Comprehensive Business Strategy Analysis: Sainsbury's Case Study

This report provides a comprehensive analysis of Sainsbury's business strategy, examining its internal and external environments. It begins with an introduction to business strategies and their importance, followed by an overview of Sainsbury's. Part A delves into Sainsbury's capabilities and the impact of various environments, including PESTLE and SWOT analyses. Part B evaluates competitive forces using Porter's Five Forces model and proposes a strategic plan for Sainsbury's. The report concludes with a summary of key findings and recommendations, supported by references. The analysis covers political, economic, social, technological, legal, and environmental factors affecting Sainsbury's, as well as its strengths, weaknesses, opportunities, and threats. The report also assesses the internal environment, including the company's culture and communication effectiveness. The strategic plan considers the competitive landscape and suggests strategies for future growth and market positioning.

Business Strategy

Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
P1 Capabilities of Sainsbury’s and impact of various environments on company......................1
P2 Analysis of Internal environment as well as capabilities of Sainsbury’s...............................4
PART B...........................................................................................................................................5
P3 Evaluation of Competitive forces for Sainsbury’s.................................................................5
P4 Strategic plan for Sainsbury’s................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategies play the very crucial role in development and growth of any business
organisation. It is quite necessary that right kind of strategies is framed, so that dense growth can
be achieved and the company can compete effectively in the market. There are always level
submit these strategies which are saved by people sitting in different positions in an organisation,
for example, CEO and managing directors are responsible for framing long-term strategies for
the organisation, on the other hand, general manager is responsible for implementing those
strategies in an effective manner. After these people the role of subordinates and employees will
come. Sainsbury’s is a big company in the retail sector of UK (Champoux, Durgee and
McGlynn, 2012). The company is having a diverse and big structure and therefore the strategies
that needs to be framed plays a very crucial role in the success of the company in retail industry.
The company is having around 17% market share in the retail industry. It is having locations in
around 15 places and is committed to grow outside UK and in some of the parts of Asia. The
compan operating income is around £400 million. Detailed discussion about the business
strategy is followed by the company will be done in this report.
PART A
P1 Capabilities of Sainsbury’s and impact of various environments on company
Sainsbury’s is a big retail company in UK and it is at second spot after Sainsbury’s. The
company is having diverse operations in various business segments and it contains in its
supermarkets almost all the products of big as well as reputed brands of country and of the
world. The company is growing fast and is expected to expand in various other countries as well,
which will enable it to diversify its geographical portfolio and gain competitive advantage over
its competitors in an effective as well as efficient way (Favaro, Rangan and Hirsh, 2012). There
are various factors that affects the working as well as functioning of an organisation, the
influence of these factors on organisation and its business are discussed as follows:
Pestle analysis
It is an analysis of macro environment of a company in which it operates. The macro
environment consist of various factors like Political, social, legal, technology etc. What events
take place in the external environment will directly impact the working of company through
change in policies as well as strategies and thus it can be said that it is quite important to conduct
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a PESTLE Analysis by management of company from time to time. Every element of pestle
analysis is described as follows:
Political
There have been various political developments that has taken place in UK after Brexit,
there is a shift in the policies of various countries within the Europe and this has impacted the
overall growth as well as profitability of the company.
The most critical component of political variables of political gatherings and the
parliaments of the country in which the organizations working. They are the person who is in
charge of surrounding laws and also controls which will affect general working of the business
by and large. Sainsbury’s is confronting different political turmoil because of the way that
United Kingdom has chosen to exit from European Union (Grant, 2016). This has brought about
different issues for the organization in light of the fact that the diverse unhindered commerce
understandings that were sign the United Kingdom with European Union has reached an end and
has affected the matter of the organization in a portion of the nations of Europe. Being a set up
organization of UK it needs to roll out different improvements in its strategies and techniques
keeping in mind the end goal to develop its business and manage its intensity. As a result of
different other organized commerce understandings that can occur, the organization has chosen
to put resources into different nations of Europe like hungry, Germany and a portion of the parts
of France.
