Strategic Management Analysis of Sainsbury: PESTEL, SWOT, VRIO, McKinsey's 7S and Porter's Five Forces

This report provides a strategic management analysis of Sainsbury, including PESTEL, SWOT, VRIO, McKinsey's 7S and Porter's Five Forces analysis. It examines the impact of macro environment, internal capabilities, competitive forces and strategies for improving market position.

Business strategy

Contents
INTRODUCTION.............................................................................................................................3
P1 Apply the appropriate framework analysis the influence and impact of the macro
environment in an organization and strategies...............................................................................3
M1 Analyse the macro environment to identify and inform the strategic management decisions.
........................................................................................................................................................7
P2 critically analyse the internal environment and capabilities of an organisation by using
appropriate framework...................................................................................................................7
M2 Evaluate the internal environment to assess the strength and weakness of organizational
internal capability...........................................................................................................................9
P3 Apply the Porter's five forces to evaluate the competitive forces in given market sector for
the chosen organisation..................................................................................................................9
M3 Examine appropriate strategies for improving the competitive edge and market position on
the basis of outcomes...................................................................................................................10
P4 Applying a range of models, concept and theories, interpret and devise strategic planning for
chosen organization.....................................................................................................................10
M4 Produce strategic management plan with tangible and tactical strategic priorities and
objectives.....................................................................................................................................12
CONCLUSION................................................................................................................................13
REFERENCES................................................................................................................................14

INTRODUCTION
In strategic management, different aspects are used to produce organizational plans. All the aspect
make enable the company to produce different strategies prioritize and objectives that assure
betterment of the business organization. It helps the companies to formulate effective strategic
plan that make enable them to gain competitive advantages (Augustyn, Seakhoa-King and Mason,
2022). The firm considered in this report is Sainsbury which is second biggest chain of the
supermarket in UK. It was incorporated in 1869. This report will be based on the impact of
external environmental factors, organizational external and internal capabilities, evaluation of
Porter's five forces and different range of the models, concept and theories that interpret and
devise the strategic planning of an organization.
P1 Apply the appropriate framework analysis the influence and impact of the macro environment
in an organization and strategies
PESTEL Analysis
This framework provides great details about the operating challenges organisational faces
in the prevalent external environmental other than the competitive forces. These factors have
direct impact on the business in term of political, technological, economic and many more. In
context of the Sainsbury, its PESTEL analysis is mentioned below:
 Political- This factor play an important role in identifying those element that impact
company's long term profitability in market. It include the different polices made by
government. In UK, rate of the debt on customers and government is extremely high that
may have a direct impact on consumer's attitude and business conditions that experience a
great pressure. In this situation, Sainsbury is not just operating but also has to keep their
business running continuously
 Economic factors- Macro environmental factors such as saving rate, foreign rate, interest
rate, inflation rate and economic cycle identifying the aggregate investment and demand
within an economy (Bai and Liesch, 2022). These factors impact the organisational
competitive advantages. Economic concern of Sainsbury is rise in the salary expectation.
As other supermarket, Sainsbury's employs many workers to work simple task including

stocking shelves and manning the checkout. In this case, if respective company pays its
employees more then it will increase expenses of this company.
 Social factors- It impacts the organization in term of social culture, and the ways of doing
business activities. The attitude and belief of society play essential role in the
organizational business practices. There is a clear socio cultural trend toward the healthy
eating. Now, unhealthy food in not in trend, while the body conscious salads, snacks and
shakes are taking over. Hence, this trends of healthy diet change is very important for
Sainsbury, since adopting to customer's requirement is imperative for the long term
success.
 Technological factors- This component disrupt several business industries on a large
scale. As the technology is changing very rapidly, it impact the business organization in
many ways (Crowder, Roohanifar, and Brown, 2022). Like the other supermarket in UK,
Sainsbury also offer the online shopping option as customer want their groceries at home
with comfort. The respective company is able to provide latest technology from their
vehicles.
 Legal factors- This element play vital role in the operation of any business origination as
all enterprise have to follow the rules and regulation related to trade. If companies do not
comply with government's guidelines then they get penalized. Policies and legislation by
the government impact the company's performance in a direct way. For instance,
government has made a new law reading more tax on the advertisement of highly
processed and fatty foods which has been adopted by Sainsbury's by modifying its
products
 Environmental factors- As different market and country have different norms that
influence the company's profitability. Every nation contains different laws towards the
environment. The prime motivation of an organization should be socially responsible to
keep the environment safe and healthy. Therefore, Sainsbury has provided itself as a
socially responsibly firm by introducing the ' Reduce, Reuse and Recycle” approach which
are very efficient to manage the waste, packaging and recycling.
SWOT analysis of chosen organization

