Strategic Management Report: Sainsbury's Strategic Analysis

This report provides a strategic management analysis of Sainsbury, a major UK retailer. It begins with an introduction to strategic management and its importance in adapting to external environmental changes. The main body of the report focuses on applying M.E. Porter's value chain model to ...Read More

STATEGIC
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Porter’s value chain model..........................................................................................................3
Porter's five forces.......................................................................................................................8
RECOMMENDATIONS...............................................................................................................10
EXAMINATION OF MODEL SUCCESS AND FAILURE........................................................10
CONCLUSION..............................................................................................................................11
REFERENCES................................................................................................................................1

INTRODUCTION
The strategic management involves the preparation and execution of all the activities related
to achievement of end goal of the organization (Hitt and Duane Ireland, 2017). As if the change
occur in the external environment then company need to make the respective strategies to deal
with the same. These strategies are basically developed to get financial as well as non-financial
benefits for the organization. It also provides an accurate vision to the organization to perform its
activities to achieve the future goals. The Sainsbury is second largest retailer chain in the UK
market place with 16% of market shares in the Britain market. This report will evaluate the M.E.
Porter's model to know the competitive advantages and drawback of this model on Sainsbury.
This report will cover Porter's five forces and value chain analysis models to know how the
company can present better and which drawbacks of the organization are. Further a
recommendation will be given for Sainsbury.
MAIN BODY
Porter’s value chain model
Porter’s model of value chain is the best and well applied models in order to evaluate
company’s value creation procedure. It refers as a basic tool in order to inspect the performances
that Sainsbury execute and their connections with a view to recognize the sources of sustainable
competitive advantage. It divides the activities within the organization into two parts i.e. the
primary activities and secondary activities.

Figure 1: Value chain model
(Source: Wonder share EdrawMax, 2021)
As this is the most popular model in the business world, Sainsbury also utilize this model in
order to analyse the competitive advantage within the external environment market space. The
effective value chain analysis requires that the company realises that all activities and functions
does not require same inspection level (Wendelin, R., 2018). Hence, the primary step is to
include important activities according to individuals’ role in order to deliver efficient products as
well as services to the consumers according to their tastes and preferences. The primary activities
have been described in the value chain model which has been projected by Porter are:
 Inbound logistics: It is highly important for an organization to built positive and fruitful
relationships with their suppliers in order to receive, store and distribution of goods as
well as services to their consumers. Without analysis of the inbound logistics, it becomes
difficult for Sainsbury to develop efficient products according to the desires of customers
and thus the company have to face many challenges while doing such development
activity. This stage requires that company completely gives focus on each and every
aspect of transformation of raw material into finished or final goods which has been able
to utilize by consumers. Few examples of inbound logistics are repossessing raw

material, stocking up the inputs and within the company distribute the raw material and
mechanism in order to start the production of final product.
 Operations: The importance of this phase arises when the raw material arrives and
Sainsbury is ready to process the raw material in order to convert it into final products
according to the requirements of the customers. After producing the final products which
are ready to launch within the market helps the organization to achieve their ultimate goal
of doing business. Some examples which include the operational function within the
establishment are machining, wrapping, accumulating and testing of final product.
Machine repair and its maintenance also come under this stage. It includes manufacturing
as well as service operations both. Effective analysis of operational stage is highly
important in order to improve firms productivity, maximising the efficiency of production
of goods and make sure that the product is efficient enough that are ready to compete
with other company products within the external environment and able to give
competitive advantage to the firm (Massie, J., 2018). The enhancement of Sainsbury sales
helps the establishment to achieve constant economic growth with enhanced profitability
and set a influential foundation for competitive advantage.
 Outbound logistics: Outbound logistics activity includes delivery if final product to the
consumers after passing through various intermediary activities which are also important
before introducing final goods within the market space. Few examples of outbound
logistics activities are material managing, warehousing, preparation, order dispensation,
hauling and distribute the final products at their destination in proper manner. Sainsbury
can analyse and do optimum utilization of outbound logistics in order to travel around
competitive advantages and achieve its competitive growth. It is because when the
outbound logistics activities has been handled in timely and proper manner with optimum
utilization of cost as well as resources along with the final product delivery helps the
organization to put minimum negative effects upon the quality of the finished product,
hence maximises the customer satisfaction level along with enhancement in growth
opportunities for the establishment. Sainsbury is in urgent requirement to put
emphasising on the outbound logistics activities in order to handle quick delivery of the
company offered products to their end consumers.

