Corporate Strategies Analysis

This report analyzes the corporate strategies of Sainsbury and ASDA, focusing on their potential merger in the UK market. It includes a detailed PESTLE analysis, internal resource assessment, and evaluation of strategic suitability, acceptability, and feasibility. The report highlights the strengths and weaknesses of both companies, providing insights into their market positioning and competitive strategies.

Corporate Strategies

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Question 1 : External Analysis of UK Market environment ......................................................3
Question 2 : Internal Analysis based on Resources and Competences.......................................7
Question 3 : Evaluating Suitability, Acceptability and feasibility strategy in Context to Both
companies. ................................................................................................................................11
REFERENCES..............................................................................................................................14

INTRODUCTION
Corporate Strategies are related to the corporate business which seeks organisation to
initiate corporate actions in achieving company objective. This process motivates the employees
to work harder to beat the competitors by their planning strategy and action. Thus, Corporate
strategies is a continuous process which adopts by the organisation to engage investor to built
trust in the business. Present report is based on the Sainsbury and ASDA company. Theses both
company are entering into the potential merger in UK. Sainsbury was the second largest
supermarket chain in UK holding 16.8% shares in supermarket sector. ASDA is also a third
largest supermarket retailer in UK. With the process of merger they have earned a combined
profits of at least 30% shares in the UK grocery market.
Reports will include PESTLE analysis and 5 forces to identify the issue occurs in the
organisation and also identifies the opportunities and threats that analysis the strategy in the
industry. It also includes Internal analysis relating to resources and competences in the
organisation. Lastly report ends up with various strategies such as suitability, acceptability and
feasibility to link internal and external issues in the industry.
MAIN BODY
Question 1 : External Analysis of UK Market environment
PESTLE Analysis:
~ Political - The factors which affect externally is related to Brexit. It means withdrawal of UK
from European Union. The effect is that UK had to reduce the per capita income which affects
the GDP rate, trade and investment in the market. If company wants to expand their business
their biggest challenge is to face the new norms and polices imposed by government (Rugman
and Verbeke, 2017). Frequent Taxation changes serves risk in the foreign markets and face tough
competition to enter into the foreign market.
~ Economic - These factors mostly affects the external business cycles of the organisation. As
the services depends upon the interest rates and the goods are imported and exported on the basis
of the rates which they are imposing (What is corporate strategy?, 2019). To deal in different
sector economic factor plays a major role in terms of exchange rates and employment rates.
Every country had different style of working and also changing rates is the major issue in the
upcoming days. This defines the employment and unemployment rates in the country.

~ Social - The factors which affects the external environment are related to ageing population
and their cultures which they are implementing in the organization. Social factors mostly reflects
the lifestyle of the people and continuous changes in demand and taste in the products (Backman,
2017). External factor affects through social changes in the form of social networking sites
which causes more trafficking in the market.
~ Technological - The factors which influencing super market are in terms of new discoveries of
technologies in the market. To impact on market or to face tough competition new product
always helps the companies to make new position in the market. Technologies can be vested if
the process of patent arises which results in affecting the environment by increasing the
competitors to develop new product.
~ Legal - The factors which had a great impact on environment is related to labour cost and
various rules imposed by the government regarding to taxation. Regulation of corporate
governance and rules of ownership are the major criteria affecting the company working.
~ Environmental - The factors which influence the environment are related to global warming,
climate changes and waste of the products if they are less in demand. The changes may occurs
due to natural calamites, droughts and heavy pollution which reflects the working in the
organisation.
As per the above discussion various opportunities and threats are identified under the PESTLE
analysis.
PESTEL
Political
 Government policies regarding
individual rights = O
 Brexit =T
Economic
 Exchange rate = T
 Expansion of business = O
Technological
 technological advancement =O
 Infringement = O
 Frequent changes in technology = T
Legal
 Government norms regarding
individual rights = O
 Higher labour cost = T
Environmental

