Sainsbury's Strategic Management Analysis

This assignment delves into a comprehensive strategic analysis of Sainsbury's, a prominent British supermarket chain. It utilizes the PESTLE framework to examine the political, economic, social, technological, legal, and environmental factors influencing Sainsbury's operations. Furthermore, Porter's Five Forces model is employed to assess the competitive landscape within the industry. The assignment concludes with strategic recommendations aimed at enhancing Sainsbury's performance and navigating future challenges.

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Business and Business Environment
Name
Institution of Affiliation

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BUSINESS AND BUSINESS ENVIRONMENT
Executive Summary
This report will look at the business and business environment with a major emphasis of the
Sainsbury's retailer supermarket. Initially, the assignment will look at the organizational culture
of the retailer and the how the organizational structures and organizational functions are related.
It will also emphasize on the critical assessment of the company. There are some macro and
micro factors that directly and indirectly affect how the company achieves its goals and the
success of the operations. In the project, there will be an analysis of various external factors such
as economic, social, political and technological factors. With regard to Sainsbury's, there will be
conduction of a PESTLE and SWOT analysis for the establishment of the various impacts of the
discussed factors and the necessary steps to be implemented.
Table of Contents
Executive Summary.....................................................................................................................................2
Introduction.................................................................................................................................................3
Part 1: An in-depth analysis of Sainsbury's..................................................................................................3
1.1 Different organizational functions at Sainsbury's and how the incorporate to the company's
objectives and structures........................................................................................................................3
1.2 The impacts of the web of the interrelationship of the functions of the organization and the
organizational structure..........................................................................................................................6
Part 2: Critically assessing Sainsbury's.........................................................................................................7
2.1 The implications of macro and micro factors........................................................................................7
2.1.1 The identification of the positive and negative effects of the macro-environment on the
Sainsbury's business activities.................................................................................................................7
2.1.2 Conducting internal and external analysis to establish the strengths and weaknesses of
Sainsbury.................................................................................................................................................9
2.1.3 The explanation on the strengths and weakness and how they are linked to external factors....10
2.1.4 Evaluation of the Sainsbury PESTEL and SWOT analysis...............................................................11
2.2 Reflective Statement of finding of the report......................................................................................15
Conclusion.................................................................................................................................................16
References.................................................................................................................................................18

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Introduction
Sainsbury's is one of the main retailer's stores in the UK and was founded in 1869. The founder
of the company was John James and wife Mary Ann. Currently, the company commands an
approximate 16.3% total market share, and it is has emerged as the third largest store chain in the
United Kingdom. In the UK, it is the major supplier of food products and the oldest of them all.
At the beginning of the 1990s, it was the market leader in the retailing stores but later lost to
Tesco. Currently, it holds the third spot with regard to market share perspective. The main reason
to be the lack of competitive advantage and ultimate fall in comparison to its competitors include
the lack of a market strategy that is innovative. Other factors that led to its lack of popularity
include the corruptive acquisition of Egypt, changes in its management and misleading in the
growth opportunities (Griffin 2011). These are some of the factors that responsible for the retailer
store downfall. Various micro and macro factors implicate the achievement of the organization
objectives. These factors also impact the company decision-making process. The vision of this
organization is to emerge as the most trusted brand as perceived by its stakeholders and to
emerge as the place where people would love and enjoy to shop.
Part 1: An in-depth analysis of Sainsbury's
1.1 Different organizational functions at Sainsbury's and how the incorporate to the
company's objectives and structures.
There are many types of business organizations that are in existence and include public sectors,
private sectors, legal structure and voluntary sectors. Sainsbury can be classified as a public

