SIM336: Strategic Management Report on Sainsbury's Performance

This report provides a comprehensive strategic management analysis of Sainsbury's, a British supermarket chain. It begins with an introduction to strategic management, defining its importance and objectives. The main body of the report delves into a comparison of strategic theory and practice, usi...Read More

Strategic
Management

Contents
INTRODUCTION...........................................................................................................................................3
MAIN BODY.................................................................................................................................................3
Comparison of theory and practice.........................................................................................................3
Case Study Approach...............................................................................................................................4
Recovery plan..........................................................................................................................................6
Risk Management....................................................................................................................................7
CONCLUSION...............................................................................................................................................8
REFERENCES................................................................................................................................................9

INTRODUCTION
Strategic Management is a field which involves setting of objectives, analysis of
competitive environment, analysis of internal organization, evaluation of strategies and ensuring
that the management is able to roll out strategies for the organization (Aguinis, Edwards and
Bradley, 2017). It is very helpful for the managers in making sure that they are able to adopt the
right approach for ensuring their organization’s success in the market in the future time period.
For this the managers are required to adopt a clear approach towards the strategies which they
are going to adopt. For this report, Sainsbury’s has been chosen. It is a British Supermarket
Chain dealing in groceries and other consumer products. In this assignment, a detailed analysis
will be made on comparison of theory and practice, use of a case study approach, a recovery
plan. Additionally, a recovery plan and a risk management strategy will be discussed as a part of
this project.
MAIN BODY
Comparison of theory and practice
Porter’s 5 forces is an analytical model that helps marketers and business managers look
at the ‘balance of power’ in a market between different organizations on a global level, and to
analyze the attractiveness and potential profitability of an industry sector (How to use Porter’s 5
forces model, 2020).
Sainsbury’s made use of this model to identify the competitive position in the market.
Scenario- Sainsbury’s management wanted to use Porter’s 5 forces model because of the
increasing competition in the supermarket sector in U.K. Thus it applied this model on the
company to identify how it stands out among the competitors.
The analysis of this model in the context of Sainsbury’s is as follows-
Competitive rivalry- This means the level of competitors which are present in a
particular market (Akhtar and et.al., 2016). In the context of Sainsbury’s this force has a very
high power because of the higher number of competitors which are present in the market. Thus
the company needs to evaluate its strategy against them and must find out ways through which it
can gain a competitive edge over them. Due to higher number of competitors, the management of
the company has to focus on keeping its costs lower so that the company may keep a lower price
to gain strategic edge in the market.
Threat of substitute products- This refers to the threat which the substitute products
pose to the company. In the context of Sainsbury’s this force has a relatively lower power. This
is so because the customers who make their purchases from the firm like quality products and

thus will never prefer cheaper substitute products in the market. Thus, the management of the
organization is required to make sure that they can maintain the quality of their products so as to
create a good impression on the customers.
Bargaining power of buyers- The buyers are very important for any company
(Baumgartner and Rauter, 2017). It is so because the entire business is dependent upon them.
They are the ones who drive the revenues of the company. In the context of Sainsbury’s it is
highly important that they are able to make sure that they satisfy their customers effectively and
efficiently as this will lead towards generation of positive reviews from them for the company.
This force has a high power.
Threat of new entrants- This means the threat which the new entrants in the market may
pose for the organization (Bettis and et.al., 2016). In the context of Sainsbury’s this force has a
very high power because the new entrants find supermarket sector very attractive for investment
purposes and thus the number of new entrants here is very high. For the company it is necessary
that its management is able to frame a right strategy for the competition so that they can make
sure that they are using the right tactics in the market to obtain a strategic edge.
Bargaining power of suppliers- This means the power suppliers hold to influence the
prices of various types of inputs (Certo and et.al., 2016). For Sainsbury’s it is important that this
factor is taken seriously because this force has a high power. This is so because the organization
is dependent upon the inputs which are provided by the suppliers to it and thus an increase in the
prices of inputs by the suppliers will surely impact is profitability in the future time period. Thus
there is a requirement for the company to make sure that they are able to make a right strategy
and implement it to gain substantial competitive edge in the market.
Justification- 4 out of 5 forces has a high power and only 1 force has a low power. Thus
Sainsbury’s managers have analyzed that they are operating in a particularly competitive
environment and thus they are required to make sure that they are able to frame a right strategy
so that they can acquire a competitive edge within the market in the future time period without
any problems and issues. Therefore, the managers of firm are required to adopt a careful
approach here and ensure that the company is in a position to gain competitive edge in the
market.
Case Study Approach
Scenario- Sainsbury’s has been facing various issues and problems in its management
over the years. Thus its management decided to look into the Case Study of transformation of
Microsoft under Satya Nadella so as to get inspiration of managing the business effectively.
Transformation of Microsoft under Satya Nadella-
 Growth-oriented company- Nadella has made sure that Microsoft is now a growth-
oriented company. Thus in this way the company has changed its old mindset and thus is

