Strategic Management: Analysis of Sainsbury's and its Competitors

This report provides a strategic analysis of Sainsbury's, the UK's largest supermarket chain, and its competitors. It includes a PESTLE analysis, major issues in the retail industry, mission and vision statement, strategic competencies and capabilities, and recommendations for improvement.

Strategic Management

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Task 1...............................................................................................................................................3
PESTLE analysis.........................................................................................................................3
Major issues of Sainsbury in the retails industry.........................................................................5
Move on sustainability.................................................................................................................6
TASK 2............................................................................................................................................6
Mission and vision statement of the company.............................................................................6
Strategic competencies and capabilities......................................................................................7
Ways that how the company creates, delivers and captures value within industry.....................9
Task 3.............................................................................................................................................10
Porters’ Five Forces...................................................................................................................10
Competitive positioning.............................................................................................................11
Porter Generics Strategy............................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Strategic management is considered to be the ongoing process which have the proper planning,
monitoring and analysis of the all the important assessment of the company’s in order to meet up
the certain goals and objectives. Business environment have continuous changes which need the
dynamic strategy of success as it helps in tackling present situations, chalk out different
strategies along with deploying them for the effective implementations of management
strategies. Sainsbury is an incorporated firm which is one of UK largest retailers (Patel and
Harnett, 2018). At the present company have more than 800 stores which have inclusion of the
supermarkets and convenience store. In this report, there will be clear discussion with strategic
analysis which is supported by identifying strength, weakness, opportunities & threats of the
organisation by SWOT analysis. In addition to that’s there, the report will have environmental
analysis which effects the business strategy of company. This report will provide a clear idea
about the applicability of business model which is being face competition in external
environment. In addition to that’s there will be proper level of recommendations which supports
the firm in order to improve strategically and rise the indifferent business standard.
MAIN BODY
Task 1
Sainsbury is the UK largest supermarket chains which have gone through a level of tough
competition with other respective brands such as Tesco. In the such a tough competition it is
important for Sainsbury to pay close attention on the immediate level of business environment
along with its effect on the internal business operations (Harper, 2016). In effect to that there is a
potential way to have identification external marketing environments by using more level of
effective pestle analysis which have the clear reviewing of PESTLE analysis
Political factors
The firm have faced there more level of serious consequences among the UK supermarket chains
as the leaving the European union which is more been identified as Brexit uncertainties. In
addition to that’s it turned to be difficulty for supermarkets to have affordable importation of
products from abroad.
The next impacts of Brexit uncertainties is increase in cost of production of foreign product
would likely to have t passed to the more end customers which have resulted Sainsbury to have
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hard push over the consumers in order to continue spreading as much as possible in order to have
maximization of profit.
Economic factors
The economic factor significantly played an important character in the retail industry as this have
effect demand, cost, prices and profitability. As per the current situation, UK government have
the high debts along with consumers which have impact attitude of customers. This created more
level of business pressure for Sainsbury to operates in such a business condition (Harper, 2016).
In addition, that’s as the political factor were not in favour, the company is able to have steady
growth because of its long heritages of the offering better quality products at more competitive
prices. in addition, that due to backwards of economic factor company have resulted in rampant
rate of unemployment along with high prices of food products. The company have involvements
of various strategy to reduce the cost of products in more way to offered better quality products
at more competitive prices.
Socio-cultural factors
In the todays market, the trend of customer has the major level of preference over the one stop
shopping which is about preferring of all products available under roof. The company have
introduced their non- food products have largely which is benefited from the specific strategy.
On the other hand, the social factors which have increasing female workforce along with
longevity in the level of population (Ntsiful, 2016). This have resulted in the level of declination
of domestic meal making as growing demand for certain patterns over certain types of product.
Technological factors
The technological advancement has positive impact over the business operations which have
significant growth potentiality in the online or the web-based operations. The firm have the
online business operations in moreover to increase the business market areas. This Sainsbury
online delivery services have continuous improvement with expansion in increasing the sales by
25%. This online service have viability to 88% of the United Kingdom households.