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limited company which was founded in 1869 in London: UK. Essentially, the company is a
convenience store and hypermarket. It can also be considered as a supermarket. The company
employees 161,000 employees who work in its 598 supermarkets and 714 convenience stores. In
2015 the company registered a net income of approximately £166 million. The company just like
other stores has some aims and objectives which drive the performance of various operations.
Aims and objectives aid the company to know their direction, assess any shortfall and enhance
positive results (Brair & Hitchock 2001). They also keep in motion the mission of the company.
Sainsbury objectives entail being a leader in the provision of high-quality goods and services
while operating with integrity. These products should be better than those from competitors. The
company also aims to attain the highest standards regarding cleanliness and hygiene. It should
ensure operational efficiency, convenience and customer service. This will ensure that the
company provides a shopping environment that is friendly and attractive. Another objective of
the company is to provide excellent opportunities to its workforce for career development and
remunerations in line with the wages bills.
The company has the objective of increasing the market shares and consequently improving
profits. Their approaches that reduce operational costs are implemented and also to improve the
company efficiency. The basic functions of the company include the convenience stores,
SavaCentre, Sainsbury's fuel, café, business cards, entertainment, energy and Sainsbury's energy.
Finance is essential in every step of the company's operations. The function of the financial
analyst is to advise an investor through the provision of definite knowledge concerning the
company and potential ventures (Jones 2008). This helps in the management of investor
relationships. The finance functions implicate the commercial function of Sainsbury's, helps in

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the management of costs with vendors, aids in the improvement of revenues from the sale of
products and services.
The functions of Sainsbury concerning marketing include store fascia, loyalty card, slogans and
brand ambassador among others. This department has direct effects on the attainment of the
company's objectives. This through the development of the company's products and services.
The marketing functions have the responsibilities of developing the company's marketing mix
and the management of the brand image. Sainsbury's acknowledging slogan has been dynamic
over time. This is evident as in 1882; it was quality perfect, prices lower and in 1918 it was
Sainsbury for quality, Sainsbury for value. This has sued for the attraction of the attention of
customers and make the loyal buyers.
Another department in Sainsbury is the R&D department which lays emphasis on research and
development. This program entails the research and development of the quality of its products,
the market strategy, and efficiency enhancement. This means that if the R&D department is not
efficient, the company will lose customers over time due to lack of innovativeness and new
approach strategies to the market. Customer needs and preferences are dynamic, and this means
that they want newer versions of the same products and it is the role of the R&D to actualize.
There are the logistics departments which focus on the management of the distribution center,
transport, and warehouse functions. The logistics department is essential in the daily operations
of Sainsbury store. Since the company is a public limited company, it is required to comply with
company act. There also the human resource department which is critical in the performance of
daily operations. To have a strong workforce at Sainsbury, employee satisfaction must be
guaranteed. There is a reduction of performance and achievement of goals if the employees are

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not happy and therefore this department is essential in dealing with employee interests. The
discussed functions which are operations, finance, logistics, marketing, research and
development among others are carried out to realize the Sainsbury objectives. These functions in
the company are aimed at the achieved of increased marked shared, marketing which effective
and efficient, reduction of operational costs and maximization of company profit margin.
1.2 The impacts of the web of the interrelationship of the functions of the organization and
the organizational structure.
Organizational structures can be described as the interconnected network of many activities and
the surrounding human resource responsible for the assigned tasks. It entails activities such as
work allocation, coordination and the appropriate supervision which have been established to
achieve the aims and objectives of the organization. There are a variety of organizational
structures and include functional, divisional and matrix structures. Sainsbury has a divisional
organizational structure which entails six operational division as seen the company website. The
divisions include Sainsbury stores, online, property, finance, energy, and entertainment. Due to
the six divisions, Sainsbury is said to have a divisional organizational structure.
There a quite some benefits derived from the interrelationships between the various
organization's functions and structures. In a situation were less interrelationship is desired, a
company can adopt functional structure (Carel 2008). This structure provides that various
functions are assigned to various departments, and there the departmental managers provide the
relevant reports. All the employees are required to deal with the assigned tasks, and therefore
interrelationship needed. A firm can adopt divisional structure if there is many interrelationships
required. This provides the organizations with the power to deploy its workforce to deal with the
various functions in all the departments. For example, if a firm has a variety of product lines and

