Contemporary Management Issues in Sainsbury: Drivers of Change and Strategic Response

This report discusses the impact of drivers of change, such as Brexit and technological advancements, on Sainsbury's operations in the grocery retail industry. It includes a PESTLE and Porter's Five Forces analysis of the company's business environment and evaluates the strategic response of Sainsbury to these drivers of change. The report also provides recommendations for enhancing the company's responses.

Contemporary Management
Issues
1

INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................4
Two drivers of change............................................................................................................4
How Sainsbury's has strategically responded to these drivers of change with consideration for
the nature of the pressures for change....................................................................................9
Recommend how the organisation might enhance its responses highlighted above............10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
Business environment is inclusive for number of factors, forces and elements. It is essential
for an organisation to continuously analyse these forces in order to conduct activities and
operations in effective manner while ensuring profitability and competitiveness (Fagetan, 2021).
Contemporary management include planning, leading, organising and controlling activities of
organisation in order to accomplish overall goals and objectives. In this with help of examination
of contemporary management issues organisation can identify the forces that can impact on
strategic decisions and growth of company. Change is a dynamic element that have tendency to
benefit and destruct organisation. For this, leaders and managers with the company are required
to build contemporary management skills by providing training and development to workers in
order to enhance their performance and make operational improvements. Different type of
training allows leaders and managers to develop expertise in progress and documenting policies.
Contemporary management mainly focused upon working in an effective manner in order to
manage change. Contemporary management skills benefit to manage individuals within an
organisation to accomplish tasks, establish discipline and assure direction and plan consistency
with the help of establishing a culture of innovation and adoption. This will benefit organisation
to analyse change and further implement strategies to for higher growth and profitability.
Present report is conducted on Sainsbury which is operating its business services in retail
industrial sector. Company was founded in the year 1869. Report discusses takeover of Argos by
Sainsbury in order to boost trading and ensure higher competitive growth in market segment.
This report include discussion upon key dynamic forces which impact on business and use of
effective decision-making tool to address those temporary drivers of change. Significant
recommendations are also being included in this report.
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MAIN BODY
Two drivers of change
Business environment is inclusive of number of factors, elements or drivers that are having
tendency to impact strategic decision making of organisation. Sainsbury is operating its business
functioning as the United Kingdom second largest supermarket chain. This organisation offers
wide range of products and services to consumers and has been active since 1869. With
approximately more than 1500 stores across United Kingdom Sainsbury offer products and
services to consumers. It has been identified that there are number of driving forces in business
environment which is creating challenge in front of company in terms of higher competitiveness
in market. Evaluation of the driving forces is being done with the help of pestle and Porter five
forces analysis which is a strategic tool.
PESTLE
Political:
Without any doubt the biggest political factor which is creating challenges for Sainsbury
decision making process is Brexit. This is a major driving force which is essential for company
to overcome, as it is affecting organisation cost to acquire raw material and other inventory, as
before Brexit Sainsbury can easily acquire raw materials and other essentials from suppliers
around European Union. After Brexit it become difficult for super market to import product from
EU, as it significantly increases the cost of foreign product which will directly impact upon
consumers. Along with this it has been identified that Brexit also increased import rates which
automatically lead towards rising the end product pricing. This will affect large base of
consumers as they will move towards cheaper option (De Lyon and Dhingra, 2021). It has been
identified that increase in foreign product and import will also make Sainsbury to increase the
cost of operations in order to perform business operations. From the analysis of this factor, it has
been identified that Brexit is emerging as biggest political factor and acting as a driver of change
which is important for organisation to emphasize upon in order to conduct business efficiently.
Economical:
It is an essential factor of pestle analysis which includes elements related to interest,
inflation rate, working hours, employment, cost-of-living etc. Sainsbury is majorly operating its
business operations from United Kingdom and have more than 1500 stores in this province. It
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has been identified that United Kingdom is having stable economic platform and consumers
within this country have higher income that provides economically develop platform for
Sainsbury to operate their business functions. Along with this it has been identified that being
second largest chain of supermarket Sainsbury is having number of employee stores those are
contributing in company growth and development (Fernandes and Winters, 2021). To overcome
the fierce competition Sainsbury, fulfil higher salary expectation of workers and offer various
forms of benefits and compensation in order to retain workforce for longer period of time.
