Business and the Business Environment Report: Sainsbury and UK Retail

This report provides a comprehensive analysis of the business environment, focusing on the case of Sainsbury within the UK retail sector. The report begins with an overview of different types of organizations (public, private, and voluntary), their size, scope, and organizational structures. It then appli...Read More

Business and the Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
Section 1...........................................................................................................................................1
1. Different types of organisations.........................................................................................1
2. Size and scope of organisation...........................................................................................2
3. Organisation structure and functions..................................................................................3
Section 2...........................................................................................................................................4
a. PESTEL Model to analyses the impact of macro environment in UK retail sector. .........4
b. Application of SWOT and Porter's five force analysis to determine how it influence
decision of super market.........................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment is defined as the sum total external or external factors such as
consumers, government, trends, economic changes and many others. All these factors impacts
impacts the organisational operation as well as functions directly or indirectly(Boons and
Lüdeke-Freund, 2013). As per the scenario, the chosen company is Sainsbury, it is the British
multinational retailer that deals in clothing, electronics, furniture and so on. Its headquarters is in
London, UK. This report covers an essay where different types of organisation their size, scope,
functions and structure are explained. Moreover, in another part PESTLE model is applied to
analyse the impact of macro environment in UK retail sector are also mentioned. Apart from this,
Porter's five force model and Swot are used to determine how they influence supermarket
decisions are also discussed in this report.
Section 1
1. Different types of organisations.
There are three type of organisations that are public, private and voluntary. All these are
discussed below: Profit organisation (private company), these are the firms that are owned
through partnership, association and other who are operating their business for gaining
profitability as well as self sufficient without any state interferences. For establishing such firm 2
directors are appointed and registered under the government regulations. For example:
Sainsbury, it is the growing profit firm that operates to earn profitability. The main purpose of
respective company is to develop value for consumers to gain its lifetime loyalty. It offers huge
range of products or service4s form house hold products, clothings to insurance. Where as Non
Profit organisation (Public company), these are considered as tax exempts or charitable firm it
means that they do not pay any income tax amount which they receive for its firm. Moreover,
they are generally developed for public or mutual benefits instead of producing profits for
investors or owners. It can operates in educational settings, scientific, research and so on. For
example: NICE, It is considered as the national institute for health and care excellence. The main
purpose of respective company is to support individuals who required effective products and
services as well as obtaining large market share. The company deals in new as well as existence
treatments, medicines etc. for social care services. Non government organisations (Voluntary
firm), This is the term that is utilised mostly in international relation as well as developing
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countries (Cai and Yang, 2014). It means that more professionalised firms promoting social and
economic development. Moreover, it performs a variety of services as well as humanitarian
functions, bring people concern towards government, advocate and monitor whole policies. For
example: OXFAM which is a non government firm which performs internationally to eradicate
poverty as well as injustice presents into world. The purpose of respective company to aids in
developing long lasting solutions to poverty injustice. It facilitates people to know its rights,
increase livelihoods as well as contributes in decision making that impacts its lives.
2. Size and scope of organisation
Public (NICE) Private (Sainsbury) Social enterprise
(Oxfam)
Background It is the government
body that works for
improving health
condition of
population.
It is the multinational
retailer those which
has branches in many
countries. Net income
of firm as per
2019was 28456 crore.
This is the voluntary
organisation that
emphases more on
eradication of
poverty.
Products and services It provides medical
care services to
people and ensure to
have adequate
facilities in hospitals.
It offers grocery,
books, cloths, toys,
financial services etc.
It serves people those
who are in disaster
situations or suffering
from poverty.
Size and scope Market share: The
firm have extended
market share within
the middle market for
cloud performance as
well as explore
network of partner
and respective firm
sales and market
permit them to reach
Market share: In the
list of super market
chain, the market
share of Sainsbury is
27.4. As per the
annual report of
Sainsbury, the net
profit margin is
2.04%, revenues is
11.16% and operating
Oxfam, as per its
annual report the
profit margin is 23%.
Moreover, in Year
2018 their revenues is
$99.3 it grows by
19% from previous
one.
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and offer small
company to represent
in effectual manner.
As per the annual
report , the total
revenue is approx.
