Sainsbury's Competitive Advantage: A Business Project

Desklib provides past papers and solved assignments for students. This project analyzes Sainsbury's competitive position.

EXTENDED BUSINESS PROJECT
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Table of Contents
Group presentation (refer to poster in Appendix)............................................................................3
Introduction..................................................................................................................................3
Market size and structure of organization...................................................................................3
Porters’ five forces analysis.........................................................................................................3
Conclusion...................................................................................................................................4
Individual presentation....................................................................................................................5
1. Introduction..................................................................................................................................5
2. Company overview......................................................................................................................6
Pestle analysis (external environment analysis)..........................................................................7
SWOT analysis (internal environment analysis).......................................................................10
3. Analysis of organizations competitiveness position..................................................................11
7p’s of Marketing mix...............................................................................................................11
Human resource management....................................................................................................13
4. Recommendation for next 2-5 years..........................................................................................14
5. Conclusions................................................................................................................................15
Reference list.................................................................................................................................16
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Group presentation (refer to poster in Appendix)
Introduction
Understanding the competitive position of international business is important for analysing the
nature of the competitors in order to enhance the strategies to grab eyes of the customers in long
run of business success. This presentation has described the market share, market structure and
porter’s five forces for multi international organization, Sainsbury Plc.
Market size and structure of organization
Sainsbury is third largest chain of retail supermarket in UK having 16% market share. From the
analyse of company structure, it has been found that Sainsbury is having diverse organizational
structure that is managed by Christopher Stone, John Rosenheim and Andrew Cahn who are the
trustees of the organization. Moreover, from other perspectives, it is found that the structure of
organization is hierarchical and total number or employees working in entire stores are more than
186900 (Sainsburys.co.uk, 2019).
Porters’ five forces analysis
Figure 1: Porter’s five forces
(Source: Omsa et al. 2017)
New entry threats: As commented by Viltard (2017), new entrants in the retail organizations
bring innovation that can put pressure to develop the marketing position more effectively.
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However, in Sainsbury, threat for new entry is low, as the company has developed well
positioned that has aid in gaining trust of the customers.
Power of suppliers: In Sainsbury organization, suppliers’ power is weak and this indicates that
company has chances of increasing profits in the UK market. Moreover, it is evident that retail
industry is having a strengthening position, therefore there are numerous number of suppliers
found. This shows that company has an opportunity for switching of suppliers if they found any
difficulties in business.
Power of buyers: In this context, it has been found that buyers’ power is high in UK and most of
the customers demand for having quality products at low cost. Hence, marketers of Sainsbury
can use joint venture strategy for reducing the capital costs of the products. Moreover, providing
buyers a wide range of products with discounts and coupons can help in sustaining the market
position.
Rivalry threat: Rivalry threat in retail market for Sainsbury is high as brand named Tesco,
Morrison, Asda and Aldi are having high chance for replacing this organization. Apart from this,
qualities of the products serve by those companies are also good. Hence, Sainsbury need to
mitigate this risk by improving the product quality.
Substitution threat: In Sainsbury, it is found that different segments of products are sold
starting from food products to electronics product. In case of food products, substitution threat is
high as they are least interest on service organic product. However, on the other hand, in
electronic products, substitution threat is low as the company manufactured quality products
along with long warranty services.
Conclusion
The entire presentation has demonstrated the competitive position of Sainsbury using Porter’s
five forces concept. It has been found that the company has to improve the product quality and
freshness in order to sustain in the market. Hence, it can be concluded that developing strong
bonds with buyers and suppliers, the company can enhance its profitability and sales figure.
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Individual presentation
1. Introduction
Developing marketing strategies in international market requires analysing the competitive
position of the organization. In order to formulate the effective policies and strategies, there is a
requirement of analysis of external and internal marketing environment for the company. This is
a business project that has demonstrated the business position of the well-known UK retail
organization, Sainsbury. Furthermore, components that are used for understanding the market
competitiveness are value chain analysis and Pestle analysis for understanding the present
situation of the business. The main purpose of the study is to state the recommendations which
the organization can use for maintaining the competitive advantage for next 2 to 5 years. At the
end of the study, a section of conclusion is provided to summarize every findings of the business.
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2. Company overview
Sainsbury is one of the largest chains of supermarket that is situated at UK and having 16.9 share
in the entire supermarket sector. The company is having headquartered at London, UK and the
revenue earned as per the report of 2018 is 285.6 Crores GDP. The company is operating its
business in UK and other countries such as China, India, Scotland, Malaysia, Australia and
others. According to recent statistics 2018 about the company, it has been found that total
number of employees working in the organization is more than 186900 and the operating income
of the company £518 million (Sainsburys.co.uk, 2019). The parent company J Sainsbury plc is
found to split in three different divisions that are Sainsbury Supermarket Ltd, Sainsbury’s Argos
and Sainsbury’s Bank. Research indicates that the companies is having 1423 grocery stores in
UK region and among these 815 stores were found to be convenience stores. The company is
also found to involve in online stores of grocery and also serves merchandise operations. Main
segments where the company is operating its business operations are food, clothing, finance, and
retail operations. Research on the company indicates that the company has a plan to start more
stores in UK and international regions in future years.
Figure 1: Market share of Sainsbury
(Source: Sainsburys.co.uk, 2019)
3. Competitive advantage
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Pestle analysis (external environment analysis)
Political factors  Brexit event has result in the occurrence of unstable
political environment in UK. This is the main reason for
which the business of retail market is facing difficulties
in gaining profit.
 However, UK government is found to encourage the
international marketers to implement their franchises in
order to enhance the economy of the region
Figure 2: Political situation of UK economy
(Source: Evans et al. 2017)
 UK government enforces favourable taxation policies
and employment laws. This can help Sainsbury to
enhance their kingdom more effectively.
