Sainsbury's: Internal and External Business Analysis Report

This report provides a comprehensive analysis of Sainsbury's, examining its business environment, organizational structure, and the interplay of various internal and external factors. The report begins with an overview of different types of organizations, differentiating between private, public, and voluntary sectors, and discusses their respective legal structures. It then delves into the size and scope of these organizations, using examples like HSBC and the American Red Cross to illustrate key differences. The report further explores the relationship between various organizational functions, such as marketing, human resources, production, and finance, and how these functions are interconnected and contribute to the achievement of organizational objectives. The impact of micro-environmental factors on Sainsbury's operations is also examined, highlighting the importance of understanding these elements for strategic decision-making. Moreover, the report includes an internal and external analysis of Sainsbury's to identify its strengths, weaknesses, and the relationship between these factors and external macro factors. Overall, the report provides a detailed understanding of Sainsbury's business environment and its operations.

Business and the Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
P1- Different types and purposes of organizations......................................................................3
P2-Size and scope of different types of organizations.................................................................4
P3-Relation between different organizational functions and their link with structure and
objectives.....................................................................................................................................6
P4- Impact of micro environmental factors on the operations.....................................................7
P5- Internal and external analysis of the specific organisation in order to identify the strength
and weakness...............................................................................................................................8
P6- How strength and weaknesses interrelate with the external macro factors.........................10
Macro ........................................................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business refers an activity of making money by buying and selling products for different
purposes. Business environment is sum of both internal and external factors like political, social,
economic, customers, employees and others (Čepel and et.al., 2018). This present study is based
on Sainsbury’s that is the second largest chain of supermarkets in the UK, founded by John
James in 1869.This present study is going to show impacts of internal and external
environmental factors on performance of company. It will analyse impacts of external
environmental factors like political, social, environmental and others.Further, it will also discuss
impacts of organizational structures like hierarchical, flat and others. Different structures have
advantages and disadvantages and affect flow of information. Different types and size of
structures also have different legal entityand as per the legal entity and structure they have to
follow rules for protecting themselves against lawsuits.
P1- Different types and purposes of organizations
Private:All those companies that are being owned by individuals are known as private sector
organizations. They are being run for earning money and making profit. Profits that are being
generated are being divided and benefited to owners, shareholders and investors. In regards to
financing it can be said that these organizations are financed by private moneycollected from
shareholders and bank loans. It is one of the main parts of economy. All organizations of private
sector are privately owned and for profit businesses (do Monte, 2017). It may be sole traders and
partnership enterprises. Revenue generated by such organizations is being divided among
business owners and shareholders and some amount is reinvested in business for earning more
profit by satisfying customers’ needs.Sainsbury’s is private sector organization as it is owned and
controlled by groups of people rather than the government.
Public: It consists of those companies that are being owned by the government. The main
purpose of such organizations is to provide services and goods to people for their beneficial and
improvement of living standard. Such organizations are being run by the government and money
is being raised generated from revenue from local people. Whatever amounts they earn are being
re invested in business for providing better services to people. Unlike private organizations, these
organizations do not focus on making profit and distributing money or revenue among owners
and partners. It may be public limited and public (El-Ghalayini, 2017). Example of public
limited company is HSBC.
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Voluntary: It is also not for profit organizations that are run as well as owned voluntarily by
trustee and people who want to help people and join such organizations voluntarily. Main aim of
such organizations is supporting vulnerable and needy people that cannot help themselves and
require help of others for living a better life. So, overall it can be said that such organizations
work for helping out community. For operating business they require money that is being
collected from donation and gifts. Profits are being regenerated in voluntary sector of
organizations and it can also be run and known as social enterprises. American Red Cross is
humanitarian organization that provides emergency services or assistance to people, affected
from disaster and is in need (Liao and Huang, 2016). Examples of voluntary sectors are, Cancer
Research UK, The National Trust, Oasis International Association, Wellcome Trust.
Legal structure
The legal entities are organisation that has legal rights and responsibilities including tax filing.
There are two most important requirements for enterprise to be complaint with the low, first its
policies need to be consistent with laws.
The legal structure or requirement of public limited is that liability of each member is
unpaid amount on their shares. It has separate legal entity from its members and the company is
owned by Board of Directors. Minimum 2 shareholders are required, issue shares to the public to
value of £50,000, it registers with companies house, at least 2 directors – one must be individual,
have qualified company secretary. Examples of public company are, royal dutch shell, Unilever,
HSBC, tesco, vodafone, BHP, national grid etc.