 Marketing and sales: At this point of phase, Sainsbury highlight the benefits and
attractive points about their offered product in order to attract more and more customers
towards their business activities in order to show them that their offered goods are
efficient enough to achieve their desire level and better than their competitive firm
offered goods. Only production of high quality of goods and offer them to the consumers
at affordable costs are nit the ultimate goal of the firm and create value for the products
that Sainsbury offers. However, investment in promotional activities in the form of
marketing and sales activities which helps the managers to attract potential customers
towards their business firm. The marketing strategies has been prepared in this stage in
the form of push or pull in nature, completely dependent upon the Sainsbury business
objectives, brand value, ready for action dynamics and current status of the company in
the market. Effective and wise integration of marketing activities into system helps the
organization in order to develop brand impartiality of Sainsbury and help to stand out in
front of their competitors (Narkhede, B., 2017). However, the company should aware
about making any kind of false commitments about products and their features that they
are unable to fulfil through their production department. It shows and ensures the
coordination among the various stages of the value chain activities appropriately.
 Services: The customer loyalty has been built and sustains with the pre sale and post sale
activities that have been done by the firm. Nowadays, customers want post sale services
as highly important as marketing and promotional activities. The power if negative
feedbacks from the customers highly affect the brand image of the firm within the market
space. The company have to give similar emphasis on the support activities in order to
avoid any kind of damage to the brand reputation and thus the firm also utilize this as a
tool to promote their products and a positive vibe about their offered goods as the mouth
publicity is equally beneficial as any other kind of marketing activity.
However, the value chain model also consist if secondary activities also known as supportive
activities also plays a vital role in coordinating and facilitating the primary value chain
activities. Sainsbury also get advantages of effective analysis of its supportive primary activities
which are explained above in detail along with their importance to the firm. Just like primary
activities, secondary activities are also equally important to the firm. Supportive activities
include:

 Firm infrastructure: The firm infrastructure describes various range of activities such as
legal matter handling, quality management, accounting, financing, human resource,
planning as well as strategic management. Efficient infrastructure management allow
Sainsbury to improve the value of the whole value chain management. Company is able
to control infrastructure activities to strengthening the competitive position of the firm
within the market space.
 Human resource management: Sainsbury can evaluate different human resource
activities by analysing various aspects of human resource actions such as recruiting,
selecting, staffing, training, rewarding, performance evaluation and other personnel
management activities. The effective HR management practices within the Sainsbury
allow them to lessen competitive heaviness which is based on appealing, obligation and
skills of their workforce. The company is completely dependent upon the highly skilled
and talented employees will also enhances the importance of using this value chain model
within the firm in order to support while achievement of company goals as well as
objectives. Technology development: In this modern and highly advanced era, the importance of
technology has been increased because each and every stage of value chain analysis is
dependent upon the technological advancements within the organization. The
technological introduction into the production, marketing, distribution as well as human
resource activities requires Sainsbury to realise the importance of technological
development within the firm. The technological advances have been divided into
production activities and process technological development activities. Some examples
which include the techno development are software automation, customer service support
portal through advanced technology, product design research approach and data analysis
has been done with the help of such advancements. The department which utilizes this
approach in most suitable manner are the research and development department (Testa,
C., 2017).
 Procurement: This step denotes the procedure of purchasing various kinds of inputs that
may range from machinery, raw material, equipments, and other necessary items for
producing finished as well as final goods which are ready to distribute within the market