Economic factors  GDP rate is found to enhance from 1.48% to 1.9%
starting from year 2012 to 2022. On the contrary, it
has been observed that growth of GDP is low after
the Brexit issue. Moreover, change in the business
policies of Sainsbury has occurred due to the change
in inflation rate in UK
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Figure 3: GDP rate growth of UK
(Source: Sullivan and Gouldson, 2017)
 UK government that has affected the growth of
Sainsbury business develops fiscal rules. It is
evaluated and observed that GST tax is imposed on
the business of UK retail products.
 Hygienic value of the product is maintained in every
food stores of UK and about 5% tax is imposed in
the organizations of UK whose income are above
£1.5bn.
Social factors  The consumers of UK are found to be health
conscious; hence, every organization is having
responsibility to keep the food and other retail items
in a safe condition.
Figure 4: Increasing growth of population in UK
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(Source: Ball, 2017)
 The population rate of UK is going on increasing.
The research statistics indicates that population has
maximised from 65 million to about 67 million
between year 2015 to 2018. Hence, it can be said
that demands for the groceries and food products in
UK supermarkets is getting high.
Technological factors  UK government is found to invest technologies
highly in order to change the business operational
techniques. For example, government has spent
about 15.6 billion pounds in 2015 behind R&D
development of business organization. Hence, this
shows that businesses are using high IT techniques
in marketing their products
 The Government is focused on developing e-
commerce technologies and inventory system.
This has helped Sainsbury and other businesses of
UK to focus on online stores of groceries
Legal factors  UK governance is concerned on developing the food
safety measures and hence, it has established Food
and environment Protection Act 1985 that has
helped in maintaining the safety standards of food
products of Sainsbury (legislation.gov.uk, 2019).
 UK government has developed Companies Act
2006 so that business can implement the regulations
in order to gain the trust of the consumers
(legislation.gov.uk, 2019).
Environmental factors  UK Government encourages the business
organizations in developing CSR programs and
policies in order to enhance the environmental
condition. For example, government is concerned on
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reducing carbon footprints, hence they encourage
supermarkets to ban plastic bags and use paper bags
instead of that.
Table 1: Pestle analysis
(Created by Learner)
SWOT analysis (internal environment analysis)
Strength
 Innovative promotional strategies
 Focused on developing business
philosophy
 Company has a well-position in
international market
 Third largest supermarket chain in
entire UK
Weakness
 Surrounded with high competitive
rivalry such as Tesco, Asda and
Morrison
 Low margins and growing costs of
products
 The company faces a risk of brand
switching
 Challenge to retain the existing
customers
Opportunities
 Scope of expanding its business in rural
areas of UK region
 The company spend funds in
developing corporate policies
Threats
 Major threats of the company are high
levels of competitors
 Loss of brand equity
Table 2: SWOT analysis
(Source: Created by learner)
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3. Analysis of organizations competitiveness position
7p’s of Marketing mix
Figure 5: 7ps of marketing mix
(Source: Mallik and Farhan, 2018)
Product: As mentioned by Mallik and Farhan (2018), product is the main elements that helps in
enhancing the sales level of the company. In Sainsbury, it is found that company is offering wide
variety of products by focusing on innovation and quality. It has been observed that stores of
Sainsbury are offering about 30000 variety of products among which 20% belongs to be from
their own brand. Food products that are offered by the organization are having natural flavours
and developed with low-fat contents, as the consumers are health conscious in nature. In
addition, the stores offers home collection accessories such as kitchen and other furnishing
items that are attracting in nature.
Place: As per information, Sainsbury is having about 598 supermarkets along with 714
convenience outlets. Among these 45 stores are found to operate for 24*7 hours and others
operate until Friday midnight. On the other hand, the food items that are offered by this
supermarket are also having home delivery option. Sainsbury handled all the distributor stores by
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own, however, after the occurrence of disputes in year 1970, the company has contacted with the
specialists such as DHL and NFT to supply the frozen foods effectively.
People: This element of marketing mix helps in the development of business process of the
organization. As opined by Boonpradub and Thechatakerng (2015), employees working in the
organization enable to deliver the business products to the customers effectively. In context of
Sainsbury, it has been monitored that company is having well-trained employees and a lump sum
amount is spend in the skill development of these employees in the organization.
Price: The pricing strategy that is followed in Sainsbury is “Value for money.” It has been
observed that the company use a strategy of price discriminatory based on the position of the
product. The products offered for the kids and basic necessary items are offered at low price. As
per analysis on the pricing strategy, it has been found that company uses competitive pricing
strategy in order to sustain in the competitive UK market.
Promotions: Certain promotional activities are found to be organizing such as Social media ads
and commercial ads for gaining attention from customers (Abidemi et al. 2017). ATL and BTL
promotions are used by Sainsbury to attract the targeted customers. Under ATL promotion,
organization uses television and radio for to deliver corporate image among the external
stakeholders. On the other hand, under BTL database promotions and slogans such as “Live
well for less” that is a promotional campaign for encourage customers to buy products.
Process: Both traditional and online marketing process is followed to deliver the products in
bulk. In online process of delivery, choice of “click & collect” is provided to decrease the
difficulties of customers. Sainsbury is planning to come with upgraded stores to meet the
changing needs of customers.
Physical evidence: The stores of Sainsbury are decorated with innovative designs. Moreover,
qualities of baskets and trolleys provided by the company are of high quality. In the stores of
Sainsbury, the quality of shelves used for product presentations are quite impressive and this
helps in increasing the shopping experiences of customers.
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