Strategic Analysis: Porter's Five Forces and PESTLE for Sainsbury

This report provides a strategic analysis of Sainsbury's, a major player in the retail industry. It begins with an introduction to strategic analysis and its importance for businesses, followed by a detailed examination of Porter's Five Forces model to assess the competitive environment. The analysis considers factors such as competitive rivalry, potential new entrants, the power of suppliers and customers, and the threat of substitute products. The report then applies the PESTLE framework to evaluate the external factors influencing Sainsbury's operations, including political, economic, social, technological, legal, and environmental aspects. The analysis highlights key challenges and opportunities for Sainsbury, such as the high level of competition, the impact of Brexit, changing consumer trends, and the importance of technological advancements. The report concludes with a summary of the findings and their implications for Sainsbury's strategic decision-making.

STRATEGIC ANALYSIS

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Compare theory and practice.......................................................................................................3
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Strategic analysis are tools which help businesses in the market to be able to plan and use
the right technique to be able to operate effectively in market. There are a lot of frameworks
which can be used by organizations to be able to find out right methods to function and compete
with competitors in market. Sainsbury is a public limited company which was founded in 1869
and headquarters of company is in London. The further report is going to discuss tools which can
be used by businesses to be able to operate effectively in market. There is an analysis of Porters
five forces which is going to make business have a good understanding of market so that future
decisions can be taken by business. The competition in market is high and to be able to get a
place for themselves businesses in market will have to use these tools.
MAIN BODY
Compare theory and practice
There are a lot of frameworks which are present in market so that there are going to be
higher results which are going to be present. Porter's five forces was given by Michael E. Porter
so that micro environment of the organization is going to be maintained. The competition in
market is increasing which needs to be controlled and that can be done with help of this analyses
so that results and profitability is going to be higher. The further report is going to discuss
competitive analyses with the help of porter's model of Sainsbury with Tesco.
 Competitive rivals (High)
There are already a lot of rivals which Sainsbury is having in this industry like Tesco,
Walmart, etc. therefore it is important for organization to make sure that they are taking the right
measures and right techniques are being used in organization. For a higher performance and
competitive advantage there have to be right measures which the business must take which is
good for overall development of company. There are few competitors who have large market
share and Sainsbury is one of them which need to be worked upon and focus of the company is
also going to be higher (Abdel-Basset, Mohamed and Smarandache, 2018). The exit barriers are
also high in company which will have to be maintained so that organization will be able to focus
and force workforce to make company have higher productivity and operations so that demands
and needs of the customers are being maintained. As compared to Tesco they will have to have
higher profitability when there are going to be right decisions which are being taken so that the

business will be able to have higher forces which will make the company be able to have good
lead in market.
 Potential new market entrants (Low)
The economic sale which is present in Sainsbury is high because of competitive
advantage which the company is having for themselves in market. The organization has been
able to develop a place for themselves over years and due to experience organization has
gathered a competitive advantage which is good for a long run in market. It is going to be
difficult for new entrants to come in this industry since organization has already made high
reputation and loyal base of customers which is present in organization. There are a lot of
advertisements which the company has made so that they can capture the market effectively.
Networks of Sainsbury are also very loyal and strong in market which is why the other entrants
will not be able to compete with this organization (Bush, 2019).
 Power of suppliers (Low)
Sainsbury has numerous numbers of suppliers which the company has got for themselves
in the market which is good for getting a control on this factor for the company. There are
suppliers which will charge raw material for higher value which is why having networks with
suppliers with a lot of them is important for Sainsbury so that they will be able to shift from one
to another. To have cost friendly measures in organization, Sainsbury will shift from one to
another suppliers so that organization will not be dependent and control is going to be higher of
company then of suppliers on the organization. It is because of experience and right measures
which company has taken over time, organization understood the importance so that there are
going to be higher results.
 Power of customers (Medium)
The demands of clients are growing and that needs to be fulfilled by firm from time to
time so that there is going to be superior sales. The company needs to have a good profitability
for themselves so that they will be able to invest in other factors for the further growth which is a
very important factor for company to have (Forces analyses of Sainsbury, 2020). Customers
bargain a lot but products of Sainsbury are already of high quality, and they are also selling their
products at lower price which is a great advantage which the organization is having for them.
There are a lot of sales and discounts which Sainsbury is providing for customers so that
customers will not have a controlling power over the organization which is going to make

