Business Strategy for Sainsbury: Analysis, Evaluation, and Recommendations

This study analyzes the business strategy of Sainsbury, a leading supermarket chain in the UK. It includes an analysis of the company's capabilities, competitive environment, and strategic directions. Recommendations for growth tactics and a strategic management plan are also provided.

BUSINESS STRATEGY
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Table of Contents
INTRODUCTION...........................................................................................................................2
PART A...........................................................................................................................................2
Analysis of chosen company and its capabilities by using appropriate frameworks.............2
Analysis of competitive environment utilizing Porter’s five forces model............................7
PART B............................................................................................................................................9
Evaluation of different kinds of strategic directions accessible to firm.................................9
Justification and suggestions in context of most appropriate growth tactics and platforms 10
Developed strategic management plan with tactics, objectives and strategies....................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13
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INTRODUCTION
A business tactic refers to appropriate decisions and actions that an organization takes or
considered to reach their venture aims and competitive edge in their industry. It is set of effective
strategies and methods that a firm can use to gain attention of new buyers, to give tough
competition to new or existing players and to strengthening own business performance in
effective manner. The current study will base on Sainsbury, which falls under category of
leading and most famous supermarket chain in United Kingdom. This study will explain macro
and internal business environment analysis in context of chosen company and will also analyse
competitive atmosphere within sector by using specific model like Porter’s five forces.
Furthermore, in this report evaluation of varied kinds of strategic directions for firm as well as
suggestions in regard to suitable growth strategies and platform will be described, along with
strategic management plan with tactics and clear objectives.
PART A
Analysis of chosen company and its capabilities by using appropriate frameworks
Mission-
Organization mission statement is to be the consumer’s first choice for products such as
fresh food, delivering goods on timely manner and excellent services at a competitive cost
through performing even faster, easier and together with suppliers, workers and other
stakeholders (Black and Spain, 2018).
Vision-
Sainsbury is known as UK’s second oldest food retailer and has been trading for over
than 147 eras. With clear vision and mission statement organization is operating its business
since for so long. Its vision is to be the most famous brand in the whole world, where individual
love to work with them.
Objective-
Sainsbury offer its consumers distinctive, quality goods at competitive prices across
general merchandise, food, financial and apparel services. The management set strategic business
objectives for company, which they can achieve by performing and working hard. The main
objective of firm is to enhance satisfaction level of buyers at each purchase and to gain
competitive advantages.
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Firm is operating their business and managing its functions as well as operations in
effective manner. They can consider strategic directions and planning framework such as
PESTLE, stakeholder analysis and other to grow even better.
PESTLE Analysis-
Political factor-
Changes in trade rules, political instability and stability, taxation policy and other
elements are included in this factor that affect current strategies of any business. In context of
Sainsbury, imminent Brexit is one of the biggest political factors that impact current tactic and
practices of firm in negative manner, by blocking connections between EU and England and
increasing import rates, which definitely increase product pricing of company (Evans and
Menon, 2017). Firm create strategy to enter into new market place but due to this factor its
overall tactic can be affected and to make it successful management needs to pay high import
rates that may be not possible.
Economic factor-
Unemployment rate, rising costs of fuel, increasing demand of labours and income level
of people, all these components are included in list of economic factors that directly impact on
existing business plans and tactics of Sainsbury or any brand in world of business (Farber,
Silverman and Von Wachter, 2017). Unemployment rate impact exist employment and
recruitment strategy of company, because government put a lot of pressure on many firms within
retail and other sectors to hire and recruit local people to improve & enhance their living
standards even better. It can be said that this factor put positive impact on firm hiring tactics
because they can choose and select skilled applicants from pool of talent who are able to work
harder for achieving aims and objectives of firm.
Social factor-
Changes in lifestyle, emerging trends, preferences of consumers and changes in buying
behaviour of customers are social factors that impact new and current strategy of firms (Adapa
and Roy, 2017). Changes in preference of buyer’s impact tactic of Sainsbury. Organization
decide to enter into Germany and develop strategy relate to it, which turn into increasing
productivity and profit margin, but due to changing consumer preference this strategy would
affect negatively. Many people in the world are increasing shifting towards a health conscious
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diet and drive towards using organic products that change way of supply chain and management
activities.
