Reflective Analysis of the Internal Business Environment

This reflective analysis explores the internal business environment of Sainsbury, a retail company in the UK, using the value chain model. It discusses the primary and support activities of the value chain and reflects on the effectiveness of the model. The analysis also highlights the company's background, internal environment, and the benefits of implementing the value chain model.

Reflective Analysis
Of The
Internal Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
a) Value Chain Model............................................................................................................1
b) Company............................................................................................................................2
c) Internal environment..........................................................................................................3
d) Reflection on Value Chain Model......................................................................................5
CONCLUSION................................................................................................................................6
REFRENCES...................................................................................................................................8

INTRODUCTION
Internal business environment is considered as the element of business environment that
consist of several factors present inside of an organization which may impact on workplace and
their decision making (D'Aquila, 2013). A firm may adopt numbers of model in order to conduct
analysis of their internal business environment such as value chain model which that is
developed by Porter. Organization selected for this assignment is Sainsbury which is public
limited company operating in retail industry at United Kingdom. The main aim of conducting
this report is to enhance knowledge about value chain model and its effectiveness. Report will
also include information about respective company as well as it will also describe about
evaluation of internal environment of Sainsbury.
MAIN BODY
a) Value Chain Model
Value Chain Model is also known as Porter's Value Chain Analysis which is a business
management concept that is developed by Michael Porter in year 1985 by his book named
Competitive Advantage. Michael Porter defined respective model as a collection of activities
which are generally performed by an organization in order to create value for their customers at
potential marketplace (Daspit and et. al., 2013). Value Chain model helps in creating additional
value through that firm can gain competitive advantage as well as high profitability at
marketplace. In respective model an organization is split into two parts i.e. primary activities and
support activities and it is essential for management to consider both the parts while developing
decision. Through respective model a company management able to understand how they can
add values to their products or services so that they ask more than the cost for the additional
value, that help in generating profit margin.
Along with this there are several sub elements are there which are included in two parts
of respective model like primary activities include inbound logistics, operations, outbound
logistics, marketing and sales as well as service. On the other hand support activities include sub
elements like procurement or purchasing, human resource management, technological
development and infrastructure. Value chain model also help in representing the internal
practices of a firm that are engaged in transforming inputs into outputs so that company can
attain their desire goal and target effectively as well as successfully. In addition to this there are
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numbers of benefits which are gain by a company when they adopt value chain model such as
they can improve their logistics, enhance customers order management, it also lead to increment
on return on investment (Drogalas, Karagiorgos and Arabatzis, 2015). Along with this, there are
also several other benefits attain by a firm such as enhance competition, create high profitability,
lead globalization of supply and productions and many more.
But there are some major limitations of value chain model which are faced by a firm
when they adopt respective model such as some time organization structure is not connected
along with value chain which impact on procedure. In addition to this respective model is also
too linear and sequential, it is not able to fit in all situation and company structure, value chain
model also use info tech and feedback, they also not give due information and many more. So it
is essential for company management to conduct proper analysis of own business structure as
that will help in developing decision related to implementation of value chain model.
b) Company
Sainsbury is listed as third largest supermarket chain at United Kingdom. It is founded by
John James Sainsbury in year 1869 at Holborn, London, U K. It is a public limited company
operating their business operations and functions at retail industry and its head office is located
at Holborn, London, EC 1, United Kingdom. Respective supermarket offer their products and
services through several medium or store such as forecourt shops, hypermarkets or superstore,
supermarket and convenience shop. There are also numbers of subsidiaries of Sainsbury's such
as Nectar, Sainsbury's Supermarkets Ltd., Argos, Sainsbury's Local, Habitat and Sainsbury's
Bank. Vision of respective retail store is to be one of the most trusted supermarket, where people
love to shop as well as work (Our vision, 2020). They make it possible by keeping their
customers in heart of everything they do as well as investing at their stores. Moreover, respective
supermarket and their colleagues also to offer best possible shopping experience to their
customers.
