Strategic Management Plan for Sainsbury's: Analysis of Macro and Micro Environment

This report provides an analysis of the macro and micro environment of Sainsbury's through Pestle, stakeholder's, SWOT and VRIO analysis. It also includes Porter's Five Forces model and strategic management plan for the company.

Unit 32 Assessment

TABLE OF CONTENTS
TABLE OF CONTENTS.................................................................................................................2
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Analysing macro environment of Sainsbury’s through Pestle and Stakeholder’s Analysis.......3
Evaluation of Sainbury’s internal environment through SWOT and VRIO Analysis................6
Porter’s Five Forces Model for Sainsbury’s.............................................................................11
Strategic Management Plan.......................................................................................................13
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
TASK 1
Analysing macro environment of Sainsbury’s through Pestle and Stakeholder’s Analysis
Pestle Analysis
Political Economic Social
 Brexit Uncertainties
Vote in the favour of leaving
European Union by United
Kingdom will prove to be very
 Increasing fuel costs
The fuel prices have been
constantly rising slowly over
the last years. This increases
 Health consciousness
Adopting healthy lifestyle by
eating healthy is the recent
trend of today’s world. This

difficult for the company to
import products outside the
country at affordable rates.
the cost of production for the
company (PESTLE
ANALYSIS, 2022). The fall in
availability of fossil fuels and
rise in tax will further increase
the production cost affecting
the profits.
 Rise in salaries
Increase in expectations of
high salaries also implies
negative impact on the
organization. Large number of
employees are hired by
Sainsbury increasing the
salaries will results in high
production cost leading to low
profits or increase in selling
price. High selling price may
results in fall in sales volume.
 Vehement competition
The firm faces a lot of
competition as there are
various other businesses in the
industry giving tough
competition to the firm urging
it to innovate regularly while
remaining at low profits.
creates demand for healthy
products among consumers
adapting to this trend will be
beneficial for the organization.
 The fair-trade movement
The fair trade means offering
fair prices to the farmers for
their produce. This will be
advantageous for the firm in
the long term.
Technological Legal Environmental
 Upgraded technology
Using latest technology at the
supermarkets to save
 Laws
Complying to all the consumer
protection laws, labour laws,
 Carbon Footprint
Companies super market
chains have large impact on

consumers’ time will be
profitable for the company as
it will increase the sales
volume.
 New Analytics
Utilization of Big Data and AI
principles allows company to
know its operations in more
detailed manner. These
advanced analytics may be
used by the firm in building
models for determining
expected sales more
accurately and minimize the
waste. This affects profits
positively.
 Online shopping
The firm also sells its products
through online mediums.
Advancements in E commerce
will be good for company.
environmental laws, etc.
within the nation is essential
of company’s smooth
functioning.
carbon footprint.
Transportation is the major
reason behind companies large
carbon footprint. Sainsbury
should find out ways that are
Eco friendly to reduce its
carbon footprint being
produced.
 Plastic Waste
In addition, to large carbon
footprint company is major
contributor towards the overall
plastic waste produce.
Supermarkets use single use
plastic in their packaging
process. The company
requires to implement major
measures for adopting
environmental friendly ways
to its processes.
Stakeholder’s Analysis
Stakeholders are the individuals or group of individuals having some stake or interest in the
Sainsbury’s. Stakeholders have different levels of interest and influence in the organization.

Below are the various stakeholders of the firm:
Shareholder: They hope that Sainsbury declare profits every year.
Suppliers: Sainsbury’s suppliers are from Britain and abroad. Suppliers are highly valued by the
company. Organization believes in integrity in sourcing.
Managers: The organizational vision and goals are carried out by the managers of Sainsbury.
Ability of company’s growth reflect in its growth. Managers take charge of all the affairs making
sure shareholders have dividends annually.
Staff: Sainbury’s staff depends on company’s sustainable growth for their living. Staff members
put in the best of their efforts helping organization to meet its strategic goals. They are the
organizational face and core of its success.
Customers: They are the ultimate users of the products and services of the company. They want
continuity in good quality products at reasonable prices.
Community: Creation of economic impact is major by the company. Sainsbury supports
community through various schemes.
Evaluation of Sainbury’s internal environment through SWOT and VRIO Analysis
SWOT Analysis

