Sainsbury's Business Performance and Market Position Report

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ROX: REPORT
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Contents
INTRODUCTION...........................................................................................................................3
Industry data................................................................................................................................4
Key business stakeholders...........................................................................................................4
Challenges faced..........................................................................................................................5
PESTEL.......................................................................................................................................5
Porter’s five forces.......................................................................................................................7
Key issues faced..........................................................................................................................8
In the recent past, Sainsbury had to confront many challenges...................................................8
Conclusion:......................................................................................................................................9
Appendix........................................................................................................................................10
References......................................................................................................................................15
PART 2..........................................................................................................................................17
Introduction....................................................................................................................................17
Reflection...................................................................................................................................18
Conclusion.................................................................................................................................21
Appendix........................................................................................................................................22
Tuckman model.........................................................................................................................22
References......................................................................................................................................25
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INTRODUCTION
This report is prepared to assess the business performance and market position of Sainsbury. It
covers the marketing analysis of Sainsbury, an analysis of the macro-environment with the
application of PESTEL analysis. It covers the analysis of competitors with the application of
Porter's five forces.
Sainsbury's is the second-largest supermarket in the UK. It is established in the year 1869 by
John James. It has a 15.3% market share and total revenue is 28.456 billion pounds in the year
2018. It employees more than 180,000 people and shortly it is planning to merge with ASDA.
The sovereign wealth fund of Qatar is the largest shareholder of it.
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Industry data
The retail industry of the UK is leading the industry with the £395 billion revenue generation in
the year 2017. The retail sector in the UK is comprised of a food market, clothing, automotive
fuel, and household goods shops. The food market has the largest share in the retail industry.
The number of jobs created by it 2.8 million in the year 2017 and the output generated is £ 92.8
billion. This industry is going through ups and downs. Factors affecting are changes in the
buying preferences of the consumers, online shopping and changing the economic situations
(Norman, 2019).
% of the UK
Economic output £ 92.8 5%
Employment 2.8 million 9%
Business 319,125 5.6%
Key business stakeholders
Customers: Sainsbury has consumers across the globe due to its high-quality products and
services. It has consumers of all age groups. They believe that they know their customers very
well and offer products at fair prices.
Suppliers: the suppliers of Sainsbury are from more than 60 nations, more than 2000 UK
farmers and grower development group members.
Competitors: the level of competition for the organization is high due to the presence of
numerous competitors and these are Waitrose, Tesco PLC, ALDI, Argos, Morrisons, and
Iceland. Iceland is a major food competitor. To face the competition organization needs to
formulate an effective marketing strategy to deal with the competition.
Performance: it is performing very well in the overseas market and also in the market of the
UK. It has generated $ 39.4 B. it enjoys a good reputation due to healthy food products.
Salisbury has witnessed an increase in sales by 3.5% in the year 2018 (Chris Rhodes, 2018)
Strengths: Sainsbury is a multinational company and captures most of the market share in the
UK. It has adopted an effective expansion strategy in the global market. It also uses an
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innovative strategy for marketing and campaigning. A loyalty card scheme is also working in
favor of the organization.
Weakness: The operational cost of Sainsbury is increasing and it is reducing the marginal cost. It
has bad customer retention. It is also facing a problem of expenditure more than the revenue
generation.
Challenges faced
 It is facing strong market competition in the industry due to the presence of a rival in the
food market.
 It is facing tough situations due to the degrading diplomatic relationship between the UK
and Qatar.
 Rising tension between the management and employees due to several reasons affects the
management of business operations. It also affects the goodwill and reputation of the
organization.
 It is facing a threat of substitution due to the availability of similar products in the market
(Sainsbury, 2019).
PESTEL
Political Economic
Political factors are the factors that are political
developments, policies, and procedures that
affect the business performance of the
organization.
Political relation with Qatar as a Sovereign
wealth fund of Qatar is the largest shareholder
of it
Political changes and Brexit can influence the
business.
Economic factors are changes in the inflation
are, exchange rate and interest change by the
BoE that affect the business performance of the
organization.
A steep drop in the GBP
Changes in the interest rate affect the
availability of funds.
Drop in the rate of inflation.
Social Technological
These factors are the structure of the society,
the share of the working-age population, their
It is the degree of integration of technology in
doing business that affects the business
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education and attitude towards work that affect
the business performance of the organization.
Growing demand for organic food
Sainsbury has viable business operations and
functions
performance of the organization.
The threat of cybercrime
Weak data protection
Data-driven scrutiny of business to maintain
consumer base (Jeff Wells, 2017).
Legal Environmental
Legal factors are laws, rules, and regulations
stipulated by the parliament of the UK to
regulate the business activities that affect the
business performance of the organization.
Delayed legal proceedings
Rigid tax laws of the UK
These factors are the policies formulated to
protect the environment, reducing pollution,
etc. that affect the business performance of the
organization.
Mitigation of environmental damage
Mitigation of carbon emission
Fig 1: PESTEL analysis
Source:
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Porter’s five forces
Porter’s five forces are used to identify the degree of competition any organization attracts. The
forces are
The threat of new entrants is high for the Sainsbury due to the simple rules and regulations for
the new entrants and also lack of investment is required to enter into the retail industry. it is the
impact on the business profits and operations due to the entry of a new business unit in the
market.
Bargaining power of buyer is high for the Sainsbury due to the presence of many alternatives in
the market. It is the negotiating power of a buyer. If it is high he has the power to control the
price of a product and vice versa.
Fig 2: Porter’s five forces
Source
Bargaining power of supplier is low for the Sainsbury due to the presence of many suppliers. It
reduces the negotiating power of a supplier. It is the negotiating power of suppliers. If it is high
he has the power to control the price of a product and vice versa.
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The threat of substitution is high for Sainsbury due to the presence of numerous alternatives in
the retail industry and also due to the availability of similar products on the same price structure.
The rivalry is high for the Sainsbury due to the presence of many global brands in the UK, for
example, ASDA, Tesco, etc. it is the presence of competitors in the market.
Sainsbury is required to formulate an effective strategy to reduce the risk to the business and
fight competition in the market. It needs to use a proactive approach to formulate operative
policies to mitigate risk to the business (Jeff Wells, 2017).
Key issues faced
In the recent past, Sainsbury had to confront many challenges
 Sainsbury's Waltham point warehouse staff was angry with the management due to the
changes in its absence policy.
 It has cut down various job roles to reduce its business expenditure. This news did not go
well with the employees and owners and managers had to face many difficulties, anger,
and frustration of employees.
 Usdaw members went on strike due to financial trouble faced by them.
 It is facing steep operational challenges due to the emergence of e-commerce and digital
marketing.
 The operational challenges faced by it in delivering products, offering products, mapping
their pattern of buying.
 It lacks the technological resource to manage the consumers in this digital era and it
needs to integrate technology well in the business (Sainsbury, 2019).
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Conclusion:
This work evaluated the business model, performance and operations of Sainsbury. It also
evaluated the challenges faced by the organization at present and also the emerging challenges
for it. It covered complete analysis with the help of PESTEL, Porter's five forces, etc.
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Appendix
Industry data
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PESTEL analysis
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Porter’s five forces
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