Analysis of Sainsbury's Business Environment: Tasks 1-4 Report

This report provides a comprehensive analysis of Sainsbury's business environment. It begins with an introduction to the company, its vision, mission, and objectives. Task 1 focuses on Sainsbury's purpose, the objectives of different organizational types, stakeholder satisfaction, and its responsibilities. Task 2 explores economic systems, and the impact of monetary, fiscal, and competition policies on Sainsbury. Task 3 examines marketing structures, organizational forces, and the business and cultural environment. Finally, Task 4 assesses the significance of international trade, global factors, and the European Union's impact on the company. The report concludes with a summary of key findings and insights into Sainsbury's operations within its dynamic business environment.

Business Environment
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1Purpose of Sainsbury..............................................................................................................3
1.2 Purpose of various types of organization...............................................................................4
1.3 The extent to which the organization meets the objectives of its stakeholders....................6
1.4 Various responsibilities of Sainsbury and strategies to attain them......................................7
TASK 2............................................................................................................................................7
2.1 Types of economic systems...................................................................................................7
2.2 Impact of monetary and fiscal policies on Sainsbury............................................................8
2.3 Impact of competition policy on Sainsbury...........................................................................9
TASK 3..........................................................................................................................................10
3.1 Impact of marketing structures on pricing decisions of Sainsbury......................................10
3.2 Impact of organizational forces on the functioning of Sainsbury........................................10
3.3 Impact of business and cultural environment on Sainsbury................................................11
TASK 4..........................................................................................................................................12
4.1 Significance of international trade to Sainsbury..................................................................12
4.2 Impact of global factors on the business of Sainsbury........................................................12
4.3 Impact of European Union on the functioning of Sainsbury...............................................14
CONCLUSION .............................................................................................................................14
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INTRODUCTION
Business environment refers to combination of internal and external elements that impact
a business. The internal elements means factors available within the organization like,
management, employees, technology etc present within the company. Thereafter, external
elements refers to factors that indirectly impact the working of company like, suppliers,
customers, government etc. in order to ensure smooth functioning of organization its is important
for company to consider these factors while functioning. This further help organization in
exploiting business opportunities to maximum extent. Furthermore, by considering business
environment company can keep conforming with new changes.
In the present report, learning will be focused on the role of business environment in the
functioning of Sainsbury. The company is leading retail chain operating more than 1106
supermarkets and convenience stores (About us, 2015). In this report, vision, mission of
company will be highlighted. Addition to this aspect, the impact of competition policy, fiscal and
monetary policies on the working of Sainsbury in UK market will be detailed out.
TASK 1
1.1Purpose of Sainsbury
The core purpose of Sainsbury is to become leading retailer of UK and expand its
business in global market. Further, vision , mission and objective of company are explained as
follows:
 Vision: The vision of company is to be a trusted retail company where employees like to
work and customers enjoys great shopping experience. The vision of company is to
expand its business in global economy.
 Mission: The mission statement of company states that Sainsbury wants to provide high
quality of food and health services to its customers. For this aspect, company is also
reducing the salt content in cooked meat (About us, 2015).. The company mission is to
give respect to environment by reducing the amount of waste to landfills.
 Objective: The objective of company is to understand the needs of customers, offer
unique and ethical products at fair prices
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1.2 Purpose of various types of organization
There are many organizations working at present and performing there functions with
different cause and objectives. Out of them some are explained as follows:
 Sainsbury Plc: It is a public ltd company which is owned and managed by government
of UK for the people. The main objective of this organization is to make optimum use of
resources for the benefit of public and society. In addition to this aspect, it aims to
provide valuable services to public (About us, 2015).. Therefore, it also generate large
number of employment and help people in improving their standard of living. The
company is listed in London stock exchange. The vision of company is to reduce the
landfill waste to zero %.
 Virgin Group Ltd: It is a type of private company which is owned and operated by
private individuals (Maguire, 2003). The main purpose of working of these enterprises is
to increase their profit, ensure growth and success. Further, objective of private
companies is to increase their market share and maximize the wealth of their
shareholders. The vision of company is to expand its market share and provide its
valuable services in every possible location.
 NHS: It is a public company funded by government to provide free point services to the
citizens of UK (Greenwood, 2010). The company is functioned with the help of tax
collected from the citizens. The main purpose of this organization is to provide health and
care services to the public. The vision statement of NHS reflects the aim of company to
ensure high quality health of individuals and ensure long lives of them. Further,
organization aims at making a constant improvement in health and care services offered
by it.
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 Corner shop: It is a type of sole proprietorship which is owned and operated by single
individual who is liable for all debts and keeps all profits. The main objective of owner
of shop is to increase its profit and expand its business.
