Business Environment Analysis: Sainsbury's Report - Semester 2, 2024

This report provides a comprehensive analysis of Sainsbury's business environment. It begins by defining different types and purposes of organizations, classifying them based on size and scope, using Sainsbury's as a case study. The report then explores the relationship between organizational functions, structure, and objectives, highlighting the use of transnational organizational structures and discussing the impact of various functions like marketing, finance, HR, and production. The analysis extends to the macro environment, employing PESTLE analysis to identify the positive and negative impacts of political, economic, social, and technological factors on Sainsbury's operations. Furthermore, the report examines internal and external analysis using SWOT to identify strengths, weaknesses, and their interrelation with macro factors, providing a holistic view of Sainsbury's position within its business environment. The report concludes by summarizing the key findings and their implications for Sainsbury's strategic decisions.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Explanation of types and purposes of organisations.............................................................1
P2: Details about size and scope of organisations......................................................................2
TASK 2............................................................................................................................................3
P3: Relation between functions of organisation and their link with structure and objectives.....3
TASK 3............................................................................................................................................4
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.................................................................................4
TASK 4............................................................................................................................................6
P5. Examine internal and external analysis in order to identify strengths and weakness of an
organisation..................................................................................................................................6
P6. Explain interrelation between strength and weakness affect macro factors.........................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
A combination of factors which influence the working pattern of an organisation is
known as business environment. They affect the functioning of the company directly or
indirectly. Sum of these factors influence the environment and situation of the business. For this
report, Sainsbury's has been selected which has a product line of groceries and general
merchandise. In this project, types of organisations, interrelationship of various functions in
organisation structure have been covered (Draijer, 2020). Additionally, influence of macro
environment on operations of business and interrelationship of SWOT analysis with macro
factors has been analysed.
TASK 1
P1: Explanation of types and purposes of organisations
Types of organisations include profit, not-for-profit and non-governmental. An
explanation about all these organisations is as follows-
Profit organisations are the one whose main aim is to earn profits by providing goods and
services to consumers. Profit organisations are Private organisations. These enterprises derive
their main income by sales and form a vital part of the free-market economy (Aithal, 2016).
Sainsbury's which is a British groceries and general merchandise provider is an example of a
profit organisation.
The purpose of Sainsbury's is to provide a wide variety of goods as it is a chain-based
supermarket in United Kingdom. Its business model is based on providing the customers with a
wide choice of goods and services to choose from. It provides quality products to the consumers
so that their satisfaction level is maintained. It wants to stay ahead of its competitors in the
market and become market leader in supermarket business in U.K. Sainsbury's provides products
such as groceries, own-brand food products, premium-quality brand products and specific food
items according to customer's needs. It is a private limited company.
Not-for-profit organisations are the one that do not aim to earn profits and all its surplus
revenues are used for further the purpose of organisation. These are mostly government
organisations. An example of not-for-profit organisation is BBC which is a British television
channel.
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BBC acts in the interest of public and informs, educates and entertains people. Also, it
aims to news and information, supporting learning for people of all ages and shows the most
quality content to its viewers. It provides people with national and local radio stations and has
maintained a detailed website. It is a public ltd. company.
A non-governmental organisation is the one non-profit organisations which does not have
government intervention in operations (Guiyua nd Yang, 2016). Oxfam is the example of non-
governmental organisation which was founded in U.K. and aims at alleviation of global poverty.
It is a global movement of people who are fighting inequality to fight poverty together. It is a
not-for-profit organisaton.
The purpose of Oxfam is helping to remove the injustice to many people which is caused
by poverty. It aims to help people out of poverty level, advocated equal rights for genders, saves
lives and ensures supply of food. Additionally, it aims to provide equal resources for all people
and increasing funds for basic needs and requirements of poor. The services provided by it
include education and healthcare facilities for all. Also, it helps people to get out of poverty and
takes care of their basic needs and requirements.
P2: Details about size and scope of organisations
Enterprises can be classified into many types on the basis of their size and scope such as
micro,small, medium and large. Details about these enterprises are given as follows-
Micro enterprises are very small businesses employing not more than 9 people. An
example of micro enterprise can be Boss Brewing Company which is a brewery in U.K. Boss
Brewing company is a micro enterprise. It has a wide scope in brewing industry. The market
share of organisation is very low and the profit share is also low because of intense competition.