Strengths Weaknesses Sainsbury is a listed company of the
London Stock Exchange. High quality products are offered by
company enabling it to give maximum
customer satisfaction. Highly satisfied
customers leave great feedback to the
company (SWOT Analysis: What It Is and
When to Use It, 2022 ). Company’s promotion strategies are
unique and innovative this helps it in
giving great competition to the
competitors. Social Media and Online Presence is a
strength for company. It has healthy
relations with the customers. Company faces high competition in the
market forcing it to remain at low profit
margins. Increase in cost of factors of production
results in low sales volume. Customers keeping on switching to other
brands. Thus, low customer loyal is a
weakness for the company. Some customers find the products of
competitive brands cheaper as compared to
company’s products. Company has been facing huge financial
losses over past two years resulting in
decrease in annual profits and revenue for
the company. Opportunities  Threats Introduction of technological automation
for self checkouts by customers serving
them 24*7 will make the process more Through globalization more and more
companies are entering the market
imposing legal and expansion threat on the

convenient and efficient increasing sales
volume. Adapting to latest health conscious trend
among customers by introducing more
dietary products is a great opportunity for
company to increase its sales volume. There is great benefits attached to
expansion in rural areas. The company can
capture this opportunity for higher sales
volume. There is great scope for company to
expand itself globally. More and more customers shifting
towards Sainsbury’s. Its a great
opportunity for company to cater the needs
of new customers.
company. Competitors developing new technologies
giving tough competition to the company
impose a threat for the company. Sainsbury has been in controversies
recently impacting its image posses threat
to the company. Rising standards of legality and new rules
coming up impose threat to the company.
VRIO Analysis

Resources Value Rare Imitable Organization
Financial
Resources  × 
Patents   × ×
Distribution
Network  × 
Human
Resources   
Cost Structure × ×  ×

Products  ×  
Research and
Development ×  ×
Sailsbury’s fiancial resources have temporary competitive advantage. Distribution
network and human resources have sustainable competitive advantage. Research and
development are partly competitive (Mohamed, Mohamad and Abdullah, 2018).
Porter’s Five Forces Model for Sainsbury’s
Porter’s Five Forces model

Weaknesses and Strengths within the industry are determined and shaped by identification and
analysation of the model called Porter’s Five Forces. Sainsbury’s use this analytical business
model to sustain in market at different profitability levels.
Competitive Rivalry
It refers to the totality of competitors having the capabilities to eliminate a company. If
the competitors are large in number offering equal number of products and services, the power of
the company is less (Bentham, 2018). In retail industry of United Kingdom there are three major
names Tesco, ASDA and Sainsbury’s, having tough competition to each other. The competitors
constantly improve their pricing strategy in order to maintain their market dominance. These
factors create competitive threat for the company.
Bargaining Power of Customers
High bargaining power of customers means low profits earnings by the firm. Buyers
often demand high quality products and services with a tendency to pay less. Customers with
high bargaining power demands high product discounts and offers (Planet and et.al., 2018).
Bargaining power of customers is high when the number of supplier offering similar products is
high.
Bargaining Power of Supplier
High bargaining power of suppliers is unfavourable for the business. Bargaining power of
suppliers in high when there are less suppliers in the market and also when the products offered
by suppliers are highly differential from others. Suppliers with high negotiation power sells their
produce at higher prices, increasing the cost of production for the firm. High bargaining power of
suppliers force an organization to sell its products at higher prices. This may result in low sales
volumes.
Threat Of Substitute
Substitutes are the products that can be purchased in place of the products offered by
Sainsbury’s. Customers purchase alternatives when they are available at better prices with
compromising the quality to the products. To avoid the threat of being replaced in the market
Sailsbury’s focuses on being service oriented, offers products with an understanding of core
requirements of its customers and increasing switching costs for its customers.