concentrating more and more on achieving higher growth rate so as to gain a good
position in the market. Therefore Sainsbury’s managers can learn from this approach and
can adopt the same so that the company can make good profits in the future time period.
 Innovative approach- Nadella has made innovation the top priority at Microsoft. Thus
by adopting an innovative approach Microsoft has launched various new features in its
products which have managed to get the attention of various customers. Thus Sainsbury’s
also can learn from this innovative approach which has been adopted by Microsoft to
make sure that it is able to launch new features in its various products and thus can
achieve its goals and objectives which are set for the future time period.
 Priority to workers- Nadella gives very high priority to the workers at Microsoft. Their
creative and innovative ideas are given priority and they are involved in the decision-
making within the company. This has led towards the company progressing in the market
due to the feedback which is received from the employees. Thus the managers of
Sainsbury’s can also make sure that they give due priority to their workers and thus in
this way can achieve the goals and objectives easily.
 Launch of new products- Nadella has made launching new products an important
priority at Microsoft. The approach here adopted by the company is to look for the needs
and requirements of the customers which they are having and making sure to provide
them the right products which can fulfill these needs and requirements easily without any
problems and issues in the future time period (Durand, Grant and Madsen, 2017).
Therefore the managers of Sainsbury’s can adopt a right approach here and make sure to
launch new products according to the various needs and requirements of the customers.
 Good analysis of the competition- Nadella has made sure that Microsoft is able to do
good analysis of the level of competition which is prevalent in the market. Thus the
various operating systems present in the market have been analyzed by the managers of
Microsoft and they have made a strategy to ensure that the Windows OS of Microsoft
fares better against them without problems and issues. Thus there is a requirement for
Sainsbury’s to make sure that they are able to achieve the required goals as well as
objectives.
 Transformation of the overall system- Prior to Nadella taking charge there was some
laxity in the system of Microsoft which was hurting the company. Thus Nadella has made
sure that the company’s overall system has been transformed so that it can fare better
against the competitors and can target profit maximization in the future time period.
Therefore the managers of Sainsbury’s are required to make sure that they transform their
overall system so that they can achieve better results just like Microsoft and can attain a
competitive edge over their various types of rivals present in the market. Thus it is
required that the company adopts a strategic approach here.
Thus, it can be said that Sainsbury’s managers can learn a lot from the Case Study of
Microsoft. By using this approach, they can find out the various types of ways which
have been used by the company to gain a strategic edge in the market over its

