Foundation of Business Communication Report: Sainsbury's Case Study

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FOUNDATION OF BUSINESS COMMUNICATION
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Table of Contents
Introduction....................................................................................................................................3
Part 1: Formal Report....................................................................................................................4
Introduction................................................................................................................................4
Industry analysis........................................................................................................................4
Key businesses of Sainsbury.....................................................................................................5
Suppliers of Sainsbury...............................................................................................................5
Competitors of Sainsbury...........................................................................................................5
Performance of Sainsbury.........................................................................................................6
SWOT analysis of Sainsbury.....................................................................................................6
PESTLE analysis of Sainsbury..................................................................................................7
Porter’s Five Forces Model in Sainsbury...................................................................................8
Key issues in Sainsbury.............................................................................................................9
Conclusion.................................................................................................................................9
Part 2: Personal reflection...........................................................................................................10
Skill development.....................................................................................................................11
Conclusion...................................................................................................................................13
References..................................................................................................................................14
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Introduction
The business market possesses high versatility, whether domestic or global. The changes in the
business market influence companies to a large extent. The report will use the UK-based
company Sainsbury’s for assessing the influence of the external operating environment on the
company. It will consist of analysis related to the industry, external environment, competition
and company performance. It will adopt the models such as SWOT/PESTLE analysis and
Porter’s five forces analysis. This report will also involve a personal reflection exhibiting the
learning experiences and skill development.
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Part 1: Formal Report
Introduction
Sainsbury is the UK-based supermarket company with the second position in the UK largest
supermarket chains. The company operates on a domestic scale and serves as the
convenience stores, hypermarkets and supermarkets in the UK. This section will provide an
overview of the external environment analysis of Sainsbury in the UK supermarket sector.
Industry analysis
The UK supermarket sector has been overgrowing with the strengthening of major players. This
industry has been dominating by the four major players, namely Tesco, Morrisons, ASDA, and
Sainsbury. As per the reports, the market value of grocery retail business has been reached to
179.1 billion GBP (Statista.com, 2019). It has been forecasted that the online stores will
enhance with a rapid rate till the year 2023. The market value of online stores was £11.4 billion
and forecasted to reach £17.3 billion, which indicates the challenges for the supermarkets,
hypermarkets and convenience stores. As per the estimation, the supermarket growth will arrive
at £95.9 billion from £89.1 billion, which shows the impact of online stories (Warner, 2019).
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Key businesses of Sainsbury
(Figure: Sainsbury’s key businesses)
(Source: By Author, 2019)
Suppliers of Sainsbury
The company maintains a healthy relationship with the farmers, suppliers and manufacturers. It
believes in working with suppliers as the partner for excellent sourcing of products. More than
2,000 farmers are associated with Sainsbury who belong to the UK Farmer & Grower
Development Group (Sainsburys.co.uk, 2019). The company has invested about £30 million in
the Farmer & Grower Development Groups. It undertakes to source from about 60 countries.
Competitors of Sainsbury
The major players of the UK supermarket industry are the competitors of Sainsbury, including
Tesco, Asda, Morrisons, Waitrose, Amazon, Wal-Mart, and ALDI. All these companies are
engaged in producing and selling similar products to Sainsbury. Some of the companies offer
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Sainsbury Businesses
More than 15,000 branded prioducts
807 convenience stores & 605 supermarkets
More than 10 UK stores
Crafted and affordable home designer products
4,500+ designer products
Offers exclusive range of clothing
3,000 quality products selling through online and
stores
Positioned as 10th largest UK retailer of clothing
800+ stores & 60,000+ quality products
Sells products of Samsung, Bose, LEGO & others
UK's third most visited website
Offers financial products & rewards to
Sainsbury's shoppers
More than 8 products & 230 travel money
bureaux
1,500 clients all over the UK
Home products with quality and craftmanship
Associated with 13 in-house designers & 400
stores

products and services at the prices lower than Sainsbury. It has impacted the competitiveness
of Sainsbury in the supermarket industry of the UK (Hökelekli et al., 2017).
Performance of Sainsbury
Sainsbury has been growing at a slow rate in the UK supermarket industry. The performance of
Sainsbury has been mainly affected due to the existence of players such as Aldi and ASDA. At
the end of the year 2018, the company attained a 16% market share in Great Britain's
supermarket sector. On the other hand, it was 16.4% at the end of 2017, and a slight reduction
has been realized in the market share until April 2019 (Statista.com, 2019). A decline of 1.1% in
sales has been reported in January 2019, indicating the failure of Sainsbury in the festive
season (Moore, 2019). Till April 2019, the company incurred a reduction of 1.2% in sales even
when the grocery industry grew at the fastest rate of 2% (Butler, 2019).
