Business and Business Environment: A Case Study of Sainsbury's

Desklib provides solved assignments and past papers to help students succeed.

BUSINESS AND BUSINESS
ENVIRONMENT
1

Contents
LIST OF FIGURES.......................................................................................................................3
INTRODUCTION........................................................................................................................4
LO1 & LO2................................................................................................................................ 5
TASK 1- EXPLAIN THE SIZE, SCOPE, OBJECTIVES AND LEGAL STRUCTURE OF DIFFERENT
TYPES OF ORGANIZATIONS AND DISCUSS SECTORS IN WHICH THOSE ORGANIZATIONS
OPERATE...............................................................................................................................5
TASK 2- ANALYSIS OF TWO TYPES OF ORGANIZATION STRUCTURE IN SAINSBURY’S AND
EXPLAIN INTERRELATIONSHIP BETWEEN DIFFERENT ORGANIZATIONAL FUNCTIONS WITH
THEIR ADVANTAGES AND DISADVANTAGES AND IMPACT ON ORGANIZATIONAL
STRUCTURE.......................................................................................................................... 9
LO3 & LO4.............................................................................................................................. 14
TASK 3- IMPACT OF MACRO ENVIRONMENT CONSIDERING BREXIT ON THE BUSINESS
OPERATIONS OF SAINSBURY’S USING PESTEL ANALYSIS....................................................14
TASK 4- DETERMINE THE INTERNAL AND EXTERNAL ANALYSIS USING SWOT ANALYSIS
FOLLOWING BREXIT AND EVALUATE THE IMPACT OF MICRO AND MACRO FACTORS ON
THE DECISIONS AND OBJECTIVES OF THE BUSINESS..........................................................17
CONCLUSION.......................................................................................................................... 22
REFERENCES........................................................................................................................... 23
2

LIST OF FIGURES
Figure 1: STRUCTURE OF SAINSBURY'S.....................................................................................6
Figure 2: LEGAL STRUCTURE OF DFID.......................................................................................7
Figure 3: LEGAL STRUCTURE OF BFH........................................................................................8
Figure 4: SAINSBURY'S SUPERMARKETS ORGANIZATIONAL STRUCTURE.................................9
Figure 5: ORGANIZATIONAL STRUCTURE OF SAINSBURY'S BANK...........................................10
Figure 6: SAINSBURY'S ORGANIZATIONAL CHART..................................................................10
Figure 7: INTERRELATIONSHIP BETWEEN VARIOUS DEPARTMENTS......................................11
Figure 8: PESTEL ANALYSIS.....................................................................................................14
Figure 9: SWOT ANALYSIS.......................................................................................................17
3

INTRODUCTION
The following report is developed to be shown at the Annual General Meeting of the
Sainsbury’s and will describe about various types of organizations on the basis of their
objectives, size, scope and structure. The report will focus on the relationship between
various departments within the organization connecting links with the objectives and
structure of the organization. The second part of the report will lay emphasis on the positive
and negative impacts of the micro and macro environment of Sainsbury’s using SWOT and
PESTEL analysis considering the impact of Brexit and how the decisions of the business are
influenced with these factors.
Sainsbury’s ranks third in terms of largest food retailer having 16.9% share of the industries
of supermarket in the UK. Sainsbury’s is managed and operated in three main divisions
which include Supermarkets, Sainsbury’s Argos and Sainsbury’s Bank, all having the head
office in London (Muskett, 2017).
4

