Business Organization: Sainsbury's SWOT and PESTLE Analysis

This report discusses the organizational structure of Sainsbury's, interrelationship between different departments, SWOT and PESTLE analysis, and the impact of globalization on the company's structure. The report also covers the political, economical, social, technological, legal, and environmental factors affecting the company.

Business organisation

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Organizational Type, Size and Scope..........................................................................................3
Interrelationship between different departments. .......................................................................4
Swot Analysis..............................................................................................................................6
Pestle Analysis ............................................................................................................................8
Influence of globalization on organizational structure of Sainsbury's.......................................10
Impact of globalization..............................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
A commercial body that is being established to generate profit through its operations is
called business organization. Activities performed by different business organization directly
effects the cash flow in the market. Economy of a country is based upon these business activities.
The functionality and profitability of the organization depends upon several factors such as
competitors, environment etc.
The report will be discussing the operating activities and facts about Sainsbury's. The
effects of different factors on Sainsbury's business operation will be analysed with the help of
S.W.O.T. and PESTLE analyses tools. Concept and effects of globalization will be a part of the
report.
MAIN BODY
Organizational Type, Size and Scope
Type
Sainsbury's has a hierarchical organization structure. In this type of organization the
chain of command goes from top to bottom. This is a pyramid shaped structure. CEO or board of
directors are peak of the pyramid and base consist of non-managerial employees (Osterrieder,
2021). Middle part of pyramid includes managers and H.O.D.'s. Any command or instruction
from board of director flows downward. Decisions taken by them will be convened to the middle
managers, and they will deliver it further to the employees. Delegation of authority and
responsibility is properly divided in this structure.
Hierarchical structure enables effective communication. Multiple level of authority helps in the
specialization of employees and managers. It helps to put the least pressure on employees.
On the other hand it has some flaws like it lacks the collaboration among different departments.
Size
Sainsbury's is one of the largest chain of supermarket with more than 400 outlets and
300+ convenience stores located in UK. The combine area of different outlets and offices is
spread around 23,144,000 sq. ft. (2.15 km²). They operate with the workforce of 153000
employees. This workforce includes every level of employees. With efforts of these employees
Sainsbury's serves 16 million people each week. They offer large variety of different grocery

products. Sainsbury's plc has also established themselves in banking and energy sector. Total
asset evaluation of Sainsbury is around £27 billion.
Scope
The organization was established in 1869 in Drury lane, London. They went public in the
year 1973. The organization showed a rapid growth and in today's date they have flourished in
all over UK. Sainsbury Plc. is split into three divisions Sainsbury's supermarket LTD.,
Sainsbury's bank and Argos. Different division targets distinct customer base. Sainsbury super
market and bank operates in United Kingdom. Whereas, Argos operates in both home country
and in foreign countries. Supermarket sector and Argos targets the demographic segment of the
market. On the other hand, Sainsbury banks target psycho graphic and techno graphic segment of
the market.
Interrelationship between different departments.
Organization activities are divided into different categories and each category has a
department. These departments work inter relatively with each other for the smooth running of
the organization. In Sainsbury, these departments are divided into H.R. department, operations
department, finance department, marketing department and logistic department.
The interrelationship between these departments is:
H.R. Department
Human resource management is responsible for hiring, training and functioning of some
personnel. The perfect fit for the role is necessary for the improved customer experience (Trost,
2020). Sainsbury needs skilled sales executive to provide services to the customer. This directly
effects the sales. A higher customer satisfaction rate leads to higher sales.
Operations Department
Operations department is responsible for sales and services that are provided by the firm.
Higher or lower sales will affect the overall profitability of firm and effects the functioning of
every department directly or indirectly. Sainsbury's operations department works to increase
sales in their supermarket by providing large variety of products and best services to the
customers at affordable prices. Online grocery delivery services are also provided so the
customers can purchase products from the comfort of their home.
Finance Department

