Business and Business Environment: Sainsbury's Case Study Report

This report provides a comprehensive analysis of the business environment, covering various aspects such as different types of companies (profit, non-profit, public, and private), their scope, and size (micro, small, medium, and large enterprises). The report uses Sainsbury's as a case study to illustrate these concepts, examining its structure, purpose, and market position. It further explores the relationship between different organizational functions (finance, production, human resources, and marketing) and how they contribute to achieving organizational objectives. The report also includes a PESTLE analysis to assess the impact of the macro-environment on the UK sector, a SWOT analysis to identify internal strengths and weaknesses, and an application of Porter's Five Forces to understand the competitive dynamics within the supermarket industry. This analysis provides insights into how businesses navigate and respond to various internal and external factors to achieve their goals.

BUSINESS AND
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1 ................................................................................................................................................1
P1 The explanation of different types of companies...................................................................1
P2 The different scope and size of the business..........................................................................2
LO 2.................................................................................................................................................3
P3 The relationship between different organisation functions and their link in achieving
organisation objectives................................................................................................................3
LO 3.................................................................................................................................................4
P4 Identifying the positive and negative impact on the macro environments with specific
examples......................................................................................................................................4
LO 4.................................................................................................................................................6
P5 Identifying the internal strength and weakness in context of supermarket............................6
P6 Explaining how these strengths and weakness interrelate with external factors...................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................1

INTRODUCTION
Business environment includes all the internal and external forces which impacts the
operations of the business. The external forces are the forces which cannot be controlled by the
any organisation. Organisation operates in a dynamic environment where things changes at rapid
speed so the study of external environment is important for the business(Beaumont, Whitaker
and PEDERSEN 2013). This report is covered in two sections and first sections includes
assessment of different types of organisation such as profit, non- profit and public and their
scope and purposes and the difference in micro, small and medium. The Sainsbury's is used as a
major company in this report as it is a retailing company and has their own super markets and
has high scope in this area. The different type of organisation structure which relates to size and
scope of company and how the functions of organisation relate to the achievement of objective.
The other section is case study which involves the Pestle analysis the impact of macro
environment in U.K. Sector and apply the swot to identify the internal strengths and weakness
and Porter's five forces analysis on the supermarket to understand the impact of decision of the
supermarket.
LO 1
P1 The explanation of different types of companies.
There are different type of organisation that exists in the market who works for the
different purposes that is dependent upon the nature of the company. The organisation is a group
of people who are working together to achieve a objective. The type of objectives defines the
nature of the company. The defining of various type of companies can be categorised as
public,private and voluntary organisation.
Private organisation refers to the type of business owned and managed by an individual
or group of individual who control and operate the business with a motive of earning profit. The
firm can be operated by a single person in this, the profit and liabilities are owned and managed
by the single person which is known as sole trader. The organisation which is controlled and
handle by two or more individual is known as partnership and the profits are distributed against
the amount of capital invested by them. Here, the private organisation which is used as example
is Sainsbury's. This company sells groceries and considered as the second largest chain of
supermarket in U.K. The company produce clothing for home wares, electrical etc. The

purpose(Celik and Kandakoglu 2012). of the company to earn more profit by selling more goods
in their supermarkets. The legal structure of private organisation depends upon the act in which
firm is registered. If the organisation is registered in company act 2013 which made them to
follow all the rules that are applicable to the company.
Non profit organisation refers to the firm that is owned and operated by the
government and these type of organisation do not work for profit instead they provide services to
public without taking any charge from it. The National Health Services is a organisation formed
by the government which provide health care services to the citizens of the country where it is
situated. The purpose of NHS is to remove inequalities from the country regarding the health
services received by the citizens. The purpose of the non profit organisation is to provide welfare
services to the citizens of country and the legal formalities are required to comply such as law
made for the health and safety measures in the company.
Non government organisation are the type of organisation which is formed by a group
of people with a motive to do something good for society. The firm chosen for this type of
voluntary organisation is National trust which is involved in protecting the cultural heritage of
the region. The purpose this trust to secure the natural beauty and the protection of historical
items. The purpose of the NGO is to fulfil the objective which is specified by them and it can
not be profit and they have to take legally approval from the government and follow all the rules
made for NGO.
P2 The different scope and size of the business.
There are various type of organisations such as public, private and voluntary which have
different sizes and scope of the company. The organisation has different purposes and their
purposes totally depend upon the natur of the business as there are various types of enterprise
operate in the market place. The types of enterprises are micro, small , medium and large
enterprises.
Micro enterprises is a type of enterprise which is operated at very small level and in
this type of business the limit of employees do not exceeds than 9 and the government of U.K
has defined micro enterprises is a enterprise where fewer employees are there and annual
turnover do not exceeds then 2 million . The Mantons cards which is providing best services in
greeting cards and gift is a micro enterprise has a stable profit share in the market.