LO1 & LO2
TASK 1- EXPLAIN THE SIZE, SCOPE, OBJECTIVES AND LEGAL STRUCTURE OF
DIFFERENT TYPES OF ORGANIZATIONS AND DISCUSS SECTORS IN WHICH
THOSE ORGANIZATIONS OPERATE
The various types of organization along with their size, scope, objectives and structures can
be differentiated as follows:
SOLE PROPRIETERSHIP: The business is owned and operated by the owner, that is, the sole
trader, who receives all the profits and bears all the losses of the business (Aguilera and
Crespi-Cladera, 2016).
PARTNESHIP BUSINESS: this type of organizations are owned and operated by two or more
persons that are referred to as partners and they share all the profits and losses of the
business.
SMALL AND MEDIUM SIZED ENTERPRISE: SMEs in the UK have turnover less than £25
million and employs less than 250 people in the business. These companies have gross
assets less than £12.5 million (Aguilera and Crespi-Cladera, 2016).
There are few other types of organizations such as public, private and voluntary
organizations which can be described as:
Private company: The sole proprietor, partnership or joint stock companies can own and
manage a private organization where the ultimate aim of the business is to maximize the
profits and increasing the sales and market share of the business. These organizations come
under the category of secondary sector (Aguilera and Crespi-Cladera, 2016).
Example: Sainsbury’s is one of the largest public limited companies in the UK. It is a retail
company founded in 1869. The products of the company are offered in hypermarkets,
supermarkets, convenience shops, etc. and are sold worldwide (Muskett, 2017).
5

Purpose: the purpose of the company is to provide good quality products to its customers at
fair prices and maximize satisfaction.
Size: Sainsbury’s is the third largest retail company in the UK having 1415 outlets in
worldwide till 2017. The company generated revenues of 28.456 billion Euros and has
employed 186,900 people till 2018 (Muskett, 2017).
Scope: The business of Sainsbury’s is divided into three major divisions which are
supermarkets, Sainsbury’s Argos and Sainsbury’s Bank. The company was founded 150 years
ago and has spread its business all over the world.
Legal structure:
Figure 1: STRUCTURE OF SAINSBURY'S
(Source: Muskett, 2017)
PUBLIC LIMITED COMPANY: These organizations are wholly or partly owned and managed
by the local, state or central government of the country. These types of organizations
provide services that are in interest of the public, thus, they are categorised under tertiary
sectors (Black, 2018).
Example: Department for international development is a public limited company that
focuses on the development of the business internationally by staffing students and
graduates that are given projects for dealing with problems faced by various countries like
poverty, promotion peace, etc. (Black, 2018)
6

Purpose: The purpose of the organization is remove poverty from the country and ensures
the rights and interest of the communities.
Size: The Department of International development has many stakeholders which include
the government of the UK, public, trade unions, shareholders of the business, etc. (Black,
2018)
Scope: The UK government has planned to spend on the annual development of the
overseas to about 0.7% that totals up to 14.5 Billion Euros of gross national income of the
country.
Legal structure:
Figure 2: LEGAL STRUCTURE OF DFID
(Source: Black, 2018)
VOLUNTARY ORGANIZATION: These are the community based organization formed by a
group of individual having common interest and that aims to do something good for the
society without focusing on earning profits. These organizations are headed under tertiary
sector (Samani, 2017).
7

Example: The British Heart Foundation (BFH) is a charitable trust founded by a group of
medical professionals in 1961. They had a common interest in saving people from heart and
circulatory diseases (Samani, 2017).
Purpose: The purpose of BFH is to prevent heart and circulatory diseases by doing excessive
research about causes, treatment, cures for these diseases.
Size: The BFH aims to spend 100 million euros for about 1000 research projects yearly in the
UK. The BFH has over 950 professionals that focus on taking care of the patients in the UK
(Samani, 2017).
Scope: The organization raise funds through various sources which include 40% of their
income, 31% is the voluntary income arranged by the professionals, 23% are the profits
retained in the business and 5% is the income through investments.
Legal structure:
Figure 3: LEGAL STRUCTURE OF BFH
(Source: Samani, 2017)
8

TASK 2- ANALYSIS OF TWO TYPES OF ORGANIZATION STRUCTURE IN
SAINSBURY’S AND EXPLAIN INTERRELATIONSHIP BETWEEN DIFFERENT
ORGANIZATIONAL FUNCTIONS WITH THEIR ADVANTAGES AND
DISADVANTAGES AND IMPACT ON ORGANIZATIONAL STRUCTURE
There are three main divisions in which the business of Sainsbury’s is operated. These
divisions are Sainsbury’s supermarkets, Sainsbury’s Argos and Sainsbury’s Bank. The
organizational structure for all the three categories would differ according to the roles and
activities performed in each division (Dobson et al. 2016). Thus, the organization structure
of retail outlets of Sainsbury’s can be shown as:
Figure 4: SAINSBURY'S SUPERMARKETS ORGANIZATIONAL STRUCTURE
(Source: Dobson et al. 2016)
The organizational structure for the Sainsbury’s Bank is hierarchical that comprises of a
superior subordinate relationship within the organization. This structure can be represented
as:
9