This tool is used by the organization to determine and examine the organizational internal
strength and weakness and the external opportunity and weakness the help them to develop certain
strategic goals. In relation to Sainsbury, its SWOT analysis is mentioned below:

Strength Weakness
 Sainsbury is a listed company under
constitution of London Stock Exchange
in which people can buy their shares
easily.
 The respective company has adopted an
innovative strategy against its rivals.
This strategy pit each product which are
sold by its competitors (Firth and
Rahimi, 2022).
 Due to pandemic, there is a shortage of
the supplies. In this situation, Sainsbury
had to increase its product's price as a
result, sale price dropped to great extent.
 This company is facing a huge financial
losses since last years that result in a
decline in its annual revenue and profit.
Opportunities Threats
 Sainsbury has established a large
network in UK, that witnesses a great
opportunities for this company for
developing new income and extra profit.
 The company has opportunity to expand
its business in other market by merge
with other big multinational companies.
 Sainsbury is facing a neck to neck
competition as its competitors develop
new technology which is a big threat for
respective company.
 The legal standard and new rules and
regulation have created major setback
for the Sainsbury in its business
operational activities.
Stakeholder analysis
 High power with high interest- These stakeholders of Sainsbury are very important as
they get priority with the project's progress. In this, the CEO, CFO and other opt level
authority of company are included.
 High power with low interest- These stakeholder influences the company, but they have
no interest in company's project. In these stockholders of Sainsbury, its skilled staff and
other promotional department are involved.
 Low power with high interest- The Company should inform these stakeholders regularly
and make sure that they are not facing and difficulties in a project (Kapadia and et. al.,
2022). In these stakeholder of company, their workers and the suppliers are involves.

 Low power with low interest- Sainsbury monitor their these stakeholders by excessive
communication. It includes the company's customers.
M1 Analyse the macro environment to identify and inform the strategic management decisions.
Sainsburyis operating its business practices in UK. This company is running its business
in a highly competitive environment. Through the PESTEL analysis, company's weakness and
strength has been identified. When it comes to the social, political, technological, legal and
environmental condition of organization, it all is supporting by several external strength and
opportunities at the same time. Sainsbury is having a specialization in convenience shopping and
great food value (Kocaman, 2022). This company mainly focus on its target audience that help
in targeted more and more customers. The respective company impacted by some political
elements but due to the implementation of favorable strategies it is able to cope up with them.
P2 critically analyse the internal environment and capabilities of an organisation by using
appropriate framework
VRIO analysis- This is an internal analysis that helps and allows the organisation to
identify the resources and their capabilities that give them a sustained competitive advantages. In
context of Sainsbury, its VRIO analysis is discussed below:
 Valuable- Resources must be valuable, so that it can provide some sort of benefit to the
organisation. Sainsbury is a leading organization in the market due to which its reputation
is considered as a valuable resource.
 Rare- If resources are uncommon and only some few organizations can acquire them then
those resources are considered rare. Sainsbury's customer rating is very high that means it
has a very strong customer base which is very rare as mostly organization has has not an
excellent customer rating.
 Imitable- If resources are extremely expensive for the organization to acquire them then it
become hard to imitate. In relation to Sainsbury, its imitable resource is company's brand.
Mostly people are aware about brand of that organization. This resource is very hard to
imitate as every organization are not able to establish such brand recognition.
 Organization- The company should effectively assemble and co- ordinate its resources for
organized to capture value (Mesjasz and et. al., 2022). Sainsbury has organized its
company very well as it has adopted an effective leadership strategy that allow respective
firm to implement its strategic decisions well.

