Sainsbury's Strategic Analysis Report

This report provides a comprehensive strategic analysis of J Sainsbury plc, a leading supermarket chain in the United Kingdom. It begins by examining Sainsbury's strategic position within the competitive UK retail market, highlighting its vision, objectives, and key strategic initiatives. The analysis then delves into an evaluation of Sainsbury's resources, encompassing physical, human, financial, and intangible assets, utilizing a resource audit and value chain model to illustrate its strengths and weaknesses. A critical assessment of Sainsbury's product mix is conducted using the BCG matrix, categorizing its products and identifying areas for potential growth. The report further explores key future directions for strategic growth, including multi-channel strategies and diversification into non-food segments. Finally, recommendations are offered for enhancing Sainsbury's competitive advantage and achieving sustainable growth. The report concludes by emphasizing the importance of strategic analysis for organizational success and long-term sustainability.

Critical Strategic Analysis of J
Sainsbury’s

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Strategic position of Sainsbury....................................................................................................1
Evaluation of the resources and value systems of company........................................................3
Evaluation of product mix of Sainsbury......................................................................................6
Critical analysis and evaluation of key future directions for strategic growth............................8
Recommendations........................................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

TABLE OF FIGURES
Figure 1: Resource Audit of Sainsbury...........................................................................................4
Figure 2: Value chain model............................................................................................................5
Figure 3: Marketing Mix.................................................................................................................6

INTRODUCTION
Strategic analysis is done in any organization with the motive to carry out strategic
business planning. It is generally performed with the help of SWOT analysis in which the
strengths, weaknesses, opportunities and threats of a business are being assessed. With taking
competition in the existing market and operational environments, strategic analysis is done.
Basically, it is believed that strategic analysis can be best used at the organizational level if it is
executed in a proper manner (Büyüközkan, Çifçi and Güleryüz, 2011). Through making SWOT
analysis, productive results can be gained at departmental levels of business. In the present
report, there will be a critical strategic analysis of J Sainsbury’s plc in which evaluation of its
resources and value systems will be focused. Along with that, product mix of company will be
assessed as well. Also, a critical analysis of the key future directions for strategic growth of the
firm will be discussed with giving appropriate recommendations.
Strategic position of Sainsbury
J Sainsbury plc is the biggest chain of supermarkets in United Kingdom in the present
scenario. In this organization, strategic planning is done with an aim to consider the future course
of company and to deal with what it is doing, customers for which the business is running and
the way it is performing all its functions effectually. Major emphasis of Sainsbury in its business
strategic planning is to beat and avoid competition and to predict the future scenario where will
be going over the next years (SAINSBURY'S STRATEGIC REVIEW: WHAT YOU NEED TO
KNOW, 2014). It can be critically analyzed that if enterprise would not focus on its strategic
planning and business strategic analysis, to run in the long run with sustainability and profits will
not be possible as per the present market conditions. Company is doing strategic analysis for
determining where it is going and to know the exact requirements of business in the markets
where it is running and where it desires to get established (Dasu and Tong, 2010). The way in
which it can grab the available opportunities comes under its strategic planning.
The business strategy of Sainsbury is to have a clear goal and long term plans/strategies
so that the vision of company can be fulfilled and delivered to the most trusted retailer who can
attract the attention of maximum buyers and can persuade them to purchase the products of firm.
However, wrong selection of retailer may lead to severe losses for the firm. Basically, there are
some major areas on which company has focused in its business strategy. These areas are
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underpinned by the values of firm and with the customer insight (Zott and Amit, 2013). The
values and vision of Sainsbury remain unchanged and the firm has refined its goals in such a way
that it shows their level of commitment towards meeting the needs and expectations of
customers. Company has updated its strategy as well to sustain the business in the long run with
gaining a competitive edge over others (Dess, Lumpkin and Eisner, 2010). But, if these strategies
are not being implemented effectually and successfully, instead of profits, company may have to
gain losses in relation with decreased market share.