Legal structure for private company is it is treated separate entity and alos register as
taxpayer. It has separate life from the owners and duties and rights are also separate. The
shareholders are the owners of the company. Managers of private company may be shareholders.
Examples of private company are, Swire, Arnold Clark, Dyson, Bestway group, JCB, 2 sisters
food group etc.
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Sole traders
Soldiers are the self employed person who run their own business individually and share whole
profit and liability as well. Starting update sole traders, It is necessary for the businessman to
register with customs and HM Revenue as self employed for tax and national insurance purpose.
Partnership
A partnership his formal argument between more than two parties to operate and manage the
business and share its profit. there are some legal documents that are required to form a
partnership some of them are partnership agreement, partnership deed, employment contract etc.
So, from the above discussed all different types of organizations it can be said that all
enterprises have different legal entities. Profits and losses are also being divided accordingly and
with the purpose and aim of different types of organizations, they can be identified and differ
than each others.
P2-Size and scope of different types of organizations
Every organisation has different size and scope that define their category and type of
organisation. size is the number of people who are working within the organisation or the
structure company has been implemented to run the activities daily basis. Silence golf
organisation shows the differences between the large, medium, small organisation that include
their goals and objectives, market shares and profitability and sustainability.
Public company size and scope- Public sector is a part of the economy that is composed of all the
government levels and the government control enterprises. this kind of organisation have huge
scope within the business becausepeople have more believe interest on the public companies as
compared to the other type of companies because it is owned or run by government itself so they
get a security and support from the government (Mutebi, H. And et.al., 2020). HSBC is the
British multinational investment bank who are providing financial distress to their customers.
this firm This operating their business in all around the world and there are 235351 Employees
are working currently for them. and it can reach to 200000.
Private company size and scope- Private companies are owned by individuals and the
group of companies, they are having a greater chances expand their business and earn higher
probability. Sainsbury Is the privately owned company And it is second largest chain of
supermarket within the UK. there are around 116400 Employees are working under this
company an it can also reach to the limit of 2,50,000. They are rapidly growing their business
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Ann recently they’re having 1428 total number of location and all over the world, this shows
there size of the business.
Voluntary size and scope- Voluntary organisation does not work for the profits, they just
created to help society and the people who are facing a problem in their life. Their main motive
is to help those people I providing them a find that they get from the NGOs and Government
bodies and civil society organisations. American Red Cross is humanitarian organization that
provides emergency services or assistance to people, affected from disaster and is in need. Size
of this kind of companies are not limited and people can add with this companies with the
motive of helping society.
Legal organisations size and scope- There are many legal organisations made by the government
to provide justice and creating a law. Law society of England and Wales, it is the organisation
that helps too create a loss for the society and welfare of the society (Liu, L. And et.al., 2018).
they provide a justice to the people who is suffering from the legal issues and may not motive of
this kind of legal entities to provide a justice through the law. The former president of this Law
Society is David Greene. The members of the society are often consulted When important
issues are being debated in the parliament or by the executives and it was found in 1825.
P3-Relation between different organizational functions and their link with structure and
objectives
Sainsbury is in private organisation That is consist of various Department that helps to run daily
activities within the workplace. each and every functions of those departments are interrelated
and linked with each other and help them to reach their daily goals and objectives. it is necessary
for the leaders and managers to be aware of those functions are working together to create a
higher opportunities and objectives for the organisation.
Marketing Department
Marketing is the one of the most important part of the company. marketers are responsible to
collect the useful information from the market and provide it to the each and every Department
so they can work effectively (Asha’Ari, M.J., 2020). marketers give in formation that are related
to the particular Department like customer related information they give to the production team
of the company which is used to develop a new product or innovate the product. New talent and
skillful employees in formation is given to the human resource management where they recruit
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those employees And fund related information is provided to the finance Manager of the
company.
Human resource Department
It is another most important part of Sainsbury, That helps too recruitment provide a
training to the employees from each and every every Department. When any of the Department
need employees if there is any requirement of new job then they contact to the HR manager
because they are the responsible to recruit and select the desired candidates for the particular job
role. They know potential of the employees.