McKinsey's7s for Sainsbury
There are 7 soft components of the McKinsey's 7S models that include, style, staff,
strategy, skill and many more. All these are related to people in the organisation. In context of the
Sainsbury, its 7 soft element are mentioned below:
 Strategy- Sainsbury needs to create a balance between the short run costing savings and
protecting its competitive advantages. The respective company should avoid the cutting
cost which can outcome in the delivery of inferior delivery of product and services.
 Structure- Sainsbury needs to focus on the diversifying suppliers geographically so that
geopolitical, climate related and other major disruption do not influence long term survival
of respective company.
 System- Sainsbury should mainly focus on the customer relationship, data visualization,
risk management, web app optimization and many more (Quinteiro, 2022).
 Staff- At present, around 175000 employees are working in Sainsbury company and all of
them mange the activities effectively set by respective organization.
 Skills- Without having talented and skilled employees, Sainsbury cannot able to come the
present position. For this respective company need more talented and skilled employees.
The worker's skill can be enhanced by providing them training.
 Style- It refer to leadership style that is required in physical location. Sainsbury believes in
the democratic leadership style which is very efficient as it involve all the workers.
Therefore, respective firm has adopted democratic leadership for its employees.
 Shared values- Business has build an effective and successful business model on the basis
of their core values, mission and vision. Sainsbury's management believes that the values
should be maintained and shared among all workers to have some advantages.
Opportunities should be given to employees so that they can share their ideas for
improving the process.
M2 Evaluate the internal environment to assess the strength and weakness of organizational
internal capability
From the analysis of internal environment, it is identified that Sainsbury’s strength lies within
high quality product and customers relationship (Yilmaz, 2022).

The benefit of this strength is that they support the Sainsbury to attract new customers and also
retain old ones in effective possible manner. McKinsey's 7S is used by the respective company to
find out level, sources and forces of the internal powers. The company has strategy to work with
an ultimate efficiency and so on. Company has their share vision that has been carried on to other
parties within system. They have also skilled workers with great understanding in different field
that make enable the Sainsbury to arrange issues.
P3 Apply the Porter's five forces to evaluate the competitive forces in given market sector for the
chosen organisation
The model of Porter's five forces is helpful for the company's manager as it aid them to
understand the organisational internal capability and impact of different internal elements. In context of
Sainsbury, its porter's five forces are depicted below:
 Threat of new entrants- This treat always lies within market for which the business
organisational need to be ready to face the competition. Sainsbury is facing challenges
given by its competitors or rivals and there is dew scope to have threats from the new
entrants in market.
 Power of the buyers- In relation to Sainsbury, customer's buying power is very high as
there is much other organization like Sainsbury (Roxas, 2022). So buyers have option to
switch on other brands that provide same service at cheaper price with quality.
 Buying power of suppliers- As there are various similar organisation like Sainsbury, due
to which it paves the suppliers to take benefits and enjoy more bargaining power as the
scope to move into some another organization.
 Substitute product- In market, several substitute product are available that create scope
for customer to switch on other substitute product.
 Threats of rivalry- Existing rivals of Sainsbury are very competitive and threats are also
obtaining on regular basis to set the price and bring some new products in market.
M3 Examine appropriate strategies for improving the competitive edge and market position on the
basis of outcomes.
To improve the market position and competitive edge, it can be advised that the
differentiation and innovation strategies are best that can be employed by Sainsbury. By Porter's
five forces, it is analyzed that the increasing new entrants and competition are biggest threats for
respective company. To overcome and deal with these challenges, Sainsbury can emphasize more

on carrying out the differentiation in their product and services. This company can focus more to
develop and offer some innovative products and services those now other rivals in market
offering. For the respective company, differentiation strategy is very effective to gain competitive
advantages over the other players who are operating in the marketing.
P4 Applying a range of models, concept and theories, interpret and devise strategic planning for
chosen organization
It can be stated that Bowman extended model and Poretrs generic strategy are two essential
model that can be used by the company to understand their strategic positioning within market. In
relation to Sainsbury, porter's generic strategy and Bowman are discussed below:
Porter's generic strategies
 Cost leadership- This strategy provides the ideas about pricing policy. In this system, a
company set price to do competition but after assuring a strong profit structure (Schänzel,
2022). In this, profit and competition can be balanced as per the system,.
 Differentiation strategy- It is another effective strategy in which product of a company
will be launched within market with some variation. The variation helps the company to
implement the differentiation strategy.
 Focus strategy- It helps the company to look into particular market type. In a competitive
market, this strategy is not so efficient and effective. This strategy is also not suitable for
Sainsbury.
For Sainsbury, the diversification strategy will be suitable and important strategy. In
differentiation theory, various product ranges will be established. If Sainsbury does not get
success in it, then they may suffer a big loss of the market share. By adopting this strategy,
Sainsbury can product a unique product to grab attention of new customers. It can add improve its
food product with some new variation in term of health benefits.
Ansoff matrix
Organisation uses this model to analyse and plan effective strategies for business growth
(Schlegelmilch, 2022). In relation to Sainsbury, there are four strategies of Ansoff which are
mentioned below:
 Market penetration- It involves an increasing in the existing market share. It deals with the
organization selling their current product to the current market. This strategy is less risky.