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adopts the divisional structure. This means that the organization needs to have marketing, R&D,
sales and accounting among other departments for each product. The high interrelationship and
teamwork are desired, then the company should consider implementing the matrix structure.
There are both pros and cons of the interrelationship of functions and the structure of the
organization. Interrelationship promotes the sharing of skills, experience among the employees
and this is beneficial to the organization in the long term. This means that the organization can
recruit employees from diverse origins, culture, and ethnicity. It aids the company in the
development of diversity in the workplace which fosters an environment of sharing skills and
experience. It is not always possible gathers are the requirements, but the provision of a friendly
working environment helps in realizing the full potential of the employees. The interrelationship
helps in the proper function of the operations and timely achievement of the goals. Despite the
above benefits, there some shortcomings which include a slower process of decision making.
This is so since the organization has to perform two aspects of the interrelationships in the
process if its adoption.
Part 2: Critically assessing Sainsbury's.
2.1 The implications of macro and micro factors
2.1.1 The identification of the positive and negative effects of the macro-environment on the
Sainsbury's business activities.
Macroeconomic factors have a profound effect on the operations undertaken by any firm. These
factors usually include economic, political, environmental and technological. There are both the
benefits and shortcomings of these factors on the business operations of Sainsbury.
Economic Factors

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These are the factors that impact on the purchasing power and spending of the customers in an
economy. They include GDP, GNI, sales tax, unemployment inflation and GDP real growth rate.
Another important issue is the disposable personal income. In the case of immense growth in the
economy, there will be positive impacts on the level of sales for Sainsbury since the income of
the consumers will have improved. On the other hand, increase in inflation will lead increase in
the cost of raw materials leading to high product prices.
Political Factors
These factors have a great effect on the operation of an organization. Political factors entail the
degree of government interference in the business operations. They include factors such as legal
issues, rules from the governments and other relevant regulations that affect the policies and
procedures in the organization (Regoff & Bezos 2007). There are new challenges and
opportunities in the retail market brought about by the concept of globalization. Since Sainsbury
is a retail store, globalization has brought about opportunities such as joint ventures and
partnerships in the emerging markets, especially in the developing nations. Also, the UK
government has reduced the corporate tax by 2% from 30% to 28% which has helped the
retailing business to make the investment with the excess money.
Technological Factors
When technology has utilized the rate of growth of production increase. The development is both
in quantity and quality, and therefore technology has affected the operations ate Sainsbury. The
company will be to adopt the trending technology and integrate it into the business. Failure to do
this, the production of goods and services would be outdated making the company lose market

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opportunities. Most the consumers are not fun of queuing process witnessed in the UK. The
modification of this issues using technology has been a basic concern for the company.
Environment Factors
These factors affect the way business operations are carried out, and they include natural
resources. Marketers and their activities influence These factors. Environmental factors must be
maintained as eco-friendly since they affect the operations.
From the above discussion, it can be seen that the macro-environment factors have its pros and
cons concerning the operations of Sainsbury's.
2.1.2 Conducting internal and external analysis to establish the strengths and weaknesses
of Sainsbury.
In the running of daily business operations, there are strengths and weaknesses that apply in
every situation. The paper will establish the weaknesses of Sainsbury after evaluation of the
internal and external analysis. One the strengths that give Sainsbury competitive advantage is the
use of online media in which customers can make orders and have their orders delivered. Only a
few of the retailers have adopted this approach, and therefore the company's online growth is
improving, and this is one of the company's viable strength. It also takes care of its loyal
customers through the provision of high-quality products supported with after sale services and
maintenance of excellent customer relationship. The loyal customers are some of the biggest
strengths of any company (Brair & Hitchock 2001). One of the organizational goals is to attract
loyal customers, in this respect, Sainsbury does research and development on the marketing
strategy and customer relationships. Another strength of the firm are its strong brand equity
which is essential in making new customers be loyal customers. It is much smoother to achieve