 MC Donald's : It is type of franchisee providing fast food products and beverages in
more than 119 countries. The most of the restaurants of Mc Donald's are owned and
operated by independent individuals (Ahmed, 2012). The vision of company is to become
top most burger by doing innovation and provide valuable experience to its customers.
1.3 The extent to which the organization meets the objectives of its stakeholders
Stakeholder are those individuals that have interest in the functioning of company can be
affected by its operations. In order to be successful it is crucial for Sainsbury to maximize the
satisfaction level of its stakeholders. The various stakeholders are explained as follows:
 Customers: The main consideration of customers is to get ethical products at fair prices.
Further, the main concern of customers is to get customer care service, superior quality
product etc (Olarewaju and Folarin, 2012). Therefore, to meet the needs of customer’s,
Sainsbury conducts market survey to identify the needs and preference of customers.
Further, it provide good quality products and great customer experience to customers.
 Government: The government can cause serious impact on the functioning of business
enterprise. It generate various rules, regulations and guidelines which are important for
company to follow to operate smoothly. Sainsbury pays tax, duties on time to avoid
government actions. Further, it follow the policies like, equality, competition etc to meet
the purpose of government.
 Employees: The human resources available within the organization, help in attaining the
overall objectives of company (Gasparotti, 2009). Therefore, to retain the competent and
loyal employees, Sainsbury give them proper salary, bonus, safe working environment,
job security etc.
 Suppliers: The services and products provided by suppliers are key input for the
producing the outputs for Sainsbury (Arnold, 2004). The suppliers may shift to
competitors and cause adverse impact on the functioning of company. Therefore,
Sainsbury give them timely payment, develop good relationship to meet the needs of
suppliers.
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1.4 Various responsibilities of Sainsbury and strategies to attain them
The are many responsibilities of company towards different individual, groups and
bodies. They are explained as follows;
 Maximize the stakeholders interest: It is the major responsibility of company to
maximize the interest of stakeholders. Further, it should identify the needs of
stakeholders and fulfill them in best manner (Gasparotti, 2009). Therefore, Sainsbury
ensure good relationship and sound communication with its stakeholders. For this aspect,
surveys are conducted for getting customer feedback. Permission of government
authorities is taken in major business decisions. Further, meetings are held with suppliers
and customers to identify their opinions on business matters.
 Contribution towards environment: It is the responsibility of company to fulfill its
duties and responsibilities towards environment (Lynch, 2005). Therefore, Sainsbury do
proper waste management and avert using non recyclable packaging materials etc.
Further, company objective is to reduce the carbon footprints to more than 50% in future
to reduce global warming.
 Fulfillment of legal responsibilities: It is key responsibility of Sainsbury to strictly
adhere the legal regulations laid down by UK government. Therefore, company consider
various legislation like, employee, anti-discriminatory etc (Olarewaju and Folarin, 2012).
Therefore, organization give proper working environment to its workforce, discourage
their exploitation. Also, while appointing the staff company give equal opportunity to
both men, women, disabled etc. No discrimination is done on the basis of caste, creed,
color or religion etc.
TASK 2
2.1 Types of economic systems
In order to make effective use of resources, it is important for company to allocate
resources for best function at right time. The optimum use of resources help in increasing the
efficiency of organization. The various types of economic system are explained as follows.
 Command economic system: In this system, the resources are allocated by centralized
authorities. Therefore, the decision-making power and control of command economy is
in the hands of government. For instance, government have authority to raise tax and use
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the collected amount for investing in infrastructures etc. The main advantage of
command economic system is to make optimum use of resources. The economy of Cuba
is a type of command economy (Economic System, 2013).
 Free market economy: In this type of economic system the market forces determine the
allocation of resources. Therefore, the production decision is based on the demand and
supply conditions prevalent in market. The decision about what to produce is taken after
determining the customer’s needs (Dragoi, Rosu and Draghici, 2013). For example, the
economy of USA and China are working under free market economy to a large extent.
 Mixed economy: It is the combination of command and free market economy where
resources are owned by both private individuals and government. The advantage of
mixed economy is that it makes a balance between public and private sectors and ensure
flexibility in operations (Arnold, 2004). For instance, Sainsbury Plc is working under
mixed economy as UK have mixed economy.
 Transitional economic system: It is economic system that is developing into market
economy from centrally planned one. The major reason for such reason behind this
change is due to liberalization, privatization and restructuring. For instance, the economy
of China and Russia are presently changing into transitional economy.
2.2 Impact of monetary and fiscal policies on Sainsbury
Monetary policies refers to process through which the monetary authority of UK controls
the money supply through charging rate of interest. The main objective of monetary policies is to
control the rate of interest and ensure stability and growth of economy. In addition to this aspect,
the objective of monetary policies is to ensure stable prices and minimize the problem of
unemployment in UK (Krkoska and Robeck, 2007). Thereafter, Bank of England is responsible
for framing and implementing monetary policies. Therefore, it decides the rate of interest at
which bank can borrow money. For instance, if Bank of England reduces the rate of interest than
bank can acquire more funds at low cost. Further, they can lend money to individuals and
business enterprises. Therefore, in that case Sainsbury can get more loans at low interest rates
and invest funds in growth and development projects.