Sainsbury has adopted this strategy to grow in industry when Asda and Tesco came in
competition. It helps the company to enhance their profit margin.
 Product development- In this growth strategy, a company introduce a new product for current
market and customers’ base. Sainsbury realize to follow this strategy right after Tesco when
they introduce the Tesco metro. Sainsbury has also introduced its “Sainsbury Central Format.”
This project of company offer new facilities for the customers.
 Market development- This strategy suggest the organisation to enhance their product’s sales
in to a new market. Sainsbury should also expand its business within a new market especially in
international market. Sainsbury should increase their service of holidays, credit cards,
insurance, banking and many more.
 Diversification- This strategy is risky for the organisation in their expansion. This strategy
deals with the launching of a new product by company where organisation never operated
before (Schühly, 2022). Sainsbury was dealing in grocery retailing initially, but later its start
to own clothing and it also diversified itself in financial market and many more.
Bowman extended model
As per this model of the strategy, Sainsbury is available with the eight different strategies that
cane be considered by company’s brand to gain the competitive edge over its other rivals. In relation to
Sainsbury, the strategies and their applications are discussed below:
 Low price and low value added- In this, Sainsbury is required offering those product and
services that delivers a low value at the low price.
 Low price- In this, respective company need to attain the cost reduction so that they can offer
the product and services at a low price to its customers.
 Hybrid- Here, Sainsbury will be required to give emphasis in integration fee aspects of the low
price and few aspects of the differentiation (Stangl, 2022).
 Differentiation- According to this strategy, Sainsbury needs to emphasize on providing the
services and product that are innovative with a highest perceived value.
 Focus differentiation- Here, the brand of respective company require positioning their product
a price level that are highest in respective industry to attract more customers or audience.
 Risky high margins- In this strategy, Sainsbury need to offer services and product at high price
without offering the additional value to their customers.

 Monopoly pricing- This strategy is very useful when only single business is operating in
market and it has no competitors in market. In this, Sainsbury can charge a high price for its
customers in the exchange of services and goods.
 Loss of the market share- According to this strategy, Sainsbury will be needed to provide the
service and product of higher vale in the comparison with competition.
M4 Produce strategic management plan with tangible and tactical strategic priorities and
objectives.
Vision- Sainsbury’s vision is to become most trusted retailer in market where customer loves to
work and shop. It includes the treading public fairly.
Mission- Its mission is to be customer’s first choice for the food and great service at the
competitive cost through fast, together and simple working.
Competitors analysis- It has be analysed that currently, the competition is relating industry is very
intense, therefore, Sainsbury will be employing the differentiation strategy for dealing with the issue of
competition (Swarbrooke, 2022). The respective firm will provide innovative and different product to
their customers in order to carry out the differentiation within market place.
SMART objectives
 Develop variations in product in order to create differentiation.
 Improve and enhance the product portfolio every year.
 To increase company’s sales by 20% within next 2 years.
Evaluating and monitoring plan
 Suitability- Sainsbury is looking forward to improve people’s lives around the world and is is
evaluated that its current strategic plan is very suitable as it will help the company to
accomplish their objectives and mission.
 Appropriate- Through cost benefits methods, the appropriateness of company’s strategic plan
has been evaluated and identified that their selected plan is appropriate for a long term (Voola,
and et. al., 2022).

CONCLUSION
From the above report, it is concluded that, through the analyse of macro environmental
factors, a business can understand their requirement and assure that how these needs can be very
important. As per the understanding of external factors, Sainsbury and establish a string system in
which help in company’s development along with organisational betterment. The PESTEL
analysis gives an effective idea regarding the roe of macro environmental factors within context of
Sainsbury. There are various elements that give different aspects of company and market. By this
study, it is analyzed that the strategic plans are very essential as they provide organisation with the
opportunities to achieve objectives and goals in ling run. Furthermore, new entrants and
competitions are major thread for organisation that impact growth and success of the respective
firm. Therefore, it is suggested to the considered organisation that it should adopt the
differentiation strategy with some strategic plan so that it can operate its business in effective and
efficient manner.

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