BUS6001: Sainsbury's Strategic Response to Contemporary Issues

This report analyzes Sainsbury's strategic responses to contemporary management issues, focusing on the acquisition of Argos as a case study. It identifies lower profitability and a competitive market as key drivers of change, examining how Sainsbury's utilized Kotter's 8-step change model to imple...Read More

Contemporary
Management Issue

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Overview of case study..........................................................................................................1
Two drivers of change............................................................................................................1
PESTLE analysis of Sainsbury's............................................................................................4
Define strategy........................................................................................................................5
Strategic decision....................................................................................................................5
What is organisational change?..............................................................................................6
Porter’s Five Forces of Sainsbury's........................................................................................6
Key stakeholder’s for the change in Sainsbury......................................................................8
CONCLUSION................................................................................................................................9
RECOMMENDATIONS.................................................................................................................9
References:.....................................................................................................................................11
Books and Journals...............................................................................................................11

INTRODUCTION
In the contemporary business world there is huge amount of problems and issues that the
business comes across on the periodic basis. The businesses face some major contemporary
management issues which impact their daily operations as well the future growth. The issues
faced by the firms are associated with the changes in political conditions, environmental changes
or financial changes of the company (Desselle and et. al., 2019). The present report is a
discussion over the identified primary drivers of change and how Sainsbury response to the
various changes. Beautiful theories and frameworks are incorporated in order to understand the
respective dynamic forces of change and its impact over the company. In addition to this
recommendations are provided for enhancing the Sainsbury performance as the response to the
key drivers of change.
MAIN BODY
Overview of case study
The case study is based on the British multinational supermarket chain Sainsbury. in the case
study there is discussion of takeover of Argos by the Sainsbury. In 2016 the famous supermarket
retailer Sainsbury of UK acquired the catalogue retailer Argos. The cost saving technique of the
Sainsbury was already improving the profits of the company while the acquisition with the Argos
outlets with the Sainsbury stores was driving the use amount of increment and the trading
intensity (UddinAhmed, Mazid and Ahmed, 2020 ). According to the chief executive Mike
coupe of the Sainsbury’s the grocery market of the UK remains extremely competitive. It is also
mentioned by the chief executive of Sainsbury that there are the pleasing set of results in against
of the difficult market backdrop which are enforced by the acquisition synergies from the Argos
business (Quix and van der Kind, 2019 ). Also the bricks it has caused a major challenge to the
retail industry of UK and especially to Sainsbury since the company sells 30% of goods that are
imported from the EU. Sainsbury also mentioned that availability of the stock remains bumpy
during the early summer but with the acquisition now returned to the normal.
Two drivers of change
When an organisation adopt any variety of change within its functions, operations or as an
overall changes in organisation there are several drivers that force or support the change. Drivers
of change are the internal or external forces that shape the form of changes within organisation
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and also help in decision making. There are several types of drivers of change that impact the
organisation’s functions such as human resource, political drivers, globalisation, competitive
market, business instability, technology advancements and many more. These drivers of change
are sometimes useful for an organisation and sometimes act as disrupters. In case of Sainsbury
acquisition with catalogue retailer Argos there are multiple drivers of change that allowed
company to take such step that has proved to be profitable for the company (Rhodes and Zhou,
2019). The two major drivers of change in case of Sainsbury are discussed below:
Lower profitability: In half year of the 2016 the company due to the Brexit was facing the low
profitability issue which acted as a driver to make certain changes within an organisation that can
pull up the company’s sales and revenue. The low profitability is major driver of change that let
the Sainsbury to take over the Argos after which in half of the year the company was able to
increase its trading and save operating cost that lead to higher profitability and larger revenue.
Competitive Market: the retail market of UK is highly competitive as there are huge numbers
of large size organisations like ASDA, Tesco and Morrison that rule the market effectively.
Therefore the higher competitive market for the Sainsbury becomes a reason for the change in
organisation in order to gain competitive edge and also to reduce the bumpy stock. It was also
conveyed by the Chief executive of Sainsbury that the market of grocery is extremely
competitive therefore; the acquisition of Argos with the Sainsbury has lead to pleasing results
against the market.
Sainsbury takeover of Argos has boosted the sales in the market also the merger of the
company with the Argos has led to the different changes in the organisation. Significant drivers
of change and the acquisition of Sainsbury with the Argus the company has led to the
development changes transformational changes and transitional changes as company has to
modify all its marketing strategies in order to make the successful acquisition and to overcome
the financial losses. Company also made the transitional changes by clearing out some of its
sales in order to fill up with the catalogue of Argos. Benefit with the change as this increase the
sales of the company and also help the company in maintaining its strong competitive presence
in the market of UK thereby making the bumping stocks to normal (Rice and Pan, 2020).