SWOT analysis of Sainsbury
I. Strengths
a. The business philosophy helps Sainsbury in developing a positive image in the
market. Its business philosophy states “assisting customers in living well at less
cost".
b. It has the financial services division that sells retail as well as wholesale banking
services (FATRICIA, 2016).
c. It is the third-largest company of the UK supermarket industry with a market
share of approximately 15.8%.
d. Broader product portfolio assists the company in gaining a more extensive
customer base.
e. It possesses an experienced team of leadership and engages in sponsoring
major events such as Paralympics.
II. Weaknesses
f. High competitiveness exists in the segments of the retail sector, where Sainsbury
operates.
g. The company has to sell the product at higher prices due to increasing food
prices.
h. Challenges have occurred due to easy brand switching by the customers (Guo
and Wang, 2019)
i. Lower profit margins have to be set by Sainsbury due to the risk of online
retailing trends.
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III. Opportunities
j. Growth of rural areas
k. Installation of self-checkout machines
l. Expansion in emerging economies
IV. Threats
m. Growing globalization
n. Intense competition in the retail sector (Aluko and Knight, 2017)
PESTLE analysis of Sainsbury
 Political factors: BREXIT implications for the companies, the political relationship of the
UK with Qatar, and an unstable economy have developed challenges for Sainsbury.
 Economic factors: Reduction in GBP due to BREXIT and food price inflation constitutes
the significant economic factors that impact the financial performance of Sainsbury.
 Social factors: Increased demand for sustainable practices and organic food has
formulated opportunities for the company. Also, Sainsbury’s support to the farmers and
growers has been assisting in gaining positive image (Brunvall et al., 2016).
 Technological factors: Sainsbury has adopted digital services that have helped in
keeping the pace with technological trends. The performance of the company has been
enhanced by driving a better customer experience.
 Environmental factors: Increased consciousness of people towards the society and
environment protection has emerged the enhanced focus on waste management and
recycling by Sainsbury.
 Legal factors: Emergence of the sugar tax, ban on advertising high-fat food and drink
items, and delay due to regulatory approvals has increased challenges for the company
(Nazareth, 2019).
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Porter’s Five Forces Model in Sainsbury
(Figure: Porter’s Five Forces analysis of Sainsbury)
(Source: By Author, 2019)
A. Threats of new entrants
Different barriers to entry for the new players since the supermarket industry of the UK are
massive. It results in high competition, huge investment and several foods and other related
laws and legislation. Therefore, for Sainsbury, this force is weak in the supermarket industry.
B. Threats of substitutes
Availability of few substitutes at high quality and high prices has made this force weak for
Sainsbury. The company also engages in selling food products that implies that food falls under
the necessities due to which its demand can never fall (Arshed and Pancholi, 2016).
C. Competitive rivalry
The competition within the supermarket industry has been increasing due to the growth of small
players. Only a few players exist in the industry that has significant market share. Their market
share has been affecting these days due to the small players. Therefore, the competitiveness of
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Sainsbur
y Porter
Five
Forces
Analysis
Threat
s of
new
entran
ts
Threat
s of
substit
utes
Compe
titive
rivalry
Bargai
ning
power
of
buyers
Bargai
ning
power
of
suppli
ers

the sector can never be underestimated for Sainsbury. Other rivalry companies are selling
products and services at lower prices. Therefore, this force is strong for Sainsbury.
D. Bargaining power of suppliers
Sainsbury is the owner of a large supplier base from all over the UK. Numerous suppliers are
available in the supermarket industry, but there is a higher number of buyers. It weakens the
force of the bargaining power of suppliers for Sainsbury.
E. Bargaining power of buyers
Due to the lesser number of firms than suppliers, low buyers’ income, and high product
differentiation has made this force weaker for Sainsbury (Haleem and Jehangir, 2017). Buyers
do not have control over the product prices.
Key issues in Sainsbury
Recently, the company has announced the merger of Sainsbury with ASDA. There are many
reasons for this merger. But this announcement has left the jobs of thousands of employees at
risk. It indicates the clear case of poor human resource management within Sainsbury. The
company has been dealing with several challenges after the merger with ASDA (Toms, 2018).
Apart from this, the increased competition in the industry has been raising issues for Sainsbury.
Easy brand switching, employment shifts and high prices have affected the overall performance
of the company. Due to this, the company has reported reduced sales and profits from the last
two years. It has become difficult for the company to align the operations correctly with the
resources.
Conclusion
From the analysis of Sainsbury, it has become clear that the company possesses strengths that
enhance the industrial competition. The analysis tools of SWOT, PESTLE and Porter’s five
forces have assisted in scanning the internal and external business environment of the
company. Specific issues are being faced by Sainsbury that are majorly related to human
resource management.
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Part 2: Personal reflection
My new semester was initiated in week 1, where the unit title was the Foundation of Business
Communication. My excitement level was high due to the new semester and new people. I
became aware of enhancing knowledge for self-organization, information sharing, and
communicating with each other.