Furthermore, it has been underlined that after Brexit number of individual working in European
Union have probability shift in United Kingdom which will significantly increase labour force
within country (Rodger and Stephan, 2021). This creates an opportunity for Sainsbury to attract
new employees within an organisation in order to add value for organisation in order to perform
business operations in market.
Social:
This factor of pestle analysis includes elements such as population growth rate, career,
attitude, health and safety, age distribution, education level, average disposable income level, etc.
In order to serve consumers in effective manner Sainsbury emphasize upon analysing actual
needs and demands of consumers with the help of survey and other techniques. This benefit
company to satisfy consumer needs and demands accordingly (Gottschalk, 2021). Furthermore, it
has been identified that United Kingdom is an economically developed country with higher
education level. It has been underlined that average disposable income level of individuals in
United Kingdom is also high. By empathising upon this opportunity Sainsbury continuously
perform their business while considering consumer behaviour in order to strengthen their
consumer base and enhance their loyalty towards company to retain them for longer period of
time. Sainsbury efficiently ensures that company meet consumer behaviour demand evidently in
order to ensure higher competitiveness in industry.
Technological:
There are continuous advancements in technology in terms of different aspects such as
analytics use of Artificial Intelligence and Big Data principals which is acting as a driving force
and increasing competition in market. It has been that in retail industrial sector technology is
advancing at higher rate in which number of organisations are taking use of high technology to
provide consumer qualitative services. Furthermore, it has been evaluated that use of technology
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is also facilitating business organisations to build high accurate model in order to perform their
business operations in effective manner. Technological destruction is also increasing the trend of
online shopping which is acting as a major driving force. In this, competitors of Sainsbury such
as Tesco is providing efficient online shopping experience to consumers in order to provide them
comfort (Harrison, 2021). It has been evaluated that the advent of e-commerce in grocery retail
market and use of technology is transforming the manner of business operations. Online
shopping and technological advancements are increasing the sense of competition in market. To
overcome this driving force Sainsbury is required to implement effective techniques tools and
technologies in order to enhance competitiveness in industry.
Legal:
This factor of pestle analysis included as elements related to import and export, taxation,
access to material, changes to legislation impacting employment employees, health and safety
laws, etc. With having different layers of decision-making Sainsbury ensure that any change and
modification in legal aspects for retail industrial sector in United Kingdom is being effectively
adopted by company without any delay (Kalaitzake, 2021). With the quickly changing needs of
consumers Sainsbury ensures that all the legal rules and regulation is being effectively adopted in
business structure without any delay in order to make sure that they provide better experience to
consumers and satisfy employees in effective manner. It has been identified that the legal
ramifications to due to Brexit is also acting as a major factor that can affect Sainsbury. In this
company is required to make changes in number of its policies.
Environmental:
Being a large-scale organisation Sainsbury ensures that their business operations does not
affect environmental conditions in any way. For this company emphasize upon current climate
and environmental conditions in order to ensure that company undertake efficient step to curb
their wastage and carbon foot print (Kohnert, 2021). Sainsbury focus upon adopting technologies
to eliminate plastic waste and reduce carbon footprint in order to contribute in society.
Above pestle analysis of Sainsbury provide a deep insight into their current condition in
market place. From the above analysis it has been identified that the two major driving forces of
change which is creating challenge in front of Sainsbury is Brexit and online shopping options
and new technologies. Both of these factors are acting as driver for change which is essential for
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Sainsbury to effectively response in order to perform business operations with higher
competitiveness in grocery retail industrial sector.
Porter’s Five Force
In a business environment there are a number of elements which is acting as a driver of
change and is essential for organisation to evaluate. In this company can take advantage of
different types of effective tools and methods to analyse these forces in a well-defined and
effective manner, as these drivers of change have tendency to impact upon overall business
operations and profitability of company. Sainsbury is leading organisation in retail industrial
sector which is offering high quality services and products to consumers. In this company
regularly emphasize upon evaluating the drivers of changes and further implement strategies to
adopt them in organisational work place premises in order to maintain its competitiveness in
industry. Mentioned below analysis of business environment in which Sainsbury is operating is
business is done with the help of Porter five forces analysis. Porter’s Five Force model was
coined by Porter in order to assist organisations to emphasise upon the effectiveness of firm in a
respective industrial sector. Porter’s Five Force model directs in attractiveness of organisation in
the field in which they are operating their business functions:
Threat of new entrants
Threat of new entrants is low in retail industrial sector in the provinces of United
Kingdom. It has been identified that this sector is mainly controlled by four pig players which
include Asda, Tesco, Sainsbury and Morrisons (Korir, 2021). All these big market players are
offering high quality products and services to consumers in competitive price range. This
indicates that threat of new entrants is low in this industry. In order to overcome this threat
Sainsbury is required to make high investments in order to compete with these big players.