Inflow and outflow of cash is regulated and monitored by the finance department
(Lescure, 2019). Finance department provides funds for sales increment, for salary of employees,
for transportation facility, for marketing etc. Whole functioning of the organization is based on
these funds. Finance department of Sainsbury is responsible for budget maximization.
Supporting board level decisions allocating finance is their responsibility. Department manages
investor-organization relations.
Marketing Department
To deliver information of product and services provided by the organization, the effective
marketing techniques has to be pursued. Effective marketing attracts customer and helps in
increasing sales. Increased sales help in attaining maximum profitability (Morgan and et.al.,
2019). Journey of Sainsbury shows that how effective marketing and branding has resulted in
increased sales. Some of the marketing and branding techniques that has been pursued by the
firm are shop fascia's, nectar loyalty card, hired Jamie Oliver as their brand ambassador. The
company uses impressive and eye -catching slogans to attract customers.
Logistic Department
Logistic department handles inward and outward movement of goods. They monitor the
channels through which different products arrive. Maintenance of the stock is a responsibility on
their shoulder. Warehousing these stock properly and delivering it to the customers after sales.
Logistic department plays a vital role in Sainsbury, the large supermarket chain need efficient
amount of goods time to time. The logistic department handles this chain through thirteen
regional distribution centres and 2 national distribution centres for slow moving and frozen
goods. Any disturbance in these channels will lead to lack of product availability in the stores.
These all departments are inter-related with each other. Contribution of every department
helps the organization to sustain in long run. Improper functioning of any department will
eventually affect the working of others. Through proper sync and co-ordination between
different department organizational growth can be achieved.
In case of Sainsbury, the sales department is dependent upon marketing and H.R. team.
Finance department allocates funds to these departments for advertising and recruitment. After
sales services which are being provided by logistic department to the customer helps in

increasing customer satisfaction rate and customer retention rate. Customer base and profitability
increases when these departments work efficiently in their respective jobs.
Swot Analysis
STRENGTHS
 A LISTED COMPANY
 GOOD CUTOMER SATISFACTION
RATE
 WIDE RANGE OF PRODUCTS
 GOODWILL
WEAKNESSES
 DISLOYAL CUSTOMERS
 LOWER PROFITS
 INFLATED COST
OPPURTUNITIES
 ANYTIME AVAILABILITY
 RURAL EXPANSION
 GLOBALISATION
THREATS
 CONTROVERSIES
 PANDEMIC
 LEGALITIES
STRENGTHS1. A Listed Company
Sainsbury is a public limited company which is falls in the constituents of London stock
exchange. Anyone can buy shares of Sainsbury easily. This makes the organization more
recognizable. Listed companies attracts consumer's concentration on the company.2. Good customer satisfaction rate
The organization offers high quality goods in affordable price which satisfies the
customer needs. Quality services are being provided by Sainsbury to its customer that results in
great customer experience (Hamzah and Shamsudin, 2020). As a result, the company gets good
feedbacks from their customer for products and services offered by the firm.3. Wide range of products

Availability of different ranges of commodities is being provided by Sainsbury. This is
the biggest strength of the company. Variety of products enables the organization to serve every
segment of the population. The retail store of the firm offers different products and different
brands to the customer. On the other hand, their value products consist of expensive products
which is preferred by the higher income segment of the population.4. Goodwill
Since its establishment the company has served for 153 years to its customer. This long
tenure has implanted the goodwill of the company. The company is known to survive ups and
downs in its way.
WEAKNESSES1. Disloyal customers
Retail sector usually face this issue of customer disloyalty. After implementing many
loyalties programmes also, they are not able to maintain retention rate. Sainsbury also faces this
problem and it is a major concern for the management.2. Lower profits
Competition in retail sector in increasing day by day. To survive in these competitive
situation, the organization tries to offer same product is lower prices. This affects in the low
profits of the organization and decrease in sales due to increased competition also results in
same.3. Inflated cost
Cost of a product directly impacts on pricing and profitability. Inflation in the costs of
raw material has led to increased prices. In order to maintain competitive edge over the
competitor the organization tries to low the prices through profit minimization. This effects as
lower earning power of the organization.
OPPORTUNITIES1. Anytime availability
For providing services to the customer anytime the organization can use proper
technology and methods which can help them in faster checkouts and this will be more efficient
for customer satisfaction.2. Rural expansion