Small scale enterprises are the enterprises which can be owned by proprietor or partner
which have few employees as these enterprises can only hire 150employees and annual turnover
do not exceeds than 7.5 Million. There are various act such as Fair work Act 2009 has
implemented to check the operations of small business. The Cafe pod coffee co. which is a
coffee producer and the purpose it to become number one brand is an example of small
enterprise. The market share of the company in relation with its product that is coffee is high as it
produces high quality of goods.
Medium sized business is defined as the business who has strength of 250 employees
and these businesses are normally well established and has attractive record of its turnover and
they operate in a market where growth is high or might be working to gain a position in a high
growth potential market. The growth of these type of business is totally dependent upon the
finance availability which are generally articulated. The Granite properties is a company which
involves 143 working employees and the annual turnover is up to 15.3 million is an example of
this enterprise. The market share of the company is more than its competitor and the company is
developing their image in the market.
Large size enterprises is refer as the business which is controlled at large scale and
involves huge transactions and these are commonly known as multinational companies who
operates their business at higher level. The financial investment in this type of company is huge
and they raise fund through issuing shares in different region. The purpose of these companies is
to attain higher growth by earning higher amount of profit. The Walmart is a retail and
multinational company whose revenue is 500,343 millions and has 2,300,000 employees who
are working for the company is an example of large sized companies. The profit share of this
firm is high and they are planning to expand their business over the world and the company is
stable in the market and has great scope for growth. The organisation has different purposes and
their purposes totally depend upon the nature of the business as there are various types of
enterprise operate in the market place. The types of enterprises are micro, small , medium and
large enterprises.
Micro enterprises is a type of enterprise which is operated at very small level and in
this type of business the limit of employees do not exceeds than 9 and the government of U.K
has defined micro enterprises is a enterprise where fewer employees are there and annual

turnover do not exceeds then 2 million . The Mantons cards which is providing best services in
greeting cards and gift is a micro enterprise has a stable profit share in the market.
Small scale enterprises are the enterprises which can be owned by proprietor or partner
which have few employees as these enterprises can only hire 150employees and annual turnover
do not exceeds than 7.5 Million. There are various act such as Fair work Act 2009 has
implemented to check the operations of small business. The Cafe pod coffee co. which is a
coffee producer and the purpose it to become number one brand is an example of small
enterprise. The market share of the company in relation with its product that is coffee is high as it
produces high quality of goods.
Medium sized business is defined as the business who has strength of 250 employees
and these businesses are normally well established and has attractive record of its turnover and
they operate in a market where growth is high or might be working to gain a position in a high
growth potential market. The growth of these type of business is totally dependent upon the
finance availability which are generally articulated. The Granite properties is a company which
involves 143 working employees and the annual turnover is up to 15.3 million is an example of
this enterprise. The market share of the company is more than its competitor and the company is
developing their image in the market.
Large size enterprises is refer as the business which is controlled at large scale and
involves huge transactions and these are commonly known as multinational companies who
operates their business at higher level. The financial investment in this type of company is huge
and they raise fund through issuing shares in different region. The purpose of these companies is
to attain higher growth by earning higher amount of profit. The Walmart is a retail and
multinational company whose revenue is 500,343 millions and has 2,300,000 employees who
are working for the company is an example of large sized companies. The profit share of this
firm is high and they are planning to expand their business over the world and the company is
stable in the market(Cepel and et. al., 2018).
LO 2
P3 The relationship between different organisation functions and their link in achieving
organisation objectives.
The objective of any organisation can only be achieved when the performance of
department will be according to the standard and departmental goals are achieved. The