The enterprise has decent chances of growing its operations in the future and aims to sustain its
operations against its competitors (Hakanen, Helander and Valkokari, 2017).
Small enterprises are those businesses which employ not more than 250 people. An
example of small enterprise can be Airdri which is a world leader in hand dryer development. It
is a small enterprise. It has a good scope in the hand dryer market where it stands ahead of its
competitors. The market share of organisation is small because of presence of other small
companies in the market. It has excellent chances of growth in future and can sustain itself
against market forces and competition.
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Medium enterprises are those enterprises which have a turnover of less than £50 million.
An example of medium enterprise can be Verdant Leisure Ltd. which operates holiday parks
across U.K. Verdant Leisure Ltd. is a medium enterprise. It has a bright scope in recreation
industry. The market share of company is more than micro and small enterprises but less than
large enterprises. It has good chances of achieving growth in future and can sustain against
market competition (Kessler and Buck, 2017).
Large enterprises are those companies which has atleast 5000 employees working in it.
Sainsbury's is an example of large enterprise. It has a decent scope in supermarket industry in
U.K. as it is a leading player in supermarket chains. It can explore its product range by
diversifying into different lines. The market share of company is more than its many small
competitors and it is only behind Tesco. It can achieve high growth in the future after sustaining
itself against the competition. It has significant opportunities in general merchandise and
clothing business. It is in a very strong position to profit from a changed retail landscape. Its
investment in its first checkout-less store will give it the most sustainable source of competitive
advantage in medium to long-term. It aims to become the market leader in supermarket industry
leaving behind Tesco.
TASK 2
P3: Relation between functions of organisation and their link with structure and objectives
A system which provides the direction of certain activities for achievement of goals and
targets of organisation is referred as organisational structure. It ensures that hierarchy of
positions is followed in an organisation. The different types of organisational structures are
detailed as follows-
In Transnational organisational structure, a business is usually organised in different
dimensions which can be geographic, product and functional levels (Korcsmáros and Šimova,
2018). It requires that the company follows a multi-dimensional structure and differentiation is
ensured in it. Thus, integration can be achieved in categories of goods or geographical areas. In
international organisation structure, there are four major types such as export, global,
international and functional. Sainsbury's uses transnational organisational structure as it can
segregate its products and services in various different levels which ensures smooth functioning
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of the organisation. It ensures that the chain of command is followed in enterprise and proper
delegation of authority can be done so as to avoid confusion between subordinates.
There can be complexities in these structures such as number of people required to do
something, activities such as number of steps, functional points such as functional requirements
implemented by a system (Martins and Nienaber, 2018). In transnational structure, complexities
affect the aim of achieving integration and coordination at various levels. It is difficult to balance
between needs of functional, geographical and product stakeholders. Furthermore, decision-
making ability of enterprise may be hindered due to this structure.
In international structure, duplication of work done by staff is possible which can hinder
the progress of company. Also, the managers lose their focus on goals and targets of the
organisation in process of implementing this structure.
In global structure, it is quite difficult to align products according to geographical
locations. Additionally, it creates disadvantage as organisation loses concentration on research
and development.
The functions like marketing, finance, HR, production etc. have an impact on
achievement of organisational goals and objectives as each of them is necessary to manage the
operations of company. Sainsbury's needs to manage them well so that it can function properly to
achieve the goals and objectives.
The functional areas in Sainsbury's share an interrelationship with each other as they
cooperate and coordinate for work of the organisation. This ensures efficiency, effectiveness and
productivity in the company.
Relation between organisational structures and functions is connected with a flow chart.
Adoption of a chain of command in structure separates different departments in an enterprise. It
facilitates the employees of a particular department to concentrate on a specific task. Spreading
of functions across company requires the use of a divisional structure. Division of every
enterprise cane be done according to marketing, research & development, human resources and
production. Benefit this function offers is personnel is available in every department to carry out
tasks.