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success in the situation that the firm has a strong brand image since it makes the customer to buy
the products even without being persuaded. Sainsbury has been able to create a strong brand
equity value concerning its products and services. This analysis has established that the company
was the first to implement fair trade which is essential since it shows that the company has been
able to utilize innovation. People, on the other hand, will need to respond to innovation through
enhanced purchase behavior. After looking at the market reports, the company has a problem
since it has one of the highest labor turnover rates in the UK retail industry. Also, the own brands
are not preferred by some customers in comparison to key competitors such as Tesco and Asda
among others. If a loyal customer fails to purchase its products, it can lead to the loss of the
market share.
2.1.3 The explanation on the strengths and weakness and how they are linked to external
factors.
There are those Sainsbury's strengths and weakness that affect the achievement of the proposed
organizational goals. One of the strengths is the use of online media in marketing, and this has
been enhanced through the enhancement of technology. Some external factors such as
technology are as result of the implementation of online marketing which leads to increase
viability to the customers. The company has managed to create a base of loyal customers which
has been due to social factors. This ensures that once a customer has bought the firm's products,
they continue to buy the products and this is as a result of consumer behaviour. Consumer
behaviour is to a great extent due to the provision of services by the company, and all these are
interconnected with social trends (Wood 2012).
One the weakness of the company is the reducing customer base due to the excessive brand
equity of the company. Most customers view brand equity of Sainsbury as excessive and

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therefore do not like to afford to buy their products. This is contributed by the dynamic social
trends and customer preference. In the situation that the social trend change, the purchasing of
the company products might change and this lead to implications on the growth prospects. The
customer's habit is a factor to be considered for their choice of the product. If the customers are
not able to maintain their behaviour of purchasing branded goods from Sainsbury, the company
will lose its customer bases. The base of loyal customers and the strong brand equity are
perceived as the company strengths. This has been contributed to by the external factors such as
the economic aspect of the community. Other economic factors in action include improvement in
the disposable income, inflation, unemployment among others.
When the disposable income increases, the purchasing power of the consumers is enhanced, and
this makes the customers to purchase products provided by Sainsbury, and this increases the
possibility of making them loyal customers. In the situation that inflation increases, the cost of
production increases leading to high product prices and this means that inflation has negative
implications. The company has been exploring new areas since it is inclined to availing new
services to customers. The company objective is to improve the value bases customer which
beneficial when they respond with purchasing behavior which is interconnected with economic
factors.
It can, therefore, be concluded that the firm's strengths and weaknesses are linked with various
external aspects such as technology, economic, and social among others.
2.1.4 Evaluation of the Sainsbury PESTEL and SWOT analysis.
Sainsbury's PESTLE and SWOT analysis will help in the evaluation of its business environment
together with its strengths and weakness in a detailed aspect.

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Sainsbury's PESTLE Analysis
Political Factors
The company is based in the UK and this means that the political state of the company has
implications on the operation and performance. The rate is high concerning the government's and
consumer's debts. It affects the attitudes of the customer and business operations. Despite the
state of the political climate, it is essential for the company to remain competitive.
Economic Factors
When there is a recession, Sainsbury's business operation are affected due to the increment in
inflation and unemployment. These are the two major economic factors. When there is high
inflation, the demand of products is reduced. The increase in unemployment reduces the
customers' purchasing power. Concerning these two factors, the company needs to develop its
business operations in the developing markets.
Social Factors
Currently, the customer behaviour of customers is that the want convenience. This means that
they do not want to move around looking for different products, but they want to get products in
one place (Information Age: 2004). Sainsbury has ensured to utilize this opportunity by
providing all products in one location. The increase in female working staff has resulted into
reduced home cooking, and this means there are changes in the demand pattern.
Technological Factors

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Sainsbury has witnessed an increase in the trend of ordering food delivery online. According to
annual reports, there has been an exponential increment in online food delivery. This fact has led
to a 25% increment in the annual sales.
Legislative Factors
Government legislations and policies directly affect the performance of any firm. For instance, in
the UK there has been an added tax on the marketing of highly processed foods. Due to this
Sainsbury has decided to modify its products.
Environmental Factors
Firms should have a primary aim of keeping the environment healthy and safe in the
performance of its operations. Sainsbury's has been keeping on its social corporate responsibility
strategy. The company has presented the "Reduce, Reuse, Recycle" method which implemented
in the management of wastes, packaging, and recycling.
After a careful evaluation of the PESTEL analysis, one can conclude that the company is
impacted by various factors such as inflation and unemployment. The company, however, has
managed to implement appropriate steps in ensuring long-term sustainability.