Technology factor-
Technology advancement is one of the factors that influence current strategy of Sainsbury
positively. It can be said that development of digital marketing platform gives company the best
chance which they can use to generate brand awareness within new market place which turn into
increasing consumer base and gaining attention of new customers.
Environmental factor-
Government, consumers and other stakeholders are showing their concern towards
environmental safety, they put a lot of pressure on Sainsbury to develop and keep sustainable
business practices while entering into new market. It impact on current strategy of firm in
positive manner because organization already playing vital role by reducing their carbon
footprint and complying with CSR policies.
Legal factor-
Any type of delay in regulatory approval can lead to loss in profit, revenue and market
shares & rivals being capable to cater a better experience to buyers. Equality and consumer
safety act influence Sainsbury business practices and functions in negative manner. When firm
do not follow rules and policies related to customers and workers services they can face legal
issue which is not beneficial for its new and existing strategies as well.
Stakeholder matrix or analysis-
It is one of the best strategic management tools, utilized by companies in retails sector to
analyse individual stakeholder to identify actions which are important to align their aims with
business plans and strategies. Stakeholder matrix helps to determine interest and power of
stakeholders that can impact Sainsbury business strategy and plan in negative or positive.
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Figure 1Stakeholder Matrix
(Source: Types of Stakeholder Matrix, 2020)
High power and high interest- (Manage closely)
Each Brand in retail industry has set of key stakeholders who have some power and
highly interested in success and growth of business. In regard to Sainsbury, Government is the
main stakeholder of company (Rose, Flak and Sæbø, 2018). Authority has high power and high
interest in progress of firm because it helps them to generate more GDP by offering consumers
across nation. Local or national authority has power to change existing and new tactics of
organization.
High power and low interest- (Keep Satisfied)
It can be said that consumers are considered as key shareholder of any brand, they has
high power to change pricing structure of Sainsbury (Hansen, Kupfer and Hennig-Thurau, 2018).
Organization always satisfied their consumer’s and identifies their needs as well because it
directly impact on its brand image and profitability.
Low power and high interest- (Keep informed)
Suppliers are the third stakeholders of Sainsbury who hold low power to make any
changes within business plans or supply chain service costs. But it can be said that suppliers are
highly interested to work with successful and most reputed brand like Sainsbury because it is
quite beneficial for them in term of increasing their profit and productivity as well. Organization
need to keep its suppliers inform about any change in strategies and business practices.
Low power and low interest- (Monitor)
Last but not least, workers are the main stakeholder of chosen company, they has low
interest and power within firm. But they can negatively impact on business strategies by
demanding more facilities and refusing to accept change that is really very important for growth
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of firm. Company need to monitor each and every activity of employees just to know what they
actually want.
VRIO framework–
This tool is also used to analyse the capabilities and external factors of Sainsbury.
Valuable-
It analyses that distribution system is of the most valuable resource of chosen firm
through which they can satisfy needs of target market in effective manner. It can be said that
organization by managing their distribution process, effectively delivering products to existing
and new buyers. Along with this resource pricings strategy and innovative is also valuable for
company. Management attempt hard work to creates and produce something new according to
market needs.
Rare-
Distribution system and innovation is rare resource, other competitors would not be able
to copy Sainsbury business activities and other things because they have own way of work. But
pricing strategy is not rare, any other brand in retail industry can use same pricing tactic that
Sainsbury can utilize.
Imitate-
Organization is able to manage their distribution system and innovation related activities
in effective manner. Sainsbury with skilled applicants attempt to innovate something which is
quite beneficial for them in term of increasing consumer base and strengthen brand image in
market place.
Organization-
Sainsbury is able to set effective and right pricing strategy for consumers. Their tactic is
based upon offering customers value for money. They create new and innovative ideas to make
consumer purchase memorable, which is one of its biggest capabilities.
SWOT analysis-
Strength-
Sainsbury has diversified business with strong and higher market share, it is one of its
biggest strengths allow management to drive firm towards success (Tamzid and Parves, 2017).
Company has recently operating over 1200 convenience outlets and supermarkets, general
merchandise and online grocery operation which show as one of their key strengths.