Week 2 helped me in gaining proper knowledge of business communication. I came to know
that business communication refers to the communication that takes place within an
organization for sharing ideas or product information or other commercial information. Business
communication can be verbal or written based on the type of information that requires
exchanging within the organization. I came to know that business communication is vital for
maintaining organizational health. After week 2, I believe that business communication helps in
enhancing the motivation level of the employees that directly improves employee productivity
and performance (Keyton et al., 2013). Business communication assists in eliminating the
confusions and misunderstandings among the organizational personnel. The employee needs
to become easy to understand that results in striving towards high employee satisfaction. With
the game of self-perception inventory analysis conducted in the classroom, I became able to
identify what are my key strengths and weaknesses.
In week 3, the entire focus was on analyzing the Micro and Macro business environment. I
learnt that PESTLE and SWOT analysis are the essential tools that are useful for conducting the
environmental analysis. These tools helped me in gaining an understanding of those factors that
have a direct and indirect impact on the company. I realized that the SWOT analysis is a must-
have analysis tool since it helps in identifying the strengths, weaknesses, threats and
opportunities significant for the organizations (Barkauskas et al., 2015). PESTLE analysis
focuses mainly on the external factors while SWOT analysis finds internal as well as external
environmental factors. For examining our learning of these tools, the teacher conducted an
activity involving creating different groups. We were asked for undertaking a PESTLE analysis
of an organization and effectively presenting them.
Week 4 of this semester was all about analyzing the Microenvironment factors. I learnt about
different forces of the organizational competitive as well as the industrial environment. I came to
know that analyzing the competitive environment and industry can undertake using the model of
Porter’s Five Forces. I believe after learning about this topic that this analysis model identifies all
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those forces that constitute the competition prevalent within the industry. I discovered that the
vital forces of the industrial competition are threats of new substitutes, threats of new entrants,
bargaining power of buyers, bargaining power of suppliers and the competitive rivalry (Asiedu,
2015). I came to know the significance of this analysis model that it assists in better
identification of competition and effective planning for dealing with the challenges that occurred
by this competition. I think that organizations can deal with buyers and suppliers effectively
when using this model correctly.
In week 5, we were assigned with the Practice Week Presentation that aimed at exhibiting what
we have learned in the four weeks through the business case as Sainsbury. I think that after the
learning of four weeks, I am prepared for transforming into a personality that can undertake
good communication practices by motivating and informing the group members.
Skill development
There were four weeks in the semester, where I learnt about different organizational aspects
that are necessary for the success of an organization within the competitive business
environment. Every week, certain activities assisted me in developing and improving the
essential skills.
 Communication: I believe that communication constitutes essential skills for any
individual. I came to know that there may be verbal or written communication within an
organization. In week 2 and other weeks, I gained excellent communication skills that
would be effective for my professional life (Moore et al., 2018). My communication skills
have been improved through the classroom presentations and discussions that provided
me with the opportunity to share my ideas, experiences and learning to the classroom.
 Problem-solving: I think I have poor skills in problem-solving since I always find
difficulty whenever I have to deal with a particular problem. I always seek help from
others to get assistance in problem-solving situations. I believe these weeks have
helped in nourishing my problem-solving skills. These skills have helped me in gathering
the information related to the micro and macro environment of Sainsbury (Hesse et al.,
2015). I used these skills and analyze the aggregate information into small parts such as
SWOT analysis, Porter's five forces model, PESTLE analysis and critical competitors,
and so on. I investigated the information of Sainsbury and became able to analyze the
information and make key findings accordingly.
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 Numeracy: In the report, I gathered industrial data and analyzed it for identifying the key
findings. With the industrial data collected concerning Sainsbury, I became able to use
my numeracy skills. I learnt how to use statistics or data efficiently. This submission
helped me in the proper application of numeracy skills (Purpura and Lonigan, 2013). I
believe that numeracy skills become vital when one has to use the data or statistics and
to formulate reasonable strategies. I think that it has also helped me in improving my
logical thinking skills.
 Working with others: In the classroom presentations, we had assigned the work that
required completion in the group. I realized that every individual must know how to work
with others effectively. In the group assignments, every member was assigned to
individual roles and responsibilities. I came to know that when you work with others, you
have to be the supporting system for each other (Loughry et al., 2014). I helped my
colleagues, and we all realized the significance of continuous communication among the
group members. I think that it is difficult to maintain the coordination within the group.
Conflicts aroused, but I helped in resolving those conflicts with the analytical approach.
 ICT: Information and communications technology have enhanced their role in the
business world. It would not be wrong to say that I became able to use the ICT in this
submission and realized how significant they are for efficient working (Rastogi and
Malhotra, 2013). I used Microsoft Office Programs for accomplishing my assignment,
such as Microsoft Office Word. It enhanced my ICT skills as I learnt the use of different
information technologies for better communication.
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