The organization can take advantage of increasing demand of branded products in rural
areas by opening their outlets in villages.3. Globalization
Sainsbury can expand its business globally to increase the customer reach and attain
profitability.
THREATS1. Controversies
Some of the controversies in which Sainsbury was involved effected their reputation and
goodwill. Some of them are dairy price fixing, VAT avoiding schemes etc. such more
controversies are a threat to the firm.2. Pandemic
Covid-19 pandemic has caused a threat to many industry sectors. It affected world's
economy (Platto, and et.al., 2020). Spread of Covid-19 is posing as the biggest threat to the firm.3. Legalities
New rules and regulation in the country may affect operations and profitability of the
firm.
Pestle Analysis
Political Factors
Brexit uncertainty possess a big impact on corporate business (Levell and et.al., 2018).
Change in trading policies due to Brexit deal has affected working of Sainsbury. Importing
goods is at cheaper price have become a barrier to the organization. This effects in higher prices
of product and services offered by the organization.
Economical Factors
Increased fuel costs have a huge impact on the economy. Inflated prices of fossil fuel
results in the higher transportation charges. Operations of Sainsbury's supermarket chain depends
upon the transportation of goods for the warehouses to the outlets, and they also deliver products
to customer. This will increase their operating cost.

Rising salary index of employee in the sector will affect the organization's workforce.
Long supermarket chains need large number of work to maintain day to day activities. Increase
in salary demand will increase the expenses of the company.
Tough competition faced by Sainsbury force the company to regularly innovate and
implement strategies to increase sales. It forces the brand to lower its profits to gain customer
retention rate. Some competitors are Tesco, Morrisons, Wait Rose etc.
Social Factors
The movement of crowd towards health conscious product has increased after pandemic.
There is a shift of consumer from junk food to healthy foods such as salads, shakes etc. in these
shifting period Sainsbury has to keep in mind the demand of healthy food and fulfil it to achieve
good growth.
The fair trade movement has developed a habit in the customer to pay more for healthy
products (Harris and McNamara, 2021). It was mainly initiated for the coffee and chocolate
products so the farmers get fair prices for their produces. The business cycle has been benefited
by this movement.
Technological factors
Online shopping is the most preferred way these days. Every segment of commodities
from grocery to electronics everything is mostly purchase via online shopping. Sainsbury also
provides their customer with online services through Sainsbury online.
The company also uses new analytics methods to assess their position in the market. To
analyse this, they use artificial intelligence process.
Legal factors
Legalities of the countries has to be followed by the firm, and they have to think about
methods to meet these legalities. The sugar tax law in UK has stopped Sainsbury to promote the
product with high sugar, fat and salt containment to the kids below the age of 16 years. This has
impacted the targeted customer base of the company.
Environmental factors
Awareness for balance between ecology and economy has increased in past few years. In
respect to that, the Sainsbury organization is also working for sustainable development through
focusing on methods to reduce waste and carbon emission. The organization also spread
awareness for cleanliness among its customers.