Economical
A steep decline in the value of great Britain pound has been observed, and it is estimated
that this is a negative for company and might affect it for a longer period of time. It is essential
that company manages its geographical diversification strategies well in order to compact the
adverse effects of Brexit on the company and its productivity as well as profitability.
Along these lines one might say that Sainsbury’s works in the part which is very vital
from the perspective of customers (Ireland, Hoskisson and Hitt, 2012). The organization and its
administration are surrounding fundamental methodologies with the end goal of powerful
administration of the business. They ensure that any progressions inside the financial condition
of the nation would not be antagonistically influencing the general business structure of the
organization. Retail area is the division which is affected intensely by the sort of swelling that
wins inside the economy. The level of expansion is high the utilization of clients will go down
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and along these lines at last effect the matter of Sainsbury’s unfavourably. The organization is
surrounding important systems to defeat these issues.
Social
There has been a constant demand of organic food from customers which is making it
important for Sainsbury’s to fulfil the same in an effective manner. The company belives in
sustainable business practices which has further gained the company precious customer loyalty
in the market place.
Technological
In order to meet the ever growing demand for online shopping the company is making
necessary arrangements to enter into online shopping sector by making heavy investments in its
technological up gradation as well as R&D (Jensen and Berg, 2012).
Legal
It is quite important that all the rules and regulations of the land are properly abided by
the company, for establish the business and its brand image for a longer period of time, and
Sainsbury is committed to do the same by abiding the various laws and regulation affecting the
retail sector.
Environmental
The company is committed to reduce its carbon footprint to a great extend by 2020. It is
also making necessary investments in order to make its process a bit more environment friendly
and also consumer friendly.
SWOT Analysis
It refers to the assessment of internal strength and weakness as well as opportunities and
threats that are prevailing in the market, it is an analysis of the both in order to effectively
strategize for the organisation.
Strengths
Sainsbury’s is having a very good brand image and reputation in the retail market
because of the high quality product offering at reasonable prices that the company provides to its
consumers.
Weakness
One of the important weakness that haunts company is that the retail market is a single
operating market for the company and therefore, it does not able to enjoy the benefits of
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diversification. Also, The food business of company is operating at quite a low margin and it
might end up in loss going forward.
Opportunities
The company do have the opportunity to grow its business by venturing into online
business through collaborations. Sainsbury’s is also planning to open online grocery and
convenience stores, which is a positive for company and its business. The tastes as well as
preferences of individuals around the country and continent is changing quite substantially,
therefore it is the need of the hour that company makes necessary strategies for meeting the
needs as well as demands of people quite effectively as well as efficiently (Lai, Melloni and
Stacchezzini, 2016).
Threats
It is expected that there can be a very adverse effect of Brexit on the overall prices of
products and services, which may put the profit margins of the company in strain. Yet another
threat is intense competition in the sector, which compel company to spend heavy amount on
marketing and R&D. There are threats of various competitors as well which are very strong in
the sector and do have the capabilities to make a shift in the overall nature of market. It is
therefore quite important from the business standpoint that such competition shall be taken
positively by the company to make necessary changes in its process and procedure, if needed.
P2 Analysis of Internal environment as well as capabilities of Sainsbury’s
Sainsbury’s is the second largest retailer in UK after Tesco and is growing quite rapidly.
The company is having its stores in almost 150 locations around the world. Profitability of the
company is also quite decent with comparison to its competitors. Sainsbury’s system focuses
pass on things and organizations at direct esteem, suits to customers' needs and keep up quality
rules (Leonidou and et.al., 2015). A year back's online arrangements were up significantly. The
company is spending a good bit of amount on its way to online foray, It is estimated that going
forward a large chunk of revenue of the company will be coming from Online business and thus
will help company in enhancing its revenue as well as market reach.
The organization has different potential resembles lean inventory network administration
and age of qualities through productively dealing with its tasks. The organization is having a
mischance generosity in the market and is driving the retail business with edge. The organization
is concentrating more on making their clients their need and subsequently framing systems
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which will be gainful for both organization and additionally purchasers going ahead. Sainsbury’s
has likewise possessed the capacity to execute different mechanical degree inside organization
which has Benefited the two people working inside utilizes and outside clients of the
organization. Sainsbury’s takes after both cost authority and separation system, under cost
initiative it tries to keep up its cost by actualizing different choices with respect to production
network and conveyance (Linder and Williander, 2017). Under separation, the organization tries
to make it stores more one of a kind and focused then different organizations in a similar
business.