Production Department
Production Department is the last stage where final products and services are made. This
Department is responsible to create the final product and help company’s Function to be
successful in their main objective that is selling of goods and services of Sainsbury. they collect
the information from marketing team and other teams like finance from the finance Department
etc. So the new product that can help to satisfy the needs and demand of the customers and
company can take competitive advantages within the market where they are operating their
business.
Finance Department
It is another most important part of the company and this Department is controlled by the finance
manager of Sainsbury (Woźniak, P., Miśta, W. and Małecka, M. A., 2020). They are responsible
to ensure that companies having a proper fund to run their business activities. all the departments
within the company are funded by the finance manager, they make a proper budget for each
Department so they can run smoothly and properly and achieve their objectives. Finance
manager orders ensure that each and every Department is properly using they given resources for
the maximum. Benefit to the company.Finance manager audit all the information related to the
funds and ensure the flow of finds within the workplace of Sainsbury and help them to take
competitive advantages within the market where they are operating their business.
P4- Impact of micro environmental factors on the operations
There are many external environmental factors that has huge impact on the operations of the
Sainsbury (Ani, A.A., Kriyantono, R. and Wulandari, M.P., 2018). It can affect the companies
strategies and profitability and also influence on the decision-making of the company. it is
necessary for the leaders and managers of the Sainsbury To always aware of external factors so
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they can convert the negative impact into the opportunities for the business and take competitive
advantages.
PEST Analysis
Political factor
Political factors such as Brexit memorandum has created huge impact on the companies
profitability. most of the resources used to come from the European countries and after the
memorandum the increase the create taxes which is directly affecting on the final product
pricing. on the other side it also has positive impact free trade policies are helping Sainsbury to
expand their business and create new opportunities.
Economic factors
Economic factor such as pricing is one of the biggest factor for the companies within the
retail industry. prices of the raw material is increasing day by day and it is creating a threat on
Sainsbury. on the other side income of the people within the UK and US is increasing that means
people have more money to spend and by product from the Sainsbury.
Social factors
Customers needs and demand and their preferences changing, regular changes on
customers preference is creating a threat upon Sainsbury. on the other side companies providing
best quality products and lower prices, it was only possible because have their good relationship
with the supplies that provide them some discount so company can add value for the customers
able to gain their loyalty.
Technology
Technology is always been a factor That helps to provide competitive advantages to the
Sainsbury (Alsaffar, H., 2020). This company is using best possible technology within their
workplace to increase the productivity and quality of the product. they have also expanded their
business on the online platforms an they’re also having their own shopping website where they
sell product directly to the customers home through the delivery. On the other side technology
also have some disadvantages, one of them is continuously changing technology trends. it is
affecting the Sainsbury because it is not possible for them to continuously implement new
technology because it takes time and money both.
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P5- Internal and external analysis of the specific organisation in order to identify the strength and
weakness.
There are many some internal external factors that has huge impact on the companies
strategies and profits.
SWOT analysis
Basis Sainsbury Tesco
strength From the small grocery store
which was used to be having
limited range of products, now the
Sainsbury become the second
largest supermarket within the UK.
this company has won various
awards to provide a best customer
services, excellence retailing, and
shopping experiences to their
customers. and this is the most
profitable supermarket and retail
formatting the world
weakness like the other retailers within the
retail industry, Sainsbury he’s also
facing a lot of risk from the brand
switching. in spite of string loyalty
programmes and promotions. this
company has find it challenging to
retain a customers (Li, G.R. and
et.al., 2019).
Customer of the Tesco may not be
buying as many items related to
having a less disposable income
and the retailer has not adjusted its
inventory and selection and they
have leave it with the higher cost of
inventory, now it becomes a
weakness for the Tesco.
opportunity There was a days When people
from the rural areas were not using
products from the supermarket.
Now the people from the rural area
are shifting toward the buying a
product from the supermarket and
this culture is increasing day by
day. it can be a good opportunity
for the Sainsbury to take
competitive advantages.
Retail industry Is shifting toward
the online business. It is because
online business is the future of the
retail industry where people will
buy product online more than
offline in future. It can be a good
opportunity if the Tesco mostly
focus on the online product setting
so they can take competitive
advantages in the market.
threat Competition is the factor that is
creating a huge threat upon the
Sainsbury business. companies are
facing problem because of the
discount stores. it is also forcing the
Sainsbury to decrease their product
prices to stay within the
competition.
Same thread is also faced by Tesco
company cause they are also
operating their business within the
retail industry and War within the
industry on the basis of prices is
creating a threat upon the Tesco
company.