$146, earning per
share is around $4.69,
and operating cash
flow is $397. the
respective company
growth is based upon
the revenues,
developing strategy to
facilitate services at
new international
market. Moreover, the
government develop a
decision in year 2011
to involve
sustainability within
all that it perform
margin is 3.37%. from
the beginning the
respect firms growing
continuously has they
enhances their
operating profit ,
product line etc.
Vision Vision of company is
to improve wellbeing
of people in the
nation.
Sainsbury’s vision is
to become market
leader.
Vision of Oxfam is to
improve wellbeing of
population.
Mission Mission of NICE is to
create health
awareness among
society members and
minimise death rate in
Its mission is to serve
consumers well and
raise their satisfaction
level.
Mission of Oxfam is
to control over
poverty so that person
can leave healthy life
style.
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country.
Objective Objective of company
is to serve patients
well so that they can
leave healthy life.
Objective of
Sainsbury is to
enhance market share
and profitability of
company so that firm
can gain competitive
advantage
Oxfam’s objective is
to remove poverty and
create the
environment where
person can live
healthy life.
Legal structure Government is
responsible to take
decision and owner or
board of director is
not responsible to
repay any debts.
Companies can trade
in stock exchange to
raise capital.
Private companies
have no rights to trade
in stock exchange.
Decision are taken by
owner and board of
director is responsible
for debts.
Trust members or
volunteers work as
community and run
the firm. Trustees
provide funds and
there is no specific
legal structure of
volunteers firms.
Stakeholder Patients, medical
professionals,
government, are the
major stakeholder of
company.
Employees, managers,
investors, government
are major stakeholder
of company.
Volunteers,
government, trustees
are the main
stakeholder of Oxfam.
Micro enterprises are defined as the business which employs small number of workers.
This will generally operates with less than 10 people as well as is initiated with few mount of
finances. They are specialises into facilitating products or services for its local places. Example
of micro business are ice- cream parlour etc (Epifanova and et. al., 2015). Small enterprises
are considered as the business that employs less than 50 people as well as whose annual turnover
is not more than £10 million. For example: dry cleaners, restaurants and so on. Medium sized
enterprises are defined as the business that employs less than 250 individuals as well as whose
total annual balance sheet so not goes beyond £ 43 million. Large enterprises is an business
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which have at least 5000 staff as well as their annual turnover is more than 1.5 billion euros and
total balance sheet is grater than 2 Billion euros (Different types of enterprises. 2018).
3. Organisation structure and functions
There are various organisational structures such as flat, divisional, horizontal and many
others. So, several organisation have different structure that are discussed: Profit organisation,
Sainsbury which is profit firm have Hierarchical organisational structure as in this positions,
structures as well as obligations are distributed into various parts for assuring that work will be
performed in effective and smoother way. The organisational structure of Sainsbury is formed
with 5 committees, 11 executive committee member which are led through Group Chief
Executive whose name is Dave Lewis. It is mostly Hierarchical showing their huge scope of
business. Also, it have board of directors in which there are approx 10 members as well as
changes are done at the financial year (Sainsbury organsiational chart. 2016).
Non profit organisations, NICE has flat organisational structure as it includes non
executive chairman and non executive directors who appoints board executive members. Non
government organisations (Voluntary): As Oxfam is non government organisation, it has flat
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Illustration 1: Sainsbury organsiational chart
(Source: Sainsbury organsiational chart. 2016)

organisational structure as the charity is controlled through a chairwoman who is incharge of
number of trustees. Moreover, it try to keep mangers down as well as various volunteers up as
they try to keep cost down as more trustees as well as volunteers are not get paid.
Complexities in organisation structure is defined as the numbers of resources which are
included into a division, group or projects. In case the size of the organisational structure is large
is more complex. The company pursuing transactional structure to arrange their business with
various dimensions like product, functional and geographic level. The complexities within this
particular structure is that they can not able to organise all the level effectively. Global
organisational structure is defined as the integrated organisational structure that super imposes
upon one another or more than one aspects. The complexities of respective structure is they
create more confusion among each other as it is integrated structure (Hillary, 2017).
Some function of firm are interrelated with one another such as Marketing and HR,
both marketing and HR are interrelated with each other as marketing analyse need and demand
of consumer and according select candidates for their business. It is very important for respective
organisation to have skilled, capable and experience human resources so that goal and objectives
of business can be achieved in effective and efficient manner. Production and Finance,
according to requirement, production is done where funding is provided by finance department.