Sainsbury believe that their values makes them different and there values are their
colleagues make the different. Furthermore, another values statements of respective company are
they offer great products and service at fair price as well as they also appraise their customers
and consider them valuable. The respective company operate their business function and
operation in retail or supermarket industry due to which they faced huge competition through
several competitors such as Aldi United Kingdom, TESCO, Morrisons and Associated British
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Food. There are major two shareholders of respective company i.e. Qatar Holding LLC and
Black Rock Inc. (Major shareholders, 2020).
c) Internal environment
Internal environment is consider as component of business environment that include
numbers of elements which are present insider a company and that will impact on the the
decision making of management (Ketata, Sofka and Grimpe, 2015). This will include factors like
culture, machines or equipments, work, climate, members, management practices, management
and many more. Along with this, there are also several elements which influence internal
environment of a firm such as vision, mission, value system, human resource, organization
structure and many more. In context of Sainsbury's also conduct evaluation of their internal
environment as well as for that they adopt model i.e. value chain because that will help them in
focusing on their primary and supporting activities in effective manner. Evaluation of value
chain model in respect of Sainsbury is given below:-
Primary Activities Inbound logistics: The respective procedure related to receiving, storing as well as
distributing inputs internally. It also consider relationships with suppliers in order to
create value at market (Kuratko, Hornsby and Covin, 2014). In respect of respective
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Illustration 1: Value Chain Model
(Source: Value chain model, 2020)

company they have hubs of regional warehouse as well as they outsource their supply
chain by expert firms like Unipart, Allport DHL, CEVA Logistics and so on. They also
implement Just in time model for maintain their supply chain. Operations: It include transforming activities which change inputs into outputs that are
sold to customers (Leonidou and et. al., 2017). This will help in creating value to
operations system. In respect of Sainsbury they process raw materials so that they get end
products which they can launch into market. Outbound logistics: This will include activities related to deliver of products and services
to potential customers. It include storage, collection, distribution system and many more
which may be internal or external to company. Outbound logistics of Sainsbury include
several activities which help them in delivering of products to potential customers after
passing through numbers of different intermediaries. Their respective activity include
handling of material, warehousing, scheduling, processing of order, transporting and at
last delivering of products. Marketing and sales: This will include practices related to marketing products so that
customer prefer their products instead of competitors. In context of respective company
their sales agents as well as marketers plays an essential role because they convince
customers to purchase their products. This firm also use highly attractive and innovative
marketing and sales channels.
 Service: These are consider as activities which are related to maintaining value of
products or services in front of customers after they purchase offerings. The respective
supermarket provide both pre sales as well as post sales services which help in
developing strong customers loyalty.
Secondary Activities Procurement or purchasing: This activity will include finding vendors as well as
negotiating for the best price (McFarlane and Curran, 2016). In respect of respective
supermarket they do effective activities as well as they also have their professional
employees who deal with vendors in order to get best price. Human resource management: It define how an organization conduct recruitment,
hiring, training, motivation, reward system and so on which help in retaining employees
and improving their work quality. Sainsbury have experienced HR team who recruit right
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person at right job as well as they also conduct appraisal, motivational and training
session on regular basis which help in enhancing employees engagement and
performance. Technological development: This is related to managing as well as processing data and
protecting firm's knowledgeable information (Nyakundi, Nyamita and Tinega, 2014). In
context of Sainsbury they adopt new and advance technology which help in providing
quality services as well as products to potential customers.
 Infrastructure: These are mainly consider as support system of a company which help in
maintaining daily activities or operations like accounting, legal practices, general
management and so on. In respect of Sainsbury they conduct their business operations
and business in proper as well as legal manner which help in attaining objective
successfully.
