Business Strategy Report: Sainsbury's Analysis of Macro Environment

This report provides a comprehensive analysis of Sainsbury's business strategy, examining the impact of the macro environment, including political, economic, social, technological, legal, and environmental factors, through a PESTLE analysis. It delves into the internal environment using VRIO and SWOT analyses to assess the company's capabilities, strengths, and weaknesses. Furthermore, the report applies Porter's Five Forces model to evaluate the competitive forces within the market sector. The report concludes by interpreting and devising strategic planning for Sainsbury's, considering various theories, concepts, and models to ensure sustainable competitive advantage and alignment with consumer needs. The report highlights Sainsbury's mission, vision, and objectives, along with its environmental management system, and discusses key challenges such as Brexit and the COVID-19 pandemic, offering insights into the company's strategic positioning and responses to market dynamics.

BUSINESS

Contents
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
P 1 Impact and influence of macro environment in the company and on its strategies..............3
LO 2.................................................................................................................................................5
P 2 Internal environment and the capabilities of the company....................................................5
LO 3.................................................................................................................................................9
P 3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organization............................................................................................................9
LO 4...............................................................................................................................................10
P 4 Range of theories, concepts and models, interpret and devise strategic planning for a given
organization...............................................................................................................................10
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business strategy can be defined as a set of strategic statements. It is a summary of how
the company will achieve its goals, meet the expectations of its customers and sustain a
competitive advantage in the marketplace. Sainsbury's is the second largest chain of
supermarkets in the United Kingdom, with a 16.0% share of the supermarket sector. Founded in
1869, by John James Sainsbury with a shop in Drury Lane, London, the company became the
largest retailer of groceries in 1922. This report contains issues such as Impact and influence of
macro environment in the company and on its strategies. Internal environment and the
capabilities of the company. Applying Porter’s Five Forces model evaluate the competitive
forces of a given market sector for an organization. Range of theories, concepts and models,
interpret and devise strategic planning for a given organization (Peng, 2016).
LO 1
P 1 Impact and influence of macro environment in the company and on its strategies
Mission
Mission of the company is to be position themselves in the minds of consumers to be the
first choice for the consumable items. It is because they provide quality goods at a reasonable
and less price by working in a less complex way and together.
Vision
Vision of Sainsbury is to make sure that the needs of the consumers get fulfilled easily
such as food, home wares and recent updated technology.
Objectives-
Environmental Management System- They has a system for managing the environment as
company has control on its factors (Massa, Tucci and Afuah, 2017).
Products and Suppliers-
Focusing on cutting the deal with the suppliers of the company so that they can
contribute in preserving the environment.

Energy- Reducing the level of carbon dioxide.
Transport- Improve the aspect so that product can be increased and deliveries can be made in
time by taking routes that are short so that level of CO2 can be reduced.
PESTLE Analysis
Political Factors-
The decisions taken for Brexit have put the sector of supermarket in difficult position.
Company has announced that they will be separating from EU and this has brought changes in
the import of export of goods because of changes in rate of tariff. This will increase the rate of
their products.
Economic Factors-
These factors are concerned with the rate of inflation, standard of living of people, level
of unemployment in the country etc. these factors helps to assess the rate of growth of the
business through which strategies are formed. Sainsbury is facing issues because of the pandemic
of Covid-19, as many of the business were closed because of the lockdown which has increased
the gap in the economy. This has also affected the chain of supply and demand of products due
to which sales have been affected. It has led to loss of many jobs in the company (Holloway and
Humphreys, 2019).
Social Factors-
This factor undertakes the issues of difference in belief, opinion, values of culture etc. It
is important that Sainsbury meets with the culture of people in every market they operate in so
that they will be able to satisfy their needs and wants. Most of the consumers are concerned for
their health and in order to increase their sales it is necessary that company offers them these
products. They have started a movement which is for the benefit and good deed of farmers in
which consumers need to pay a little bit extra so that farmers can get their proper cut.
Technological Factors-

These factors help the companies such as Sainsbury to stay in competition with latest
methods that will help them to bring innovation. It also deals with bringing aspects such as
artificial intelligence into their culture. With the help of these technological advancements the
company is able to serve their consumers with more efficiency. This has helped the company to
increase their efficiency. This way the company will be able to increase their level of profits.
With the help of this company has been successful in establishing their presence online. This has
made the process of buying consumables for the customers more flexible (Kollmann, 2019.).
Legal Factors-
These factors are concerned with setting up a guideline which makes sure that the
company works under the rules and regulations set by them. It is necessary for Sainsbury that the
practices and operations are maintained by them are complied with the legal aspects so that they
are allowed to serve in the country with the assistance of government. These factors also deals
with the protection of consumers and their rights and if any case is filed against the quality of
products then they will face heavy penalties and the image of the brand in the market will be
affected.
Environmental Factors-
These factors are concerned with the aspects that preserve the environment. Many of the
businesses are facing immense pressure to contribute in this area as it is necessary for the safety
and well being of the environment. Sainsbury is taking these factors seriously and they have
announced that year by year they will take more use of resources that are renewable and reduce
the level of carbon footprint that is released by their stores. Other than this they are also
contributing in other areas which can help them to sustain the environment and improve the
image of the brand in the eyes of targeted audience.
LO 2
P 2 Internal environment and the capabilities of the company
VRIO Analysis-