Threat of substitutes
Threat of substitutes is high in retail industry. Grocery retail industry is highly
competitive in the provinces of United Kingdom. In this Sainsbury as a supermarket faces lot of
intense competition from its competitors like Tesco, Asda and Morrisons. This indicates that
these players offer food substitute as well as non-food products in marketplace which lead
Sainsbury to face stiff competition.
Bargaining Power of buyers
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Bargaining power of buyers in grocery retail sector in the provinces of United Kingdom
is high. Consumers of UK have strong power of bargaining, as Tesco, Asda and Morrisons are
offering high quality products and services in affordable price range which competes with
Sainsbury’s strategy (Küçük, Lenoël and Macqueen, 2021). It has been identified that consumers
are having high bargaining power which indicates that they have easy access and power of
switching towards other supermarkets. It has been underlined that consumer in United Kingdom
in this industry are mainly controlled by price as well as quality. Organisations who offer high
quality products and services in affordable price range get the benefit of large page of consumer
segment.
Bargaining Power of suppliers:
The supplier’s bargaining power is low in retail industrial sector due to the existing
number of suppliers operating in this industry (Veljanovski, 2021). However, it has been
identified that power of suppliers have tendency to increase in grocery retail industry, as due to
Brexit companies are facing difficulties to acquire raw material and other supplies from
European Union.
Competitive rivalry
The United Kingdom grocery retail industrial sector is highly competitive, as Sainsbury
is facing intense and strong competition from other supermarkets in industry, those who are
offering similar form of products and services to consumers. Big rivals of Sainsbury like Tesco,
Asda etc cut down the prices which keeps on increasing the intensity of competitive force within
industry. Furthermore, it has been identified that due to Brexit this competitiveness is
significantly enhanced as in this organisation in the provinces of United Kingdom majorly
emphasize upon developing strong base of consumers (MacRae, Guerrina and Masselot, 2021).
In order to develop a loyal consumer base for long term growth and rivals of Sainsbury are
taking advantage of technology in order to fulfil the needs and requirements of online shopping
of consumers.
According to the above analysis of Porter’s five forces which determine the industry
analysis of Sainsbury in grocery retail industrial sector. It has been identified that company is
facing the threat of substitute, bargaining power of suppliers, bargaining power of consumers and
intensity competition due to Brexit (Milbourne and Coulson, 2021). Brexit provided an
opportunity to suppliers to increase price as there are number of new legislations which are
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required to be abide by organisation in order to acquire raw materials from European Union.
Along with this rate of taxation and other charges is also levied which can increase business
organisation cost such as transportation etc. From the analysis it has been identified that rivalry
among existing players is also increasing which is a majorly impact of Sainsbury, as in this
leading player in this industrial sector are looking forward to earn sustainable profit by providing
different type of options to consumers such as online shopping experience. From this analysis it
has been identified that Brexit and Technology is acting as a major driver of change which is
essential for Sainsbury to overcome in order to enhance competitiveness in industry.
How Sainsbury's has strategically responded to these drivers of change with consideration for the
nature of the pressures for change
Business environment is inclusive of number of factors and driving forces which keeps on
changing on dynamic basis. These drivers of change are required to effectively analyse by
organisation with the help of proper evaluation of business environment in order to overcome
them in order to conduct business operation and ensure sustainability in industry. In terms with
change, it has been identified that while considering the nature of pressure for changes Sainsbury
analysed that Brexit can disrupt business operations if effective measures were not undertaken in
time effective manner (Razzak, Blackburn and Saridakis, 2021). Along with this it has been
evaluated by company that competition is intense in grocery retail industry in which rival firms
are offering similar form of products and services to consumers in order to increase
competitiveness. In this it has been evaluated that Sainsbury strategically responded to these
drivers with the takeover on Argos in order to boost trading and profitability (Argos takeover
boosts Sainsbury's trading. 2018). It has been underlined that half yearly results at Sainsbury
have been significantly boosted by its takeover of catalogue retailer Argos. In addition to this, it
has been underlined that cost savings also improve profitability of company and by adding are
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goes outlets to Sainsbury stores significantly increase in trading intensity is measured. Being the
second largest supermarket chains Sainsbury aim towards satisfy consumers and become their
first choice. By evaluating negative impact of Brexit upon company’s different aspects such as
cost of transportation, cost of raw material etc Sainsbury overcome this driver of change with the
help of proposing merger with Asda. This played a big game changer for Sainsbury as it
increases company ability to acquire a greater number of consumers and enhance
competitiveness in industry. However, it has been identified Sainsbury grocery super market
sales of Sainsbury still lag behind against its rival. As per the industrial factors rivals of
Sainsbury are taking advantage of technology and tools in order to provide flexible and
convenient experience to consumers. In this rival of Sainsbury such as Tesco, Asda are offering
online shopping experience to consumers which is enhancing their competitiveness in industry. It
has been identified from the above analysis that by evaluating market forces changes with the
help of in-depth research Sainsbury identified the impact of Brexit on business operations
strategies. To respond towards the driver of change Sainsbury proposed merger with Asda which
provide organisation significant opportunity to enhance its profitability and business industrial
growth.