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Weakness-
It can be said that brand switching is one of the most difficult and complex procedure.
Like most retail companies, Sainsbury also faces a lot of challenges and risks from this process.
Instead of string loyal promotions and programmes, company still finds challenging to retain
buyers, it is one of the biggest weakness of this brand.
Opportunity-
It analysed that organization effectively obtain desire outcomes and success with new
strategy by using accessible options and considering suggestions. For example, Sainsbury can
use advanced technologies to develop loyal and effective promotions and marketing plans which
makes marketing department able to reach at global level and drive new consumers towards
purchase. This is one of the best opportunities company can grab and utilize.
Threat-
There are many factors either external or internal available in business world that direct
influence overall business plans, procedures and strategies. In context of Sainsbury brand,
intense competitive level within retail industry is one of the most influencing external elements
that posses threat for firm and its new tactic.
Mickey’s model-
It is a strategic framework company can use to aligned and reinforced operational
efficiency. Strategy, structure, system, skills workers, style and shared valued are different types
of factors that influence capabilities on firm in positive manner when these can be use
appropriately.
Analysis of competitive environment utilizing Porter’s five forces model
Bargaining power of suppliers-
It can be said that degree of this force is low because existence number of suppliers is
higher (Filimonau and Gherbin, 2017). There are many suppliers exist in supermarket retain
sector who seek to work with reputed and well known brand. They cannot make any negative
impact on abilities and business strategies of company. Suppliers could not increase products and
raw material costs.
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Figure 2Porter's Five Forces Model
(Source: Porter Five Forces Analysis, 2019)
Bargaining power of consumers-
Consumers of Sainsbury have high bargaining power because accessibility of other
supermarkets like WM Morrison, Asda, Tesco and Aldi that offer similar items at related costs. It
makes goods switching costs low and giving buyers power to select between competitor offers in
same price range. It analysed that British shoppers tend to be loyal to price only more than
companies or brands that is why there are flocking to Lidl and other over few last eras, away
from big five (Ellickson, 2016).
Threat of new entrances-
Degree of this force is perceived as low because retail market structure where more than
69.9% of grocery market share is controlled by big four brands, there is intense rivalry between
other small supermarkets like Waitrose, Aldi, Lidl etc. trying to gain a competitive edge and
wider market share which cannot give space for a new company to prosper.
Threat of substitute products or services-
Degree of this force is low because consumers view substitute goods as necessity,
especially in developed world and increasingly in emerging markets. Retail market is always
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attempting to converge and assimilate new creations with respect to food items or alternative
things, to make purchasing an extremely pleasurable experience; it makes them totally difficult
to substitute.
Competitive rivalry between existing players-
In retail industry, Sainsbury and other players are giving tough competition to each other
to gain competitive advantages and become market leader. Market in which company is
operating is extremely competitive with very crowded players. Now, more and more brands are
trying to get into non food industries further intensifying competition.
Balanced scorecard-
It is strategic planning system that organization can utilize to communicate what they
trying to accomplish, align day to day work or task that every worker is doing with specific tactic
and prioritize products or services. It is one of the best way Sainsbury can use to enhance their
performance and productivity level than its competitors.
PART B
Evaluation of different kinds of strategic directions accessible to firm
Porter’s generic strategies-
Cost leadership strategy-
It is establishing a competitive benefit by having lowest cost of business operation in
supermarket retail industry (Kharub, Mor and Sharma, 2019). Cost leadership is one of the best
and most effective strategic directions available for Sainsbury, which they can consider to gain
competitive edge. They can set appropriate price for each product to gain attention of buyers.
Differentiation strategy-
It is one of the best approaches; Sainsbury can consider and follow by offering consumers
with something unique and totally different from products their business rivals may offer in same
marketplace. With this strategy, company can increase competitive benefits even better and
maximize their profitability rather than before. It allow firm to distinguish their goods or service
from Tesco, Aldi, Asda and other players.
Focus strategy-
This tactic concerns itself with determination of a niche market and promoting a unique
item in target marketplace. It is one of the three generic marketing tactics that Sainsbury can
consider to achieve business aims and objectives. Sainsbury with this strategy can concentrate on
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specific niche market and by comprehending dynamics of that area and unique requirements by
consumers within it, develop effectively low cost products for target market.