competitors. If the management of the company is able to use a right approach in the
context of various types of situations then the firm will be able to realize its goals and
objectives without problems and issues.
Recovery plan
A recovery plan is prepared by the management of a company so as to frame the right
strategies and approaches to get out of the various losses which it has suffered (Engert, Rauter
and Baumgartner, 2016). Thus if this plan is framed correctly then it can be used for making sure
that the company is able to convert its losses into profits.
Scenario- Sainsbury’s management is facing pressure because the company has not fared
as expected in the recent years. It is getting behind its competitors in the market and its profits
are not growing as expected. Thus the management has decided to frame a recovery plan which
will ensure that the company is able to modify its approach and achieve its goals and objectives.
The recovery plan in the context of Sainsbury’s is as follows-
 Communication plan and role assignments- The management has to make sure that it
is able to frame a communication plan and allocate the required roles to the subordinates.
The managers of Sainsbury’s are required to prepare a communication plan and make
sure that they are able to give different roles to the subordinates for recovery. In the light
of this situation, the company needs to communicate its plan of increasing revenues to the
subordinates and give the role of increasing sales to its sales team.
 Planning for equipments- The management is required to make a plan for its
equipments (Gallus and Frey, 2016). The managers of Sainsbury’s are required to make
sure that they are able to plan for the equipments in their company. By doing so they will
identify the problems which they may be facing and the approach which is required to be
adopted for dealing with these problems related to equipments causing low production.
Thus in this situation specific directions are required to be given to the production team.
 Data continuity system- The management should ensure the security of its data (Gans
and Ryall, 2017). If the data of the business is secured then it can help a lot. The
management of Sainsbury’s is required to make sure that they are able to manage the data
effectively. In the light of situation faced by the company they can make sure that they
are able to manage the data in the right manner so that they can control the situation and
can get a strategic edge in the market.
 Backup check- The management of the company has to make sure that it is able to check
the backup so that the firm is not in trouble during extreme conditions (Goldfarb and
King, 2016). For the management of Sainsbury’s, it is required in this situation that they
frame a right approach so that they can increase the profits in the future time period by
initiating the recovery of the firm.
 Detailed asset inventory- The management of a company is required to make sure that
they make a detailed asset inventory (Hitt and Duane Ireland, 2017). This is required in

order to make sure that the company is able to maintain the value of assets. In the context
of Sainsbury’s it is required in this situation that it frames a right strategy to improve its
profits to enhance the value of its assets and the overall financial position.
 Pictures of the office and equipment- It is important for the companies to make sure
that they are able to get the pictures of the office and equipment. In the context of
Sainsbury’s it is highly necessary that its managers are able to target recovery so that
profits may be enhanced in the future time period.
 Vendor communication and service restoration plan- It is important for the managers
to communicate with the vendors and make the detailed plans of resuming services. For
Sainsbury’s it becomes highly necessary that it is able to achieve its objective of making
recovery and earning higher level of profits in the future time period. For this proper
communication with the vendors and service restoration plan is required. This will make
sure that the company is able to make a recovery from its current position and achieve a
much-required strategic edge over its various types of competitors existing in the market.
Thus by framing a recovery plan the management of Sainsbury’s can ensure the recovery
of the company from its current position and thus it will be able to frame the right
strategies for achieving the desired goals and objectives for the company.
Risk Management
Risk Management is a technique through which the risks which a business may face can
be analyzed and thereby the corrective actions can be taken so that the risks are mitigated
effectively and efficiently.
Sainsbury’s is a big company. Therefore like other big companies it also faces various
risks related to its business. The steps which it can take for ensuring risk management are as
follows-
 Defining of business strategy and objectives- It is required from the management of a
company that it defines the business strategy and objectives (Meyer, Neck and Meeks,
2017). This can mitigate the risks effectively and efficiently and result in risk
management. Thus the managers of Sainsbury’s are required to define business strategy
and objectives clearly which will make sure that they are able to reduce the risks to a
certain extent so that goals and objectives can be achieved in the future time period.
 Establishment of KPIs- For a business it is highly important that KPIs are established so
that the overall performance can be judged and monitored (Rosenberg Hansen and Ferlie,
2016). In the context of Sainsbury’s it is highly necessary because it will help in risk
management because if there are different departments which are not performing well
then the required actions can be taken for making sure that efficiency and effectiveness of
these departments can be maintained without problems and issues. Thus Financial and
Non-Financial KPIs will be very much useful for a company here to make sure that it is

