Sainsbury's PESTEL Analysis Report: Global Business Environment

This report presents a PESTEL analysis of Sainsbury's, a major UK-based retail company. The analysis examines the political, economic, social, technological, environmental, and legal factors influencing the firm. Key political factors include the relationship between Qatar and the UK, impacting investment. Economically, the Brexit deal and associated tariffs are significant. Socially, the increasing demand for organic food presents both opportunities and challenges. Technological advancements, particularly in AI and automation, are assessed for their impact on labor costs and investment needs. Environmental considerations involve waste reduction programs, and legal factors include government regulations. The report concludes by highlighting the critical need for Sainsbury's management to consider political and economic factors when making future strategic decisions. The report is based on the assignment brief of module BM461 Global Business Environment, Academic Year 2020-21.

External Environment
Research and Analysis
Portfolio

Table of Contents
INTRODUCTION ......................................................................................................................................3
MAIN BODY .............................................................................................................................................3
PESTEL analysis of Sainsbury's ............................................................................................................3
CONCLUSION ..........................................................................................................................................5
REFRENCES .............................................................................................................................................6

INTRODUCTION
External environment factors effect business organisations and make a significant
contribution to the growth or failure of a business. PESTEL analysis is a framework which
analyses chief external factors impacting an organisation. This report includes PESTEL analysis
of British retail firm Sainsbury's which is a member of FTSE 100 Index.
MAIN BODY
PESTEL analysis of Sainsbury's
Sainabury's is a UK based retail firm which was formed in the year 1869 and currently
headquartered in London, England UK. The company has gained exceptional success since its
formation and is the second largest retail chain in UK.
 Political Factors: The main political factor affecting Sainsbury's are the political
relations between Qatar and UK. This is because the largest shareholders of the company
is state owned investment fund of Qatar (Qatari shareholders uneasy over Sainsbury's Home
Retail Group bid, 2016).
Positive Effect: The positive political relations between Qatar and UK are helpful for the
company as it encourages economical investment in the company by Qatar government.
Negative Effect: The dispute between Qatar and middle eastern nations such as Saudi
Arab have indirect negative impact ion the respective firm as it effects British governments
relation with the country.
 Economical Factors: Economical impact of the Brexit deal has high influence on
Sainabury's (Thompson and McLarney, 2017).
Positive Effect: The Brexit deal aims to improve conditions of UK based businesses
which is helpful for Sainabury's.
Negative Effect: Implementation of Brexit has increased EU tariffs, which is negative for
the company as it imports various products from EU.
 Social Factors: The rise in demand of organic food is the main social factor affecting
Sainsbury's.
Positive Effect: This social trend provides the company opportunity to offer organic
products and gain consumers.
Negative Effect: The negative effect of rise in demand of organic food is decrease in sale
of inorganic food items offered by the company.
 Technological Factors: Development in the field of AI and automation ha influence on
daily activities of the firm.
Positive Effect: The respective organisation can use AI and automation to reduce labour
costs and increase profitability.
Negative Effect: Utilisation of AI and automation technology requires the respective
firm to make high initial investment for training employees.
 Environmental Factors: Sainabury has introduced waste reduction programmes by
connecting with food charities to reduce food wastage (Tesco, Sainsbury’s & Waitrose
pledge to halve food waste by 2030, 2019).
Positive Effect: This has enhanced positive and environment friendly brand image of the
company.
Negative Effect: This programme has increased costs of Sainsbury's (Just, 2020).
 Legal Factors: Regulatory approvals from the government effect daily decision making
at Sainabury's.

Positive Effect: Sainabury is able to conduct business activities in a lawful manner
through such approvals.
Negative Effect: This delays various business activities of the company.
The main factors which should be considered by the management at Sainabury's during
seating future directions of the firm are the political and economical factor. Sainsbury's need to
plan their business activities according to relation between Qatar and UK. The company should
construct strategy which reduce negative effects of Brexit.

CONCLUSION
From the above report it is determined that external environment elements such as
political, social economical and environmental factors influence enterprises and play a
significant role in success or failure of their business endeavours. PESTEL analysis is a useful
dreamwork which helps the management of an organisation make effective decisions related to
the future of the company.

REFRENCES
Just, V., 2020. Sustainable Business Processes in Global Companies. Springer Fachmedien Wiesbaden.
Thompson, J. and McLarney, C., 2017. What effects will the strategy changes undertaken by next Plc
have on themselves and their competition in the UK Clothing Retail Market?. Journal of
Commerce and Management Thought, 8(2), p.234.
Tesco, Sainsbury’s & Waitrose pledge to halve food waste by 2030, 2019. [Online] Available through
<https://www.retailgazette.co.uk/blog/2019/05/tesco-sainsburys-waitrose-pledge-halve-food-
waste-2030/>
Qatari shareholders uneasy over Sainsbury's Home Retail Group bid, 2016. [Online] Available
through <https://www.theguardian.com/business/2016/jan/06/qatar-investment-
authority-sainsburys-home-retail-group-bid>