Business and Business Environment: An Analysis of Sainsbury's

Desklib provides past papers and solved assignments for students. This report analyzes Sainsbury's business environment and operations.

Business and Business Environment
Student’s Name:
Student’s ID:
1

Table of Contents
Introduction................................................................................................................................3
LO1............................................................................................................................................4
P1 Explain different types and purposes of organisations; public, private and voluntary
sectors and legal structure......................................................................................................4
P2 Explain the size and scope of a range of different types of organisation.........................5
LO2............................................................................................................................................7
P3 Explain the relationship between different organisational functions and how they link to
organisational objectives and structure..................................................................................7
LO3..........................................................................................................................................10
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.........................................................................10
LO4..........................................................................................................................................12
P5 Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses.....................................................................................................12
P6 Explain how strengths and weaknesses interrelate with external macro factors............13
Conclusion................................................................................................................................14
Reference List..........................................................................................................................15
2

Introduction
There are certain environmental factors that have an immense impact on the company’s
business. The study will be done in order to understand the positive and negative effects of
the surroundings on the business operations of Sainsbury in the United Kingdom. Sainsbury
is considered as one of the leading companies of the United Kingdom that deals in different
types of food products and other home equipments (sainsburys.co.uk, 2019). They aim to
provide flawless customer service in their market. As the study develops, different types of
organisations will be examined alongside their legal structures. Besides this, size and scope
will be analysed to gain a clear understanding of their business. The different departments of
the organisation certainly function in collaboration with one another. It is significant to
understand the impacts of Brexit on the functioning of Sainsbury to gain a proper
understanding of their profitability and productivity in the market. The use of PESTLE and
SWOT analysis will be done for understanding the impact of external and internal factors
respectively.
3

LO1
P1 Explain different types and purposes of organisations; public, private and voluntary
sectors and legal structure
There are diverse types of companies that function in the market. Understanding their
purpose and legal structure is necessary to gain a clear idea about their business operations in
the market. This section outlines the purpose and legal structure of public, private and
voluntary sector organisations. The detailed analysis has been done below in a precise
manner:
Public Sector
This type of organisation is mainly developed in order to provide high quality services to the
customers in the market. Profit generation is not the primary aim of their business. The main
aim of such private sector organisations is to ensure that they are able to resolve the issues
and challenges that are faced by the common mass. This allows them to enhance their process
of business and meet with their business objectives. However, they require certain amount of
funding to conduct their business in the market (Bouckaert et al., 2016). This funding is
generated with the aid of taxes and other fees that they gather in the process of business. The
purpose of public sector companies is that they are able to resolve some o the major
challenges faced by the public. The legal structure of such companies is quite different in
nature, as the state or the local government mainly runs their business. As a result, it becomes
easier for them to provide the customers with quality products and services in the market.
NHS is an example of public sector. Sainsbury will look to develop their relationship with
NHS in order to ensure that they are receiving medical aid in times of emergency. This will
help them to keep the employees under safe and secure environment.
Private Sector
Well, it is important to understand that an individual or a group of individuals mainly runs
private sector companies. The companies operating in this sector do not face too much
hindrance from the government or their policies and procedures. As a result, it eases their
process of operating business in the market. The prime motive of their business is to ensure
that they are able to increase their generation of profit in the market (Christensen et al.,
2014). The shareholders are responsible for electing their Board of Directors that is
4