organization have higher sales. There is innovation and creativity which is being involved in the
organization so that the business will be able to develop themselves in market and new products
always attracts more customers which is good for a long run in market.
 Substitute products (High)
There are a lot of products which Sainsbury has expanded them in so that satisfaction of
the customers is going to increase of them in organization and the company is going to have
higher sales. Sainsbury is improving and making sure that the measures company is taking are
according to the customers of organization. Sainsbury is serving higher quality products in
market which is going to make the company have lower profitability which is not good for a long
run. There is very little profitability and substitutes for the products which are present for the
products of Sainsbury since businesses want higher return for products and services. Tesco wants
to gain trust of customers in organization for which the company is improving products and
services accordingly so that the profits are going to be higher and productivity is also going to be
higher which is going to make company have better performance. Tesco is having high unique
identity in the market which is a great factor for firm to have so that performance is going to
increase and the organization will be able to research higher (MUKUL, BÜYÜKÖZKAN and
GÜLER, 2019).
From the above framework it can be concluded that there has to be effective working in
the organization. Business should not be dependent on any factor since the productivity can get
affected and that is not a good factor for a long run.
PESTLE
It is important for the organization to understand external factors which can influence the
working of the organization in market. The competitors in the market are high which makes
Sainsbury be even more certain of measures they should be taking for having higher performance
in the market.
 Political factors
There are a lot of changes which have come in the organization after Brexit which made
the company lose a lot of their loyal employees in the organization. Though the company
maintained that factor and there is a stable growth which is present in the organization. It is
because of the great quality of products and services which are present in organization the

company has been able to maintain their economic factor (Murphy, 2018). In order to be able to
have maximum profitability in market there are a lot of investment which the company will have
to make in the organization so that there are higher results which are going to be present. Due to
Brexit there are a lot of taxation and other policies which changed and Sainsbury changed their
operations and strategies according to this factor.
 Economic factors
The rates of pounds have reduced over time which is a drawback for the company
because the profitability is going to get affected in organization. The unemployment rates in the
market is high which can be used for higher productivity which is going to be present so that
there are going to be higher profitability. Inflation rates are also increasing which has to be
addressed by organization so that there are going to be better performance and operations which
has to be there. There are new emerging markets which are present in the market and that can be
taken advantage of by the organization so that there are going to be higher results and Sainsbury
will be having a stronger brand image in market.
 Social factors
There are a lot of changes which are coming in the retailing industry which are present,
and they have to implemented in organization so that results are going to be as expected. The
trends in the market are changing because GDP of population is improving therefore it is very
important for the company to be able to operate effectively. Healthy products and services are
being provided to the customers from time to time so that there are going to be higher brand
value in market and for that there has to be food tracking of the raw material and input and
output of Sainsbury (Pedersen, 2020). Sainsbury is very active in the market so that they can
provide the best of products and services to customers which are going to make them loyal in the
company. GDP of the country has improved by 6% over the last one year which is a great factor
for the country and the company.
 Technological factors
There must be good collection of data and for that there are more technological factors
which have been implemented in the company so that end result is going to be higher in
company. Manual working has a lot of factors which are going to affect working which has to be
controlled so that company will be able to operate effectively. Informational factors are being
monitored so that the company can get competitive market so that the organization will be able

to operate effectively and efficiently which is good for a long run. There are online platforms
which are being used by organization so that the results are going to be higher which are good
for the profitability in the market.
 Legal factors
There are a lot of legal actions and regulations which are present in market for the
retailing industry to follow so that outcomes are going to be better. There are certain kinds of
laws which have to be followed and for that slower decisions can not be taken which is going to
make performance of the organization get affected. The wages which are being paid to
employees is low but the organization is not at fault and focus is on making productivity more.
The retention level of employees is not present which is not good for a long run because the
performance is getting affected (Oladele-Emmanuel, Rejeb and Redlich, 2018).
 Environmental factors
Using right environmental measures and techniques the organization will be able to have
higher brand value and reputation in the market which is good for the further expansion of
organization in market. Carbon footprints of Sainsbury is being worked upon so that end result is
going to be better and there are serious environmental friendly measures which are put by
government are being followed by the firm. The plastic and other waste of organization is being
disposed off well so that the environment is not being harmed in any manner and there are
measures which are being followed by the employees as well. Resources which are being used in
the production of products and operations are used and measured well so that they can be
sustained in the company.
From the above framework it can be understood that businesses in the market have to
make sure that there are no external factors which are going to affect working of business in the
market. There have to be right measures and techniques which have to be used in the business so
that there would be smooth functioning.
SWOT
A business is going to have strengths and weaknesses of their own which needs to be
worked upon so that the organization will be able to gain a competitive advantage. After analysis
the organization is going to have a better idea and decisions can be made according to that so that