Porter’s five forces
Basis Sainsbury Tesco
Competitive revelry The retail and industry is highly
competitive and very crowded.
there are many companies who are
trying to get into the known food
sectors, further intensifying the
competition. For example -
The intensity of the competition
within Food and grocery retail. This
industry has faces the intense
competition direct from the
competitors that include companies
such as Sainsbury, Asda etc.
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Sainsbury has the market shares of
around 14.9% in year 2007, it has
been steadily increasing since they
are reconstructing programme was
started. this is the positive trend but
it lacks well behind the runaway
market leaders like Tesco
(Toppinen, A. And et.al., 2019).
Barriers for entry Barrier entries within this industry
is very high due to the number of
factors. Firstly, organised retail is
amongst the most sophisticated
sector Within the UK it needs to be
lot of investment and Secondly
significant brand development is
needed.
The threat of new entrants coming
into the retail industry is very low
particularly because of capital
requirement.
threat of substitute The leaders within the retail
industry such as Sainsbury, Tesco
Asda etc Theyare already operating
their business. It is necessary for
the new entrance to come up with
the different and unique product
and services to make space for
themselves. It also make necessary
for the leaders like Sainsbury to
come up with the product
innovation and development so
they can provide some differences
in quality of the product.
Tesco company over the various
products to their customers. it also
sells the substitutes of majority of
the product. they cannot change the
products but they can improve the
quality to satisfy the customers
need. Companies within the retail
industry will Take competitive
advantages within the market where
they are operating their business
and they will able to show their
presence as a strong competitor.
bargaining power of customers Bargaining power of the customer
is high cause there are many
companies who are providing
similar product so customers can go
with the others. It is necessary for
top leaders within the retail industry
like Sainsbury have create a good
relationship with the suppliers of
the goods because they can only
provide a discount to them which
they can pass on to the customers.
It will help them too reduce this
thread.
Leaders within the retail industry
have to bargain with the customers
with cars discount retailers are
creating thread upon them and
providing less price product to the
customers which is stealing their
market.
bargaining power of suppliers the bargaining power of suppliers
is low, it is because there are many
Bargaining power off this applies
law which can provide advantages
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supplies with the industry who can
provide raw material to the
companies. Suppliers have to
provide the raw material to the
company within the lower prices so
they can be their regular customer
and help them too keep selling
there material.
to the companies within retail
industry create pressure on the
suppliers to negotiate and provide
raw material in less price.
P6- How strength and weaknesses interrelate with the external macro factors
Macro
There are some macro environmental factors Such as political factors, technological,
economical and social the create a strength and weakness for the company. it is because they are
directly connected an impact on the company strategy and it's depend on the type of factor and
their impact both positively and negatively.
Strength
Political factors such as policies like free trade agreements become the stand for the
company because they are able to unprofitability and take competitive advantages within the
market where they are operating their business (Mutebi, H. And et.al., 2020). economical factors
such as decrease the prices of raw material create opportunity for the Sainsbury company to
Provide quality product and services to the customers in lower prices which help them to create a
good image in customers mind and they are able to gain their loyalty. technology become stand
for the Sainsbury when the company implement new technology within their workplace that
helps too increase the productivity . Social factors become the strength of the company when
company add some value for the customers and provide quality product in the lower prices.
Weakness
Political factors become the weakness of the company sometimes like increase in the Tax off
selling the goods that create threat on the company because they have to sell their product in
higher prices so there are more chances they can loss there customers and customers can shift to
the other brand who are providing them a discount. economical factorsCan become weakness of
the company anytime and it doesn’t only affect the Sainsbury but it can also affect the other
companies within the industry like recent corona Crisis affect the whole economy and the
industries within the economy. Social factors become the threat for the company when
prospective and demand of the customers change (Toppinen, A. And et.al., 2019). It puts the
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pressure on the company because they have to change their policies and identify the needs and
demands of their customers which takes time and money both.
The strength and weakness of the organisation are interrelated with the micro factors
because All the factors that have negative impact on the Internal environment of the Sainsbury.
Similarly positive impact also have good influence on the internal environment of the company.
For example- Social needs like change in preference of customers affecting the Sainsbury,
people are changing or switching the brand becausr they're getting huge discount from the other
companies which is creating a negative impact on Sainsbury. this is how social micro
environmental factor create negative impact on the company and become weakness.
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