Vision of Sainsbury is to become the most preferable and trusted retailer by customers
where to would love to come, work and purchase the products. Major objective of organization is
to increase the living standard of customers and offering an easy life to them. Another objective
of company is to provide the products and services with great quality and at fair prices at the
time when customers require them at their desired location (J. Sainsbury plc and the UK food
retail industry, 2016). However, it can be critically assessed that if quality and prices would not
be in accordance with the expectation and capability of customers, they would not buy the
products and may switch over to other competitor firms. Thus, appropriate pricing strategies
need to be formulated by the firm.
Sainsbury highly focuses on the desires and convenience of buyers so that they can be
satisfied in every possible way. Main strategy of organization is that it knows its customers in a
well manner in comparison to any other firm and it is always ready to serve the buyers whenever
and wherever they need them. These are the values of company that is making it different from
other rivalries present in the same and other markets (Yoo and Lee, 2011). Also, quality of
products and prices of services are playing a crucial role in making the firm most preferable one
among all retailers in UK. Therefore, it can be said that differentiation is essential nowadays to
position the brand in a different manner which can grab the attention of customers.
There are some specific areas where Sainsbury’s strategic plan is focused. The first and
foremost consideration in its strategy is to serve high quality food at reasonable prices to
customers. Through this, company is gaining the benefit of leading retailer among the buyers in
the long run with offering range of food products (Madani and Hipel, 2011).It is because; if it
would not satisfy the customers through satisfying their expectations, to stay in the market would
become impossible. Sainsbury is putting high efforts on bringing innovation in the food products
which are safe, fresh, healthy and tasty that is the major part of its strategic positioning.
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However, if the enterprise would not do so, beating competition will become very difficult which
may snatch the market share from the hands of organization. It is offering the products at fair
prices with superior quality that is sourced with integrity.
Another strategy is to reach more customers through additional channels. With the help
of opening new convenience stores and by developing business online, company is reaching at
Sainsbury’s brand extension (Zhang, Liu and Li, 2011). Its online groceries business is proving
to be very beneficial as it has increased the sale by 20% within UK. Apart from that, in this
nation, organization is gaining 90% market share with the household products. On the contrary,
Sainsbury is also focusing on growing its supermarket space through opening number of new
super markets in which it offers all kinds of food and non-food products in order to attain the
targets of increasing gross space by 15% in the coming two years. Further, company is doing
active property management in which it has increased the market value of its free hold property
in large numbers by which it getting operational flexibility (Dutta and Jackson, 2013). Also,
exploitations of potential development opportunities are playing a vital role in enhancing its
value. But, there are lots of risks associated with it as if company would not gain profits in it, it
may prove to be a big loss of invested amount.
Evaluation of the resources and value systems of company
There are mainly three kinds of resources with every organization which are physical,
human, and financial and others which are intangible. Physical resources refer to the physical
aspects of organization like equipments, buildings, etc. Sainsbury is having sufficient physical
resources like supermarkets, convenience and online stores (Lee, Ahn and Bang, 2011).
However, if there will be lack of these resources, running operations would not be possible and
thus, the sales and ultimately profits would get affected.
Financial resources refer to the funds available to the firm which it uses to carry out all its
activities in which Sainsbury is good as it is having financial services with respect to full
ownership of Sainsbury Bank PLC and property investments in the form of joint ventures with
land and securities firms. It can be critically evaluated that lack of funds result in stopping the
production and all other activities (Aslani, Naaranoja and Wong, 2013). Thus, it is essential to
have sufficient availability of capital every time in organization so as to deal with any kind of
uncertain situation and to run daily activities.
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Human resources are the people that are working in the firm and considered as the most
important assets in order to run business. Company is keeping its employees highly motivated
and satisfied as if company would not do so, running operations effectually and gaining
production to meet the final results will become difficult and there will be delay and loss in the
production (Sharma, 2010). However, intangible resources are those which are more concerned
with the perception of value. In order to assess the resources of company, Sainsbury uses the
model of Resource Audit which is shown as below:
Figure 1: Resource Audit of Sainsbury
J Sainsbury family is having 15% shares in the market and thus, it is the biggest owner of
Sainsbury PLC. This company is their largest supermarket in United Kingdom and having 17%
shares along with 1167 super and convenience stores. Apart from that, organization is employing
over 157,000 people in it across the nation. Firm is using the latest technologies by which it is
gaining cost efficiency in the operations and saving its time and efforts of employees as well.