departmental goals can only be achieved when their performance is productive which is only
possible when different departments of the company coordinates with each other. Sainsbury's
channelise the efforts of company in coordinating their departments so that they can gain benefits
related to it. The explanation of necessity to inter relation of department are described.
Financing and production- The inter-relation of these functions are necessary for the
achieving their target and it is possible through effective communication. The work of finance
function in the company is to estimate the fund requirement in the company and according to that
estimation the funds are raised through various sources that can be internal and external. The
finance function is to prepare financial budget for each activities of the company. The production
function is related to producing goods and services of the company. Sainsbury's finance and
production function interlinked with each other so that production can be done on the basis of
budget prepared by finance function so that the fund can be utilised properly(Defliese, Hren and
Lohmann 2015).
Human resource and Marketing- The inter-relation of these two departments are
necessary for the achievement of departmental and organisational goal. The work of marketing is
to promote the product in the market to increase the revenue of the company. This require human
that possess required skills and knowledge to perform the activities of marketing function. It is
the duty of the human resource of Sainsbury's to find and select the candidates according to the
requirement of marketing functions so that the marketing can be performed effectively which
will result in the achievement of department objective as well as organisation objective.
Sales with R&D- The inter-relation between these two functions is necessary for the
achievement of company's objective. The sales function is related to increasing the sales for the
company so that revenue of the company increases which allows company to grow and expand
them. It is the duty of the research function to find out the needs of the target market and provide
these information to sales so that they can use this information as an effective tool to increase the
sale by attracting target customer through providing what attracts them.
These all above inter-relation of the departments are beneficial for the growth of the
company as it increases productivity, efficiency of the departments and this inter-relation is
possible when there is an effective communication is prevailing in the Sainsbury's and if any
problem occurs than necessary steps are required to take.

LO 3
P4 Identifying the positive and negative impact on the macro environments with specific
examples.
The macro environment refers to the external environment of the company which
includes external factors in which company has no control. The study of these factors is
important for the company to protect the effectiveness of operations of the company from the
external factors. The study of macro-environment can be done through using Pestle analysis.
Pestle analysis is applied on U.K retail sector so that the external conditions can be identified.
 Political- The political factors such as political parties and rules or regulations made by
them in relation with retail sector will affect the operations of the company. There are
several political changes occurs time to time which creates a risky political environment
for retail sector in U.K as policies made by the government of U.K. This factor has
following impact on the retail sector.
Positive impact- The intervention of political parties and government provides protection to the
rights of the company which lead to increase in the profitability of retail sector(.Donahue and
Zeckhause 2012).
Negative impact- The continuous changes in policies lead to instability in the company which
demotivate the working of retail sector.
 Economical- This factors include inflation rate, foreign exchange rate, national income
etc. These factors affect the major demand and supply of the retail sector. These factors
can be used by retail sector to determine the growth rate and the spending ability of target
customers. This factors has following impacts-
Positive impact- The increase in growth rate of the country allow retail sector to increase the
supply as the spending ability of customer increases.
Negative impact- The changes in the policies which are formed to control the inflation in the
country or increasing the interest rate impacts the retail sector operations.
 Social- This includes the standard of living of the people where target customer belong
and identification of social culture has following impact.
Positive Impact- These factors affects the decision-making of the retail sector as it provides
information about target customers

Negative Impact- The people who has low standard of living will hesitate in buying things from
the U.K retail sector.
 Technological- This includes factor related to the advancement of technology which
affects the operation of the retail sector.
Positive impact- The changes in technology allow them to improve their working in the sector
which increase their efficiency.
Negative Impact- The frequent changes in technology becomes costly for the retailing sector to
adopt and apply.
 Legal- This factor involves rules and regulations formed by the government of U.K
which impacts the working of retail sector and it has following impacts(.Li and et. al.,
2013).
Positive impact- The laws which are formulated to provide benefits to the operating retail sector
provides a positive impact such as low tax rate.
Negative impact- The laws that are hazardous for the effective working of the retail sector such
as increased tax rate and it is important to follow all the rules.
 Environmental- There are different markets where different environmental factors are
applied such as weather, climate change etc. These factors has impact on the working of
retail sector.
Positive impact- A favourable weather leads to increased revenue.
Negative Impact- Unfavourable weather leads to decrease in the revenue of retail sector.
LO 4
P5 Identifying the internal strength and weakness in context of supermarket.
The identification of internal strengths and weakness is useful for effective operations of
the company. This can be studied through using SWOT analysis and this analysis is applied to
Sainsbury's which is described below.
Strengths of Sainsbury's -
 This chain of supermarket that is Sainsbury's is considered as a top 4 supermarket brand
that gives this brand strength of good brand position in the market as it deals with number
of products of different category.

