Strategy and Entrepreneurship Assessment 1 & 2

This document provides an analysis of the impact of various factors on the working of Sainsbury's, a leading retail chain in the UK. It includes an external environment analysis using PESTEL, industry analysis using Porter's 5 forces, and an internal analysis of the organization. The document also discusses the strategic capabilities of the company through value chain analysis and SWOT analysis.

STRATEGY AND
ENTREPRENEURSHIP
ASSESSMENT 1 & 2
1

TABLE OF CONTENTS
INTRODUCTION ...............................................................................................................................3
ASSESSMENT 1..................................................................................................................................3
1.......................................................................................................................................................3
2.......................................................................................................................................................5
3.......................................................................................................................................................7
4.......................................................................................................................................................9
ASSESSMENT 2 ...............................................................................................................................10
(1)...................................................................................................................................................10
(2)...................................................................................................................................................12
CONCLUSION .................................................................................................................................14
REFERENCES...................................................................................................................................15
2

INTRODUCTION
Strategy and innovation are necessary for gaining competitive advantage and success for the
business. It is vital that new and innovative strategies should be formulated for rendering effective
services to clients of business. It supports in gaining high market share and strong market position
for a firm. Present report is based on Sainsbury's which is a leading retail chain of UK that offers
food and other non food products for its consumers. External environment analysis of the company
has been done in the report by using PESTAL. It assisted in identifying impact of various factors
such as Political, technical, economical, technological, environmental and legal factors on working
of the enterprise. In addition to this industry analysis has been done by using Porter's 5 force
analysis and evaluation of each force on the working of supermarket chain industry has been done.
Furthermore an internal analysis of the cited firm has been done for identifying strategic capabilities
of the organization. Value chain analysis has been performed for discussing activities of the
enterprise and identifying core competence of the company. Moreover SWOT analysis has been
performed for identifying and assessing strength,weaknesses, opportunities and threats available for
an organization.
ASSESSMENT 1
1
Sainsbury's is a leading supermarket chain which operates in UK and renders quality
products to its consumers. Various macro and micro environmental factors affect the functioning of
the enterprise (Team, 2013). It is vital that impact of these factors should be considered while
making policies for business. PESTEL analysis for Saisbury's is as follows-
(Source- Thomas, 2007)
Political factors :- Changes in political conditions of the nation affect the overall execution
3
Illustration
1: PESTEL ANALYSIS