Figure 5: ORGANIZATIONAL STRUCTURE OF SAINSBURY'S BANK
(Source: Guirguis, 2019)
INTERRELATIONSHIP BETWEEN ORGANIZATIONAL FUNCTIONS IN SAINSBURY’S
The roles and functions of various departments in the Sainsbury’s which include marketing,
finance, production, human resource, purchase, etc. are interrelated to each other in some
ways, thus there should be effective coordination between these departments in order to
achieve the objectives of the organization efficiently (Harraf et al. 2015).
Figure 6: SAINSBURY'S ORGANIZATIONAL CHART
(Source: Tasker et al. 2018)
10
Chief Executive
Officer
Chief Customer
Officer
Product & Pricing
Committee
Customer Conduct
Committee
Chief Risk Officer
Executive Risk
Committee
Regulating
Compliance
Committee
Financial Crime
Committee
Retail Credit Risk
Committee
Operational Risk
Committee
Chief Data Officer
Finance Committee
Asset & Liability
Committee
Chief Data Officer Chief Operating
Officer
Supply Chain
Oversight
Committee
Divisional
Operational
Committee
Coll & Comms
Director
APS Commercial
Director
Director of Internal
Audit
Executive
Committee

Figure 7: INTERRELATIONSHIP BETWEEN VARIOUS DEPARTMENTS
(Source: Harraf et al. 2015)
Marketing: the marketing department of the Sainsbury’s focuses on formulating and
implementing appropriate strategies of marketing mix in the business to gain competitive
advantage and increase the sales and profitability of the company. The activities of the
marketing department are related with the other functions as the managers must
communicate the estimation of finance and human resource needed to the managers of
respective departments so as to work efficiently for accomplishing the tasks of the
department (Harraf et al. 2015).
Operations: The functions of the production department in the Sainsbury’s are focused on
taking measures to reduce the cost and improve the quality of goods and services offered by
the company. This can be done with the help of effective cooperation and communication
between the various organization functions as the management of operations depend on
the efficiency of the workforce which are provided to the department by the HR managers,
thus, the needed skills and abilities should be clearly stated by the production manager to
the HR department (Morden, 2017).
11

Finance: The finance manager in the Sainsbury’s have to maintain record and estimate the
requirements of funds needed by the other departments such as marketing manager for the
purchase and sales of goods, advertising of the brand, etc., funds needed by the HR
managers for staffing of employees, etc. thus, the managers of different departments must
work in coordination with each other to achieve efficiency in the business (Morden, 2017).
Human resource: The HR manager of Sainsbury’s is responsible for estimating the need of
personnel for all the other departments and recruiting and selecting the candidates on the
basis of the required skills and capabilities and focusing on the training and development of
the employees of all the departments within the organization to improve their productivity
for effective achievement of organizational goals (Morden, 2017).
ADVANTAGES OF INTERRELATIONSHIPS BETWEEN DEPARTMENTS IN SAINSBURY’S
 The interrelations between departments help in accomplishing the task with a high
level of coordination and communications between the departments which results in
eliminating wastage and duplication at the workplace (Heider, 2017).
 The effective flow of communication between the departments help in
understanding the needs of every department and helping each other in different
possible manner which increases the efficiency in achievement of objectives.
 The increased coordination among the members of various departments leads to
increase in productivity of the members as well as the organization (Heider, 2017).
 The effective maintenance of relationships between managers of different
departments is fruitful for increasing the sales and profitability of the business.
DISADVANTAGES OF INTERRELATIONSHIPS AMONG DEPARTMENTS IN SAINSBURY’S
 The lack of coordinated efforts in departments may result in conflicts between the
members of the departments (Heider, 2017).
 The mismanagement of relationships between department members results in lack
of control over the activities of the business which leads to inefficiencies in
achievement of desired goals.
 The ineffective flow of communication between departments leads to wastage of
resources and duplication of work in the organization (Heider, 2017).
12