Sainsbury's PLC: Analysis of the Business and Economic Environment

This report provides an analysis of Sainsbury's PLC within the UK retail industry, utilizing the UK Standard Industrial Classification (SIC 2007). It examines the organizational structure, business organization, and nature of the company, followed by a STEEPLE analysis to evaluate external environmental factors. The report further explores the impact of microeconomic and macroeconomic factors on the demand and supply of goods and services, including the effects of changing consumer preferences, technological advancements, and political events like Brexit. It also addresses the competitiveness of the UK market and the challenges Sainsbury's faces, such as labor and supply chain issues, intense competition, and shifting customer preferences, concluding with key insights into the factors influencing the company's performance and profitability.

Understanding the Business
and Economic Environment

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................4
Identifying industry and UK PLC................................................................................................4
Structure of the chosen industry..................................................................................................4
Business organization and nature of organization.......................................................................4
STEEPLE analysis of the organization........................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
The economic environment refers to the overall external economic factors that used to
influence the buying behaviour of the consumers and affects the performance of the company.
The current assignment is based on the Sainsbury Plc which is one of the largest supermarket in
UK. The report will outline the organizational structure of the company and business
organization and nature on the chosen firm. Further this report will outline the STEEPLE
analysis of the company. At last this report will outline the microeconomic and macroeconomic
factors that used to affect the demand and supply of the goods or services.
Identifying industry and UK PLC
The one industry identified from the UK Standard Industrial Classification (SIC 2007) is
the retail industry. This industry helps the company to have good profitability in the market. The
UK public Limited Company chosen from this industry Sainsbury which is one of the
supermarket retailer in the UK. The organization used to have 16% of share in the supermarket
sare sector of the UK.
Structure of the chosen industry
The retail industry basically has the three type of structures that is centralized operations,
store operations and regional operations. As the retail stores used to sell the variety of goods and
services, so they must follow the centralized structure. This will help them to have the proper
distribution of the duties and have the proper store planning (Venegas Vallejos, Matopoulos and
Greasley, 2022). Store operations used to include the marketing and these are need to be done on
the daily bases. The organizational retail structure is so crucial as it helps the companies to
operate successfully in the market.
Business organization and nature of organization
Business organization refers to the firm that is made in order to perform the commercial
work. This helps in evaluating the organizational structure of the company in order to produce
the goods and services to satisfy the wants of the consumers. The cited organization is the related
to the retail industry so the main of the company is to earn profit and provide good products to
the customers.
STEEPLE analysis of the organization
Social factor analysis: As the population of the UK is shifting to the health- conscious
diet so the cited organization must produce the diet related products. This will help the

organization to have more sales by having the productivity based on the wants of the customers.
This is the global trend that is present in the competitive market as the food brand is getting
affected by having change and preference of the customers in the market (Upadhyay, Kumar and
Akter, 2022). Changing in the consumer behaviour will cater to the fair trade movement. This
means that there will be risen in the prices of products in order to support farmers rather to have
profits.
Technological factor analysis: As the Sainsbury's E-commerce is very helpful in order to
provide the products online to the customers. By using the new and innovative technology helps
the company to operate in the market. These methods makes the company to increase their
productivity and sales in order to have better marketing.
Environmental factor analysis: The environment used to change on the continuous basis
and this lead to have changes in the taste and preference of customers. This includes reducing the
amount of plastic and waste products, fuel used for transportation and high cost for running the
industry (PESTLE Analysis of Sainsbury’s, 2022). As there are many changes in the environment
so the company must comply with those changes must take the necessary steps to work properly
in the environment.
Political Factor analysis: This is one of the biggest factor that used to affect the
Sainsbury profitability by having the imminent Brexit. This will affect the product pricing and
will give rise in the products and used to have effect the profitability (Ogundijo, Tas and
Onarinde, 2021). By the happening of Brexit there were some changes in the policies of
government which has affected the productivity and sales of the company. This helps the
company to stay in the current socio-cultural climate by having some changes in the products
sold by them.
Legal Factor analysis: The cited organization must be sure that they have the systematic
structure which does not affect them to operate in the competitive market. As there is continuous
changes in the needs and wants of the customers so the company must comply with them. As by
the happening of Brexit there has been the major effect brand.
Ethical Factor analysis: The ethical factors includes the set of moral rules and
regulations that is used to govern the actions and helps the company to make the decisions. The
cited organization as operating in he markets of UK, so they must have the proper rules and
regulations. By having the proper policies it will have the smooth flow in the market.