Recommend how the organisation might enhance its responses highlighted above
Sainsbury is a second largest chain of supermarkets in the provinces of United Kingdom.
From the analysis of Pestle and porter five force model it has been identified that the major
driving force of change which have tendency to impact strategic decision making and operations
of Sainsbury is Brexit and Technology, in which rivals of Sainsbury such as Morrisons, Tesco
and Asda are offering online shopping experience to consumers in order to provide them
comfortable and convenient services. In this it is essential for Sainsbury to emphasize upon
strategic measures to overcome the above identified forces of change. It is essential for
Sainsbury to focus upon taking advantage on emphasizing and applying all the relevant
legislation subjected to grocery retail sector can assure that they perform their business
operations under proper law. Along with this Sainsbury with the help of efficient decision
making by being second largest chain of supermarket can develop strong relationship with
suppliers. This will help Sainsbury to overcome the negative impact of Brexit and in which they
can acquire affordable raw material within UK. This will help company to provide high quality
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products and services to consumers in cost effective manner. To effectively overcome the
adverse impact of Brexit on business operations with the help of emphasizing and treating
employees in a well-defined and effective manner. Along with this with the help of having
access of skilled workforce Sainsbury can conduct their business operations even in complex
situation. Skilled and potential employees have a tendency to adopt change in significant manner
and effectively respond to them to remain in competitive market segment.
Furthermore, it has been underlined that Sainsbury is recommended to make investments
in technology in order to provide seamless online shopping experience to consumers, as rivals of
Sainsbury is taking use of high technology in order to provide convenient shopping experience to
consumers which is increasing competitiveness in industry. In this Sainsbury is recommended to
make investment in convenient shopping in order to provide seamless consumer experience and
consumer service. In this with the help of taking advantage of strategies including new product
competitive pricing and categories and improved efficiency Sainsbury can enhance loyalty
among consumers. Sainsbury is recommended to spend on digital channel more than three times
in order to make sure that consumers are served with seamless services via digital platforms in
efficient manner in affordable price element. Consumers nowadays are mainly looking towards
convenient shopping experience. In this Sainsbury can take advantage of its merger with Argos
in order to convert their stores into a digital format in order to enable shoppers to order goods
through in-store screen as well as collect online store in stores. Sainsbury is recommended to
provide consumers products and services with expected quality to consumers through website, as
with the help of this company can improve consumer experiences and can enhance their overall
satisfaction level. With the help of emphasising a new technology Sainsbury can we invest in
three technological areas which include faster supply chain in order to speed up the time which
takes for products to make in store shelves, coupon at technology which enable Sainsbury to
print targeted coupons on the product which consumer wants to buy and improve self-service
checkout as to reduce que time.
Thus, with the help of analysis it has been identified that the two major forces of change
Brexit and use of technology to provide seamless online shopping experience to consumers is
acting as main elements which is increasing sense of competition in grocery retail industrial
sector in the provinces of United Kingdom. In this to increase competitiveness in industry
Sainsbury by emphasizing upon all the above recommended measures can effectively enhance its
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response in efficient manner. All recommended measures will benefits Sainsbury to enhance its
competitiveness in industry and provide seamless shopping experience to consumers. This will
benefits Sainsbury to enhance the effectiveness of their business operations and increase overall
satisfaction of consumers through which company can increase in competition in industrial
sector in United Kingdom. Sainsbury is required to invest in technology in order to boost sales
and undertake effective measures with the help of taking an opportunity of its merger with Argos
to enhance company capability to acquire more consumer base and ensure long-term
sustainability and profitability in industry.