 Eco-friendly products = O
 Hygienic products = O
 Changing weather conditions = T
Factors Opportunities Threats
Political Opportunities in Sainsbury
helps to expose their business
into new sector. This can be
done by implementing
following techniques such as
advertising the company
profile and their products and
services (What is PESTLE
Analysis? A tool for Business
analysis, 2019). Organise
various campaign and surveys
to attract the customers toward
their services providing in
supermarket chain.
Threat may affects the
company in case of Changes in
tax or at the time of BREXIT.
As when the time of BREXIT
arises, it withdrawal the UK
from the European Union
which results in reducing
51.9% business from teh
country. This is the major
threat which affects the
business to run smoothly.
Economic Opportunities arises in case of
differential growth rates which
helps the companies to import
and export their goods and
services. This procedure helps
companies to earn income and
grow their business to new
scale (Caviggioli and et.al.,
2017).
Threats arises on the basis of
exchange rates which stops the
company to grow in different
sectors and expand their
business. As every country has
different rates to import goods
and services so they have to
manage their strategies
accordingly.

Social Sainsbury examine social
factors related to changes in
culture and fashion. Usually
customers are attracted
towards the new product and if
the company satisfies them it
results to more growth of the
company. This is the major
opportunity which every
competitors implements to
grow their business in the
market (Kazanjian, Drazin and
Glynn, 2017).
Threats may arises in case
social media marketing.
Advertisement carries the
biggest power to attract the
customers towards their
business. Failure in promoting
the products and providing
services results in threats to
business.
Technological Sainsbury uses to grow their
business is that to bring new
product in the market by
innovating high secured
technology. This results in
saving chances from
infringement of the product
and its production details
(Matt, Hess and Benlian,
2015).
Threats may arises in case of
frequent changes in
technologies which affects the
customers for timely delivery
of services. As if the
technologies are changing it
takes time to track the previous
records which affects the
interest of customers in the
business.
Legal Sainsbury while dealing in
merger is related to rights of
ownership, as in legal factors
various laws and rules are
implement which protect the
interest of owners (Argenti,
2018). Government norms
Threats in company results to
high rates of labour cost. This
is the major criteria which
affects the company due to
changes in labour cost which
results in facing huge losses

regarding the ownership rights
protect their rights and shares
in the global market.
and delay in productivity.
Environmental Sainsbury can raise
opportunities in references to
providing products which are
eco friendly in nature. As
customers shows more interest
in the products which are
hygienic and good quality
(Vormedal, 2017)
The threats to business is due
to changes in weather
condition all the products are
affected economically. This
affects the company resources
to reproduce that product and
export them in market.
Porter 5 Forces: Sainsbury uses 5 porter forces to analyses the opportunities which helps them
in decision making activity.
Porter 5 Forces
Threat of new entrants [M]
 Sainsbury innovates new products in
the market which attract the new
customers towards their services.
 Government policies are strict towards
franchising and providing licensing
Bargaining power of suppliers to industry
[M/H]:
 supplier in Sainsbury are more
important as compared to buyers
 supplier in Sainsbury are more
important as compared to buyers
Bargaining power of buyers from industry
[M/H]:
 Buyers prefer the product which results
in low price with better quality
 Buyers are attracted toward the product
of Sainsbury if they find the product
which is useful for them and can be
Threats of substitutes [M]:
 Substitutes of products and services
brings the biggest challenges in the
market.
 Company focus on products which
differentiate from the other products
this helps them to make the best

differentiate with other strategy to promote the products and its
brand name in the market.
Rivalry [H]:
 competitors which the Sainsbury are operating are very few
 Sainsbury uses some other techniques to promote their products and capture market
demand in that product.
 Threat of new entrants [M]: Sainsbury innovates new products in the market which
attract the new customers towards their services. To implement new strategy to promote
the product, helps the company to earn more profit (Strategic Framework Model, 2019).
This process threats the new players with the product differentiation which seems to be
strong among the customers. Government polices are strict towards franchising and
providing licensing which results in threatening Sainsbury to enter into the market and
engage with new customers.
 Bargaining power of suppliers to industry [M/H]: The supplier in Sainsbury are more
important as compared to buyers. For Sainsbury supplier provide same product at fair
price and less differentiate which helps the Sainsbury to switch the supplier at any time.
There are multiple suppliers in the supply chain which helps Sainsbury to expand their
business into different geographical location (Siglé and et.al., 2018). Suppliers charge the
rates according to the demand in the market and their products are not easily available
anywhere. This affect the company as they have to deal with the supplier according to
their conditions.
 Bargaining power of buyers from industry [M/H]: Buyers prefer the product which
results in low price with better quality. Sainsbury Plc focus to attract the buyer towards
their new products or bring changes in the previous products (Strategic Framework
Model, 2019.). They make strategy to build a large base for customers and bring new
scheme which provide business to the company. Buyers are attracted toward the product
of Sainsbury if they find the product which is useful for them and can be differentiate
with other. This procedure increases the bargaining power of the buyers in the industry.