Using matrix structure leads to adoption of a flexible approach in business functions as in
it workers work in departments based on functions such as marketing or finance. This structure
helps organisation to quickly adapt to dynamic business environment requirements. However,
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the drawback is that conflicts between workers can arise if such a structure is implemented in the
organisation.
TASK 3
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples
PESTLE analysis of Sainsburry Plc: It is a technique of environment scanning
which helps managers to analysis the impact of macro factors within the organisation. This
framework consider six elements (Niedermeier, Wang and Zhang, 2016). Organisations uses
these elements to identify opportunists available in market environment. Elements of PESTLE
framework of Sainsburry are mention below:
Political factors: It is one of the essential factor of macro environment. Political factors
are used to identify impact of governments rules and regulations over business environment of an
organisation (Saura, Palos-Sanchez and Correia, 2019). These factors includes tax policy, rules
and regulation regarding employment laws, and labour laws, stability level of government in an
country. Impact of political factors on Sainsburry is describe as follow:
 Positive impact: Government of U.K started various programs which helps Sainsbuury to
increase their market area in global market.
 Negative impact : Due to Brexit agreement company suffers from various problems their
profitability level has been decrease.
Economical Factors: These factors include inflation rate, interest rate, and life cycle of
an industry. These factors impact on the productivity level of an organisation. Success of an
organisation depends on how effectively an organisation will be deal with their economical
factors.
 Positive impact: The company increase its target market as demand price of their
product is increase even after recession period .
 Negative impact: Government of united kingdom increase their interest rate polices thus
the company unable to invest in long term securities,they cannot expend their market due
to high interest rate.
Social factors: These are the factors which includes demographical factors, culture
environment, preferences of customers. These factors analysis the environment within which an
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company exist (Seele, 2016). Every organisation should be work in a manner that they can
satisfied their customers. These factors are help in determining profitability level of an
organisation.
 Positive impact: Sainsbury is situated in London ,demographical factors of London
impact positively upon the organisation environment. Brand value of this organisation
has been enhanced because of their target market customers as the company focuses on
well educated sector of the economy.
 Negative Impact: Sainsbury earns profit by providing products and services of junk
food items. Now preferences of customers are changed as they mainly focus on health
food. It will adversary effect on companies earning ratio.
Technological factors: These factors are related with technical tools. At present
technologies are changes in few minutes,every day new techniques, are introduced in market
places.
 Positive impact: London is hub of IT market so it will be easy to adopt new technologies
to attract their target market customers. Sainsbury apply new techniques and price to
provide better quality services to their customers (Shageeva and et.al., 2017).
 Negative impact: Due to technological advancement now customers preferred online
shopping rather then buying products from supermarkets. Due to online marketing
profitability rate goes down.
Environmental factors: These factors are related with nature. These includes all those
elements which affect the natural environment of an organisation.
 Positive impact: J. Saisbury is leading corporation operating in United. Kingdom. The
company works on the principle of recycling of material used in manufacturing products.
Thus government provides them various subsidiaries which helps them to cover-up their
liabilities.
 Negative impact: Cost of manufacturing products are increase as the company only
manufacturing products which not impact adversary on environment.
Legal factor: These factors includes rules regulation and policies which determine
ethical way of running an organisation in the global environment. These factors includes labour
laws, employment law, rules and polices related to consumers behaviour etc.
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 Positive impact: Saisbury follows different rules and regulation prescribed under law in
very efficient manner. It will help this organisation to make good image in the
competitive market among customers.
 Negative impact: Due to increment in sugar rate cost of providing services are increases
of this organisation.
TASK 4
P5. Examine internal and external analysis in order to identify strengths and weakness of an
organisation
SWOT Analysis:- It is a strategic framework used to identify strength and weakness of
internal environment and opportunity and threat for external environment in an organisation.
Both Sainsbury and Mark and Spencer implies this analysis to determine their challenges which
are to be overcomed by its strength and opportunities (Svensson and et.al., 2016).
SWOT Analysis for Sainsbury's organisation:-
Strength (S) Weakness (W)
 It consists the largest supermarket chain
in United Kingdom.
 It have professional and specialised
leadership team.
