Sainsbury's: An Analysis of Business Environment Factors

This report provides an analysis of Sainsbury's, a leading UK supermarket chain, examining its internal and external environments. It explores key internal factors such as financial performance, business characteristics, customer satisfaction, and stakeholder analysis. The report also delves into external factors using a PESTLE analysis, covering political, economic, social, legal, technological, and environmental influences. The analysis highlights Sainsbury's stakeholder relationships, including customers, suppliers, vendors, and employees. The report concludes that both internal and external factors are crucial for Sainsbury's success, emphasizing the importance of continuous evaluation and adaptation to maintain a competitive edge. The report underscores the significance of customer satisfaction, technological advancements, and ethical business practices for long-term sustainability and market share growth.

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Business environment is the sum of all internal and external factors
that can influence a business and can affect its performance (Jansen,
2017). It consists of all those factors that have a significant influence
on the working of an organisation. Internal factors are the features
which are within the organisation and can be controlled of the
business whereas the external factors are the influences or situations
which are not in the control of businesses but have a great impact on
business decisions and its stakeholders. This report covers PESTLE
Analysis and SWOT Analysis of Sainsbury. It examines the external
and internal factors respectively affecting its business..
Political Factors- Due to increased increased import rates in European
Union the product pricing has increased resulting in loosing a large
customer base to its competitors because of availability of cheap
alternatives. Also there are conditions which affects the market share due
to change in ruling political party within a country.
Economical Factors- With the hike in inflation rate and income of the
customers remaining constant or changes, the buying behaviour of the
customer changes. They demand less products and vice versa in case of
increased income of customers (Shattock, 2017). Also there is a threat of
new entrants that may impact the market share of Sainsbury and increases
competition for sustainability.
Social Factors- Sainsbury provides its customers with some customised
and personalised discounts and benefits which results in increasing the
customer's satisfaction level and saves them from switching their brand.
Its customers tends to buy more then they actually required. It is due to
availability of surprised and unexpected products that a consumer wishes
to buy.
Sainsbury is one of the leading supermarket chain in UK. It was
founded in 1869 in Landon and is the 2nd largest supermarket in UK.
Following are the few internal factors of Sainsbury listed as:
Financial Performance- It has announced the there has been a higher
sales then that was expected irrespective of the disruption caused due
to Covid-19. It has reported a 10.5% hike in its grocery sales and
doubling of the online revenues (Manskikh, 2017). The financial
service business has improved its capital position in comparison to that
of last year. They have increased their market share to a great extent, it
serves about 17.7% of the retail grocery market.
Business Characteristics- It deals in moderate to high product quality
at a reasonable price, but some of the products are charged premium
because of its excellent quality. It has partnered with Nectar Loyalty
Program, which provided it the access the database of 13.5 million
customers, which provides it an opportunity to target its non customers
for improving its customer acquisitions rate. It was a distinctive
business characteristic used by Sainsbury.
Customer Satisfaction- Sainsbury mission and policy is to provide its
customers healthy, safe, tasty food. Quality and fair prices are their
main responsibilities. They emphasises on providing fresh foods and
devote for it by continuous innovation in their supply chain
management (Öhman, 2017). They are much concerned about the
needs and wants of their customers and try to improve the product
quality on regular basis to meet the customer's expectations. This helps
them in maximising the customer's satisfaction and to gain a
competitive advantage over others.
Internal and external environment
INTRODUCTION Internal Factors of Sainsbury External Factors of Sainsbury

External Factors of Sainsbury
Legal Factors- Labour law, Customer law and safety standards are to be
followed by the companies for running their operations. The company is
required to comply with all the rules and regulations of the country for its
smooth functioning. Sainsbury is required to know what is legal and what
is not for being a successful organisation and trade ethically (Werther,
2016). It needs to be aware about the potential changes in legislation that
can impact the business operations.
Environmental Factors- Sainsbury for sustaining its position in the
market is trying to reduce wastes in its Beef and Lamb supply chain. It is
also working for reducing the carbon emission in its operations. It ensures
taking active steps for curbing its environmental impact.
Technological Factors- In the recent era, the e-commerce segment of
Sainsbury is tremendously supportive for catering the tech friendly
generation market share. It also uses Artificial Intelligence for better
understanding of their customers needs and wants, to cater more market
share. It also uses AI to analyse and forecast sales and run better
marketing campaign.
Stakeholder analysis
Sainsbury has diverse stakeholders to deal with. A stakeholder is defined as an
individual or a group who has either invested some money or have some
interest or has some important connection with the company (Mellegård and
Pettersen, 2016). They can either affect or be affected by the business
operations. The key stakeholders of Sainsbury are:
Customers- They want the company to improve and provide better value for
the products they purchase. They demand high quality of products at a
reasonable price. Also they forms an integral part of business as without their
help Sainsbury may not be able to achieve its aim and survive in the market.
Making customers satisfied have a positive impact on the business,
it helps in maintaining its position in the market and to get a competitive
advantage over others. Studies have proved that a positive customer
experiences leads the customer to make repetitive purchases with the
company.
Whereas a negative customer experience can create hurdles for the
business. It can put the organisation's reputation at risk and may cause
potential customers to trust the business less and to switch to the competitors
products. It affects the customers perception and create a low brand image for
company's products.
Suppliers and Vendors- They are the primary stakeholder of the company.
They sell goods and services and in return demands for prompt payments from
Sainsbury. They supply steady orders and are directly involved in the
company's operations. They lends money to the company in terms of short
credits.
Employees- They have direct stake in the company, and get paid in either
monetary or non-monetary terms. They play a significant role in financial and
time investments of the organisation and performs a defined role in the
strategies and operations carried out in the organisation. They are direct linked
with the success of the organisation.
Conclusion
References
Jansen, S., 2017. External and internal factors in
a levelling process–Prevocalic (r) in Carlisle
English. Perspectives on Northern Englishes. 96.
p.111.
Manskikh, V.N., 2017. Do external or internal
factors lead to tumor development? It is still
unknown. Biochemistry (Moscow), 82(1), pp.81-
85.
From the above report it can be concluded that both
internal and external factors play a crucial role in the
success of an organisation. An organisation should
continuously evaluate and consider these factors of
achieving its vision and mission. It helps the
organisation to maintain a great brand image and
reputation in the eyes of its customers leading to
increased loyalty. If the company did not comply
with these factors there is a high probability that it
can not survive in the long run and its market share
will be taken over by its competitors.