able to achieve its various goals and objectives in the future time period. Rectifying
actions can also be taken here for facilitating improvements wherever required.
 Identification of risks- The managers of a company should be able to identify the
various types of risks which can affect a business. Thus it is required from the managers
of Sainsbury’s that they are able to identify the risks in their business. This will help them
both in the short-run and long-run so that they are able to achieve their desired goals as
well as objectives by reducing the extent of risks faced by the company. Different types
of risks have to be dealt differently by using various methods which are available. Thus it
is important for the managers to execute these methods properly.
 Establishment of Key Risk Indicators- The managers of a company should establish
the key risk indicators so that they are able to assess the extent of risk. Thus the managers
of Sainsbury’s are required to make sure that they are able to use them effectively and
efficiently in the right manner which will lead towards employing of various methods to
reduce these risks and achieving the desired goals and objectives. Therefore the company
must take the right steps for identifying the risks in various departments like Production,
HR, Finance, Sales, and Marketing. This will ensure that the right strategy can be framed
for reducing the risks.
 Providing of integrated reporting and monitoring- The management of a company
should be able to provide integrated reporting and monitoring within all the departments
(Trigeorgis and Reuer, 2017). This will make sure that the problems and issues which the
departments are facing are identified quickly and thus the right steps are taken quickly for
rectifying them. In Sainsbury’s, this is required which will lead to solving of its problems
and issues and thus the company will be able to achieve its goals and objectives and will
be able to maximize its profits to attain a strategic edge in the market in the future time
period.
Therefore, for Sainsbury’s it is important that its management can use the above-mentioned
strategies for reducing the risks which are faced by the company. Through the effective use
of these strategies the risks can be reduced and the goals and objectives for short-term as well
as the long-term can be achieved. Therefore the managers are required to give priority to
using these strategies properly in different departments.
CONCLUSION
From the above report, it can be concluded that strategic management is required by all
the businesses. This ensures that a high-level of efficiency and effectiveness is achieved by the
businesses so that profits can be maximized and competitive edge can be obtained. Porter’s 5
forces can help the enterprises in assessing their competitive position. Case Study analysis can
help the companies in getting guidance from other firms on the use of proper managerial
techniques. Recovery plan is prepared so that a firm can recover from the impact created by its

issues. Also, risk management strategies can be used for the purpose of reducing the risks present
in various departments of a company so that it is able to achieve its goals and objectives.
REFERENCES
Books and Journals:
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Akhtar, F. and et.al., 2016. Incorporating permaculture and strategic management for sustainable
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Baumgartner, R. J. and Rauter, R., 2017. Strategic perspectives of corporate sustainability
management to develop a sustainable organization. Journal of Cleaner Production. 140. pp.81-
92.
Bettis, R. A. and et.al., 2016. Creating repeatable cumulative knowledge in strategic
management: A call for a broad and deep conversation among authors, referees, and
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Certo, S. T. and et.al., 2016. Sample selection bias and Heckman models in strategic
management research. Strategic Management Journal. 37(13). pp.2639-2657.
Durand, R., Grant, R. M. and Madsen, T. L., 2017. The expanding domain of strategic
management research and the quest for integration. Strategic Management Journal. 38(1). pp.4-
16.
Engert, S., Rauter, R. and Baumgartner, R. J., 2016. Exploring the integration of corporate
sustainability into strategic management: a literature review. Journal of cleaner production. 112.
pp.2833-2850.
Gallus, J. and Frey, B. S., 2016. Awards: A strategic management perspective. Strategic
Management Journal. 37(8). pp.1699-1714.
Gans, J. and Ryall, M. D., 2017. Value capture theory: A strategic management review. Strategic
Management Journal. 38(1). pp.17-41.
Goldfarb, B. and King, A. A., 2016. Scientific apophenia in strategic management research:
Significance tests & mistaken inference. Strategic Management Journal. 37(1). pp.167-176.

Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic
management research. The Blackwell handbook of entrepreneurship. pp.45-63.
Meyer, G. D., Neck, H. M. and Meeks, M. D., 2017. The entrepreneurship‐strategic management
interface. Strategic entrepreneurship: Creating a new mindset. pp.17-44.
Rosenberg Hansen, J. and Ferlie, E., 2016. Applying strategic management theories in public
sector organizations: Developing a Typology. Public Management Review. 18(1). pp.1-19.
Trigeorgis, L. and Reuer, J. J., 2017. Real options theory in strategic management. Strategic
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Online
How to use Porter’s 5 forces model. 2020. [Online]. Available through:
<https://www.smartinsights.com/online-brand-strategy/brand-development/how-to-use-porters-
5-forces-model/>