of operational activities of business. Whenever there is situation of changes in political conditions
of a nation than all the industries working in the country gets affected due to it. When there is
inflation in the country purchasing power of people reduces and due to it market growth also
reduces. When there is deflation than people give preferences to purchasing superior qaulity
products at higher price (Posner, 2014). Various policies and regulatory frameworks are formed by
government for regulating the business environment in the country. It is mandatory for all the
organizations to follow rules and law formed by government. Government of UK has formed
various law which affect the performance of supermarket chain Sainsbury's. Stable government in
UK offers a effective market conditions which led towards executing operations of business in
desired manner.
Economical factors :- Economical condition of a country also affect the working of super
market chain and various operations of business gets affected due to it. When there is positive
growth in economy purchasing parity of people increases and they give preference for purchasing
more number of products (Pawliczek and Rössler, 2016). If there will be negative growth in the
nation it will led toward decreasing the market growth which interns reduces buying power of
consumers. Demand and supply of products gets affected due to changes in economical conditions
of a country. Cost and profitability of business also gets affected due to alteration in economic
conditions of a country. Negative growth of economy led towards higher rate of unemployment due
to which purchasing power of individuals reduces. Supermarket chain also forced to reduce prices
of their products and due to it overall profitability of business gets reduces.
Social factors :- Various social factors also influences the working of supermarket chain and
overall growth of industry gets affected due to it (Parnell, 2010). Preferences of people changes on
the basis of sex, gender and age group. It is vital for company to provide people products as per
their requirements and choice. Other than this geographical locations of people also affect the
overall operations of business and due to it, it becomes vital for organizations to develop there
products as per the needs of the consumers. Trends in the industry changes and it becomes assertive
for the enterprises to render products and services as per the needs and requirements of consumers.
Technological factors :- regular changes and modifications in technological factors also
affects the working of the industry. Everyday new innovations and changes occur in the technology
and competitive firms take advantage of these factors for providing better products for their
consumers (Ghezzi, 2013). It supports in giving superior quality products at lower price and overall
profitability of the organization gets affected due to it. For meeting market demand and challenges
imposed by rival firms it becomes vital for organizations to adopt new technology products for
providing better services to consumers. Stores of the venture needs to be updated with new and
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advanced equipments for providing superior quality services to the consumers. Use of internet and
online platform is done by company for selling the products of enterprise to a larger consumer base.
It supports in meeting the market demand for products of the enterprise and due to it overall
productivity of enterprise decreases.
Environmental factors :- various environmental factors also affect the operations of
supermarket chain and overall efficiency of enterprise gets decreases due to it. It is responsibility of
the company to take significant steps for protecting the environment (Pehrsson, 2007). Waste
reduction and carbon emission needs to be reduced to a lower level for providing health and safe
protective environment to the clients of business (Global retail challenge, 2016). Various corporate
social responsibility (CSR) activities have been organized by the company for making community
people aware about diverse environmental issues.
Legal factors :- Different legal factors also affects the working of the supermarket chain.
Laws and regulatory frameworks have been formulated by state which are mandatory to follow for
all the companies. Strict punishments are also decided by government for organizations who does
not abide by policies formed by the state (Allio, 2006). It is vital for all the companies to strictly
follow all the guidelines and instructions formed by the authorities. Taxation policy and business
policies of government are formulated for managing business environment of the country.
2
Sainsbury's is a leading supermarket chain that operates in UK and render superior class
food and non food products for its consumers. Various external and internal environmental factors
affect the working of the industry and it is vital to consider all these factors while formulating plan
of action for business. 5 force analysis for the supermarket chain industry is as described-
Threats of substitutes :- Many competitive firms are offering superior quality food to the
consumers and due to this threats of substitutes is very high. Many companies are offering
substitute products at reasonable price and it is a challenge for the company to maintain its market
position (Sainsbury plc, 2016). demand for food and non food products in supermarket chain is
vary high and due to it it becomes vital for all Sainsbury's to adopt effective measures for meeting
the demand of industry (Alsudiri, Al-Karaghouli and Eldabi, 2013). Many companies are offering
same quality products at lower products. Wide range of products are offered by the enterprise and
rival companies are also offering goods at lower pricers that are causing challenge for the retail firm
to offer merchandise at lower price.
Bargaining power of buyers :- Buyers want high quality products at lower price and due to it there
is pressure on industry to reduce the prices of its products. Bargaining power of buyers is high and
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due to this it becomes vital for companies to offer good quality products at lower price (Veiga and
Franco, 2015). It is vital foe companies to determine prices of products by considering preferences
and requirements of buyers. If competitor firms will offer more quality products at lower price than
buyers will switch towards the rival firm and due to it profitability of business reduces. Prices of
the goods needs to be determined after doing a through analysis of market conditions and response
received from purchasers (Stan Abraham, 2013). More than 30000 products are offered by the
supermarket chain and wide range of commodities are offered to the business clients. It supports in
providing superior quality products to the clients as per there requirements. Buyers give preference
to goods that are of good and high quality and available at a reasonable price. Due to this it becomes
challenging for the firm to decrease the cost of its products and offer goods that are available at
lower price.
(Source- Cheng, 2013)
Bargaining power of suppliers :- Suppliers of the company provide necessary material which is
required for executing desired operations of business in successful manner. Suppliers wants higher
price for the products which they supply to the industry (Braun, Latham and Porschitz, 2016).
Sainsbury's is a leading supermarket chain which offers superior quality products to its consumers.
As the company is a leading group it is easy for the management to fix terms and conditions of
business with the suppliers. Company can make effective strategies for doing business with the
suppliers of the company and it will support in delivering superior quality products to purchaser.
Threats of new entrants :- Supermarket chain industry is facing intense competition and due to it
many new companies are trying to initiate their business in the industry. Every new company which
is starting there operations needs to take permission from appropriate authorities and due to this it
becomes complicated for starting a new venture in the same industry (Akhtar, Lodhi and Khan,
6
Illustration 2: Porter's five force analysis