Legal factors
The government have the effective rate of the legislation and differentiated policies which have
direct impact on performance of the organization. As the legislation have introduced the new
level of tax which is advertising to have their highly processed for and along with fatty food in
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reduction of the sugar (Ntsiful, 2016). Sainsbury have the adaptation new tax which is being
modified its level of products along with complied level of legislative requirements.
In addition to that Sainsbury have maintenance of different types of legal laws which have
inclusion of consumer laws, competition laws, employment laws and health and safety laws.
Environmental factors
There is more level of pressure on the firm along with managements to have the act in more
socially manner along with holding respective responsibility in order to keep the environment
safe. This have impacted the Sainsbury in direct or indirect ways. The company have taken the
level of initiatives by campaigning their concept of ‘Reduce, Reuse, recycle’ approach for
managing waste, packaging and recycling. On the other hand, the firm is also trying to reduce
carbon footprints by identifying the new ways to becomes more level of environments friendly.
This will have impacts in reducing here ecological damages which is caused in business
operation.
Major issues of Sainsbury in the retails industry
The firm is facing there more level of challenges with declining level of market share in the
UK super markets which is instead of merging of merging with ASDA in order to overthrow
Tesco from becoming the market leader.
 In addition to that more level of consumers have considered sustainability as the
important aspects as the factor of choice which is considerably higher as comparative to
shopping of clothing and other beauty products.
 On the other hand, as the impact of the ‘blue planet effect’ in major leading to the
consumer who are pointing the finger at supermarket to have decrease their subsequent
environmental impacts through plastic reduction which is estimated as the usage of 80000
tines per years (Patel and Harnett, 2018.).
 This have results UK biggest level of retailers in the enviable position for balancing more
level of social responsibility with having protective margins.
 The firm is also facing the issues of very selective capital investments which is due to
the margin pressure brough through trade wars, rising interest rates and the apparent
disinterest of the private equity community will limit access to capital for investment.
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Move on sustainability
 At the edge of global business competitive environment is concern, every problem is all
about to have development of opportunity as the Sainsbury is nor ignoring the issues by
trailing 45 tons of plastic free fruits along with removing around 6500 tons of plastic over
the last 12 months. In addition to that firm is trying to find out more of local solutions by
widening the customer base which is more key concerns about sustainability for food
shopping.
 The firm has tired to have the raise an innovative approach for creation of the ‘refillable
zone’ as trail which is allowing the customers with the range of ambient food which are
such as cereal, rice and pasta. But through, the involvement of sheer volumes, the firm is
trying to have the activation of ability to order to create more level of competitive
advantage.
 Sustainability plays an important role in real battle against the firm who are heavy
discounters (Brown and Taylor, 2018). So, the firm is trying to have the proper level of
focus on the eating healthy and reducing level of deforestation through the use of more
sustainable resource. This will be impacted as the accelerations and growth in food &
grocery products to have the start the trade again.
Hence the firm is trying to have the major focus on the target areas where the competitive rivals
are not able to have the proper focus such as more level of experimentation on the packages sixes
in order to have the lowering of food wastages. In addition to that’s have the more improvement
in drive home concepts through increase in store marketing.
TASK 2
Sainsbury’s mission and vision
Before defining vision and mission statement, it is essential to know the exact meaning that
what is the mission and vision statement and why all organizations create or develop these
statements before making a plan and running a business (Bowen, 2018). In the context of
mission statement, it can be said that it is a statement which defines a company’s business,
objectives as well as approaches which allows company to reach all defined objectives.
