Business Environment Analysis: Sainsbury's Performance and Factors

This report provides a comprehensive analysis of Sainsbury's business environment, encompassing various aspects such as organizational structure, types of organizations, and the impact of macro and micro factors. The report begins by explaining different organizational types, including private, public, and voluntary organizations, along with their size, scope, and legal structures. It then delves into Sainsbury's organizational structure, highlighting the interrelation between different functional areas like IT, HR, marketing, finance, and production. A PESTEL analysis is conducted to assess the political, economic, social, technological, environmental, and legal factors impacting Sainsbury, with a specific focus on the effects of Brexit. Furthermore, the report includes a SWOT analysis to evaluate Sainsbury's strengths, weaknesses, opportunities, and threats, considering the relationship with macro environmental factors. Finally, the report evaluates the impact of both macro and micro factors on Sainsbury's decision-making processes and business objectives, providing a holistic view of the company's performance within its business environment.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Explaining different types of organisation with their size, scope and legal structure with
example.......................................................................................................................................1
TASK 2............................................................................................................................................4
Analysis of organisational structure and interrelation between different functional areas of
organisation.................................................................................................................................4
TASK 3............................................................................................................................................7
PESTEL analysis of Sainsbury plc and its impact on business decision and on business
objectives.....................................................................................................................................7
TASK 4..........................................................................................................................................10
1. SWOT analysis of Sainsbury plc with its relationship with macro environmental factors. .10
2. Evaluating the impact of macro and micro factors on Sainsbury decision making and its
business objectives....................................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business environment can be defines as a person, institution and all those factors that are
uncontrollable for a business entity and can affect the business operations and its growth can be
termed as business environment. It can also be said that business environment is every thing that
are connected with the business from its customer to a country it is operating in. These factors
together constitute the business environment for a business. As they all are outside the business
and thus it can affect the business operation which are controllable. Report will also lay emphasis
on Micro, macro, small and large enterprises. The present study is based on different aspects of
business environment which will assist in analysing the impact of business environment factors
on the growth and performance of a company. The study is based on Sainsbury supermarket plc,
one of the leading supermarket chain of UK.
The report will analyse the impact of Brexit on business environment which has affected
the business operations of Sainsbury. Different impact from the consequences of Brexit will be
highlighted in the report. Further, report will discuss the different type of organisation with their
purpose, scope and legal structure. Report will provide a deep insight of operational structure of
Sainsbury plc with the interrelationship of different functional areas. The report will than analyse
the impact of macro and micro factors on decision making process of Sainsbury and their
interrelationship in achieving business objectives.
TASK 1
Explaining different types of organisation with their size, scope and legal structure with example.
There are various types of organisation that are varies as per there size, scope, legal
structure and business operations. Some of these organisation are as follows:
Private company: Such organisation are a valuable part of the country's economic that is
run by individual or by a group of companies. These companies are in the operations of selling of
products and service (private sector , 2019). There solely purpose is to make profit and growth of
there business organisation. The main source of capital of these organisations are through issuing
their shares and debentures in financial and capital market or through taking long-term loans
from banks. For example, Sainsbury supermarket plc based in UK is a privately held
organisation.
Advantage of Private company:
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 It is legally registered companies which assist in making goodwill of company in market.
 The private sector companies will survive for a longer period, irrespective of its owner,
dearth, retirement etc.
Disadvantage of Private company:
 The private organisation are obliged to pay annual fee, which leads to decrease its overall
profit and is burden at the time of less revenue.
 The process of registering the company is quite lengthy and complex process. Which
requires lots of paper work. Other than this, the process of shutting down or winding up a business is also very
complex and very costly.
Public company: This kind of organisation are owned by and governed by government
or government institution. This type of organisation are operated in order to provide services to
the citizen, create employments opportunities and develop the infrastructure. Public organisation
do not operates in the motive of making profit (Fernando, 2011). They generate profit in order to
efficiently run their business operations. The different sources of funding for public organisation
are through taxes, fees, financial transfer etc. For example, Bank of England is the public sector
bank and the central bank of UK.
Advantage of public sector:
 These type of organisation generally provides products or services as comparatively l;ow
prices.
 These organisations has great opportunity of expansion as there are lots of funds
available for them
 Public sector organisation leads to protect the public interest and assist in enhancing the
economy of a country.
Disadvantage of public Sector:
 In Public sector organisation do not give importance to FDI.
 It is difficult for the company in order to take decisions, as it is quite lengthy process.
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 As they have less competition, the product or service quality leads to be low as compared
to private organisations.
Voluntary organisation: This type or organisation are usually comprised of two or more
institutions who are collaborated together which a purpose to operate an organisation in order to
provide benefit and enrich the society and human kind (Wetherly and Otter, 2014). They do not
operate in order to generate profit, whatever profit they earn they invest it again in order to
expand their operations in serving the society and human kind. The main source of funding for
voluntary organisations are charity funds, donations and government grants. Charitable trust,
foundations, NGOs are some examples of voluntary organisation. For example, British Red
Cross society is UK based voluntary organisation.