2015). Due to new ventures opening in supermarket chain industry established firms are facing
intense competition and overall profitability of the business reduces. Many online service provider
companies are selling their products through websites and it is creating competition for other
players who are operating their business functions from a long time in the same industry
(Yuliansyah, Rammal and Rose, 2016).
Rivalry of competitors :- Supermarket industry is facing intense competition and due to it overall
productivity of the Sainsbury's is getting reduced. Major firms Tesco plc, ASDA and Safeway are
offering there products to large number of consumers through there super market chain and due to
this intense competition is faced by company (Cheng, 2013). Rival firms are regularly updating
there stores with new and innovative products for providing better services to the clients of
business.
3
Sainsbury's is a leading supermarket chain of UK and holds major share of the industry.
Superior quality products are offered to the consumers at a reasonable price and due to it consumers
give preferences to purchasing products from supermarket chain of Sainsbury's. It is among one of
the largest leading supermarket chain with multiple stores in UK. The enterprise holds more than
16% market share in the industry and all the rival firms are leading behind the company (Thomas,
2007). Food and other home ware products are offered by the venture to its consumers and overall
profitability of company gets affected due to it. Many awards have been won by the company for
offering superior quality products to the4 clients of business. Competitive advantage have been
achieved by the company by offering more superior quality products to its consumers.
(SOURCE- Parnell, 2010)
Value chain analysis is defined as concept which was given by Michel Porter. He has
described competitive advantage as initiative taken by a group for creating and maintaining superior
7
Illustration 3:
Value chain analysis

