Report: Business Strategy Analysis for Sainsbury's Retail Chain

This report provides a comprehensive analysis of Sainsbury's business strategy, examining its position in the retail market. The analysis begins with an introduction to business strategy and its importance, followed by an in-depth macro-environmental analysis using the PESTLE framework to assess political, economic, social, technological, legal, and environmental factors impacting Sainsbury's. A stakeholder analysis identifies key stakeholders like customers, employees, and shareholders, and evaluates their needs and influence. The report then delves into Sainsbury's internal environment and capabilities, employing VRIO analysis to assess its resources and competitive advantages. Furthermore, the McKinsey 7S framework is used to evaluate the alignment of strategy, structure, systems, staff, skills, style, and shared values within the organization. The report concludes with an overall assessment of Sainsbury's competitive position, incorporating insights from Porter's Five Forces model, and providing strategic recommendations. The report aims to provide a thorough understanding of the company's strategic approach and its ability to adapt to the dynamic retail landscape.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
INTRODUCTION...........................................................................................................................4
Macro-environmental analysis....................................................................................................4
Internal environment and capabilities.........................................................................................7
Competitive analysis...................................................................................................................9
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Business strategy is basically the set of actions as well as decisions which helps the
organization to achieve the specific goals as well as objectives. The main aim of this report is to
study the business environment and strategy of Sainsbury and analyzing its competitive position.
In short, business strategy is mainly the summary of how the organization will achieve its goals
and objective sand how it will improve its overall position in the market.
Sainsbury is primarily the renowned retail organization and chain of supermarket being
established in 1869 by John James Sainsbury and headquartered in London, United Kingdom.
This organization mainly deals in wide range of subsidiaries like banks, fuels, groceries, energy,
cafe etc.
This report gives a brief overview of PESTEl analysis, stakeholder analysis, SWOT
analysis, VRIO analysis, Mckinsey 7S model, porter five force model and strategic planning.
Macro-environmental analysis
Business environment is made up of both internal and external environment which
involve several factors. Both internal and external factors affect company's performance in a
critic manner. For being in the competition and becoming the market leader it is important for
company to analyse all factors (Chaouk, Pagliari and Moxon, 2020). By analysing all micro and
macro environmental factors it can make changes in its strategies and provide services to
customers accordingly. Macro environment is known as external environment which include
mainly 6 factors such as political, social, technological, economic, environment and legal. For
analysing effectively all these factors, Sainsbury's need to choose the best tool. PESTLE analysis
tool is known as the best model by which Sainsbury's can make itself beneficial and analyse
impacts of all factors.
PESTLE analysis: Detailed analysis of all macro-environmental factors of Sainsbury's is
discussed below:
Political: In the context of political factor, it can be said that Brexit is one of the main factor
which is affecting Sainsbury's to the great extent. As per the Brexit, England will remain no
longer a part of European Union which is affecting import rates as it is increasing this rate. So, it
can be said that it has affected to this company in a negative manner. On the other hand, it is
stated that UK has political stability in retail sector which can give several advantages to
company.

Economic: It is stated that Sainsbury's is mainly dependent on road-based transport in order to
ship its all products as well as services all across the UK. But after Brexit and other factors like
increasing rates in diesel it is becoming bind to increase prices of its products. It can decrease
sales of it because people do not prefer to pay high. Employees are also expecting high salary if
prices of products are increasing (Perera, R., 2017). So, it can be said that changes in economic
factors are having negative impacts as it is increasing overall cost of the company.
Social: In the context of fast food it can be said that the higher part of the revenue of the UK is
deriving from this fast food which means people of the UK invest money in it. It is beneficial for
Sainsbury's as it can increase its sales by more focusing on quality of fast food. It is also stated
that people are becoming health conscious so, they prefer healthy food. Sainsbury's is providing
healthy food to customers. So, overall it can be said that this factor and skills of Sainsbury's to
satisfy needs of customers is having positive impacts on it.
Technological: There are several retailers which are making effective use of advanced
technology. It is increasing competition. This competition may decrease its sales. On the other
hand, it is stated that development of E-commerce store of Sainsbury's are highly helpful towards
catering to the current technical friendly generation. It is also increasing customers' experience.
So, it can be said that investment in technological factors are providing opportunities but
increasing competition is somehow threat for Sainsbury's.
Legal: There are several laws and regulations introduced by the company which are having
negative impacts as it is putting pressure on companies to change way of performance and
strategies as well. For example: sugar tax, introduced by the UK government is impacting
supermarkets in own brand products. Aim of this new laws is to reduce sugar quantity which is
good but it is somehow putting pressure (Shenoy and Aithal, 2017).
Environmental: It is stated that Sainsbury's is producing high level of Carbon footprint which is
highly adversarial to the current environmental condition. As per the changes in environmental
factors, all these retailers need to make sure that they are taking active step to curb their
environmental impacts. They are also required to fulfil climate oriented needs. So, it can be said
that it is both positive and negative impacts on its performance (PESTLE Analysis of
Sainsbury's, 2017).