Whereas, a vision statement defines the desired future position of the company as where it sees
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itself in the future or were it wants to be. Here are the mission and vision statements of
Sainsbury’s along with some values which defines its image such as:
Vision: Vision of the Sainsbury’s of future goals is to become the most trusted retailer and
make an environment where people love to work as well as shop (Vision Statement and Values
of Sainsbury’s, 2018). For accomplishing this vision or the future objectives, Sainsbury’s is
trying to put their customers at the heart of everything. It also invests in its stores, workers and
channels as well in order to offer the best possible shopping experience to customers and
accomplishing vision.
Mission: Mission statement and objectives which it wants to achieve in the present is to
offer high quality of services and products to customers as well as maximizing effective financial
return to stakeholder. It also wants to be the first choice of its customers specially for food and
deliverable products at affordable prices.
Values: Values refers fundamental believes which motivate an organization and people to
perform activities for accomplishing goals. There are 5 main pillars of Sainsbury’s which link it
with its values such as: community, colleagues, health, sourcing and the environment. So, from
all these pillars it can be said that it thinks about all who are involved with the company directly
and indirectly. So, as per the values, it wants to help its customers by providing healthy food
products and by improving the quality of food.
Strategic competencies and capabilities
There are several internal environmental factors by which performance of Sainsbury’s can
be affected in both positive and in a negative manner. For reducing all those factors which can
affect it in negative manner and increasing positive environmental factors, it is important for
company to analyse all factors (FATRICIA, 2016). For this purpose, it is also important to select
the best strategy and with the help of SWOT analysis model, it can identify all internal
environmental factors which are discussed below:
Strengths
All type of customers: One of the main strength of Sainsbury’s is it caters all types of
customers. It does not have any specific age group and characteristic of customers or target as it
offers its food products and services to all types of customers. There are only few products which
are expensive and for that it has targeted higher income of people.
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Innovation strategies: It is stated that Sainsbury’s is mainly known for its innovative and
effective promotional strategies. These strategies allow it to make people aware about features of
products. Example of its innovative strategy is brand match promotion. In this strategy,
Sainsbury’s sells its one of the products by comparing its own brand with same companies in the
industry or other players (SWOT Analysis of Sainsbury’s. 2019).
Right expansion moves: Its other main strength and ability which makes it successful is its right
expansion of business moves. There are several companies who got failed because of the wrong
decision of brand expansion. But Sainsbury’ got successful and increased market shares by this
strength.
Weaknesses
Low profit margin: It is stated that competition in the retail industry of the UK is increasing
rapidly. It puts pressure on all retailers to make its position stable in the industry by the hook or
crook. So, for attracting customers’ and remaining in the competition, Sainsbury’s has decreased
its profit margin, it can give it profit in the future. But currently it is a weakness of Sainsbury’s.
Increasing costs: For procurement costs, retailers are bound to spend on shopping experience
which may be differentiator for higher income group of people. All accommodation and
attracting customers, it requires to invest in technologies and other elements which can increase
its overall cost.
Opportunities
Market expansion: It is stated that Sainsbury’s has a strength of right expansion movement and
this strength can provide it opportunity of market expansion, In addition, it is also stated that
Sainsbury’s has expanded its business in villages rather developed countries. It has made it able
to increase sales and improve image in the eyes of customers.
Changing lifestyle of customers’: It is stated that customers continuous changing needs are
putting pressure on retailers to change their way of performing and make all food products
healthy. It is stated that Sainsbury’s has strength of innovation strategy which has made it able to
take advantage of changing needs of customers. With the strength it is satisfying changing needs
of customers..
Threats
Competition: Retail industry of the UK is becoming competitive day by day. It may decrease or
lower revenue and sales of all retailers. Customers have more bargaining power and they can
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switch their shops. So, it can be said that competition in existing players such as: Aldi, Asda and
Tesco is the big threat for Sainsbury’s.
So, from the above, it can be suggested that Sainsbury’s need to focus on using some
differentiation and cost leadership strategies to decrease weaknesses and threats (Misbah and
Mahboob, 2017).