These both have to work together in order to achieve set goal and objectives in systematic
manner. If finance provide limited funds to production then accordingly manufacturing is done.
The finance has to allocate funds to all department in equal proportion so that they all can carry
out work in proper manner.
Section 2
a. PESTEL Model to analyses the impact of macro environment in UK retail sector.
PESTEL analysis is defined as the tool which is utilised to examine as well as observe the
factors of macro environment which may have effects upon the performance of firm. Moreover,
in industry like retail sector utilised to evaluate the external factors such as political, economical,
social, technological and so on which impact a business. All these are discussed below: Political factors: This factors includes foreign trade policy, government policy, trade
restrictions and many others. All the retail stores profit as well as revenue are impacted
through the policies of the UK Government. Moreover, these regulation effects economy,
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global trade laws and customers purchasing habits. The laws impact which goods can be
exported, imported and sold into stores. For example: When retail stores have branches
into another countries, they required to abide through polices in that nation. Different
policies of various country impact the retail sectors specially a big firms such as
SAINSBURY etc. Economical Factors: These factors includes unemployment rates, exchange rates,
economic growth and others (Hilton and Platt, 2013). A strong economy permits
customers to purchase those products which they want. This means that various investors
are interested to invest in profit that is provide through retail stores. The retail sector was
capable to be stable during recession time. This is one of the industries that were
managed to scrape through. By year 2020, respective sector many view their international
sales in about $30 trillion. Presently, the worldwide of economy is in huge spot for retail
sector for expansion. Moreover, if economy is not good, in that case so not matter how
many products are offered as their public can not able to afford or justify its purchase. So,
respective sector have to perform consequently sue to that they suffer from loss. Social factors: These factors includes career attitudes, age distribution, cultural barriers
and others. Customer preferences are the essential social factors that impact the retail
sector. For example: Firms like Sainsbury depends upon the consumers of UK as well as
more understandable and facilitates services. Moreover, as per the report of PWC 65%
Shoppers of UK are loyal shoppers. This impact the UK retail sectors positively as they
consider it an opportunity through which they building closed ties and one to one
relation with consumers. Technological factors: Retail sectors utilise a several types of technology daily. As
technology is becoming advance day by day, stores are adapting new systems, hardware
and software (IşıK, Jones and Sidorova, 2013). The retail sectors are great benefited with
the usage of internet. As various firms has websites of business and provide digital
catalogue for its products. For example the firms like Sainsbury formed their own online
mobile payment system which is known as PayQwid. From London to Edinburgh, in
about 524 stores of respective company are utilising this app. Consumers can pay for
shopping and obtain loyalty points. Moreover, saves organisation's labour cost as well as
time. So, this impact the retail sector positively.
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 Legal factors: In retail industry, retail stores required to meet the conditions of legislation
before starting any shops or operation business effectively. As retailers are growing, new
laws come into effect if it do not follow them this impact the firms as well as respective
industry as well. For example: In year 2016, around 17 employees of Sainsbury taken
legal action against employer as per the gender and age discrimination. This impact their
company's reputation and profits as employees are not satisfied they will not perform
effectively. So, this will also impact the retail industry.
 Environmental factors: These factors involves the environment as well as ecological
aspects like climate change, weather and others. Like other sectors, retail industry are
also impacted through sustainability concerns. Many retailers invest more money in
minimising renewable energy as well as carbon footprint. So, retail firms such as
Sainsbury motivate their customers to shop at Sainsbury.com. Moreover, all the retail
stores required to meet the needs of environment for customers as well as safety of staff.
All these impact the respective industry in bot manner positively and negatively (PESTEL
Analysis of UK retail sector. 2019).
b. Application of SWOT and Porter's five force analysis to determine how it influence decision
of super market.