This model contains four aspects which helps to assess the capability of the company on the
basis of resources they have. This can be measured with the aspects of the model.
Valuable-
This aspect states that resources of the company which helps them to enhance their
capabilities whether they are tangible or intangible they will have value and that value will help
to put more weight in the operational aspects of the company.
Rare-
This states that resources of the company that helps to increases the capacity of the
company are rare and not available easily. Many of the resources that are available but in fewer
amounts are not even taken or acquired by Sainsbury (Teece, 2018).
Imitable-
This factor of the model states that resources that is possessed by the company cannot be
imitated as they are unique and protected by them. Even if there is a case in which competitors of
the company acquires the resources of Sainsbury they will have to bear a high amount of cost.
This helps the company to know that only those players in the market can acquire who maintain
their operations on this scale. For instance in order to pull it off it is necessary that competitors of
Sainsbury have same level of resources.
Organized-
This aspect looks after all the other areas so that they can perform properly and in order
to do that they need to make sure that every aspect is organized in the company. for instance It is
important that department of human resources of the company monitors every other department
so that work will remain organized.
In order to assess the internal environment of the company SWOT Analysis has been conducted.
Strength-
Right moves of Expansion-

The company used to deal in small stores but now with time they have been able to
expand their scale of operations and convert it into supermarkets. On the top of that they have
been successful in taking the company to the fourth position among other competitors in UK.
Wholesale and Retail Banking-
The department of financial services for the retail sector has many services of banking for
wholesale and retail. Competitors do not focus on the retail sector of the banking but it has
helped to make the risk involved diverse (Bloom and et.al., 2018).
Distribution of Channels-
One of the strength of the company is that they have channel of distribution that is
strategic as it is very flexible for the customers. The reason behind it is that it helps to provide
more variety to customers and increases the level of convenience through which the company is
able to gain advantage over their competitors.
Weakness-
Switching of Brand-
This factor is concerned with the level of competition which takes away the customers of
the brand. Despite the different strategies of promotion they have been failing in retaining their
customers.
Low margins-
It is because of high level of competition which also involves online platform has
affected the volume of sales of many companies. Although company has kept the prices of their
products low this is not a sustainable factor (Wheelen and et.al., 2017).
Growing costs-
It is necessary for the company to keep their stores unique so that customers have a better
shopping experience here. Things that need to be provided are valet parking, multilevel parking,
spacious and big stores with more employees which overall increase the cost for the company.

Reduction in sales-
Decline in sales of the company has been observed by their managers for the last few
years. The reason behind that is the increasing rate of inflation in the country and that is putting
more pressure on the other companies as well as the competitors in the sector of retail. From four
years the operating profit of the company has been decreasing.
Opportunities-
Growth in Villages-
Nowadays demand of goods that are branded in rural areas has been increased. This has
helped Sainsbury to achieve growth in the markets of rural areas.
Demographics-
It is necessary that Sainsbury focus on retaining the age group of people who are old as
most of them are wealthier and by making their stores easily accessible with flashy designs they
will be able to retain them and improve their sales.
Obesity-
The people of UK are turning to obese which is an opportunity for the company to
improve their sales. In order to do that they need to shift their consumers to consuming more
products that is good for their health and provides those products that are healthier (Wood and
Logsdon, 2017).
Threats-
Brexit-
The decision to leave EU by the government of UK has impacted on the political and
economic aspects. This aspect has increased the tariffs in many areas because of which company
has to increase the prices of products and the consumers are not ready to pay more for their
necessities.
Uncertainty-