The internal environment of the company is largely influenced by the culture that are
being followed by the individuals within the organisation, be it employees or workers in general.
Therefore it is quite obvious that the culture of the organisation is quite diverse, because of the
fact, the company is present in various countries and therefore a diverse cultural workforce is
there in the company. Some of the other factors that do have a direct bearing on company’s
internal environment is the effectiveness of communication within the whole organisational
structure be it from top to bottom or bottom to top. It is very important that employees views and
opinions are taken as a important factor for the purpose of decision making and it shall be used
for effectively making strategy as well as policies for the company. If their views will not be
seen as important for the management, then they will feel demotivated and will not give their
best, which would result in productivity loss for the company in the longer run.
PART B
P3 Evaluation of Competitive forces for Sainsbury’s
A proper evaluation needs to be made of the competitive forces that exist in the market
and within the company’s internal environment for the purpose of effectively framing strategies
for company in the longer. A proper analysis of such factors would enable the company to make
certain tough decisions within the market that whether to invest or divest, which strategy to
follow cost differentiation or product differentiation etc. Thus, for this purpose Porter’s five
forces model will be proper tool to analyse the competitive forces that do have a effect on
companies working in general (McGrath, 2013).
 Threat of Substitute: It alludes to the danger that a contender may bring certain items or
administrations which may substitute the present item or administration of the
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organization and along these lines may bring about the loss of clients piece of the overall
industry and in addition productivity of the organization when all is said in done. An
organization like Sainsbury’s Shall ensure that its rivals does not ready to duplicate its
items too less administrations which it gives to its clients and buyers if the organization
neglects to do as such it might wind up losing its piece of the overall industry and this
will influence general profitability of the organization. There are various substitutes of
the company’s products which is offered in the market by companies like Tesco,
Morrison, Aldi etc. Therefore it is quite crucial for the company to implement right kind
of innovative techniques to boost the overall growth as well as development of company
through differentiated products (Muduli, 2012).
 Threat of New Entrant: It refers to the constant threat that is always there regarding
entry of a new player in the market. Sainsbury’s is the second biggest retailer in the UK
market and hence the company is quite safe at this position, when it comes to having
threat of new entrant. The entry of a new player within the market is unlikely, because of
the fact that in order to enter in new market there is a need of substantial resources, which
every company can not possess. Thus, the retail sector is a sector with substantial entry
barriers and a threat of new entrant in the industry is very less to the management of
Sainsbury’s.
 Threat of existing competition: There might be certain threats from the existing
competitors that the company might be facing it is very essential that proper analysis of
company’s strength is done, in order to make sure that the effect of policy and strategies
of competitors will be very minimal on Sainsbury’s and its business growth.
There are different contenders inside this industry which has ended up cool great
in estimate, a portion of the illustrations incorporate Asda, Tesco, Walmart and so forth
these organizations do have a ticket assets to rival Sainsbury’s, and Sainsbury’s will need
to expedite something on the table which is diverse then these organizations, generally
shoppers will change to these organizations who are putting forth nearly an
indistinguishable sort of value from well as administrations for their items (Bharadwaj
and et.al., 2013).
 Buyer’s Bargaining Power: The company sells products, which are quite good in terms
of quality, but the other competitors are not behind in terms of offering value for money
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to the company, therefore customers do have the choice to turn over to any other
company if the needs as well as demands of consumers are not fulfilled in an effective as
well as efficient manner (Brewster, 2017). It is thus essential that management of
Sainsbury’s shall make sure that the level of quality of its products would not deteriorate
and service delivery shall be above par, the only there is a scope that a buyer would stay
loyal with company and would not look for other companies to make its purchases.
 Suppliers Bargaining Power: It refers to the bargaining power that a supplier would
posses, while selling goods to the buyer. If the no. Of suppliers is very less and the goods
supplied by them is unique in nature then, then they will be having a bargaining power
towards the purchaser. Retail industry is consisting of various suppliers of goods. The no.