 The Sainsbury's use low cost strategy in providing each type of product which attract the
attention of customer and helps them in retaining them for long term which provides an
opportunity to the company to expand their market(Pearson 2017).
 The promotional strategies adopted by the Sainsbury's are highly creative and innovative
which attracts the attention of the customer and make brand more stronger in against of
their competitors.
Weaknesses of Sainsbury's-
 The brand has always a risk which is brand switching of their customers which made the
company to do various promotional activities which includes huge cost and investment.
 The competition is increasing in the retail sector due to increase in the addition of online
retailers which has resulted in lost volumes so the company has to cut down the cost of
their product to survive in the market.
Opportunities of Sainsbury's-
 In this era, the rural areas people are also using the branded products as there are every
type of product which are used in daily activities and now in villages as well. This has
emerged as an opportunities for the Sainsbury's.
 The Sainsbury's can expand their markets in the rural areas as well to increase the
revenue and expansion which will result in higher growth of brand.
Threats of Sainsbury's-
 The main threat for the company is online retailers who are increasing day by day which
result in the loss of profit for the company as company has to charge lower price to retain
their customer for longer term.
Porter's Five force model- This model define the competitive force in the environment which
affect company are as-
 Threats of new enterant- There is a high threat for the Sainsbury's as it is very easy to
enter in the supermarket as it require less amount of capital and customers are not so
loyal towards brand(Düking, Holmberg and Sperlich 2018).
 Bargain power of suppliers-The bargaining power of suppliers depends upon the
availability of supplier and in case of Sainsbury's there are many suppliers so that there is
less chances of this.

 Threat of substitutes- The threats of substitutes is higher in case of Sainsbury's as there
is high competition in the market so it requires for Sainsbury's to make strategies to
remove this threat.
 Rivalry among Existing competitors- The existing competitors becomes a bigger
threats when there is a restriction for new entries and Sainsbury's is facing higher amount
of competition in the market and more strategies are formed to get a competitive edge in
the market.
 Bargaining power of buyers- The bargaining power of buyer increases when there are
high amount of retailer and few supplier then price is impacted by the buyers choice and
Sainsbury's has high no of competition so the needs of customer are considered.
Influence of SWOT and Porters five forces on decision-making-
This analysis of internal strengths and weakness allow Sainsbury's to take necessary steps
for their growth and survival. Strengths allow company to take decision regarding future
strategies related to increasing the value of current strengths and company can take decision to
overcome those weakness which is not allowing to expand and opportunities can be grab by the
company for their longer term survival and decision can be taken to protect the company from
upcoming threat.
P6 Explaining how these strengths and weakness interrelate with external factors.
The inter-relation between strengths and weakness with macro environment factors is
necessary to study to determine their effect on Sainsbury's. The company uses detail analysis of
all the external factors which are as follows-
 Political- The political factors such as stability of government provide strength to the
company as it provides information to the company which allow Sainsbury's to take
necessary step and the regular changes negatively affect the operations through reducing
their profit by changing in any policy related to it.
 Social- The Sainsbury's is providing additional beneficiary services to their customer as
providing discounts on huge amount of buying and many which becomes a competitive
advantage for the company(Romero-Gutierrez, Jimenez-Lis and Martinez-Chico 2016).
 Economical- The Sainsbury's is facing huge competition from the online retailer in
economic environment and this is affecting their revenue and profit area and the analysis
of these factor is a strength as company can take correct decisions in respect of it.

 Technological- The Sainsbury's is using updated technology in their retailing sector and
the information about changes in technological sector allows company to update their
which becomes a competitive advantage for the company.
CONCLUSION
From the above report, it can be concluded that the internal and external factors affects
the performance of the company and there are various type of organisation are present such as
private, public etc which have different legal structure and the size and scope of small, micro,
medium and large is studied. The inter-relation of various functions are beneficial in achieving
organisation objective. The positive and negative impact of external factors are studied through
proper analysis and internal strength and weakness is identified through SWOT and Porter's five
force model and the interrelation of macro factors with the strengths.