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TechnologicalCapabilitiesOrganizationalSystemsIntangibleResourcesHumanResourcesFinancialResourcesPhysicalResources

Figure 2: Value chain model
(Source: Value chain analysis model, 2016)
The value system of Sainsbury plays a vital role in making the firm successful and
gaining a competitive edge over others. Also, company is offering a stimulating and well
equipped working environment to its employees along with effective training and development
sessions. It is having a solid financial position which can be seen in its growth of 7.1% of sales
and the operating profit of £738m that got increased by 10.0% in the year 2011. Along with that,
it can be assessed that Sainsbury has opened 2715 stores in UK which is very near to its biggest
competitors, that is, Tesco and ASDA (J Sainsbury plc, 2016). In terms of techniques, company
is very strong as it is using the latest methods of production and thus, gaining higher profits at
low cost.
It brand values are having passion for healthy, safe, tasty and fresh foods. Major
emphasis of company is on delivering the products and services with high level of quality and at
affordable, reasonable and fair prices. However, if company would not emphasize on its value
system, trust of stakeholders will get affected that will lead company to a loss. Sainsbury has
always been the leader of bringing innovation in products before any other competitor firm that
is providing the same products and services.
Along with that, company has always taken care of the social and ethical values with
complying of which it is running all its operations. It is because; if there would not ethics in the
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business operations and if enterprise would not run its business activities on fair grounds, staying
in the market in the long run will not be possible as stakeholders would not accept it (Hua,
Cheng and Wang, 2011). This is the reason; by running all activities ethically, it is gaining a lot
of support from government as well as from other stakeholders in performing business in an
effectual manner. Sainsbury made many efforts to reduce the environmental effects so that
operations can be continued and society would not get affected.
Evaluation of product mix of Sainsbury
In order to evaluate the product mix of Sainsbury, tool of BCG (Boston Consultancy
Group) Matrix can be used which is explained as below:
Figure 3: BCG Matrix
(Source: The BCG Growth Share Matrix, 2016)
Star: Here, company is having high growth of its products and thus, the business also
grows by offering the products that are as successfully in competing in the market. Sainsbury is
gaining the competitor edge over other rivalry firms present through providing different and
innovative products. With gaining higher profits, company is able to expand its business through
increasing its scope. This part of matrix requires high investment which Sainsbury can make and
thus, it comes in this category (Theißen and Spinler, 2014). With making high investment,
chances of growing the scope of business increases. Therefore, it can be said that by offering
more differentiation in the products and services through bringing innovation with the use of
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latest technologies, Sainsbury can win the competition and will have the leading position in the
retail industry of UK.
Cash Cows: In this, business grows at a very low rate and products have relative market
share. Businesses that fall in this category mainly require little investment as they are small in
size. However, they made investment so as to stay in the market. Here, for growing the business,
effective leadership and strategies are required. As Sainsbury is one of the leading supermarkets,
it generally makes huge investments and thus, it does not come in this category (Benson and
Henderson, 2011).
Question mark: This category states to those businesses which have low market share but
still, they operate in the areas where there is high scope of growth. But, these markets require
high amount of investment to make the business survive and successful. With the help of making
investment, company can gain growth in the market and will earn high profits as firms that fall in
this category are those that have the potential to grow at a fast pace. However, management
needs make some growth strategies (Büyüközkan, Çifçi and Güleryüz, 2011). Sainsbury can
come in this category as to gain the leading position in the market, that is, to beat the competition
with ASDA and Tesco, it can make strategies as per this part of BCG Matrix. With the help of
this, Sainsbury can expand its business and can have higher growth in the business. This will
lead the firm to run successfully and with sustainability in the long run (Dasu and Tong, 2010).