responsible for managing the different functions of their business in the market. Besides this,
the Chairman of the organisation is able to meet with the market requirements and ensuring
that the company is able to earn profit in the operating market. Sainsbury will be able to
develop their business with ASDA. They will be able to know about the strategies used by
ASDA in the market and develop their business in an authentic manner.
Voluntary Sector
There are numerous social issues and challenges prevailing in the society. Voluntary sector
organisations are responsible for ensuring that they are able to identify all the issues and
resolve them in an authentic manner. This helps reducing the negative impact of social
factors on the society. They do not look to increase their generation of profit in the market but
look to provide adequate solutions to the issues that have developed in the society. Most of
the non-profit organisations are NGOs. It is quite difficult for voluntary sector companies to
develop their legal structures in the market (Van Dooren et al., 2015). However, they have to
ensure that the legal structure is selected in the right manner to provide smooth operation of
their business. They can take recourse to trusts and associations that allow them to gather
some funding to meet with the expenses of their different departments. Besides this,
associations and trusts have their share of advantages and disadvantages in terms of providing
a suitable legal structure to the non-profit organisations. Wellcome Trust is an example of
voluntary sector organisation. The company aims to provide quality health service with the
help of gathering funds from the society. Sainsbury will be able to provide them with enough
help by implementing their CSR activities.
P2 Explain the size and scope of a range of different types of organisation
Public Sector
Public sector companies usually do not require too much capital to conduct the activities of
their business. With the help of their legal structure, they are able to meet with the
organisational requirements in the market and ensure that the customers are being satisfied.
Their contribution to the GDP is important to understand with respect to the growth of the
organisational performance (Johnson et al., 2017). Tesco is a leading example of Public
Sector Company.
Private Sector
5

These companies have about 50 shareholders in the market. However, they are not liable to
trade their shares in the market and as a result; it becomes difficult for them to make use of
the stock exchange. As a result, they have to ensure that they do not face too many risks in
their business process and they take recourse to selling their shares in the market. John Lewis
Partnership is an example of Private Sector Company.
Voluntary Sectors
Voluntary sectors mainly operate without the inclusion or interference of the state or local
government. However, in most of the cases, it has been identified that they receive funding
and support from the state. They are ideally large companies having a huge workforce that
looks to resolve the social issues and challenges existing in the society (Butler and Wilson,
2015).
Sole-Traders
This business type is managed and controlled by a single individual and he or she is liable for
all the different aspects of the business. All the profit earned in the process of business is
liable for the business owner. Similarly, he or she is responsible for any kind of debt that is
earned in the business. They are responsible to develop the rules and regulations for the
employees to follow in the workplace. They do not require huge amount of capital to develop
the process of their business (Cousins et al., 2014). Wettone Matthews Ltd is an example of
sole trader company. It can provide help to Sainsbury in terms of their auditing and other
aspects.
Small and Medium Sized Enterprise
This type of business companies are mainly developed to earn profit in the market. Small and
medium sized companies often make use of a stereotypical structure so that it allows them to
gain respective market share and operate in an authentic manner.
6

LO2
P3 Explain the relationship between different organisational functions and how they
link to organisational objectives and structure
This section of the study allows a proper understanding of the interrelationship between the
different organisational departments and the ways in which they help Sainsbury to meet with
their objectives and structure. The relationship of the different organisational department has
been analysed below:
Marketing Department and Human Resource Department
The marketing department plays a crucial role in terms of ensure that they are able to promote
the services and goods in the operational market. With the help of this, Sainsbury is able to
reach out to the customers and enhance their process of business operations. However, the
human resource department is responsible for recruiting and selecting the right set of
workforce so that they are able to address the needs and requirements of the marketing
department. Besides this, the human resource department is capable to ensure that the
workforce is adding to the productivity and profitability of their organisation (Allameh et al.,
2017).
Marketing Department and Finance Department
The finance department plays a significant role in terms of developing the budget for all the
other departments of Sainsbury. The different activities of the marketing department such as
market research and promotional activities require a certain amount of budget that is
allocated by the finance department. This will help them to ensure that the marketing
activities are being done in a precise manner.
The interrelationship of the different departments within the organisation has a direct impact
in attaining the objectives of their business. The management of Sainsbury should be capable
of ensuring that they are working in accordance to their business objectives. The ways in
which the marketing department interrelates with the other departments is enough to make
sure that the company is able to enhance the quality of their products and services to meet
with the satisfaction level of the customers (Wright, 2018).
7