 Raising food prices impact the sales of
the company.
 High and tough competition in retail
sector segment.
Opportunities (O) Threats (T)
 It has the opportunity to create threat
for it competitors by partnership, joint
venture, etc., to enter in market.
 It may also expand in different
countries of Africa, Asia, etc. by
establishing their new branch.
 Emerging globalisation results in
challenges and tends to be the
opportunity of organisation.
 Increasing cost leads to increase
competition and tight labour supply.
SWOT Analysis for Mark and Spencer organisation are:-
Strength (S) Weakness (W)
 It consists of high recognition and wide  It have bad publicity as there is no
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variety of brand and products.
 There are large number of stores and
outlets with famous designing brands.
trending store.
 It purely depends upon manual working
which increases its cost.
Opportunities (O) Threats (T)
 The environment of organisation leads
to capitalise with increase in returns.
 New segments are usually evolved
according to the upcoming fashion to
defeat its competitors.
 Rising raw material creates threat in
profitability.
 Other retail stores impose threat
because of their discounted prices.
The SWOT Analysis is essentially applied by every organisation to determine their
strength over weakness with the ability to utilise opportunities as power to defeat competitors
and decline threats by correct measures. It influence the companies for decision- making process
in planing to reduce weakness and threats by increase in strengths and opportunities. It is simple
analysis used by business to determine their strategic position in operation. It is the study of
internal and external environment through analysing SWOT analysis of an organisation in this
competitive market. It's main target is to identify factors that influence programming of
organisation with useful information in strategic planing process.
P6. Explain interrelation between strength and weakness affect macro factors
Every organisation consists business environment which is further classified in internal
and external environment, on which SWOT analysis implied for strategic position. These internal
environment includes board of directors, employees and organisational culture., which are also
termed as “micro environment.” In external environment there are following factors, which are
suppliers, strategic partners, customers, regulators and competitors followed with technological,
economic, social, political, legal and international dimensions. These are also termed as “macro
environment” of an organisation (Viriyasitavat and et.al., 2018). The SWOT Analysis creates
great impact on these environmental resources which helps to compete with competitors.
The strength overcome weakness by interrelating with each other through micro factors
to build more possibilities of strength for reducing weakness of an organisation. Sainsbury
strength and weakness interrelate with each other affecting macro factors by being the largest
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merchandise and clothing retailers in UK providing its product in wide area. It also helps to
maintain balance sheet with consistent profitability by reducing its liability. Differentiated food
proposition with good quality leads to increase in strength with distributing in macro factors by
its specialisation. Big number of employees are being performed to provide wide services to their
customers.
The Sainsbury's organisation interrelate strength and weakness with macro factor by the
main focus to serve its customers through marketing mix. Management also directs and controls
with SWOT analysis to achieve organisation goal effectively and efficiently. The macro factors
affect marketing management in maintaining successful relationships with target market. It
creates balance in work efficiency through personnel management which leads to prevalent in
assigning projects by interacting with subordinates. The macro analysis political which allows
democratic and free market to trade with Cargo movement. Sainsbury's SWOT analysis consists
specific key determinants for success of company. Macro evolution suggests that Sainsbury can
undergo enough change in long term duration.
CONCLUSION
From the above project it can be concluded that business is defined as an organisation
which engaged in performing industrial, commercial, and economical activities. Atmosphere
within which business entity runs is known as business environment. It include all those factors
which directly and indirectly affect the organisation. An business entity can run their business in
between three sectors, profitable ,non profitable and non government sector. Size of an
organisation is totally depends upon the vision their owner decides at the time of establishment
of the organisation. Manager of an organisation can run their business as small, medium and
large size depends on the net capital value of the business entity. In the competitive market
environment growth rate of of large scale organisation is always high as they have more
resource compare to medium and small size organisations. To attain sustainable growth rate
business entities uses PESTLE, SWOT analysis techniques. Success of an enterprise is totally
depends on how efficiently they analysis their environmental factors, these techniques help
organisations to identify strengths, weakness opportunities available in business environment
and then make those policies which help in attain predetermined goals of an organisation.
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REFERENCES
Books and Journals:
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