Dogs: Under this category, businesses have low market share as well as the market in
which they operate is also not attractive. These businesses have the option to generate profit in
order to come above the breakeven point. Sainsbury is strong at the side of its market share and
presently having high market share as compared to other competitors. This is the reason it cannot
fall in this category of BCG Matrix (Zott and Amit, 2013).
Critical analysis and evaluation of key future directions for strategic growth
Sainsbury is committed to offer variety of healthy, tasty, fresh and safe food to customers
in accordance with their needs and at the prices that they can afford. However, company has
increased its scope and got expanded by using number of acquisitions of new stores with taking
into consideration the needs and satisfaction of customers. At present, Sainsbury is not limited to
its product range of groceries and general merchandise as now the firm is offering range of
electronic products as well as it is having clothing section along with banking, insurance services
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and equipment’s (Business analysis of Sainsbury,2016). Major strategy which organization is
performing is of “one stop shopping”. It means all kinds of purchasing requirements of
customers will be fulfilled under one roof of Sainsbury.
There are many benefits of offering range of different products segments but it can prove
to be a limitation for firm as well. It is because; managing such a large store is quite difficult as
well as maintaining it will involve a huge cost. Thus, if these stores would not offer higher
profits, bearing such a huge cost may lead to severe losses for Sainsbury. At present, for gaining
growth in future, key areas where company is making efforts is the volume and transaction
growth through offering higher quality in products by making necessary and appropriate
improvements (Dess, Lumpkin and Eisner, 2010). Apart from that, its simpler pricing is also
playing a significant role and proving to be a successful strategy as offering lower regular prices
is helpful in increasing the customer base and thus, the profits of firm. Market leading service
and availability are also facilitating the organization is gaining strategic growth.
On the other hand, multi-channel strategy is providing success and growth at a significant
level in convenience and online marketing. It cannot be ignored that Sainsbury is also getting
benefitted through non-food segment which continues to grow with giving efficient performance
in the segment of general merchandise, clothing and financial services (Yoo and Lee,
2011).Thus, it can be assessed that will all these strategies; company will remain competitive for
the foreseeable future and will achieve the vision through taking right decisions. These are the
key future directions where company will perform and gain success with sustainability in
business.
Recommendations
As Sainsbury is in a sound position and there is no need to specialize or cut down on their
core business activities, there are a very few recommendations that can be made on company by
which it can increase its scope. Sainsbury is financially sky high but still, to be at the leading
position in the long run, it is important for the firm to diversify in new segments. Organizations
can introduce an innovative type of business to increase its customer base and other stakeholders
(Madani and Hipel, 2011).Presently, Sainsbury is dealing in range of electric products and
services but they are lacking in one thing which is currently highly in use for the customers. This
product is laptops which firm is having but offering at a high price in the market. This is the
reason; in this product segment,
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Dell and PC are the leading retailers across the world as they are offering it at affordable
prices. Thus, Sainsbury should purchase high quality products at competitive prices as it will
help the firm in earning higher profits through increasing sales and productivity. However, there
is one issue associated with this strategy (Zhang, Liu and Li, 2011). It is that Dell, PC World and
eBay are the direct competitors of Sainsbury for Laptops and they can easily reduce their prices
to be at the leading position. Thus, in this situation, the competition would become unbearable.
CONCLUSION
From the above report, it can be concluded that performing strategic analysis prove to be
very helpful for the organizations in order to run business in a smooth and secure manner. It
helps the firm in assessing the strengths which it can use in order to expand business in new
markets. Through this, weaknesses of business are known on which business can work in order
to improve the areas where it is lacking behind. Further, strategic analysis assists the
organization in identifying the opportunities that exist in the market so as to grab them for
growing business in the long run with beating the competition. Apart from that, firms become
able to assess the threats by which it can get protected by any kind of risks that are present in the
business and affect its growth through implementing strategic analysis effectually.
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