Fiscal policy regards to the change in government taxation to modify its spending
programs in order to develop more roads, infrastructure etc. This further affect the aggregate
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demand of the UK economy. Thereafter, with the help of fiscal policies, government controls the
inflationary situations. However, with this aspect, Sainsbury may have positive or negative
impact on its operations. For instance, government increases its tax rate and uses the amount in
developing new roads etc. Therefore, the company will be forced to pay more taxes and the
profitability of Sainsbury will be reduced due to more taxation. Thereafter, company have to
increase the prices of its product which will cause negative impact on customers as tax burden
will be shifted upon them (Dragoi, Rosu and Draghici, 2013). Further, the establishment is
required to cut down its unnecessary expenses like, heavy promotion etc also increase its
bargaining with suppliers. With this aspect, organization can reduce its overall operational cost.
However, fiscal policy will have positive impact like development of new infrastructure like
road, railways etc that can used by company in its logistic management.
2.3 Impact of competition policy on Sainsbury
The competition policy ensures healthy and fair competition among organization of same
industry. It further restricts Sainsbury from doing misuse of powers available to it. Further, the
advantage of competition policy is to promote healthy competition and ensure smooth
functioning of market. The competition policy also help in inducing technological developments
and innovations among businesses in order to sustain competition. The main objective of
competition policy is remove unfair trade practices like, confining competition by fixing prices
etc (Arnold, 2004). Therefore, to facilitate competition, the government of UK deregulated the
retail industry. Hence, it resulted into entry of new retail company like Premier product company
etc. The major impact of competition policy is that Sainsbury is facing tough competition from
new as well as existing enterprises. Thereafter, to sustain competition, company is forced to
reduce its prices in order to attract more and more customer. In addition to this aspect,
organization is required to spend more amount on research and development activities which has
further increased the operating cost for organization (Kourteli, 2005). Further, due to competition
policy, company is forced to do heavy advertising and promotion that will help company in
sustaining competition. Overall, it can be said that competition policy is causing serious impact
on the performance of Sainsbury.
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TASK 3
3.1 Impact of marketing structures on pricing decisions of Sainsbury
There are various kinds of market structures that are present today. They are explained as
follows:
 Monopoly market: It is type of market structure where there is single manufacturer of
product and services while, there are large number of consumer's. This enable the
manufacturer to do price discrimination and charge heavy prices from customers.
Therefore, it is not beneficial for the customers.
 Perfect competition market: In this type of market, there are, large number of buyers
and sellers. The product offered in this type of market is homogeneous therefore, there is
tough competition among businesses (Sawyer, 2004). Any change in the prices have
direct impact on the demand therefore, the prices are kept in align with the rivals price.
For instance, Sainsbury is working in perfect competition market where it is facing direct
competition from its rivals like, ASDA, Tesco, Morrison etc. therefore, company have to
keep its prices after considering the prices of its rivals.
 Monopolistic market: In monopolistic market, it have both elements of monopoly and
perfect competition. In this type of market, there are large number of competitors and
monopolistic company offering differentiated products. Therefore, there no such price
competition between rival companies (Wetherly and Otter, 2014).
 Oligopoly market: In this type of market situation, there are few business organizations
dominating the entire industry. Further, they oligopoly firms also offer differentiated
products and prices are charged on the basis of features and quality of products offered to
customers.
3.2 Impact of organizational forces on the functioning of Sainsbury
Organizational forces refers to the interaction between demand and supply forces
prevailing in market. The production decision of company is also depend to large extent on the
market forces. Thereafter, these forces have direct impact on the profitability and success of
organization. Therefore, it is important for company to consider these forces while taking any
business decision (Potter, 2008). In this aspect, Sainsbury do intense market research through
help of surveys etc to ascertain the demand of its product in market. This help company in
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ensuring appropriate supply of its products and services to meet the demand of its customers in
best manner. Further, by meeting the needs of customers, company can ensure satisfaction
among them. Further, the surveys also help in identifying the needs and preferences of customers
therefore, products which are most liked are produced by company. Therefore, market forces
help Sainsbury in ensuring proper availability of demanded products in the stores of company.
Further, the prediction of demand also help company in offering products as per the quantities
requested by consumers. This reduce the problems of over stocking, lack of availability of
products etc. Therefore, overall it help in increasing the satisfaction level among customers,
matching the demand and supply etc. further, Sainsbury can increase its proficiency and
reputation in market (Ahmed, 2012). Hence, it is very important for company to consider
demand and supply forces while taking production decisions. However, being working in
perfect competition market company cannot take advantage of high demand of its product.