So, from the above analysis it can be said that some factors are in its favour and some are
having negative impacts. This analysis will definitely help it out in making changes in way of
performing and other strategies.
Stakeholder analysis
Stakeholder analysis refers a process of identifying needs and behaviours of stakeholders
or all those people who are involved with the company directly and indirectly. It is one of the
best technique and model which can allow Sainsbury's to analyse needs of customers, employees
and provide value for money to them. By making an effective use of this model, company can
increase its brand and retain customers as well as employees with the company for the long run
(Eskerod and Larsen, 2018). Stakeholder analysis of Sainsbury's are discussed below in a
detailed manner such as:
1. Determining stakeholders
First step of stakeholder analysis is to determine all stakeholders. Some stakeholders of
Sainsbury's involve
Customers: Customers are people that shops at Sainsbury's store as well as online stores.
It is one of the main stakeholder for Sainsbury's which seek value for money, effective customers'
services and variety of qualitative products. In this context, it can be said that customers have
more power of bargaining and also can switch shops. On the other hand, it is one of the most
important stakeholder for Sainsbury's which take interest in all activities of Sainsbury's as how
they perform etc.
Employees: Employees refers people who work for Sainsbury's in its premises and try to
accomplish goals by performing several functions. They are the one who serves customers and
are mainly liable for the success as well as failure of the company. It is also one of the main and
important stakeholder for Sainsbury's which take main interest. They want the company to grow
because if company grows then they can get chances of promotion and other benefits (Eskerod
and Larsen, 2018).
Shareholders: It is also known as stakeholder as they own the company. As per the
investment amount, they have decision-making power. They want company to grow and get
success. Shareholders or investors want to keep a stable level of profits from Sainsbury's.

National government: Government is also considered as stakeholder for Sainsbury's
because they set rules which Sainsbury's' need to follow. They want Sainsbury's to stop illegal
activities and improve image.
Suppliers and distributors: Suppliers are one who provides raw materials to Sainsbury's
and it is important for Sainsbury's to maintain a strong relationship with them to make itself
beneficial. They want Sainsbury's to provide qualitative products at the best price and earn profit.
Suppliers in this sector has low power of bargaining as there are several stakeholders. So,
company can switch suppliers. They also take less interest as compare to other stakeholders
(Kent and Zunker, 2017).
2. Prioritizing
In this step, company needs to prioritize stakeholders and identify that which stakeholder
are key for their success. Sainsbury's stated that customers, employees and Suppliers are main
stakeholders because with the help of employees they can provide qualitative products to
customers. Customers are also on the top of the list because they are the one for whom company
perform all functions and earn profit. Suppliers also play an important role because they supply
raw materials to the company at the best price. Without having raw materials, company cannot
make final goods and satisfy customers (D’Agostino and et.al., 2020).
Customers are one of the stakeholder of Sainsbury's who have high power as well as high
interest.
National government and suppliers have somehow high power of bargaining and changing
rules but low interest.
Employees have low power but high interest.
3. Ways to communicate
It is also important for Sainsbury's to have effective communication strategy to introduce
all policies, rules and informations of company to all stakeholders. It is stated Sainsbury's mainly
focuses on newsletter and magazine. Oral communication or face to face communication allow
Sainsbury's to introduce all informations and vision of the company to its all stakeholders.
Internal environment and capabilities
VRIO analysis
With the help of VRIO analysis model, Sainsbury's can identify strengths of its internal
resources and take competitive advantages.