Advantage of Voluntary:
 It has low operational cost as compared to other organisation.
Disadvantage of voluntary:
 Getting fund on time is difficult task.
Difference between size and scope of different organisations:
Dimension Private Public Voluntary
Company Sainsbury plc is British
based supermarket chain
in UK.
Bank of England is the
central bank of UK and
sole issuer of bank notes.
British Red Cross society is
the UK based which
engaged in serving millions
of people across the world.
Size It has more than 186900
employees that are
working in more than
1415 shops around the
UK. It is a large
enterprise
The bank has more than
40000 employees and
different committees
working al over the UK.
It is a large enterprise
There are more than 32500
volunteers and 3500 staffs
both in UK and overseas.
It is a large enterprise
Scope Sainsbury plc is operating
all around the UK.
It has wide range of scope
(Hillary, 2017).
The organisation has a wide
scope.
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Legal Structure It is listed in London
Stock Exchange and is
registered as private
limited company.
The bank is independent
public organisation, wholly
owned by the treasury
solicitor on behalf of UK
government.
This organisation is
governed by a board of
trustees, and is registered
charity organisation.
Purpose
Sector
To become a sustainable,
multi-channel retailer.
And to maintain high
level of customer trust
and employee relation.
Secondary sector
To maintain the financial
and economical stability in
UK.
Tertiary sector
To assist human kind and
society at the time of any
crises strikes.
Tertiary sector
Operation Sainsbury is engaged in
selling cloths, one
products, food and non-
food products. It is
indulge in financial
services.
They control and the
monetary policies of the
country. They have full
authority of the private
sector banks and make
polices and rules for them
(Hamilton and Webster,
2018). Their other
operations includes
funding to the
organisations and general
public.
In operates all over the
world to help millions of
people at the time of crises.
TASK 2
Analysis of organisational structure and interrelation between different functional areas of
organisation.
Organisational structure of Sainsbury plc are as follows:
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The organisational structure of Sainsbury's is power culture. It has top executives management
team which are responsible of making all the decisions and strategies for all the organisation.
Later, there are different managerial areas which are operated through their respective managers.
They are responsible for making decisions regarding their functional areas framed their galas and
objectives. These functional managers are accountable to report about their operations to the top
executives (Vendrell-Herrero and et.al., 2018). In power culture, the top management is the
authority which creates strategies and policies for rest of the organisation and they have to follow
the rules and work in accordance to their authority.
It can be said that, there are numerous department and functional areas in Sainsbury that
are interrelated to each other and with the organisational objectives. These different departments
are work with the aim to achieve the purpose and objective their respective department and of the
overall organisational goals.
Information technology: their main operation includes to enhance then communication
process, data processing. They interrelate with different department such as marketing in
promoting the product and services, analyse the trend etc.
HR department: the main operation of HR is to recruit, hire, select and manage the
needs of the employees of organisation. They interrelate with other department to fulfil their
requirement of employees and train them accordingly. Different department coordinate in order
to prepare the job description as per their vacant job (Brown, 2018). HR communicates to
finance department in order to get the funds for recruiting process.
Marketing department: Their main operation is to promote and increase the sales of the
product and service of the organisation. They would get funds from finance department in order
to operate their activities. Finance department will make budget for them in order to be ensure
that activities are performing by staying within the budgets.
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Finance Department: it essential part of any organisation. They allocate funds to all
departments as per their needs (Faghih and Zali, 2018). They prepare budgets for them and
control the budgets also.
Research department- It is one of the most important sector in an organization as this
sector brings out recent trends by analysing the market.
Production department- This department carries out the function of production and
converting raw material into finished goods.
TASK 3
PESTEL analysis of Sainsbury plc and its impact on business decision and on business
objectives.
PESTEL analysis is an effective strategic tool which will assist in getting better insight of
the impact of external environment on the business performance and decision making process of
Sainsbury plc. It can be said that following the Brexit, there are various uncertainty that has
arises in the UK and EU, which can leads to affect the organisation's overall profitability and
business operations. The retail sectors are supermarket are having great impact both in positive
and negative way which needs to evaluate efficiently in order to make efficient strategy in order
to overcome this. The PESTEL analysis of Sainsbury plc are as follows:
Political: It can be clearly identical that Brexit has dis-mental the political environment
of UK. It has leads to create the clods of uncertain political instability which will going to
influence almost all the sectors and businesses of UK (Akinboade, 2015). Brexit gas leads to
affect and change many rules and regulation of UK with EU, which may leads to affect the
business operations. Other than this, there are some other factors also which leads to affect the
business operation of Sainsbury plc, like government interference in retail industry, tariff rate
and duties for import and export. This political factors has both negative and positive impact on
Sainsbury business performance:
Positive Impact:
Government of UK, has made several policies in order to improve the stability of
business sectors. Sainsbury plc can tare advantage of these laws in order to maintain its business
operations smoothly. Good tariff rates and duties can also assist the business to import its
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product and export the raw material in order to maintaining the profitability. Despite of the
political instability, Sainsbury can take advantage of its reputation of offering high quality
products.