In order to successfully implement changes Sainsbury has utilise the Kotter’s 8 step change
model that will help the company to understand the current changes as well as to the solution to
implement the changes as per the Sainsbury’s objectives and strategies.
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Kotter’s 8 step change model
Kotter’s 8 step change model is discussed below in context of current changes faced by the
Sainsbury:
Build Urgency: In order to make a successful change it is very important for an company that
everybody in a company really wants it. Therefore, developing a sense of emergency around the
need for change is a first that Sainsbury should spark. This is the beneficial to the Sainsbury in
igniting a spark of motivation to get the things better. Overdid employees about the competitive
marketplace and started taking initiatives about the change through their strategies and by
exploiting the market opportunities (Campo and et. al., 2021).
Create strong coalition: The second stage is all about convincing the employees and
stakeholders of an organisation that change is necessary. To have a successful change a strong
leadership and the support from the stakeholders of the organisation is essential. Sainsbury
develop a team date change and influence the employees as true leaders of the organisation
thereby also emotional commitment was provided.
Create a vision for change: When there is need for the change that multiple ideas have
solutions floating around on the floor of organisation. Creating an appropriate vision for the
change is must the spelling the ideas with the overall vision of the people that can be easily
understand and grasp. Sainsbury has a vision to gain profitability as well as to gain the
competitive advantage there by creating a acquisition strategy to execute the vision.
Communicate the vision: developing a vision is not enough as it must be communicated
effectively among the employees and other workers of the Sainsbury. The clear communication
of the vision of the company helps the employees in setting clear about their roles and actions.
Also, this motivates an employee to work harder to meet the changes successfully (Clark,
Trimingham and Wilson, 2020).
Remove obstacles: whenever there is change in organisation obstacles are the part of it. There
are issues like resistance of employees, lack of resources etc. In case of Sainsbury acquisition
with Argos the biggest obstacle is the resistance of employees that must be removed timely in
order to encourage employees to work for change and accept the change wishfully to gain its
benefits. As, for the successful implementation of change the correct application of skills and
competencies of employees is mandatory.
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Create short term victory: when there is implementation of change the company must celebrate
the short term wins in order to motivate employees. By doing this the company encourages the
employees of the organisation to work with more potential in order to earn more wins in future
through the current changes.
Build on the change: short term winning is never end as they are just the beginning of the
implementation of the change. Therefore Sainsbury make sure that the work is done with more
efforts and potential in order to have long term success as the successful implementation of the
change in future which is reflected as the Sainsbury boost in trading in year 2019 and
profitability increment in half year (Fengyi, 2021).
Anchor the changes in corporate culture: in order to stick to the change the company must
make it the part of its corporate culture. Thus, Sainsbury should officially announce in the firm
that acquisition is the part of the Sainsbury core values and strategic planning. Acquisition with
Argos is the part of Sainsbury will continue to be same in future.
PESTLE analysis of Sainsbury's
The Pestle analysis is the analytical framework to analyse the drivers for change and the
factors that creates the need for change within the company. The pestle analysis of Sainsbury is
discussed below:
Political: Sainsbury is the multinational organisations that operate in several other country part
from UK and therefore, has deal with different political aspects of different areas. therefore, with
the change in the political conditions of the UK with EU the company was facing the downfall of
sales by 0.5% in year 2017 and after the company acquired Argos which increased the
company’s sales by 2.7% in year 2019 and also boosted its trading. Hence, political conditions
always act as drivers of changes for the retail sector of UK.
Economic: for the better sales and revenue it is very important for Sainsbury to have economic
stability in the country in which it operates. With the COVID-19 there was major decrease in
UK’s economic conditions and also the prices of many supplies where increased by the
suppliers. This was resulted in the lower profitability to the Sainsbury as the customer’s
disposable income was also lowered that bring lower sales and revenue to company (Bentham,
2018).
Social: the social changes are changes in the lifestyle of customers, change in eating habits etc.
in UK the customer where now more concerned for their health due to which there was increase
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in the demand of organic, gluten free healthy food. This changes the grocery and retail market as
the free movement was started in the UK which increased the price of healthy food supplies.
Also the chocolate, sweets, and coffee segment of the Sainsbury were highly impacted as the
sales of these items where highly low.
Technological: the technology is itself growing fast and is the key drivers for the changes in the
organisations. In order to comply with the benefits of the technological advancements the
Sainsbury has effectively managed to acquire the Argos that already operates both at physical
stores and online. This helped the Sainsbury to turn itself as the online retailer too. Also during
the Covid-19 the company has effectively used technology in making online delivery, orders,
payments etc (Brito and Harkiolakis, 2017).
Environmental: there are the many climatic changes that impact the production of grains and
cereals which are major products of the grocery. Due to this the Sainsbury sometimes come
across high price by the supplies due to less availability of the resources and items in market.