CONCLUSION
As per the above-mentioned report it has been concluded that grocery retail industry is
facing intense competition rivalry among existing firms. To overcome this competition in order
to enhance competitiveness in industry business organisation with the help of identifying the
forces of change get benefit in implementing effective strategies, through which these drivers of
change can be addressed. In order to evaluate the driving forces PESTLE and Porter five force
act as a strategic management tool through which organisation can evaluate each and every
aspect in business environment and can further evaluate these factors impact upon business
decision making. In order to successfully operate in business environment, it is essential for
organisation to make sure that strategies will benefit consumers at greater extent rather than only
acquiring profitability. This will help company not only ensure sustainability in industry but will
also benefit them to restrict consumers to switch their preferences over other rivals in industry.
From this report it has been identified that Brexit posed a challenge for retail industrial sector as
most of the raw materials or other essential materials come from European Union. Due to Brexit,
there is negative impact upon company operational sector. Furthermore, it has been identified
that emergence of new technologies in which consumers mainly prefer online shopping options
is also emerging as a driver of change. In this consumer wants time saving and convenient
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advantages. For this with help of implementing and developing technologies business
organisation can satisfy consumers at greater extent while assuring showing higher
competitiveness in industry.
REFERENCES
Books and Journals
Brooks, C and et. al., 2021. A Review of Food Fraud and Food Authenticity across the Food
Supply Chain, with an Examination of the Impact of the COVID-19 Pandemic and
Brexit on Food Industry. Food Control, p.108171.
De Lyon, J. and Dhingra, S., 2021. The Impacts of Covid-19 and Brexit on the UK Economy:
Early Evidence in 2021. Centre for Economic Performance, London School of
Economics and Political Science.
Fagetan, A.M., 2021. The Regulation of Hedge Funds in the United Kingdom and the Impact of
Brexit. In The Regulation of Hedge Funds (pp. 241-282). Palgrave Macmillan, Cham.
Fernandes, A.P. and Winters, L.A., 2021. Exporters and shocks: The impact of the Brexit vote
shock on bilateral exports to the UK. Journal of International Economics, 131,
p.103489.
Gottschalk, S., 2021. From Black Wednesday to Brexit: macroeconomic shocks and correlations
of equity returns in France, Germany, Italy, Spain, and the United
Kingdom. International Journal of Finance & Economics.
Harrison, C., 2021. Excess returns or excessive risk? Environmental impact in the age of news
overload.
Kalaitzake, M., 2021. Brexit for finance? Structural interdependence as a source of financial
political power within UK-EU withdrawal negotiations. Review of International
Political Economy, 28(3), pp.479-504.
Kohnert, D., 2021. The Brexit hammer: repercussions for the US and transatlantic relations in
times of Corona. Available at SSRN 3910290.
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Korir, L and et. al., 2021. Current and Emergent Economic Impacts of Covid-19 and Brexit on
UK Fresh Produce and Horticultural Businesses. arXiv preprint arXiv:2101.11551.
Küçük, H., Lenoël, C. and Macqueen, R., 2021. UK economic outlook: Brexit Britain in Covid
recovery ward. National Institute Economic Review, 255.
MacRae, H., Guerrina, R. and Masselot, A., 2021. A Crisis is a Terrible Thing to Waste:
Feminist Reflections on the EU’s Crisis Responses. International Studies, 58(2),
pp.184-200.
Milbourne, P. and Coulson, H., 2021. Migrant labour in the UK’s post-Brexit agri-food system:
Ambiguities, contradictions and precarities. Journal of Rural Studies, 86, pp.430-439.
Razzak, B.M., Blackburn, R. and Saridakis, G., 2021. Employees' working life and performance
of UK ethnic minority restaurants: a qualitative approach. Benchmarking: An
International Journal.
Rodger, B. and Stephan, A., 2021. Brexit and Competition Law. Routledge.
Veljanovski, C., 2021. Calculating Cartel Damages. Research Handbook on Cartels, Peter
Whelan, ed., Edward Elgar, Forthcoming.
Online
Argos takeover boosts Sainsbury's trading. 2018. [Online]. Available
throughhttps://www.bbc.com/news/business-46135274
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