Economical Factor analysis: As the cited organization is highly dependent on the road-
based transportation. As there is rise in the prices of petrol and diesel from the last some years
which bound them to have the product rising. The rise of the new or existing supermarket in the
UK is the strong economic actor that the company has to deal with.
Microeconomic factors affect demand of goods
The microeconomic factors are those factors that used to affect the demand of the
products of the organization (Nash, 2018). The customers wants to but more product at the low
rate which used to affect the demand of the products. The cited organization Sainsbury's used to
face problems as these factors used to affect the demands of the products in the competitive
market. In the below diagram it is shown that as the prices of the products is increasing the
demand from the customer side used to decrease.
Determinants of supply and its affects
The determinants of the supply includes the price of the commodity, prices of other
goods, technological changes, changes in laws and regulations, etc. The factors such as change in
technology and government policies may affect the supply of the products of the company.
Sainsbury's has its operation in the UK markets so these are the crucial determinants that used to
affect the supply of products (Hart and et.al., 2020). As people are now more preferring the
health and diet conscious food so the company must produce these as this will affect the supply
of the products in the market.
Competitiveness of UK market and impact on business
There is high competition in the UK market which used to have great impact on the
companies operating there. The competitiveness in the market is determined by focusing on the
competitiveness of operating in the external environment in which the organization used to
operate. As there are different types of firm in the UK market which used to have impact on the
profitability of the cited organization (Rohwer and Topić, 2019). In the retail industry there are
different types of firm operating that used to have effect the companies operating there. As the
cited organization has many competitors in the market of UK so this will have the great impact
on the profitability and productivity of the company.
Examples of random shock helps in evaluating UK fiscal policy
The random shock is termed as the uncertain change in factors of production that used to
affect the supply and demand of the products. By having change in the prices of the products

used t have great effect the fiscal policies of UK this is the main problem that may affect the
fiscal policies of the UK (Asche and et.al.,2021). The increase in the tax prices will affect the
economy of the UK and will also have great impact on the cited organization. For example, By
rise in the prices of tax will use to affect the productivity and profitability of the Sainsbury.
Discussing business problems and challenges
There are some challenges and problems that is faced by the Sainsbury's by the external
environment on themselves as well as on the customers is as described below:
1. The company used to face the labour and supply chain problems which used to
have negative impact on the organization.
2. As the company used to have many competitors in the market which used to
affect the business decisions in the market (Bentham, 2018).
3. As the customers in the market used to switch on the products which affect the
productivity of the company which they have produced.
CONCLUSION
From the above report it is concluded about the retail industry that is classified under UK
SIC 2007. Further this report has evaluated about the organizational structure of the company
and business organization and nature on the chosen firm that is Sainsbury. Further this report has
described about STEEPLE analysis in order to analyse the external environment of the company.
At last this report has evaluated the microeconomic and macroeconomic factors that used to
affect the demand and supply of the goods or services.

REFERENCES
Books and Journals
Asche, F. and et.al.,2021. Brands, Labels, and Product Longevity: The Case of Salmon in UK
Grocery Retailing. Journal of International Food & Agribusiness Marketing. 33(1).
pp.53-68.
Bentham, J., 2018. Business and Economics in the News–Sainsbury's and Asda-the decade's
mega-merger. Teaching Business & Economics. 22(3). pp.11-12.
Hart, M. and et.al., 2020. A roadmap investment strategy to reduce carbon intensive refrigerants
in the food retail industry. Journal of Cleaner Production. 275. p.123039.
Nash, J., 2018. Exploring how social media platforms influence fashion consumer decisions in
the UK retail sector. Journal of Fashion Marketing and Management: An International
Journal.
Ogundijo, D. A., Tas, A. A. and Onarinde, B. A., 2021. An assessment of nutrition information
on front of pack labels and healthiness of foods in the United Kingdom retail
market. BMC Public Health. 21(1). pp.1-10.
Rohwer, L. and Topić, M., 2019. The communication of Corporate–NGO Partnerships: analysis
of Sainsbury’s collaboration with Comic Relief. Journal of Brand Management. 26(1).
pp.35-48.
Upadhyay, A., Kumar, A. and Akter, S., 2022. An analysis of UK retailers’ initiatives towards
circular economy transition and policy-driven directions. Clean Technologies and
Environmental Policy. 24(4). pp.1209-1217.
Venegas Vallejos, M., Matopoulos, A. and Greasley, A., 2022. Collaboration in multi-tier supply
chains for reducing empty running: a case study in the UK retail sector. International
Journal of Logistics Research and Applications. 25(3). pp.296-308.
Online
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