Therefore, company can increase its prices with the increase in its prices because if company will
do this its buyer will shift to rival companies which is not beneficial for Sainsbury.
3.3 Impact of business and cultural environment on Sainsbury
There are various business and cultural factors that impact the functioning of Sainsbury.
Therefore, to ensure constant growth and development in its operations, it is important for
company to consider these factors while operating. Culture plays strong role in determining the
behaviour of customers as well as its employees (Kourteli, 2005). For instance, if company have
strong and positive culture than employees will be motivated. Further, they will help
organization in attaining its overall objectives of growth and profitability. Thereafter, company
will also be able to retain its competent and qualified personnels within the organization.
Likewise, if there is negative work environment, the employees will be demotivated, they will
work less than their potential. Further, due to negative work environment, the employee turnover
will be more which will subsequently impact the overall performance and reputation of
Sainsbury in market. Furthermore, the customers are also attracted with the culture of company.
For instance, if customer enter into stores of Sainsbury there is light music and employees greet
them with smiling face and ensure warm welcome than it will have positive impact on the
customer (Adler, 2007). Therefore, the cultural values of company play strong role in the
functioning of an enterprise.
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TASK 4
4.1 Significance of international trade to Sainsbury
With the help of international trade, company can offer its products and services to
customers present in different corners of the globe. Thereafter, company can target wide range of
customers and expanding its business in global economy. Further, it will also help in economic
development of nation by making optimum use of its resources. The main advantage of
international trade is that, it help company in increasing its market share by targeting more
customers of foreign nations (DesJardins, 2007). Further, Sainsbury can use international trade
for increasing its profitability and productivity. Therefore, with the help of international trade,
company can export its products to foreign countries and import raw material available at cheap
cost. With this aspect, company can take benefit of economies of scale by making full use of its
production process.
Further, organization can set up its chain stores in target foreign countries or use
franchising etc. to enter into foreign market. Thereafter, company can offer its products and
services to countries where growth opportunities are more. In addition to this aspect, Sainsbury
can get benefit of cheap labour, low manufacturing cost etc. The major advantage of
international trade is it will help in generating more jobs and thus leads to growth of economy.
With the help of competition policy, Sainsbury will have to compete at international level.
Therefore, to sustain competition company will consistently upgrade its technology and offer
innovative and unique products (Honorati and Mengistae, 2007). Thereafter, it will provide
recognition to company at international level.
4.2 Impact of global factors on the business of Sainsbury
There are various factors at international level that have serious impact on the operations
of company. They can be further explained as follows:
 Political: It refers to the policies and regulations laid down by UK government that
impact the operations of company (Fernando, 2011). Thereafter, one such government
policy is competition policy due to which, company is facing tough competition from
new entities. Further, to reduce the political interference within its operations it is
important for company to consider political factors. For this aspect, company have to pay
tax on proper time follow policies etc.
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 Economic factors: It represents the economic polices like, GDP, GNP and household
disposable income etc. that impact the working of company (DesJardins, 2007).
Thereafter, it also involve inflationary and unemployment situations of country. For
instance, the fall in disposable income of the citizen of UK can reduce the demand of
superior goods and services offered by company.
 Social factors: It refers to prevailing trends, division of population, income of
individuals, their living standard etc. that impact the purchasing decisions of prospective
customers of Sainsbury. Thereafter, it also involve need, preference and taste of
customers. The change in social trend can cause direct impact on the demand of
company. For instance, increase in the income of individuals can influence the demand of
superior and high end products of organization (Matthews, 2005).
 Technological factors: It represent the latest technology and processes that help
company in producing unique and upgraded products and services. Sainsbury use new
technology to develop innovative products that further provide core competence to
company in market (Brandon, 2014). Further, technology also help company in
improving the quality of its services. For instance, company use digital technology to
generate awareness about its product and boost its sales.
 Environmental factors: It represents the environment policies that impact the demand of
companies products and services in different markets. With the growing environment
consciousness among people throughout the world, it is important for Sainsbury to
consider environmental aspects (Frischtak, 2001). In this respect, company is taking
effective steps for reducing carbon footprints and waste to landfills.
 Legal factors: To ensure smooth functioning, it is important for company to consider
legal policies while operating at domestic as well as global level. For instance, its is
important for company top consider equality policy of UK while functioning. Therefore,
Sainsbury should give equal opportunities, pay to men, women and disabled doing same
type of job at same level.
4.3 Impact of European Union on the functioning of Sainsbury
 Enhanced job opportunities in domestic country: As per the employment policy, the
organizations functioning in UK are required to increase the job opportunities for
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