Of suppliers is quite good in the sector and therefore it is unlikely that there would be any
bargaining power that suppliers would be having. It is also important that right kind of
strategies are framed by the management of Sainsbury’s in order to make its supply chain
effective and efficient and leaving no room for bargaining to suppliers.
Hence, these were certain forces that do impact the overall business activity of
Sainsbury’s. It is also very important that analysis of these forces is further translated into
effective policies and procedure to overcome the adverse external environment impact on the
company. These forces not necessarily are a negative for company, sometimes there might be
opportunities, which may come arise. It is therefore quite important to remain vigilant for such
opportunities that may arise over period of time within the organisation (Schrader, Freimann and
Seuring, 2012).
P4 Strategic plan for Sainsbury’s
Tesco is the huge multinational organization, it is having differing activities around the
globe and consequently, it is imperative that correct sort of a key arranging is done as such that
organization can profit by different positive factors that it as of now have. A portion of these
components incorporate great brand picture, minimal effort, brilliant offering, and better
administration conveyance and so on.
The most imperative piece of confining a vital arrangement is build up A statement of
purpose which won't just guide people inside the organization that what the administration of the
organization needs and how it see the organization in future. Whenever in the wake of wearing a
statement of purpose is defined objectives that achievable that must be accomplished by the
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general population are working inside the organization. These objectives can be as far as amount
of value. The amount can be that income that should be achieved, Level of gainfulness. To the
extent quality is concerned it can be the workplace gave by the organization, the administration
quality, the nature of strategies and systems and the sort of culture that wins inside the company.
The objectives can be long haul or here and now. The long haul objectives are to make
organization substantially more beneficial and gainful alongside dealing with every one of the
necessities of the general public (Wang and Verma, 2012).
Strategies to meet consumer’s Demands
Sainsbury shall implement various types of strategies in order to overcome the various
kinds of barriers that it faces in the business that has been discussed in detail above. It is also
important to look from the perspective of consumer and realise what they want, so that right kind
of policies are framed to incorporate those needs as well as demands within the processes,
products and service offering of the company. The needs and demand of consumers shall be kept
on priority by the company as it is rightly regarded that consumers are indeed king.
Strategies to manage Human Resource
The company shall also plan certain various schemes of training and development of its
employees to empower them and to make sure that they remain motivated to provide for
company’s aims as well as objectives in an effective as well as effective way. Company is
engaged in a business which requires dealing with customers on a daily basis and therefore they
should posses employees which could have a lasting impression on the overall mindset of
consumers towards the company (Smith, 2013).
CONCLUSION
Thus, it can be said that business strategy is a very Essential part of any business. It sets
purposes, directions, objectives for the organisation and also frames guidelines in order to
achieve the set objectives as well as targets It is also quite important that these strategies are
implemented in effective way so that company can achieve competitive advantage and business
growth in the longer period of time. There are various tools which strategies can be framed
within an organisation, for example, PESTLE analysis and sort analysis which Allows the
company to assess internal strengths and weaknesses with external opportunities and threats and
therefore it allows the company to strategise in a better way for the development of company and
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its stakeholders. It is also necessary to keep in mind that influence of these factors on the
company and its working so that a proactive approach towards these factors can be applied.
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REFERENCES
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Ireland, R.D., Hoskisson, R.E. and Hitt, M.A., 2012. Understanding business strategy concepts
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Lai, A., Melloni, G. and Stacchezzini, R., 2016. Corporate sustainable development: is
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Brewster, C., 2017. The integration of human resource management and corporate strategy. In
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Schrader, C., Freimann, J. and Seuring, S., 2012. Business strategy at the base of the pyramid.
Business Strategy and the environment. 21(5). pp.281-298.
Wang, J. and Verma, A., 2012. Explaining organizational responsiveness to work‐life balance
issues: The role of business strategy and high‐performance work systems. Human
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Smith, D.J., 2013. Power-by-the-hour: the role of technology in reshaping business strategy at
Rolls-Royce. Technology analysis & strategic management. 25(8). pp.987-1007.
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