Figure 1: Organisational Chart
(Source: created by learner)
Selection of the right organisational structure is important for Sainsbury. Since they are food
retail organisation, hierarchical structure is most suited for their workplace. With the help of
this, the higher authorities are able to manage the functions of the employees and other staffs
(Maduenyi et al., 2015). They are also able to resolve any kind of issues that they are facing
in the workplace. The supervisor in the workplace should be capable of ensuring that they are
able to keep the employees aligned to attaining the business objectives. Sainsbury also
functions as a financial service provider in the market (Feng et al., 2015). Therefore, it is
important for them to follow horizontal structure in the workplace. It will allow them to
make sure that the management is able to make quick decisions in the workplace to provide
quality financial services to the customers.
8

Figure 2: Horizontal Structure
(Source: Daft, 2015)
9

LO3
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples
In order to understand the positive and negative impact of different macro environmental
factors on the functioning of Sainsbury, Pestle analysis has been done. This provides a clear
understanding of the different factors that affects the business. The detailed Pestle analysis
has been done below in a brief manner:
Political Factors
Identifying the political factors is important for Sainsbury in order to ensure smooth
functioning of their business. There are instances, when the political scenario is not stable
enough to meet with the business objectives. Change in the ruling party means incorporation
of new policies and laws. This increases the corruption level and has a negative impact on the
growth of productivity in the market. The management of Sainsbury should ensure that they
align their workplace in accordance to the newly developed policies and legislations. This
will allow them to run their business in a successful manner.
Economic Factors
The overall economic condition of the country has an immense impact on the growth of the
company. The decrease in rates of foreign exchange has a negative effect on the
organisational business. The intervention of the government in the business of Sainsbury
decreases their economic growth. As a result, it creates hindrance in the development of their
productivity in the market. In order to increase the company’s impact on the overall
development of the economy, they have to gather skilled workforce to meet with their
business objectives in an authentic manner (Cadle et al., 2014).
Social Factors
The overall culture of the society has a major impact on the business environment of
Sainsbury. They have to ensure that they develop their business structure in a certain manner
so that it allows them provide social message to the customers. They could make use of
certain social networking sites to reach out to the targeted customers.
Technological Factors
10

The company should ensure that they are making use of new and advanced technologies in
the workplace, as it will allow them to enhance the quality of their services and products in
the market. They have to identify the technologies used by their competitors so that it allows
them to gain competitive advantage. In case of technological disruption, the organisation
should have a backup plan and implement them in the workplace. This will help to reduce the
overall negative impact of technological disruption.
Legal Factors
Sainsbury should ensure that they are aligning their business to the different types of policies
and laws so that it allows them to increase their generation of profit in the market. The
employment laws will allow the management to ensure that they are using these to develop a
better workplace (Ho, 2014).
Environmental Factors
Sainsbury should conduct their business by keeping in mind that they are not polluting the
environment in which they are operating. They have to take initiative to recycle the waste
generated in their business process. This will allow them to create a safe and secure business
environment for Sainsbury in the market.
11

LO4
P5 Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses
Conducting a proper SWOT analysis provides a clear idea about the different internal factors
that may affect the business of Sainsbury in a better manner. The following provides an idea
of the SWOT analysis of Sainsbury:
Strengths
Some of the major strengths that the company possesses are as follows:
 They provide high quality customer service in the market that increases their market
share.
 The quality of services and products are developed to suit the requirements of the
customers in the market.
 Their balance sheet allows them to enhance their profitability in the market.
 They are able to expand their business in an authentic manner.
Weaknesses
They have to tackle certain weaknesses in their workplace. They are as follows:
 The margins of their food business are less in the market.
 They have only a single operating market (Jenkins and Williamson, 2015).
 The customers’ tendency to switch brands has a negative impact on their business growth.
 The rise in price of their products is an area of weakness for Sainsbury.
Opportunities
However, the company can make use of the available opportunities in the market to increase
their sales and productivity. Some of the major opportunities are outlined below:
 The use of technologies provides them with opportunities to develop new products in the
services.
 They have a great deal of brand recognition in the market that helps to attract customers.
Threats
12