PESTLE Analysis of Sainsbury

ASSIGNMENT
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
PESTLE Analysis of Sainsbury...................................................................................................3
Porter’s five force analysis of Sainsbury.....................................................................................5
TASK 2............................................................................................................................................6
Mission and vision statement of the company.............................................................................6
Strategic competencies and capabilities......................................................................................7
Rationale of how the company creates, delivers and captures value within industry.................8
Task 3...............................................................................................................................................9
Discuss the possible strategies that the company could follow to defend its core business........9
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
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INTRODUCTION
Strategic direction includes future actions and plans that are required to be taken by the
organization order to work for achievement of future vision of the organization. Strategic
planning is important for organizations as it helps them in provision of sense of direction and
outline measurable goals (Hermansyah, Sainsbury and Krass, 2017). It also helps organizations
in taking day to day decisions. This assignment will focus on Sainsbury which is second largest
supermarket chain of UK. It was founded in 1869 and its headquarter is in London, United
Kingdom. Sainsbury have more than 1400 shops and have more than 116,000 employees
working for them. This assignment will lay emphasis on analysis of external environment of
Sainsbury, mission and vision statement, strategic competencies and capabilities of the company,
and strategies that the company could follow to defend its core business.
TASK 1
PESTLE Analysis of Sainsbury
PESTLE analysis can be defined as macro environmental factors framework that can be
used by organizations like Sainsbury for analysis of all kinds of external factors that can impact
overall performance of an organization (Rodríguez, Paredes and Yi, 2016). It is one of the best
tools that can be used by organizations in order to analyse future strategic directions for the
company to move forward. Close analysis of external business environment analysis can help
Sainsbury to gain competitive advantage and bring required or necessary changes within their
organizational strategies. PESTLE analysis includes factors such as: political Economic,
Sociocultural, Technological, Legal, and Environmental factors that can affect an organization
like Sainsbury in many different ways both positively and negatively.
Political Factors: Political factors have a great influence on overall performance of an
organization like Sainsbury. One of the main and biggest political factors that affects
organization like Sainsbury in a negative manner is imminent Brexit. That means UK will no
longer remain part of EU because of which import rate will increase (Moore, McDonald and
Bartlett, 2017). This will result in increase in product rates due to which chances of loosing
customers will increase and customers will get attracted towards competitive products that will
be offered to them at lower prices. Current government and customers debts are also impacting
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customers attitude towards the organization because of which Sainsbury is experiencing great
pressure.
Economic Factors: Market in which Sainsbury operates, economic conditions of the market are
also important to be focused on. From past few years fuel cost is rising slowly but continuously
because of transportations of goods into or around the country has become difficult because their
profit marking on sales of their goods is quite low which is impacting their overall profitability
(Malgas, Khatle and Mason, 2017). This is one of the main factors because of which they are
bound to increase their product prices. This will further result in loosing lower income customers
as increasing prices of the products will push their lower income customers away. Change in
minimum wage that should be paid to workers and increasing expectations of employees for
higher salary expectations is also impacting Sainsbury and their overall profit margin.
Social factors: For retail sector organizations social factors are also important to be focused on
as it can affect their customer satisfaction, overall sales and profitability. Today most of the
customers prefer to shop at one stop i.e. they require all the products and all kinds of available
choices under one roof. Sainsbury has also introduced non food product items which has largely
helped them to attract a greater number of customers. There is another change in social trend i.e.
people today are becoming health conscious and prefer to avoid fast food or food that are
unhealthy for an individual (Evans, DePuy and Gupta, 2017). They prefer having healthy food
items such as salad etc. Focus on this social chance and adopting it as a long-term strategy can
help Sainsbury to gain competitive advantage and sustain within the market in which they
operate.
Technological Factors: Advancement in technology is increasing importance of technology
adaptation within an organization in order to gain competitive advantage. Today a greater
number of customers are focusing on online shopping and introduction of Sainsbury’s e-
commerce websites is helping them to attract a greater number of customers. These e-commerce
websites are also helping them to attract technology friendly customers. However in order to
attract more number of customers they can focus on improving their user experience. They can
also focus on implementing analytical tools and technologies which will further help them to
analyse their type of customers, their needs and requirement in a better manner which will
further help them to increase their overall sales (Warden, Han and Nzawou, 2018). Sainsbury can
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