space. Along with all other stages, this step also connects with other phases to optimise
inbound, operational as well as outbound activities. With the help of effective usage of
this model, the Sainsbury is able to set different target from their competitive firms and
do optimum utilization of resources while production of finished product according to the
desires of the consumers after doing complete and detailed analysis about their
requirements.
Porter's five forces
This model is a strategic management tool which assists to know competitive of an
organization. In this tool there are five forces and their respective strength help the managers of
the Sainsbury to know and understand the opportunities they have in the respective industry
(Bindra, Parameswar and Dhir, 2019). These fives force of Sainsbury have significant impact on
the profitability of the organization in the particular industry. The following five forces are
discussed below:
Threats of new entrant (Low): In the retail industry when an new organization enter the market
then they always come with innovative ideas and new creative strategies. Usually they reduce
their price and put more pressure of the market of Sainsbury (Altukhova and Semko, 2018). The
new and better values are offered to the customers at lower price to attract maximum level of
customers in the market. Yet the retail market is being very huge and Sainsbury have a
favourable image and value in its market. Any new entrant new lots of encourage and investment
to provide products which are compared to Sainsbury and customers of Sainsbury are also loyal
with the brand that is why they will not move easily to any other brand. The company also
focused on providing new innovating product to their new and existing product, so they are not
leaving the company. They are also investigating the market place, and then they produce their
products so that they can offer more customers and enhance the satisfaction as well.
Bargaining power of suppliers (Medium): Sainsbury used to buy its raw material from
different suppliers in the market. The supplier can be reduced the margin of Sainsbury easily
which they are earning on each product distributed in the market. As bigger supplier of the
market used to negotiate to extract the higher prices from retailer companies (Amara and
Tiriveedhi, 2017). Sainsbury has the option of a supplier is reducing their earning margin then
they can easily shift to some other supplier in the market immediately and maximize their profit.

They are having one of the strongest supply chains in the market and also make use of different
type of material in the products. When the prices enhance of one raw material then they can
change their raw material easily.
Bargaining power of customers (Higher): The customers in the market have lots of choice to
buy their products and their demand is also usually higher. In the current market customer are
searching for those products who offer them higher value at minimal prices range (Stindt and et.
al., 2017). The Sainsbury profit is directly being influence by the customer preference of
products, so they are offering different type of discounts and offers to the customers so that they
are connected with the brand. Sainsbury's customers are having higher power to bargain because
there are number of competitors who are offering same category of goods. Yet the customer base
of Sainsbury is higher than also if the buyer will find better option then they will move easily to
that brand and left Sainsbury.
Threats of substitute products and services (Higher): The Sainsbury is offering retailing
products and that are having lots of substitute products which can meet the customer needs.
Sainsbury's profit is being suffering a lot due to substitute product which are offering smilier
satisfaction to the customers of Sainsbury. After being more services oriented then the product
oriented the organization is facing this issue due to substitute product in the market. The brand is
also analysed the need and want of customers insight of what they are buying.
Rivalry among the existing competitor (High): The competition in the market of Sainsbury is
intense as the entire retailer in the market is offering the same type of goods to the customers
(Pezzutto and et. al., 2018). To take a competitive advantage the company need to drop their
price which will lead to reduce the profitability of the company. Yet the Sainsbury is trying to
move towards sustainable products in the market but for now they are attracted the customer by
minimize their cost. They are also having higher scale on which they are operating but the
competitors are also having wider scale to operate in the market.
RECOMMENDATIONS
It has been evaluated that Sainsbury wants to hold on its sustainability agenda by organizing
smart strategies and modify them according to the value chain analysis model. This is the
company strategy to modify them every year in order to take competitive advantages. With the