Bowman’s strategy clock-
Hybrid strategy-
This strategy includes some component of low price, but also some goods differentiation.
Purpose of this tactic is to persuade buyers that there is better added value through combination
of reasonable and valuable price & acceptable items differentiation. It can be a quite effective
positioning tactic Sainsbury can use which allow them to add more value in their offers
consistently.
Vertical or horizontal integration strategy-
It can be said that Organization to achieve all its objectives in effective manner can
utilize horizontal integration tactic. With this strategy company can grows their business by
acquiring a same brand in supermarket retail industry at same point of supply chain. This tactic
will help firm to reach at global level and gain attention of international buyers.
Diversification-
Along with above strategic directions, company can also consider this strategy that help
firm for developing their business in effective manner rather than its competitors. It is one of the
four main tactics for growth determined by Igor Ansoff, which makes firm able to look at other
markets they can tap into or new items they can launch to increase their revenue.
Justification and suggestions in context of most appropriate growth tactics and platforms
From above analysis, it can be said that in context of Sainsbury there are different types
of strategic directions or strategies available for them which they can consider and implement for
achieving further growth opportunities. Ansoff matrix model provide appropriate and most
applicable suggestions to company which management can use to gain all benefits and
competition advantages, this framework is consist with four different strategies.
Market penetration-
With this strategy chosen firm can use their existing products such as general or grocery
items in existing market that help to increase market share even better (Lévay, Drossinos and
Thiel, 2017). They should decrease prices to gain attention of new consumers which turn into
increasing customer’s base.
Product development-
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With this tactic, company should develop new item to provide to existing buyers as well
as new. It can usually include extensive research and development as well as expansion of firm’s
items range. It provides many benefits to firm in term of increasing their profitability and
productivity.
Market development-
In this strategy, Sainsbury must enter a new market with their current range of products.
With the help expanding their business company become a global leader and gain attention of
new buyers towards them easily, they should implement this strategy.
Diversification-
At lasts this strategy of Ansoff works magically when company enter into new market
with new product according to trends and market needs.
Developed strategic management plan with tactics, objectives and strategies
Vision-
Vision of Sainsbury to reach at global level with strong consumers base.
Mission-
The mission of company is to gain attention of loyal customers and retain them with
purchasing products for longer.
Objectives of Sainsbury-
 To become global leader in retail industry
 To gain attention of new buyers
 To increase profit margin and sales
 To build strong and loyal relation with buyers.
Strategies-
It can be said that Sainsbury can achieve and fulfil their set or smart objectives by using
appropriate and beneficial strategy. They can use Hybrid and differentiation strategy and
implement within current business management plan which is quite useful and beneficial in term
of increasing sales, revenue and profit margin even better than other players. Furthermore, it
analysed that company by paying high taxation charges easily enter into new market where
potential buyers are seeking to purchase quality products from well known brands like
Sainsbury. As discussed above, diversification strategy is also beneficial for company in term of
strengthen their brand image in market.
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Tactics-
Sainsbury to gain competitive edge and become a global leader set effective and better
pricing strategies for buyers such as low pricing strategy because it allow them to drive people
towards purchasing items against competitors. Moreover, it can be said that they can use
marketing mix elements such as product, price, place and promotion to gain better success.
Implementation and control-
It can be said that management can implement chosen strategies and tactics by dividing
roles and responsibilities between workers. They can control each activity by monitoring
performance of staff and directing them.
Evaluation-
Success of this plan can be evaluate by manager via considering profitability and using
appropriate methods such as KIP.
CONCLUSION
By summing up above discussion, it has been concluded that Sainsbury by using effective
frameworks and suitable methods indentifying factors that directly influencing its business
strategies in negative and positive manner. By taking right decision and developing strategies,
organization effectively reduced the negative effect of political and other factors. Furthermore, it
has been summarized that by following and implementing hybrid and differentiation strategy
firm is sustaining within retail industry for longer period of time. By analysing power and
interest of different stakeholders such as suppliers and consumers, firm taking decision to which
they satisfied and prioritized first.
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