Value: As per the VRIO analysis of Sainsbury's, it is identified that its food products are
valuable as customers also pay high for this resource. Skilled workforce are also valuable
resources of Sainsbury's which helps it out in accomplishing goals of the company. One of the
main reason is it provides great training to them which makes them competitive and effective
than others. Distribution network are also valuable resources (Vargas-Hernández and Garcia,
2019).
Rare: It is stated that Sainsbury's have strong financial stability and it is one of the main rare
resource. Local food of Sainsbury's are not rare as there are other retailers who are also providing
same features of products. But Employees of Sainsbury's are known as a rare and important
resources because all its employees are well-trained.
Imitable: Imitability means ability of companies to copy resources. Financial resources and
stability of Sainsbury's are rare as well as costly to imitate by others. There are several retailers
who have strong financial stability. But skilled workforce of this company are not costly to
imitate as other companies who have strong financial stability can hire its workforce or provide
more training.
Organization: Financial resources of this company is well-organized In order to capture value.
Sainsbury's makes an effective use of this strength as it invest it carefully and appropriately. This
carefully investment of this resource help it out in taking competitive advantages (Yudhistira,
2016). In addition, it is also stated that its distribution channels are also well organized which is
being used by this retailer in an efficient manner, This well-organized resource help it out to
reach global and potential customers by making sure products are available on all of its outlests.
McKinsey 7S Framework of Sainsbury
Strategy- the company in implementation the leadership business strategy as the
communications' message of adding value to money. There is extensive level of explorations o
the economies of scales along with proper level of exercise the dealing with suppliers to have
securing low purchase cost.
Structure- the company is having proper level of development for the organizational structure at
highly hierarchical along with compromising the many layers. The company is eliminated the
deputy store management to have simplification of organization structure.

System- the company having steering wheel performances which have the containing the
different level of measures. There is proper level of evaluation performances which is more level
of simplification required.
Staff- There is proper level of skill developmental in the employee along with proper level of
training and development in order to meet up the companies objectives. There is proper
providence of the attractive measures to get better reinstatement of employees.
Skills- There are more capabilities to have the different level of activities in order to have proper
level of kill management according to major contemplation
Style- There is more level of cultural organization in terms of leadership and interactions
between staff and other stakeholders. The company has proper level of delegation in terms of
authority which make firm more level of prosperity.
Shared values- there is proper summarization of the vision and missions which have the proper
level of definitions s in terms for the reason which are creativeness the existing with
implementation of soft and had hrm policies which makes the to get better reinstatement of
employees.
Competitive analysis
Porters five forces analysis
Porters five forces analysis is considered to be the strategics level of management tool
which is helpful in analyzing the different industry along with understanding and underlying to
have the level of profitability regarding the forces' industry.
Porters five forces analysis helps in the domination of five forces strategy which have the
significant level of impacts on the profitability of firm in its industry.
As the forces are
Threat of New Entrants is considered to be threats in the industry which is determined
as the barriers to entry. It is considered in order to have the higher level of difficulty in order to
enter the UK supermarket. This is making the industry more attractive for the level of exiting
companies (Lüttgens, and Diener, 2016). It took the large period for the level for competitors in
order to have the considerable stages. On the other hand, in additions of opening the level of
business as big as Tesco have the major cost of million ponds with havering no guarantee of
success. So the threat of new entrance in the retail sector is considered to be low.