Also in order to reduce the impact over the environment the company has made the sustainable
changes was eliminating the plastic usage and adopted the reuse, recycle and reduce strategy in
its working and production of products.
Legal: the grocery market has to follow all the food safety acts as per the UK law and other laws
of different country in order to trade and operate ethically and legally correct. For the Sainsbury
as multinational brand complying with the employability laws of different countries in which it
operate is essential because this will help the company to keep its employees satisfied and
maintain equality among them.
Define strategy
Strategy is the tactics or the actions that are developed by an organisation to accomplish
their desired goals and objectives. Strategies are the most structured and pre plant action plan
that provides organisation direction to reach their goals and also assist employees and other
leaders of the organisation to align their actions as per the business strategy in order to improve
financially and also to gain competitive edge (Sainsbury, 2020).
Strategic decision
Strategic decisions are the long-term decisions that have futuristic influence over the
company because these decisions are concerned with the overall environment that surrounds the
organisation under which form operates such as the employee’s resources and the external
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forces. For instance Sainsbury decision to acquire the Argos in order to boost trading and
profitability is one of the strategic decisions that help the company to meet its business
objectives and to conquer the financial instability.
What is organisational change?
Organisational changes are the modifications in the company’s structure culture internal
process infrastructure technology or many more that influence the current operations employees
are the functions of the organisation. Most of the organisational culture changes are done to help
the company to increase the profitability or to enhance the company's performance in market. the
Sainsbury has adopted the development change by acquiring the Argos.
Porter’s Five Forces of Sainsbury's
This framework is utilized to analyse the competitive factors that impact the daily
operations, strategy and market share of the Sainsbury in the UK retail market: the five forces of
Porter’s are discussed below in context of Sainsbury:
Bargaining Power of buyers: Sainsbury is the multinational retailer and has very powerful
product portfolio and customer approach. This makes the company free from the high bargaining
power of customers. The customers of retail industry are large in amount and also have their
needs that the Sainsbury fulfil in low price and best quality (Haleem and Jehangir, 2017).
Bargaining Power of suppliers: in the retail industry of UK there is huge number of suppliers
of grocery items. Due to this it becomes easy for the Sainsbury to maintain its power among the
suppliers and put pressure of cost cut off in order to have profit. Thus this makes the bargaining
power of suppliers low in thus industry as for the buyers losing big organisations like Sainsbury
is not affordable
Competitive rivalry: the UK retail market is full of competition as there are many big size
organisations operating in this industry very effectively. The organisations like Tesco, ASDA,
Morrison’s are some the key competitor’s of the Sainsbury. The company has huge threat of
competitor’s as there strategies are effectively creating competitive edge in the market.
Threat of new entrants: entering into the UK retail market as an grocery retailer or supermarket
is the huge decisions that requires the loads of investment. Therefore, for the Sainsbury there is
very low threat of new entrants as company has huge market share and for a new entrant to enter
this market the new product, innovation is must else the company may fail to operate in between
of firms like Sainsbury (Rześny-Cieplińska and Szmelter-Jarosz, 2019 ).
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Threat of substitutes: there are several substitutes available in the market for the products and
services offered by the Sainsbury. as the company the grocery retailer and there are companies
like Tesco, ASDA and many more that offers same products and services at lower prices which
bring high threat of substitutes to the Sainsbury. In order to reduce this threat the company must
opt for innovation and lower its prices but cutting its cost.
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Key stakeholder’s for the change in Sainsbury
Analyse the key stakeholders in the change acquired by the saints vary by taking over catalogue
retailer Argos which has boosted the trading of the company is analysed with the help of
stakeholder's mapping (Cheshmberah, 2020 ). This is a framework that defines the individuals
were interested influenced and concerned for the company at different level. Stakeholders
mapping in context of Sainsbury has been discussed below:
INFLUENCE
INTEREST
HIGH LOW
HIGH Shareholders Government
LOW Employees Customers
Customers: consumers are the most prominent stakeholders of any organisation as without them
company cannot accomplish their goals of attaining the highest sales and revenue. Have a power
in influencing the strategies of the company in order to fulfil their needs and demands but does
not show any interest in company's performance in the market. Therefore, the consumers have
low level of power or influence but low interest in the company's decision of change in
Sainsbury.
Employees: human resource is the asset for an organisation and is useful in order to to
successfully implement and attend the changes within an organisation therefore in the change of
the Sainsbury human resource has a strong interest but low influence as the decision making in
the hands of the managers and the leaders. Employees are in under the category of high power
and low interest.
Government: government has a strong influence or can active the drivers of change within an
organisation therefore they are least interest in the company's changed but have high influence in
the change. Thus, they are under the low interest and high power matrix of the stakeholders
mapping.