Ways that how the company creates, delivers and captures value within industry
Fair price: One of the main and best strategies which makes it able to create as well as
deliver values is its fair pricing strategies. It is the strategy by which Sainsbury’s retain its
customers within the organization for the long run. By sharing customers’ passion for safe, fresh
and healthy food it delivers value (Täuscher and Laudien, 2018). It also focuses on continuous
innovation and delivers quality of products and fair prices. So, it can be said that it is one of the
effective strategies of Sainsbury’s.
Active property management: It is stated that the ownership of the property assets of
this company can deliver an ability to adapt operational situations as well as exploitation of
development opportunities can increase value. So it can be said that ability to manage property is
other main valuable strategy (Cortimiglia, Ghezzi and Frank, 2016).
Promotional channels: It is stated that Sainsbury’s has effective and innovative
promotional strategy which has made it able to take competitive advantages and attracting
customers to the great extent. To reach customers’ it has allowed its customers to come its stores
and also allowed them to buy products online. By opening new convenience stores as well as
online operations it is creating and delivering value within the industry. In the context of online
operations, it is also stated that it expanded its business with a good sale just under approximate
20%.
Sustainability: It is analysed that Sainsbury’s has 5 main pillars which shows all those
things for which it thinks about. The environment and society are 2 of them. For satisfying needs
of environment and society, it develops sustainability strategy which does not only allow it to
satisfy their needs but also increase image of this company in the eyes of people. It also makes it
able to attract wider range of customers (Setting Sustainable Sourcing Standard,. 2019). As per
this strategy it has created new and independent sustainability standards for sourcing raw
materials. It also works with trusted partners, developed action plans, increase relation with
suppliers and customers’ and make them sure that all it sources products with sustainability.
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So, from the above discussed all strategies it can be said that Sainsbury’s is one of the
sustainable organizations who sources with integrity. Rather, sustainability and all these
strategies it has other main strategies which allow it to create and deliver values such as:
differentiation strategy, skilled workforce etc.
Task 3
Porters’ Five Forces
Competitive forces under this model are from the industry within which firm is operating.
Here competitive forces of Sainsbury’s are being analysed these forces are-
Threat of New Entry
This competitive force includes competition that Sainsbury’s may face from the new entries
in the industry (Lewis, 2017). Strength of this competitive force is based on various factors
like capital and investment required to enter in the industry, restraining force from current
existing firms for new entry etc. Competitive strength in Sainsbury’s in this is strong as this
is not easy that any firm can enter retail industry at such big level. Though it is possible to
operate at small level with less capital investment, which is also competition for Sainsbury’s
but cannot make significant impact on its success.
Threat of Substitute Products
Sainsbury’s is a retail firm and this is why the company itself provide all the substitute
products for its products. But here substitute rather refers to those companies from where
customers can buy goods instead of Sainsbury’s. In this context Sainsbury’s have various
substitute like online retail websites, local grocery stores etc. In this competitive force power
of Sainsbury’s is low.
Bargaining power of Suppliers
This is the power that suppliers possess and this is strong when suppliers are limited or they
are supplying products which are rare and difficult to find. Sainsbury’s in this competitive
force is strong as there are more suppliers comparing to buyers and resources being supplied
are not difficult to find somewhere else (Meyer and Cohen, 2018). Along with cost of
switching suppliers is also not significantly different and this makes everything favourable
for Sainsbury’s.
Bargaining Power of Buyers
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This power is power of buyers and can be said as power of customers. Presently customers
are most powerful force but, in this context, customers are powerful when they are less in
numbers or there are many others firms to cater their needs and cost of switching is also not
high. In this context there are high number of customers and this make the Sainsbury’s
powerful than customers but at the same time there are various other firms operating in this
industry and customers can change the seller without significant of switching. On this note
power of Sainsbury’s is low. On its overall analysis it can be said that power of Sainsbury’s
in this force is moderate.
Industry Rivalry
This force of competitiveness refers to rivalry that exists among existing firms in the
industry. There are various factors which make firm strong in this power and due to its
competitive strength position of Sainsbury’s in this force is strong. But there are various
other firms and this make competition strong.