Confidence of customers has been affected by the issue of Brexit which has led to affect
the confidence of the company in the market. Other than this the level of inflation in the country
has reduced the level of real income in the hands of people which reduces their power of
spending of people and reduces the power of company to give discounts.
LO 3
P 3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organization.
Threat of Substitutes-
This aspect is concerned with the impact of the dealings of the company because of the
substitutes of products available by other companies into the market. Taking the case of
Sainsbury it deals in the sector of retail and there are many other companies in the market who
works in the same sector and offers the products that are of same attributes which influences the
decision of consumers to choose between different brands and stay loyal to one of them. The
only difference is that accessibility and the design of the store. Number of substitutes and
availability and price of switching to other product will determine the threat that the company
will face and power that they have on it. It is necessary that company offers high quality at
reasonable price so that they are the first preference in the eyes of customers. Sainsbury has
achieved second position in UK and in order to do that they have invested lot of efforts so that
they can retain their position (Parker, 2018).
Threat of new Entrants-
This aspect is concerned with the entry of new business in the market but in the same
sector. This imposes a threat on the business of Sainsbury as they have to face more competition
in the market. There are barriers to limit the entrants of another business coming into the sector
and in order to break that barrier level of resources are required. The resources require a high
level of investment which is not available to many people. Sainsbury has a advantage and that is
they operate on a large scale and new entrants mostly start their business on a low scale which
will not affect the business of the company on a major scale. This makes it difficult for others to
enter into the industry and gives Sainsbury the control of it.

Bargaining Power of Buyers-
This aspect is considered as most important because buyers are the key factors of the
company’s success. They are the centre of the business because the market is customer centric.
This aspect gets affected when the no of buyers are high and the cost of switching is low. The
company has been able to establish their market with a position that is moderate and the reason
behind that is if there are many buyers in the market then there are many sellers also to serve
their needs. The services provided by the company are one of the reasons that they are successful
in this competitive market (Bovée, Thill and Raina, 2016).
Bargaining Power of Suppliers-
Suppliers of the company helps them to assess with the necessary supplies such as raw
materials, equipment etc. this helps the company to maintain their flow in order. The power that
is hold by the suppliers are high over company but only when their availability is less but if their
availability is high and they have no unique offerings then there will be no factors on which this
can be varied upon. The cost of switching to another supplier is very low and if the management
of the company looks for better alternatives then it can be done at low cost. This puts the power
of supplier low in the case of Sainsbury.
Rivalry among Competitors
This aspect is concerned with the level of rivalry among the competition that already
exists in the market. There are many competitors who operates on a big scale such as Tesco,
ALDI etc. sometimes because of it the business of the company gets affected but still with the
proper assessment of strategies has helped them to maintain their position in the market. this
states that even after facing immense level of competition in the market the force of this aspect is
strong and positive in the side of Sainsbury (Brennan, Canning and McDowell, 2020).
LO 4
P 4 Range of theories, concepts and models, interpret and devise strategic planning for a given
organization
Vision

Position themselves that well that their customers remain loyal to them.
Mission
To make sure that on both the platforms that is online and offline the services provided are
efficient (Ghauri, Grønhaug and Strange, 2020).
Objectives
 To increase the market share by 10% by the end of current financial year
 To increase profit margin by reducing cost of the operations by 15% within current
financial year
 To increase product availability on online platform by 25% to ensure that customers can
get what they need through online platform
With the help of Porter’s Generic Strategy the company will be able to assess their strategic
directions. There are three aspects in the model of Porter Generic Strategies such as
Cost leadership-
This aspect of the model states that company will maintain their operations and services
at the lowest cost possible so that they can have the advantage over cost and so that they can sell
their products easily in the market with leaving their competition behind.
Differentiation-
This aspect states that in order to increase their visibility in the eyes of consumers they
offer products that have some unique attributes into it which is different than their competitors so
that they can increase their value in the market.
Cost Focus-
This aspect of model help to companies such as Sainsbury to reduce the factor of cost and
target group or set of consumers specifically under the same level of price. For instance products
provided by the company which are food based are offered at lowest cost available.

Differentiation Focus-
This aspect of generic strategy states that company focus and implements the strategy of
differentiation for a group of consumers they have targeted or introduce a different item which
will be unique than others.
Still above all the aspects mentioned the most suitable and viable for the company will be
the direction of cost focus and differentiation and that when both of them are implemented
together in the culture.
There is another model which assess the strategic direction of the company and that is Bowman’s
Strategic Clock. The model is based on the idea of differentiation and price.
Low added value and low price-
This aspect focuses on making sure the relativity between price offered by them and price
offered by the competitors remain low.
Low Price-
In order to comply with this aspect of strategy it is necessary that company form their
products in high level of quantity and sell them in the target market in order to increase their
value.
Hybrid-
This aspect states that with the strategy of keeping their prices low they also focus on
making the attributes or the whole product in a different manner.
Differentiation-
This aspect states that products offered by the company are of high quality and they are
successful in increasing the level of perceived value.
Focused Differentiation-
This stage involves dealing with products that are of high range such as luxury goods and
goods that are exclusive to the consumers (Boone, Kurtz and Berston, 2019).