Shareholders: shareholders are recognised as the key stakeholders of the Sainsbury's. The
shareholders have a high influence and interest in the decision of Sainsbury to acquire the Argos.
The shareholders also play role in managing the change (Voss and et. al., 2019). Thus, they are
shown in high interest and high influence matrix of stakeholder’s mapping.
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CONCLUSION
From the above information it is concluded that change in Sainsbury was mandatory and
therefore Sainsbury's to takeover Argos was right decision. It has benefited the company not only
terms of profitability but also to gain the competitive advantage. The acquisition with the Argos
help the company to face the challenges during the covid-19 also held in enhancing the cells
thereby making the company highly competitive in the retail industry of UK. Due to the
certification Sainsbury was able to get through its financial problem in half year and also the
problem of bumpy stock in summer were back to normal. It is concluded that this was highly
pleased and change for the Sainsbury. In order to manage the chain successfully the company
had effectively applied the Kotter's 8 step change model that provided the company a successful
path for the change implementation. Is also concluded from the above analysis of the
stakeholders that for Sainsbury the customers are the most important stakeholders for which
company also applies strict code of conduct for the ethical trading. Thus, for every organisation
changes are mandatory and for the successful implementation strategy planning is highly
important.
RECOMMENDATIONS
After concluding the information from the above report there are some mandatory actions
that change very is required to take in order to utilise the change and their implications positively
and optimally. Some of the recommendation by which Sainsbury can enhance its response
towards the contemporary management issues and the effective change within an organisation
are discussed below:
 It is suggested to Sainsbury to develop digital and effective supply chain that has large
numbers of suppliers. In order to implement this recommendation the company should
work with the logistic department that will help the company to build stronger supply
chain. This will help the company in increasing the competition in the retail industry and
also move ahead of the competitors.
 The Sainsbury is also suggested to lower the cost of an online delivery network and to
enhance the workability of online distribution channel. This is suitable and attainable for
the Sainsbury's as Argos acquisition can act as a supporter because Argos already
operates online. With the support of it and marketing team company adopt this objective
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effectively and also through this company can increase online sales and set its footprint as
the online retailer too.
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References:
Bentham, J., 2018. Business and Economics in the News–Sainsbury's and Asda-the decade's
mega-merger. Teaching Business & Economics, 22(3), pp.11-12.
Books and Journals
Brito, T.L.D. and Harkiolakis, N., 2017. Influence of UK economic and market policies on a
small wine merchant. International Journal of Teaching and Case Studies, 8(1), pp.29-
45.
Campo, K and et. al., 2021. Going online for groceries: Drivers of category-level share of wallet
expansion. Journal of Retailing, 97(2), pp.154-172.
Cheshmberah, M., 2020. Projects portfolio determination based on key stakeholders’
expectations and requirements: Evidence from public university projects. Journal of
Project Management, 5(2), pp.139-150.
Clark, N., Trimingham, R. and Wilson, G.T., 2020. Incorporating consumer insights into the UK
food packaging supply chain in the transition to a circular
economy. Sustainability, 12(15), p.6106.
Desselle, S.P and et. al., 2019. Applying contemporary management principles to implementing
and evaluating value-added pharmacist services. Pharmacy, 7(3), p.99.
Fengyi, Z., 2021. The Analysis of Asda-Sainsbury’s Merger/Acquisition. Journal of Finance
Research, 5(1), pp.1-6.
Haleem, F. and Jehangir, M., 2017. Strategic management practices by Morrison PLC, UK.
Analysis, lessons and implications. Middle East Journal of Business, 12(3), pp.2-9.
Quix, F.W.J. and van der Kind, R.P., 2019. The retail in international perspective. In Retail
Marketing (pp. 83-104). Routledge.
Rhodes, A. and Zhou, J., 2019. Consumer search and retail market structure. Management
Science, 65(6), pp.2607-2623.
Rice, W.L. and Pan, B., 2020. Understanding drivers of change in park visitation during the
COVID-19 pandemic: A spatial application of Big data.
Rześny-Cieplińska, J. and Szmelter-Jarosz, A., 2019. Assessment of the crowd logistics solutions
—The stakeholders’ analysis approach. Sustainability, 11(19), p.5361.
Sainsbury, D., 2020. Toward a dynamic capability theory of economic growth. Industrial and
Corporate Change, 29(4), pp.1047-1065.
UddinAhmed, J., Mazid, T. and Ahmed, A., 2020. Argos: Revolution in Non-Food Retailing.
SAGE Publications: SAGE Business Cases Originals.
Voss, H and et. al., 2019. International supply chains: compliance and engagement with the
modern slavery act. Journal of the British Academy, 7(s1), pp.61-76.
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