Influence of globalization on organizational structure of Sainsbury's
A process which is driving the world towards interconnectivity and resulting in
increasing trade due to wide market size is called globalization (SENTISHCHEVA, 2021).
Organizational structure of Sainsbury
Sainsbury's PLC. Is a business structure which is operates in 3 sectors, supermarket
chain, Sainsbury bank and Argos. Sainsbury supermarket segment aims to provide their
customers with high quality goods and services in comparatively low prices. They provide
grocery products, merchandize, fresh meat and frozen items to their customers. In some
supermarkets they have pizza corner and bakery too.
Impact of globalization.
Increase in flow of goods
Globalization impacts as increasing flow of goods in the market. Increase in market size
allows a large variety of suppliers and customers. Competitors of Sainsbury purchase goods from
international markets at cheaper prices and sell their products in comparatively lower prices than
Sainsbury. This forcefully drives the organization to lower the prices to compete in the sector. To
provide customers with low price products the organization minimizes its profitability.
Increasing competition
International trading allows a business to pursue larger markets by influencing customers
mindset and preferences with different operating strategies. Invasion of foreign business in local
markets of UK has increased the competition of Sainsbury. This forces the organization to
improve and enhance the quality of their products and services to stand out in the sector.
Spread of technology
Connectivity of different countries enables the fast movement of knowledge and
technology. Ease of access to new technology leads to overall advancement of developing
countries (Matthews and Greenspan, 2020). Availability of enhanced technology helps a
business to operate in a effective manner. Innovative technology may help in lower operating
costs. Increasing demand of technology derives the organization towards regular up gradation.
Access to new trends

Globalization leads to mix in different culture of different countries and consumer
preferences can be influenced easily. Preferences of the consumer are being affected by the mix
of cultures (Burlacu and et.al., 2018). Changing culture in a country leads to new trends. Trend
has to be analysed regularly to satisfy the customers of different preferences. For example
increasing trend of vegan eatables has to be fulfilled by Sainsbury to achieve higher consumer
satisfaction.
Access to labour
Global markets provides employment to both skilled and unskilled labours as the value of
different currencies creates a win-win situation for both the employers and candidates. The
candidates get higher pay and employers gets labour at cheaper costs. Availability of skilled
labour at lower cost is a positive impact from a business point of view. Skilled workforce leads
to better quality of goods and services provided to the customers. Sainsbury recruits labour from
all over the world. It helps the organization to operate with skilled employees that provides
customer with their best. This leads to the higher customer satisfaction.
CONCLUSION
The above report concludes that Sainsbury is an organization with hierarchical structure
whose profitability and sustainability depends on the working of different department. The
organization should work on its weaknesses and catch the opportunities to expand their business.
The report states that the organization is rigid to the local market of UK. In this phase of
globalization Sainsbury should also target international market and open their outlets across the
globe. To develop a competitive edge they should import goods and services from different
suppliers.

REFERENCES
Books and journals
Burlacu, S. and et.al., 2018. Globalization–pros and cons. Calitatea. 19(S1). pp.122-125.
Hamzah, A. A. and Shamsudin, M. F., 2020. Why customer satisfaction is important to
business?. Journal of Undergraduate Social Science and Technology. 1(1).
Harris, J. and McNamara, K., 2021. Social Movement Lessons from the Fair Trade Movement.
Lescure, M., 2019. From the function of finance to financial departments. Entreprises et histoire.
(2). pp.5-15.
Levell, P. and et.al., 2018. The economic consequences of the Brexit deal. Centre for Economic
Performance, LSE.
Matthews, P. and Greenspan, S., 2020. Technology Definitions. In Automation and
Collaborative Robotics (pp. 45-67). Apress, Berkeley, CA.
Morgan, N. A. and et.al., 2019. Research in marketing strategy. Journal of the Academy of
Marketing Science. 47(1). pp.4-29.
Osterrieder, P., 2021. Organizational Structure. In Managing Industrial Services. (pp. 53-66).
Springer, Cham.
Platto, S. and et.al., 2020. COVID19: an announced pandemic. Cell Death & Disease. 11(9).
pp.1-13.
SENTISHCHEVA, E. A., 2021. Globalization in the modern world. In Молодежь и XXI век-
2021 (pp. 11-13).
Trost, A., 2020. Human Resources Strategies. Cham: Springer International Publishing.
1