involvement of modern technological changes, company wants to enhance their footfall within
the organization and reduce extra cost activities such as electricity cost within their stores, using
electric vehicles while doing home deliveries of goods and services and usage of solar panels on
the roof will help the firm to reduce and do optimum utilization of their resources which also
provides cost benefits to the firm. With the help of effective value chain model, the company is
able to produce organic goods and pricing it separately and effectively in order to provide it to
the consumers at affordable cost with the help of optimising their production procedure which
also affects minimising their cost efficiently. The position of Sainsbury have enhanced since the
company introduces organic food items with their innovative strategies. Sainsbury encash its
reputation with the help of providing 100% fresh food in retailing business to enhance their
image within the market place through various promotional activities which includes campaign
as well as direct interactions with their customers with advanced technological techniques with
the help of social media as well as while doing production procedure (Magnani, G., 2018).
Although this is already happening and consumers are able to purchase their products through
the medium of technology. With the help of value chain model, Sainsbury is able to select
premium quality raw material and enhance consumers’ loyalty and develop brand identity in the
market space. Company is able to speed up their produced goods to the final consumers.
Organization reduce the cost of production with the help of find better deals with the suppliers
thus able to offer quality products at low cost prices. Through this model establishment is able to
reduce wastage and negative impacts within the environment. With the involvement of this
model, Sainsbury introduces Dow Agro science practices in order to investigate unique
marketing opportunities and take out value from nonspecific goods market.
EXAMINATION OF MODEL SUCCESS AND FAILURE
This model helps the organization in order to reduce their production cost in appropriate manner
so that the firm better deals with their suppliers and able to provide high quality goods at low
price rate according to the desires of the consumers. This model helps the establishment to utilize
and evaluate their strategies in order to use them in efficient manner so that the company is able
to get their desired outcomes along with complete satisfaction of their clients. However,
involvement and evaluation of the organization through this porter’s model also have some kind

of drawbacks which includes that the analysis of the firm with the help of this model happens
only in the basis of individual industry rather than on broad industry because the model includes
such kind of framework only. The problem within this model is their structure as it only offers
the examination of the firm within one industry while on the other hand some companies use
different methods of analysis and through that they are able to straddle several opportunities for
their organization (Westerlund, M., 2020).
CONCLUSION
From the above description it has been concluded that with the help of strategies
management practise Sainsbury can avail the competitive advantages in its market place. As the
competitor are having huge impact on the financial and non-financial factor of the company and
M.E. Porter help to identify all these factors in detailed manner. The study also shows that firm
introduces Dow Agro Science practices in order to evaluate new and advanced marketing
strategies that will help in their business enhancement. Further it concludes that the porters five
force and value chain analysis help to know the effective idea to gain benefits and competitive
analysis is being prepared within this study.

REFERENCES
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Bindra, S., Parameswar, N. and Dhir, S., 2019. Strategic management: The evolution of the
field. Strategic Change. 28(6). pp.469-478.
Altukhova, L.A. and Semko, I.A., 2018. Strategic management of competitive agribusiness
organizations model. International Journal of Advanced Studies. 8(2). pp.9-21.
Amara, S. and Tiriveedhi, V., 2017. The five immune forces impacting DNA-based cancer
immunotherapeutic strategy. International journal of molecular sciences. 18(3). p.650.
Stindt, D. and et. al., 2017. On the attractiveness of product recovery: The forces that shape
reverse markets. Journal of Industrial Ecology. 21(4). pp.980-994.
Pezzutto, S. and et. al., 2018. Forecasting electricity market price for end users in EU28 until
2020—Main factors of influence. Energies. 11(6). p.1460.
Rajahonka, M., Westerlund, M. and Wendelin, R., 2018. The future of the Internet of Things:
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losses in vegetable and fruit supply chain: An Indian perspective. Renewable and
sustainable energy reviews, 80, pp.1355-1371.
Burger, N., Demartini, M., Tonelli, F., Bodendorf, F. and Testa, C., 2017. Investigating
flexibility as a performance dimension of a Manufacturing Value Modeling
Methodology (MVMM): a framework for identifying flexibility types in manufacturing
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Strange, R. and Magnani, G., 2018. Outsourcing, offshoring and the global factory. In The
Routledge companion to the geography of international business (pp. 60-77). Routledge.
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Online
Wonder share EdrawMax, 2021, [Online]. Available Through.<
https://www.edrawmax.com/value-chain/>.
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