quality performance. Value chain is explained as set of predefined activities which supports in
achieving desired goals of the organization in successful manner. Whole logistics operations of the
company comer under the same category which includes purchasing of raw material, manufacturing
of products, delivering of material through a effective supply chain network (Murthy, 2012).
Various activities done by a business firm for performing desired operations of the business comes
under the category of value chain network. All the major functions of business are completed by
management of the organization in a successful manner. Effective strategies are formulated for
executing the operations of business in an effective mode. Sainsbury's is a retail chain and deals in
lifestyle and retail sector. Various food products and home-ware commodities are offered through
supermarket chain of the company. USP of the company is reasonable price products which are
offered at supermarket stores of the company (Marren, 2007). Company sells its products through
offline and online mode and large number of clients are offered products and services of the venture
by making use of this channel. Market segment for the company is people who purchase household
commodities. Various activities which are included in value chain network are capacity utilization,
Sainsbury's is a leading supermarket chain of UK which offers large variety of goods to its
consumers. It is vital that there should be proper linkage among activities performed in the
enterprise.
Policies and decision taken by the group are also a significant part of value chain network.
More than 150000 employees work with the company for executing the desired operation of the
corporation. Management provide effective leadership to the staff members and specific tasks and
responsibilities are assigned to each worker to accomplish (Marx, 2016). Marketing department of
the organization designs attractive advertisements and promotional strategies which aids in gaining
attention of consumers and creating brand awareness about products offered by the company. There
are 560 supermarket stores of the company where large variety of commodities are offered by the
venture to its consumers. Products of the group can also be purchased from authorised website of
the company and from other online shopping sites (Marren, 2012). Company is regularly expanding
its business operations in diverse geographical nations including African and Asian countries. It is
supporting in expanding the financial revenues of the organization and increasing profitability of
the venture. There are 340 convenience store of the company and sum total of 870 stores providing
products to consumers of UK. Company try its best possible efforts for providing services to the
consumers in an effective manner. More than 30000 products are offered at supermarket stores and
20% products are from own label brands of the venture. New innovations and modifications are
regularly done in the products offered by the company and it supports in providing wide range of
commodities to the clients of business.
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4
SWOT analysis is done for identifying and assessing strength, weaknesses, opportunities
and threats of the business. Swot analysis for saisbury's which is a leading supermarket chain of the
country is as follows-
Strength :- Sainsbury's is a leading supermarket chain which holds more than 16% market share in
the industry. The company has experienced and knowledgeable employees which amount more than
150000 and supports in executing desired objectives of the enterprise in a successful manner. More
than 30000 products are offered at supermarket chain of the company and among them 20%
products are under the category of own label goods (Armstrong, 2013). Marketing department of
company formulates attractive marketing strategies for creating brand awareness about products
offered in the company. All the products offered by the enterprise are checked for its quality and it
supports in delivering superior quality products to the clients of business. All the food products are
inspected for their quality and home-ware commodities are also inspected properly before their final
delivery to the consumers. Company is focussing for making products that are environment friendly
and causes less harm to local environmental area. It is largest retailer chain of UK and offers quality
products for its consumers. Wide variety of products are offered to buyers due to which high more
number of buyers are provided with the services and goods offered by the enterprise.
(SOURCE- Allio, 2006 )
Weaknesses :- Due to rise in food prices all over the world total investment cost of the company
has increased and it has forced the firm for increasing the price of products offered by it. In addition
to this stiff competition has been faced by companies working in the sector and it has challenge for
making modifications in existing products and services for gaining competitive advantage.
Opportunities :- Company has options to expand its business operations in large market areas of
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Illustration 4: SWOT ANALYSIS

divers geographical nations. Many markets like Asian and African countries offer good
opportunities for doing business in the country and it offers chance for enhancing profitability of the
business. Online platform offers options for selling products of the company to a large geographical
area (Wang and Shyu, 2008). It is a cost effective and time saving medium for doing business and
selling products which are offered by Sainsbury's. Options of partnership can be chosen for
expanding the operations of the company. Growing economies of the world such as African and
Asian countries offer larger market area and wide consumer base for selling products of the
company.
Threats :- Many rival firms such as ASDA, Tesco plc and other ventures are offering superior
quality products at lower price to the consumers. It becomes challenge for the company to gain
market share by achieving competitive advantage (Gautam, 2015). Globalization has opened doors
for doing business in more easier manner and due to it many new entrants are trying to establish
their business in supermarket industry. It is a challenge for companies which are presently existing
in the market and doing their operations. It is vital that modifications should be done in the
organizational structure and culture and products also needs to be designed in an effective way.
CONCLUSION
Summing up the present report it can be concluded that there are diverse factors that affect
the functioning of the business. External and internal elements influence the working of the
enterprise and operational activities of the organization are also gets affected due to this factors.
PESTAL analysis can also be done for identifying impact of external factors on business
functioning of the enterprise. In addition to this SWOT analysis can be conducted for assessing
strength, threats, opportunities and weaknesses of the company. All these methods supports in
formulating effective strategies for executing desired operations of business. TOWS matrix can be
constructed for formulating set of strategies for executing functions of business in successful
manner. Moreover CANVAS approach can also be used for implementing the strategies in an
effective manner.
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Online
Global retail challenge.2016.[online]. Available
through:<http://http://www.cpcstrategy.com/blog/2015/04/global-retail-biggest-challenges-
overcome-selling-internationally/>. [Accessed on 1st November, 2016].
Sainsbury plc.2016.[online]. Available through:<http://www.j-sainsbury.co.uk/about-us/business-
strategy-and-objectives/great-products/>. [Accessed on 1st November, 2016].
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