 Threats of substitutes [M]: Substitutes of products and services brings the biggest
challenges in the market. Sainsbury focus on providing the best quality of products to the
customers at lower price (Kiambi and Shafer, 2016). Usually Company focus on products
which differentiate from the other products this helps them to make the best strategy to
promote the products and its brand name in the market.
 Rivalry [H]: The number of competitors which the Sainsbury are operating are very few.
As no one can beat the marketing strategy which the company is using to differentiate the
product. Sainsbury uses some other techniques to promote their products and capture
market demand in that product. This makes the rivalry porter stronger among the
industry.
Question 2 : Internal Analysis based on Resources and Competences
RESOURCES ~ Descriptive approach is an approach based on the facts of reality. Four
resources that to be identified as the strength of the Siansbury and one weakness reflects in
market.
As per Sainsbury 4 strength and 1 weak points
Strength  Revenue:As per the annual report its revenue is increased from the previous
year. This means that company has sufficient funds to emerge risk in the
market.
 Share value: As per the share value from the previous year there weighted
average share is increased which defines the strength of the company.
 Cash Flow: Sainsbury had increased approx 20% cash flow from the
previous year.
 Goodwill: the goodwill of the company has just double from the previous
term. They increase their brand name in the market.
Weak  Operating income: Due to annual report of the company, there are less
operating profits in the company.
Some Strength which are identifies under Sainsbury are: -

Resource Characteristics Key indicators
Tangible resources
Financial resources As Sainsbury is the second
largest retailer supermarket in
UK. The internal capacity for
raising funds and borrowing
are also high which indicates
the strong financial position.
Sainsbury hold 16.8% in the
retailer market. To be rated on
the top in the market its
operating cash flows are also
stable (Mayer and et.al.,
2017). They engage with
1,304 stores in the global
market. Due to encouraging
more productivity in market,
the financial status of the
company is to be strong.
Sainsbury deal in many
products which helps them to
generate their internal funds
and also their strategies are
strong to face the tough
competition in the global
market.
Brand image
Profit margin
Physical resources Sainsbury build the
physical status in the
market regarding the land,
building and location.
Status
Quality material

Equipments and
techniques which the
company are providing are
the useful tool to motivate
employees to work harder
and achieve targets.
Resources which are
physical in nature has the
great impact on company
success (Achy and Joekes,
2016). Employees are
motivated if they provide
stress free working
premises. Sainsbury uses
top quality raw material to
produce the product and
engage in timely delivery
of services.
Intangible resources
Human Resources The major strength of
Sainsbury success is that
employees are motivated
towards the work. They
trained and guide them about
the working strategy and
efforts used to beat the targets
of the company. Almost
1,61,000 employees are
engaged with the Sainsbury
Motivated personnel base
Skilled workforce

company. The responsibility is
to trained the employees
regarding the company
working and examine their
skills and experience in
achieving goals (Journeault,
2016). To retain employees in
the organisation training is the
major perspective to judge the
loyalty and examine the
employee turnover rate in the
industry.
Technological resources Sainsbury rated at the
second largest retailer
which indicates that they
are using the vast
technologies to beat the
competition in the market.
The company success
depends upon the
resources in the form of
updating technology. The
main strength of Sainsbury
is to bring new products
and innovation regarding
their delivery of services
in the market (Preuss and
et.al., 2018). By this
innovation they have made
so many patents and
trademark on their
Brining new products via
innovation
Product testing before
introducing in the market