Negative Impact:
Brexit has affect the retail and supermarket businesses of UK. Sainsbury has large supply
chain and vast distribution channels all over Europe, but after referendum there are many
changes in laws and regulation which has affected the sales and revenue of the business. It has
resulted in reducing the performance of business operations.
Economical : Following the Brexit, the world has witnesses that pounds has been
affected and gone lowered to Dollar and Euro, which leads to worsened the economical
condition in UK (Leviäkangas, 2016). Brexit has leads to create high inflation rate, declining in
consumer spending power which will affect the sales of Sainsbury. Economic factors like,
recession, debts, unemployment, increases in product prices are adversely affecting the
performance and profitability of Sainsbury plc.
Positive Impact:
In order to overcome from the economical instability, expanding the business operation
across the nation will assist the firm in over coming from the recession in home country and will;
provide a new way to enhance the sales and customer base of the company (Robinson and et.al.,
2016). Sainsbury can also export its product with strong supply chain network in order to
maintain the business operations and profitability.
Negative Impact:
Increasing domestic inflation has leads to increase the products of the raw material which
has affected the cost of manufacturing which leads to increase the higher prices of food product
and created various supply chain issues which leads to affect the sales of the company.
Increasing in inflation has leads to decrease in the consumer spending power. Increasing the cost
off import due to declining currency rates has results to impact on the business operation of
Sainsbury
Social: The cultural and social beliefs and value are some of the social factors. Ue to the
economic and political imbalance, it has leads to affect the disposable income of consumers and
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income of peoples which will leads to impact the business operations (Pereira and Kalakoti,
2014). The rate of employment has been affected after Brexit, level of skilled employees, buying
and purchasing habits of consumers has changed a lot, which has affected the overall
profitability.
Positive Impact:
Regardless of the Brexit impact, the social factors has leads to gain advantage for
Sainsbury, as it has developed online food shopping facilities and operating through 800 and
more stores which assist in increasing its sales which assist in maintaining the sales growth and
profitability of the business. Constant demands of the consumer for Sainsbury products are assist
in providing opportunity to the company in offering discounts and other offer which leads to
increase the sales and revenue for the firm.
Negative Impact:
Following Brexit, it leads to move the many skilled employees from UK as per the
change in policies for the free movement of employees and workers in Europe. Rising the age
population of UK has also affecting the various business opportunities. Needs of skilled labour is
also a main issue which has to be face by company.
Technological: It is on of the most important factors which can assist the business
operations of Sainsbury in appropriate manner. In the scenario of Brexit, there are various
uncertainties regarding the supply chain of food and beverages products in EU and in UK also.
Through adopting online business services, Sainsbury can achieves in the market growth and
efficient business operations (PESTLE AND SWOT ANALYSIS OF SAINSBURY’S 2017 , 2019).
Using the data driven analysis is an important factor which will help the company in order to
drive the demands of the retail consumers.
Positive Impact:
Sainsbury has a strong presence in the digital marketing which leads to assist in making a
constant demands of consumers. The company has successfully introduced digital services which
includes online food shopping and new technology called click and collect services. It leads to
increase the sales and help Sainsbury to achieve the profit.
Negative impact:
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Implemented digital technology will leads to heavy investment y the firm which has
impacted the total profitability of company (Niemann, Kotzé and Mannya, 2018). The disturbed
supply chain management of company will affect the proper delivery of products to the customer
which can leads to affect the reputation and further sales.
Environmental: there are different norms and environmental standard which company
has to maintain in order to operates its business successfully. The recent trend of retail clothing
are giving rises to ethical and environmentally conscious consumers who leads emphasis on
adopting standard of reducing use of plastics and recycling of waste material. Reduction of food
waste is the major challenge which has to face by company that can affect not only its business
operations but also its reputation among the customers.
Sainsbury has effectively started business activities in order to reduce the wastage
through organisational activities and collaboration. Company has also collaborated with Waste
and Resources Action Programme in order to minimize packaging and food waste in Sainsbury
stores. The company also takes initiative in order to reduce its operational carbon omission
upto30%. The company is also involves in various Corporate Social Responsibilities activities.
Legal: With the change in economical and political scenario, it has leads to changes many laws
and regulation which leads to affect the retail sectors (Selvaduray and et.al., 2018). The various
legal framework which includes, employment laws, intellectual property law. Sainsbury plc
should affectively evaluate and compliance the law in order to operate its business activity
effectively and efficiently. The new law called sugar Law which has been introduced by UK
government are aims in the reduction of sugar content by 22% which will leads to affect the
company's food and beverages products.
TASK 4
1. SWOT analysis of Sainsbury plc with its relationship with macro environmental factors
It is an effective tool which assist the Sainsbury in order to evaluate its own strength and
weaknesses and the external factors opportunities and threat which company can strives. It assist
the company in making business strategy and the operations in UKL and global market of retail
industry. SWOT analysis in an effective strategic tool which leads to evaluate strength and
opportunities of Sainsbury which can effectively compensate to the weakness and to make
strategies against the threat of competitors (Rudawska and Bilinska-Reformat, 2018). These are
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