SWOT analysis is defined as the tools which is utilised to evaluate the firm's competitive
position as well as to make strategic planning. This assesses internal aspects and present as well
as future potential (Lee, Kao and Yang, 2014). SWOT analysis is performed for determining that
how this influences supermarket decisions. Strengths: It is considered as the initial step for performing SWOT analysis for super
markets. The strengths of the super marketers low prices. Also, the firm may provides
creative products in comparison to another one. Moreover, the main strengths of UK
supermarket is it usages technology in optimal manner for enhancing the shopping
experiences of their consumers. As many of the firm like Sainsbury launch new RFID
enabled barcoded system for counting the numbers of products automatically. Also, many
store of the supermarket have advance m-commerce facility as well as mobile payment
application.
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 Weaknesses: With the help of market research, the retailer can able to check if they has a
weak brand image. Moreover, UK super market use the low cost strategy due to which
they leads towards low profitability margins. Opportunities: The opportunities of the industry are identified through reviewing firm's
market research as well as sales force. As super market are emerging day by day so many
companies like Sainsbury, M&S etc. have their stores in various developing countries but
expanding their business to emerging countries such as Turkey, Indonesia and other may
be effective opportunity for the supermarkets.
 Threats: The threats of the UK supermarket can be identified through SWOT analysis as
it involves demand of the customers, recession etc. As due to Brexit Referendum, the
Britain were no longer in EU, so the trade deals as well as cost matters are the threats for
them. (SWOT Analysis of UK super market. 2019)
SWOT analysis influences the decision making of supermarkets as through this strengths,
weaknesses, opportunities and threats are identified. So, in order to overcome from the
weaknesses they have to develop some strategies regarding it. Moreover to grab the opportunities
effectively they has to operate their business in effective and profitable manner.
Porter's five forces analysis:
This is defined as the essential tools that is utilised to know about the forces which shape
competition into industry. Moreover, this help them to adjust its strategy in order to suit their
competitive environment as well as for improving their potential profitability (Pulver, 2012).
Porter's five forces analysis of UK super market are mentioned below: Threats of new entrants: This is somehow tough to to enter into UK supermarket due to
various barriers such as entry capital requirements, cost advantages and so on. There are
various supermarkets within United Kingdom such as Sainsbury, Asda etc. For new
entrants, This is hard to occupy the market share of UK supermarket within present
structure. So, the Threats of new entrants is high. Power of buyers: The bargaining power of buyers is low in UK super market. Within
respective country, their individuals required its daily usages products, so it buy things.
For the huge super markets, there are various aspects which influences the buyers choices
like comfortable transport , free parking and others. Due to homogeneity of these aspects,
customers are more focused towards products price. So, various firm forms different
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pricing strategy as per the respective position. For example: Sainsbury supermarkets
facilitates clubcard which shows their consumers loyalty. Power of suppliers: In UK supermarket, the power of suppliers is low as respective sector
have many suppliers as compare to buyers. It has less control over prices and also the
product which they facilitates are standardised fairly, not more distinguished and has low
witching cost. So it is simple for buyers such as Sainsbury to switch its suppliers. All
these shows that UK supermarket have low bargaining power of suppliers. Threats of substitutes products: The threats of substitutes product or services of UK super
market is low as there are not so much substitutes present for the products like groceries
etc. which are produced in respective sector (Rocha, 2012). Due to some substitutes
which are available are also generated through low profitability earning sectors.
Moreover, it refers that there is not any ceiling upon more profit that a companies can
gain into industry. Because of all these threats of substitutes is low.
 Competitive rivalry: The competitive rivalry among existing companies is very high into
UK super markets sectors. As within various supermarkets of UK like Sainsbury,
Morisions, ASDA and others are strong competitors among themselves in respective
sector for gaining the market share. This is very much essential for all their super markets
to develop various creative measures for acquiring more market share.
So, from the above porter's five forces model it is determined that this influences
decisions of supermarkets. As it have low bargaining power of buyers, suppliers, threats of
substitutes as well as its threats of new entrants and competitive rivalry is high. Therefore, as per
the low and high force respective industry have to formulate their decisions such as which
strategies is to follow and others.
CONCLUSION
From the above report, it has been concluded that business environment plays crucial role
in all industry. There are three types of organisation such as profit, non profit and non
government organisation which has different purpose, size, scope, structure and so on. Moreover,
PESTEL analysis have impacts upon UK retail sector in both t he manner positively as well as
negatively. In addition to this, SWOT and Porter's five force analysis are performed in order to
ascertain that it influence the decision making of respective industry.
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