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SWOT Analysis
Strengths Weakness Opportunities Threat
 The use of online media
in marketing strategies
 Presence of loyal
customers
 Having a strong brand
with equity value
 Diversification in its
investments
 The first store to
introduce and implement
fairtrade.
 Presence of information
technology infrastructure
 Perceived as
an expensive
brand in
comparison
to its
competitors
Tesco and
Asda
 Lack of
proper
inventor
management
 The company
is weak is
international
markets.
 Has an
extensive
market,
 Possibility for
acquisition.
 The presence
of a well-
developed
inline
platform.
 Stiff
competition.
 There is
drastic
slowdown in
the economic
growth.
 Reduction of
product costs
by the
competitors.
 The company
has a
restricted
exposure to
the global
markets.
The company has been able to diversify its operational units which have led to reduced risks.
This means if there are problems experienced by one unit, other units are there to support. The
growth prospects of the company have been enhanced by its IT usage and implementation of

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other technologies. Sainsbury should have an international business plan in case there is
worsened the case of economic conditions in the UK.
2.2 Reflective Statement of finding of the report.
These reports show that there are essential aspects relevant for decision making in an
organization. There has been an extensive evaluation on the macro-environment and micro-
environment. This is the PESTEL and SWOT analysis respectively.
The macro factors have a profound effect on the entire operation of a company in a broader
perspective. The decision making can be affected by the political factors which can either be
positive of negative. There are also economic factors such inflation, unemployment which must
be put into consideration. The dynamism of these factors can seriously affect how business and
the decision making process. The society keeps on changing, and this means that an organization
will need to keep up with the social behavior and utilize it appropriately in business operations.
Irrespective of the change pattern, there can be a good perspective on the process of decision-
making. Technological advancement has led to the realization of new opportunities of business.
This means that technological factors must be considered in the process of decision making.
Another issue that I have noted is that every business needs to comply with legislations set by the
government. Non-compliance will lead to penalties or cases for the organization. It is in the
commitment of many businesses to maintain an eco-friendly environment.
The micro factors have their effect the decision-making process. The strengths and weakness
also have a profound effect on the decisions made and this means that the company will try
within its means to overcome its weaknesses.

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An organization's objectives are affected by both micro and macro factors such as political,
economic, social environmental, technological and legal factors which make up the macro
environment. Other factors are in the micro environment and include strengths, weakness,
opportunities, and threats. Both have positive and negative effects on the achievement of the
firm's objectives. In case if political instability, the achievement of firm's objectives will be
delayed. In the situation of economic factors such as lower inflation reduces the cost of
production resulting in provision of surplus sales and can help the company achieve its
objectives. It is the obligation of any organization to comply with legislative rules by the
authorities. In case the rules are favourable, then it will easier to achieve the objectives, but it
will be challenging in case the rules are not favourable.
An organization is supposed to develop its strength aspect since it helps in the achievement of
objectives and creation of competitive advantage leading to sustainable development. Therefore
the company should use its strengths to achieve its objectives. Necessary steps should be
followed to deal with a company weakness. The aspect of threats should be dealt with
accordingly since failure a company won't achieve its objectives and that the loyal customer base
can diminish. Appropriate application of opportunities in organization operations will lead to the
attainment of company objectives.
Conclusion
A company will need to have an understanding of its business environment so as to determine
the success of its operations and attainment of the firm's goals and objectives. Through the
understanding and the evaluation of the environment surrounding the business, a firm balance the
strengths, weakness, opportunities and threats. The company is also required to monitor the
political, economic, social and technological issues on a periodical basis. This will helps in the

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establishment of rising issues that might pose problems or provide opportunities. Sainsbury will
be kept to make appropriate steps in the evaluation of the business environment on a regular
basis. The company should also formulate a strategic plan that will help direct the business
towards the realization of the organizational goals and objectives in the short term and the long
run.

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