the business will be able to grow. SWOT analysis helps the businesses to understand their
internal factors which are going to be discussed in the further report as well.
 Strengths
Sainsbury is one of the oldest organizations in retailing industry which is a great factor
since company has got experience in the market as well. The organization has expanded
themselves in varieties of products and services which is a great factor for organization. There is
higher investment as well which Sainsbury has put in this market so that they will be able to gain
competitive advantage which is a great factor for the organization. In UK, Sainsbury has over
600 stores when there are just 800 stores in the country which is a great way of reaching out to
customers and there are more than 30,000 lines of organization for customers (Coreau, Narcy
and Lumbroso, 2018). There are a lot of advertisement actions which Sainsbury has taken so that
they can reach out to customers as well, and they have a good measure taken for branding their
products and services in market.
 Weaknesses
There is a visible growth which is present in the market for costing therefore the
company will have to comprise their products quality or the pricing of products will have to be
increased. There are a lot of risks which Sainsbury will have to face for switching the brand as
well and that is going to make the promotions and loyalty of customers switch as well and that
would impact sales and profitability of organization. Low margins for getting customers to
purchase the products and services of Sainsbury which needs to be present so that company will
be able to operate in market effectively. Technology has also made a lot of difference in working
as well which is not good for a long run since the organization will not be able to operate
effectively in the market. The company has not been able to gain the market because of Tesco
and other companies in the market which has made the company have a lot of limitations.
 Opportunities
Sainsbury should take advantage of expanding themselves in villages and since they have
a strong brand image then it will be easier for the company to have higher sales. Sainsbury will
have to find more employees which are going to be retained in the organization so that the
company can have a stable productivity and functioning which is going to be present. Emerging
countries like Brazil, India, Russia, etc. are good targets for company and if the organization
expands themselves in these countries so that business will be able to have a strong base for them

(Jui, Trappey and Fu, 2016). There are going to be labour as well which business can find easily
to be able to expand and the profit margins are going to be higher of the organization in the
market which is a great factor for organization.
 Threats
There is already a lot of organizations which have developed themselves in this sector of
the market which is going to make the performance of the organization be affected. The
companies which are present in market as competitors are ASDA, Morrison's, Aldi, etc. which
are taking away customer base of Sainsbury which needs to be maintained. There has to be good
control on business so that there are going to be good sales and performance of the firm in the
market. Discounts as well can not be given by Sainsbury all the time since the company is not
having high pricing and are not making high profits as well therefore the company will have to
be certain which is going to make the competition rise. Quality of Sainsbury is high so that they
can have loyal customer base which is going to make the quality of products and services of
organization improve (Griewatz and Lammerding-Koeppel, 2019).
All businesses have individual internal factors which can affect the working of the
organization and those have to be analysed so that right decision can be taken. Businesses have
to make sure that there are right measures and the organization will be able to operate effectively
without having a lot of troubles in working.
Recommendations
Sainsbury will have to find new methods and techniques in order to be able to function
effectively and efficiently in the market so that there are going to be effective growth. The
company will have to invest more in research and development department as well so that the
company can have higher operations and unique identity for themselves in the market
(Venkatesh, Paluri and Bhattacharya, 2016). Right leadership style in the company is going to
make the internal factors of the company be well maintained which is a great factor for the
overall development of the company.
CONCLUSION
From above discussion it can be concluded that firm in the market will have to use right
frameworks to be able to operate effectively in bazaar. It is because of competition rise and the

customer’s expectations and demands that businesses need to analyse the market effectively in
order to be able to get a competitive advantage which is going to be very good for a long run of
the business. The companies in the market will have a better sense of direction which would be
present and organization will be able to operate and perform effectively in market.

REFERENCES
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Online
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<https://pestleanalysis.com/pestle-analysis-of-sainsburys/>.
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<https://www.ukessays.com/essays/management/forces-analyses-of-sainsbury.php>.
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