d) Reflection on Value Chain Model
Value chain model is effective for every company because through it they can understand
as well as evaluate their internal business environment in successful manner as well as that will
also help in developing proper decision. In respect of Sainsbury, by implementing value chain
model they also attain several effectiveness,from which some major are given below:- Improve flow of materials and products: By adopting value chain management at
respective company management able to improve flow of materials as well as products
because they able to do accurately forecast of sales and demand of products. Along with
this it will also help them in conducting proper inventory management which minimise
delay. Seamless flow of informations: At marketplace customers demand for real time response
as well as they also want easily access to products and services offer by company by
maintaining their supply chain effectively. So when Sainsbury implement value chain
model effectively they able to improve flow of information which help in fulfilling gap
successfully. Enhance flow of finance: Supply chain management is not consider as improving flow
of products and services but it also consider flow of cash (What Are the Benefits of Value
Chain Management?, 2020). In respect of this, respective company adopt value chain
management which help them in dealing with challenges that are connected with
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financial flow. Along with this that will also help management in figuring out appropriate
solution of issues that are occur at workplace related to finance. Improve vendor management: By implementing value chain model at workplace
Sainsbury able to synchronizing design as well as source teams along with vendors which
help them in ensuring effective outsource of components and subsystem (McFarlane and
Curran, 2016). That are conducted by respective company in order to meet quality,
performance, schedule and many more. This will also help in avoiding several issues
which are related to inventory, design flaw and wastage. Standardized procedure: By implementing value chain model respective company able
to effectively evaluate procedure as well as that will also help in effectively management
of process by ensuring customers feedback and expectations get meet successfully. Along
with this it will also help them in minimising overall operational waste as well as
inefficiencies. Improve profitability: By adopting value chain model respective company able to
enhance their profitability ratio because it will help in minimising wastage, cost of
production or process and time. Through which Sainsbury able to enhance their revenue
and profit margin that lead to overall success.
 Better product research, planning and development: By implementing value chain
model at respective supermarket they able to create cross functional team strategies
which are related to plan, development and deliver of services and products which help in
fulfilling need as well as requirement of customers in successful manner.
These are some of the main benefits of value chain model which are gain by Sainsbury by
analysing their internal environment by respective model.
CONCLUSION
By conducting analysis of above discussed points it can be summarise that for every
company it is essential to conduct evaluation of internal environment because through it they can
understand their effectiveness at the marketplace. For that an organization management may
adopt numbers of theories as well as model such as Value chain analysis which is majorly used
for the evaluating internal environment of a business. Through this management of a firm able to
get numbers of benefits for example it help in reducing time frame of conducting work, it also
help in minimising operating costs and many more.
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REFRENCES
Books and Journals
D'Aquila, J., 2013. COSO's Internal Control Integrated Framework Updating the Original
Concepts for Today's Environment. The CPA Journal. 83(10). p.22.
Daspit, J. and et. al., 2013. Cross-functional team effectiveness: An examination of internal team
environment, shared leadership, and cohesion influences. Team Performance
Management: An International Journal. 19(1/2). pp.34-56.
Drogalas, G., Karagiorgos, T. and Arabatzis, K., 2015. Factors associated with internal audit
effectiveness: Evidence from Greece. Drogalas, G., Karagiorgos T. & Arampatzis K.
(2015). Factors associated with Internal Audit Effectiveness: Evidence from Greece.
Journal of Accounting and Taxation. 7(7). pp.113-122.
Ketata, I., Sofka, W. and Grimpe, C., 2015. The role of internal capabilities and firms'
environment for sustainable innovation: evidence for G ermany. R&d
Management. 45(1). pp.60-75.
Kuratko, D. F., Hornsby, J. S. and Covin, J. G., 2014. Diagnosing a firm's internal environment
for corporate entrepreneurship. Business Horizons. 57(1). pp.37-47.
Leonidou, L. C. and et. al., 2017. Internal drivers and performance consequences of small firm
green business strategy: The moderating role of external forces. Journal of Business
Ethics. 140(3). pp.585-606.
McFarlane, J. and Curran, R., 2016. Business Organizations The Internal Environment.
Nyakundi, D.O., Nyamita, M.O. and Tinega, T.M., 2014. Effect of internal control systems on
financial performance of small and medium scale business enterprises in Kisumu City,
Kenya. International Journal of Social Sciences and Entrepreneurship. 1(11). pp.719-
734.
Online
Our vision. 2020. [Online]. Available through:
<https://www.about.sainsburys.co.uk/about-us/our-vision>.
Major shareholders. 2020. [Online]. Available through:
<https://www.about.sainsburys.co.uk/investors/major-shareholders>.
Value chain model. 2020. [Online]. Available through:
<https://www.researchgate.net/figure/Porters-value-chain-model_fig1_319114871>.
What Are the Benefits of Value Chain Management?. 2020. [Online]. Available through:
<https://smallbusiness.chron.com/benefits-value-chain-management-70083.html>.
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