focus
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on their target customers the company should provide the products and services according to
the needs and wants of the customers in the market. Implementation of effective strategies
will help the company to cope up with every factor of macro environment as well as micro
environment and provide their products and services with good economies of scale.
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Part B: On the basis of this analysis critically evaluate and
justify strategic options for the organisation:
1. Critical evaluation of the different types of strategic directions
available to the organisation
Porter's generic strategies:
Porter's generic strategies of framework which helps an organization to take several
strategic directions and decisions for the betterment and growth of the company. The porter's
generic strategies for Sainsbury’s has been given below:
Cost leadership: In order to attract more and more customers towards the products
and services Sainsbury’s should provide their products and services at lowest possible prices
so that they can attain cost leadership in the market and gain competitive advantage.
Differentiation: According to Porter, an organization should offer something
different to their customers for which they came to the organization. Sainsbury should adopt
and strategy to offer coupons with loyalty points on their purchase to their customers so that
they can retain with the organization.
Focus: In this strategy Sainsbury should consider on both the strategies in such a
manner that they can provide affordable and reasonable products to their customers with
focus on offering something different to them.
2. Justification and recommendation of the most appropriate growth
platform/s and strategies
Ansoff’ Matrix of Premier Inn:
Basic Meaning Sainsbury’s
Market penetration Market penetration is a
technique which helps an
organisation to offer a
different product or service in
the same market to maximize
their sales.
Sainsburys deals in variety of
products and provide
numerous offers to their
customers. Discount vouchers
and loyalty points to the
customer will help the
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company to increase their
sales in the same market.
Product development Product development is a
situation in which a new
product or service is
developed by an organisation
in the same market in which
the organisation is operating.
The introduction of
Sainsbury’s Central format is
an example of product
development strategy by the
organisation.
Market development Market development strategy
used by an organisation to
increase their customer base
and offer their existing
products to a new market.
Sainsbury’s PLC is a second
largest team of supermarkets
and have the option to expand
their business in various
markets with the same
business.
Diversification Diversification is a situation
in which an organisation
enters into a new market with
the new product to be
introduced to get more
customer base and
profitability.
This is strategy can be risky
for Sainsbury’s but provides a
new experience to the
company. The best example
of diversification for
Sainsbury’s that the company
was deal in grocery retailing
store at the initial stage but
has started their clothing
business later.
3. Evaluate ways and means by which the chosen strategy/ ies can
be monitored in order to ensure success
At the end it is essential for an organization to revise their strategic plan in order to
find deviations at early stage. In order to revise the strategic planning of Sainsbury’s an
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appropriate framework of strategy is used with numerous number of factors which are given
below:
Low price and low value added: In order to retain in the competitive market
Sainsbury’s use this strategy which helps their customers to get their products at reasonable
prices (Rashid, Ali, and Hossain, 2020). The mean variance of this strategy are given below:-
Low price: To take a market leader the products and services offered by Sainsbury’s
are provided at boss best possible lowest prices.
Differentiation: The Company should follow the strategy of differentiation and
provide something innovative and different in their products and services in order to retain
their customers with them.
Loss of market shares: In the situation the company should formulate some
strategies as they are losing their market shares due to their high competition in the market.
Bowman’s Strategic clock for Sainsbury’s:
Bowman's strategic clock helps an organisation to use a strategic tool forgetting the
options for positioning in market according to the price as well as perceived value of the
product and services offered by the company. Bowman clock strategy is generally used in
conjunction with the tools like Ansoff matrix. It is also used as an alternative for extension to
put a generic strategy which is given above. There are two dimensions which are used in
Bowman strategic clock that are price as well as perceived value. The explanation of these
two dimensions are given below:
Price: In this dimension of price to achieve more customers to the organisation
Sainsbury should focus on providing products and services at the prices which are lower than
their competitors. Low prices in the retail sector will help the organisation to attract more
customers towards them. As retail sector organisations are dealing in high competition they
are required to fix their prices according to the competition in the market.
Perceived value: According to this dimension of perceived value the organisation
should offer some products and services which have different value from the products which
are offered by the competitors. As Sainsbury’s deals in retail products and can find out
several products which are unique for their customers to attract them towards their
organisation. Apart from this they should concentrate on providing some extra services to
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their customers which a different from their competitors such as loyalty points service and
many more.
5.0 Conclusions
From the above discussion it has been concluded that an effective strategy is very essential
for an organization in order to get success in the market. This strategy can be formulated by
the help of various models and frameworks provided by various authors. In order to analyze
the macro environment pestle analysis and stakeholder analysis is very essential for the
organization which helps them to analyze the essential people and factors of market which
affects the business of the organization. In order to analyze the internal environment SWOT
analysis of essential. Further the strategies should be revised by the company and can use
appropriate growth-growth platforms such as Ansoff matrix for Sainsbury’s.
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References
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