Threat Of New Entrants
New entrants can be new companies or the existing companies that enter to an industry to
expand their business. New entrants posses threat to the company as they enter market with the
introduction of some technology or innovations to do the processes more efficiently and
effectively (Aldemir, Şengür and Ulukan, 2021). New entrants use low pricing strategies,
reduction in production costs to offer better value to customers. Sainsbury’s have to manage the
prevention of new entrants into the industry through constant innovations in the products,
capturing economies to scale, enhanced research and development techniques to sustain
competitive edge in the market.
Strategic Management Plan
Strategic Management Plan is a process of identifying goals and objectives based on the
determination of company’s future vision by the top management. Sainsbury’s vision is to lead
the United Kingdom’s retail grocery market through its new health based range of dietary
products for the diet conscious customers. Introduction of new health products to the market. Making market share 45% by the end of 2023. Innovating the online ways of selling products.
Bowman’s Strategy Clock

Positions Low Price and low value added: This strategy is for quantity selling. Low value products
and services are sold at least possible price. Low Price: The aim of adapting to this strategy is to become the option that offers lowest
price to the consumers. Hybrid: Ofference of value added product at lowest price to the customers. Differentiation: The focus with this strategy is to offer high differentiated product to the
market.

 Focused Differentiation: Through the strategy of focused differentiation is target is to offer
high differentiated product at high price.
 Risky High Margins: With this strategy products are sold at high margins without adding to
the value of the product offered. Monopoly Pricing: In monopoly pricing single firm controls the product and associated
pricing. Loss Of Market Share: This strategy is adopted by the company wishing or forced to exist
the industry.
The company will use Differentiation position of Bowman’s Strategy Clock to offer the
new products that are new to the market to satisfy the needs of health conscious buyers of the
market and increase its sales volume (Helmold, 2020).
Ansoff’s Matrix
This tool is used by firms for analyzing and planning the growth strategies.
Four strategies of Ansoff Matrix

 Market Penetration: To increase the sales with existing products in existing market. Product Development: To introduce new product in existing market. Market Development: To enter new market with existing product. Diversification: To enter new market with new product.
The company will use product development strategy (Suciati, Kurniawan and Iswahyudin, 2020)
to offer a range of new dietary products in the market and increase its sales volume and market
share in the industry.
Monitoring and control
company monitors it strategic plan to ensure its right implementation and controls any
deviations in the results efficiently (Handrian and Mansoor, 2021). For this company use
benchmarking.
CONCLUSION
Based on the above report it has been concluded that for maintaining the competitive
edge in the market it is essential for Sainsbury’s to analyse its macro and micro environment.
The report has used Pestle, stakeholder’s, SWOT and VRIO analysis framework. Poster’s Five
Forces model has been used by the firm to maintain its competitive edge in the industry. The
report has also drafted a strategic management plan with the vision to make the company largest
market share holder of retail grocery industry through launching its own range of dietary
products.

REFERENCES
Books and Journals
Aldemir, H. Ö., Şengür, F. K. and Ulukan, İ. C., 2021. Exploring Strategic Choices of Airlines:
A Study in Turkish Air Transport Industry. Asian Academy of Management Journal,
pp.1-26.
Bentham, J., 2018. Business and Economics in the News–Sainsbury's and Asda-the decade's
mega-merger. Teaching Business & Economics. 22(3). pp.11-12.
Handrian, A. C. and Mansoor, A. Z., 2021. Proposed Business Strategy for a Nonformal
Architecture-Related Education Start-up (Case Study: Klass Academy). European
Journal of Business and Management Research. 6(3). pp.133-136.
Helmold, M., 2020. Negotiations as Integral Part of the Corporate Strategy. In Successful
International Negotiations (pp. 45-57). Springer, Cham.
Mohamed, R., Mohamad, W. and Abdullah, H., 2018. Engaging Employees through High
Performance Work Practices: Case Studies from Higher Educational
Institutions. International Journal of Engineering & Technology. 7(4.38). pp.1548-
1553.
Planet, L. and et.al., 2018. Lonely Planet Mexico. Lonely Planet.
Suciati, T. R., Kurniawan, D. and Iswahyudin, M. D., 2020. SWOT Analysis and Ansoff Matrix
in Creative Food Industry Business Development: A Study on Creative Food Business
“Komala”. Open Access Indonesia Journal of Social Sciences. 3(2). pp.69-76.
ur Rahman, F. and et.al., 2019. A unified clock and switched-capacitor-based power delivery
architecture for variation tolerance in low-voltage SoC domains. IEEE Journal of Solid-
State Circuits. 54(4). pp.1173-1184.
Online
PESTLE ANALYSIS, 2022 [Online]. Available through: <https://pestleanalysis.com/what-is-
pestle-analysis/>
SWOT Analysis: What It Is and When to Use It, 2022 [Online]. Available through:
<https://www.businessnewsdaily.com/4245-swot-analysi>