Strategic Management Analysis of J Sainsbury Plc using Porter Five Forces Model

STRATEGIC
MANAGEMENT
ANALYSIS

Table of Contents
INTRODUCTION.........................................................................................................................3
FINDINGS......................................................................................................................................3
Overview of Porter model of competition...................................................................................3
Company analysis........................................................................................................................5
Does this theory and practice work?............................................................................................7
CONCLUSION..............................................................................................................................9
RECOMMENDATIONS............................................................................................................10
REFERENCES AND BIBLIOGRAPHY..................................................................................11

INTRODUCTION
Strategic management is a continuous approach followed by business which involves-
planning, monitoring, analysis and assessment of all necessity of a company needs through
which an organisation can achieve their targets. As the business environment is rapidly changing
and due to its dynamic nature, a business can continuously analyze and assess their strategies for
business success (Allison, 2019). Business policies acts as guidelines which are created by an
organisation and these policies defines all actions and activities which needs to be performed by
an organisation to meet the desired performance standards, organizational objectives and make
progress towards business success. J Sainsbury Plc is a supermarket chain in UK which is a
second largest retail chain. The company is a public limited company which is operating with
numerous subsidiary companies and wide variety of products. The study is based on strategic
management analysis of J Sainsbury Plc and the analysis of Porter Five Forces Model. The report
will also outline how Porter Five Forces Model has been implemented by business and what
strategies can be adopted for the improvement of business functions to enhance the competitive
position and competitiveness of the company within the industry.
FINDINGS
Overview of Porter model of competition
Porter Five Forces Model is a framework which examines and evaluates five competitive
forces to identify strength and weakness of a company. The Porter Five Forces Model was
proposed by Michael E Porter in 1979 and this framework is helpful for evaluating and assessing
competitive strength of business and the position of an organisation in the industry (Amason and
Ward, 2020). This framework is used for determining organizational structure by which
corporate strategy of business can be identified. The Porter Five Forces Model can be
implemented in different parts of the economy which will help in gaining insight regarding the
competition in the industry and it is also helpful in increasing the long-term profitability of
business.
Porter Five Forces approach is used to determine competitive environment of a business
and supports in providing direction for planning business strategy. This framework support in
evaluating intensity of competition attractiveness and profitability of an industry in which

business is operating. The five forces which are identified with this framework involves-
potential of suppliers, potential of buyers, competitive rivalry, threat of substitution and threat of
new entrants.
The five forces of Porter Model are explained below:
 Potential of buyers- It is a force which is identified with the help of Porter Five Forces
Model. By identifying this force, it helps in determining the power and potential of
customers which can create an impact on business. The potential of customers can also
lead to setting lower prices of products. The power of customers can be high, if a
business has small or narrow client or customer base as customers can negotiate with
companies for better and affordable prices of products and services (Anokhina,
Maksimov and Seredina, 2019). A business with greater number of loyal customers has
the opportunity to set higher prices for the products, as this will be helpful for enhancing
the profitability and success of business.
 Potential of suppliers- The power of suppliers is another force of Porter Five Forces
model which identify the power of suppliers as they can create an impact on business
profitability and revenues. If the number of suppliers is low, then it will lead to a greater
number of organisation dependent on few suppliers. Whereas if the number of suppliers
is high, this will lead to low switching cost to different suppliers as a business will look
forward to invest at low cost which will be helpful and profitable for their revenues,
profitability and sustainability of business.
 Competitive rivalry- This force of Porter Five Forces model helps in understanding the
number of competitors operating within the industry and gain insight regarding their
abilities which can create an impact on other existing companies operating in the same
industry. If competitive rivalry is low, the power of a business is high as this is where
they get opportunity for setting high prices of the products and this will support business
in generating higher revenue from sale of their products and maximize business
profitability.
 Threat of new entrants- This factor of Porter Five Forces model supports in determining
the threat which can be processed by a new entrant or business in the same industry with
new approach (Barney and Hesterly, 2019). This factor defines that the success,