Competitive Force Position of Sainsbury’s
Threat of Entry Strong
Threat of Substitute Weak
Power of Suppliers Strong
Power of Buyers Moderate
Industry Rivalry Moderate
This analysis concludes that Sainsbury’s can take advantage of those factors in which it is strong
to compensate effect of those in which its position is weak (Zhang, Leng and Zhou, 2020).
Sainsbury’s can use its competitive strength in industry rivalry to weaken the impact of
threat of substitutes.
Competitive positioning
This is helpful in the paying more level of emphasis on the importance of there environment by
providing useful tools in order to have proper analysis of business in context of controlling
industry. This approach has been used by Sainsbury in in order to have the degree of difference
between products or services against the respective competitors. In to that, Sainsbury have the
belief that positioning withing the firm is helpful in achieving there mind of consumers which
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enable business to gains competitive advantages (Zhao and Dou, 2019). This is all based on the
porter generics strategies with the implication of strategic fits which is used between the
organizational and environment.
Porter Generics Strategy
This porter generics strategy is the framework which have proper examination of
environment in order to make strategic decision in achieving the desirable position. The generic
strategies have proper attainments of average level of performances as the strategies.Sainsbury is
dealing at the broad segments which have inclusion of the cost leaderships and the differentiation
strategies whereas in the narrow segments have the clear aims to have cost advantages which
have inclusion of the cost focus and differed focus such as banking line of Sainsbury.
The firm have developed the adoption o the hybrid strategy which have the acceptability
element of both cost leadership and differentiation. As per the hybrid strategy have the seek
simultaneously to achieve more level of differentiae by lowering the price as compare to
competitor. On the other hand, it has been argued that’s Sainsbury should have lowered the
prices of products in order to have achievement of differentiation concept. In addition, that’s the
reason behind this is, Sainsbury should be able to obtain their prices at least equal to competitors
such as Asda and Morrisons if not higher due to them being market leader.
This will result in Sainsbury by achieving high standard of market share in UK. As this
will be due to the achievement of grate volumes over the different competitors as term margin
could be still considered as superior aspects with lowering the base which is previously being
perceived.
The more level of hybrid strategies has been used as the entry strategy in per the market against
the established competitors in order to have the targeting of marker along with entry in different
geographical areas with superiors’ products at lowering the process.
In addition to that’s as the approach as cost leadership becoming the lowest cost
producers in more way of earning the profits which is essentialism been undifferentiated rivals.
The firm have the major consideration over their reinventions of the extra points in order to
became the cost leaders when this is against per organization experience.
On the other hand, as per the differentia firm would have entailing the approach which is being
aimed as charging over premium price over different products along with services in
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competitive environment. Sainsbury to employ a differentiation strategy, there is a need to
consider the inclusion of extra costs that the company would be forced to incur.
CONCLUSION
From the above assignment, it can be concluded that Business environmental analysis
played a vital role as its makes an organization able to identify all internal and external factors
which can affect its performance in a critical manner. With the help of effective strategic analysis
or identifying strategies as per the situation, company meet their organizational goals. With the
help of using effective strategies like SWOT analysis model, PESTLE analysis model, company
analysis its own strengths, weaknesses, opportunities, threats and political, social and other
factors. Further, it has also shown importance of competitive analysis with the help of Porter’s
five forces model. This model also allows an organization in identifying the intensity of the
competition in the industry which can either snatch some external opportunities or can provide.
Porter’s generic analysis also played a vital role which makes an organization able to make its
processes and products innovative and different than others in order to attract wider range of
customers and take competitive advantages. It has also shown different ways by which company
creates, delivers and captures valued within an industry and it include: differentiation strategy,
sustainability and other capabilities of an organization of creating value.
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[Online].
Vision Statement and Values of Sainsbury’s. 2018. Available through: <
https://www.about.sainsburys.co.uk/about-us/our-vision>
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