Bargaining Power of Suppliers as there is small level of suppliers in this industry which have
clear level of refection the pressure which is being business organisation by having proper level
of adaption different tactics reductants the product availability along with increasing the quality
and the prices reflectionless. So there is clear reflection of the higher suppliers powered which
can have clear increase in the completion in industry as along with impaction lower level of
profitably and growth potential.
Bargaining Power of Buyers have the clear indication on the business organization in order to
have the high level of price affordability with excellent level of customer services. This is forces
in helpful in results in accomplishing the business objectiveness as the strong level of bargaining
power have the lowering in forma profitably in making more level of competitiveness. So the
bargaining bower id the Sainsbury in considered to the strong which makes the more level of
competitiveness along with decreasing profitability growth opportunities.
Threat from Substitute Products
The availability of the existing level of product and services have makes the competitive
environment more level of challenging as per the existing level player. There is viability of high
level of substitutes which can be used as the alternative products along with serves in order to =-
meet the needs and expectation for customer. Over all the threat of substitute in considered to be
low as the cost of switching form one parameter to another substitute in considerer to be high.
Rivalry among the existing players
This forces have the clear intensification regarding the existing level of competitors
which are gingivitis the tough competition to the growth level of passionately of firm. The
Sainsbury have the adaptation of aggressive strategies which is interment for targeting and
pricing strategies (Lewis, 2017). On the other hand, this forces turned out to be more level of
critical of the switching cost is low n the customers are considered to be not loyal. The company
have the Tesco, Asda, and Morrison ‘s are the other three large supermarket irons in the UK retail
sector. All of them have a different competitor advantage over their rivals. Sainsbury ‘s range in
the convenience shops makes it hold a larger client range.
Strategic plan
Vision The company wants is most trusted retailer where the people have
to love to work and shop. This is harnessing the talents, creativity
and diversity to great services .
Mission The consumer should have preferences consumer first for food

deliverable products outstanding level of quality and great services
in competitive market.
Objectives To provide high quality products to customer.
To maximize the financial return towards the stakeholders.
To have effective developments of the customer expectation .
Strategies
( Based on Suitability,
Acceptability and
Feasibility)
As off matrix is considerations as the market tools which is helpful
in future growth strategies which have the growing level of
combinations of different products which have the development of
differentials targets that are such as market penetration, market
development, product development, and diversification.
Market penetration
This is level of growth strategy which is considered as least
risky which is in increasing the market sharers along with
development of effective sales. The company have started to
increase in increase advertising pace and long with sales
promotional by offering loyalty incentives to the respective loyal
customers.
Market development
In this strategy which is having proper level of dealing in market
expansionism. This is helpful in the increasing the sale of
production s in new markets (Yudhistira, 2016). The company
wants to have proper level for expansion international market
Tesco. The Sainsbury have the increase level of development
services of banking credit cards, insurance, holidays, and other
services it is providing in United Kingdom. Although, company i
not been seen in any of the International market like Tesco.
Product development
This strategy is considered as growth strategy by introducing new
product and customer base. As per the compensation of Tesco, the
company is recently wanted to launch the Sainsbury central
formalities which will have major adhesion in shopping
experiences to the consumer belonging small towns. There is
proper level of standardization of stores to have maintenance of

trading terms.
Diversification
This strategy is considered as the high level of risky one as it deals
with launcher the new level of products into market as this will be
considered as beneficial for company to gains major level of
profitability. The company have reticently expanse in the retailing
store interstitial along with expansionism infinitesimal markets by
proving appropriate level of insurances ans the credit cards facility.
Porter’s generic strategy
The is implementation of the strategically which have the major
level of combination the of cost leadership, differentiation and
focus strategies to handle the competitive pressure (Vargas-
Hernández and Garcia.,2019). There is major level of involvement
by sued level of multinationals firms orderer have achievements if
the growth level of objective in more appropriate rate.
Cost leadership
The company is had rte development high cost leaderships as the
main strategy, the company have the development to have the set
level of sustainable competitive adventures in which have the
intensity level of competitive global market of global consumers.
The company is charging to have the price lowering by the
resequencing cost of productiveness and maiming the level of
supply chain.
Differentiation
There is more level for differentiates emboldening level of
innovation along with addresses with consumers growing growth
level f health concerns. The combination's of the differentiation
and cost leaderships which make the building the strong level of
loyal customer base. The company has the development of
differentiated logo to build string the brand image.
Focus strategy