Strategic Analysis Report: Sainsbury's Corporate Strategy (2024)

This report provides a comprehensive strategic analysis of Sainsbury's, a major UK supermarket chain. It begins with an introduction outlining the scope and objectives, focusing on Sainsbury's merger with Argos. The external analysis employs PESTEL and Porter's Five Forces frameworks to assess the retail sector's environment, identifying opportunities and threats. Internal analysis includes SWOT, value chain, and VRIO analyses to evaluate Sainsbury's resources, capabilities, and competitive advantages. The report then evaluates the joint venture strategy using SAF criteria. The analysis covers political, economic, social, technological, environmental, and legal factors impacting Sainsbury's, along with an assessment of competitive forces like new entrants, supplier and buyer power, substitute products, and competitive rivalry. The value chain analysis identifies key activities contributing to Sainsbury's competitive advantage, while the VRIO analysis assesses the value, rareness, imitability, and organization of its resources and capabilities. The report concludes with an evaluation of Sainsbury's strategic choices and provides references.

Applied Corporate
Strategy

Table of Contents
INTRODCUTION...........................................................................................................................1
EXTERNAL ANALYSIS...............................................................................................................1
PESTEL analysis.........................................................................................................................1
Porter’s five force analysis..........................................................................................................2
INTERNAL ANALYSIS.................................................................................................................3
SWOT analysis............................................................................................................................3
Value chain analysis....................................................................................................................4
VRIO Analysis.............................................................................................................................6
EVALUATION...............................................................................................................................7
SAF criteria..................................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODCUTION
Corporate strategy indicates to an eventual pathway that considered by a company that
assists the company that assist the organisation in getting an effective edge within the market.
Apart from it, corporate strategy offers effective vision for an organisation to properly
accomplish its set aims and gaols in appropriate manner (Armstrong and Harman, 2019). This
assignment is supported to Sainsbury plc which is the second largest chain of supermarket in
UK. The firm is currently entering into a merger joint venture with Argos which is an another
retail company located in UK. The Report will covers a brief external analysis of the retail sector
within the UK as well as internal analysis of the resources and key competencies of the
company. Furthermore, the report also consists evaluation of the strategy of joint venture SAF
criteria.
EXTERNAL ANALYSIS
PESTEL analysis
It is an analysis which is conducted by the management of a company to determine the
impact of the external factor of organisation. Retail sector within the UK has been a forever
evolving industry and there are different extrinsic components ion the business environment
that create a large impact on this sector. This analysis and impact of external factors are
mentioned as under:
Political- This factor consist different elements like government policy, stability, instability,
taxation policy, corruption and many more. If there are any kind of change occur in these
components then they affect the business of companies of particular sector. In UK, Brexit is
the main factor which highly affect the business of retail industry and also influence the
compan8ies who are operating in that industry. It will mean that England will not longer
remain a part of the European Union, directing to maximised import rates. After UK's exit
the inflation rate is increased that affect the business of Sainsbury in negative manner.
Economical- Different components like inflation, deflation, foreign exchange, interest
rate etc. are considered by this factor. Sainsbury's is highly dependent on road based transpiration
so when the prices of fuel like petrol and diesel are maximised then it economically affect the
company (Baena, 2019). Another economic concern for respective company is that of increasing
salary expectations which reduce overall profit.
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Social- This factor include different components like culture, values, needs, demands, taste
and preferences, lifestyle and many more. Now these days, people aspires to shop from a
supermarket in which ll required products they can get under one roof (Benza and et. al.,
2019). This positively affect Sainsbury because it provides the consumer a level of
fulfilment of saving their time and cost. By offering healthy and quality products it also
provides the satisfaction of customers needs of healthy food items.
Technology- This factor of pestle analysis consider different elements like innovation in
technology, research and develop, advance technology, artificial intelligence and many
more. In this factor favourably affect retail industry because organisations make
technological innovation ion term of fulfilling the needs of their customers. By offering
online food service and the option of collecting their purchases from their local stores, the
company make an effective contribution in fulfilling consumers needs. This advancement in
technology can minimise the overall cost of manufacturing of the products.
Environmental- It consist different factors like weather, climate, environmental law,
pollution act, carbon footprints and many more. This factor also influence retail sector or the
organisation which operate within it. Sainsbury produce a high level of carbons footprints
that bis highly affect to the current environmental conditions. The firm also use plastic in the
packaging of its products which create negative impact on environment and also affect
image so the company.
Legal- this factor consider all the rules, laws and legislations that are formulated and
developed by the national authorities of the company for the effective running of the firm.
The management of Sainsbury effective follow all the law of different nations in which it
operate which favourably affect the company. The company follow properly follow different
laws like consumer protection act and others which assist in effective running of the firm.
Porter’s five force analysis
This concept was developed by Michael Porter in 1979 to facilitate the companies to find out
the competitive forces that are accessible with an industry (Gravagnuolo, Angrisano and Fusco
Girard, 2019). All the five forces of this analysis Are defined as under:
Threat of new entrant- It is perceived low risk for Sainsbury as the retail market
composition where approx 70% of the grocery market share is embarrassed by the big four
supermarkets. Apart from it, to establish a business in retail sector, there more funds is required
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and there are numerous rules & regulations which are significant to pursue. So it is not easy to
establish a business in this sector to new entrant and small entities.
Bargaining power of suppliers- Sainsbury has low barging power of providers as there are
number of suppliers in superstore retail sector (Köhler and Zerfass, 2019). Therefore, non-
compliant providers can easily replaced with other providers who offer needed resourced and
product at low prices to make improvement in their profitability which has led to sufferers on the
side of dealers.
Bargaining power of buyers- there are number of supermarkets like Tesco, ASDA, Aldi etc.
in retail sectors the negotiating power of Sainsbury’s consumer is comparatively high as these
companies provide same products in similar range prices. IN British, consumers are reliable to
value only rather than brands so when they get good product at affordable prices from other
supermarkets rather than big four.
Threat of substitute product- The hazard of grocery market is very high because there is
amount of Grocery corporations in retail sector which proffer comparable goods as Sainsbury.
These companies not only offer food items but also offer non-food products like electronic,
garments, furniture etc. For instant, these can consists division stores and non-food sellers with
both scale and allocation to participate with Sainsbury’s.
Competitive rivalry- Sainsbury’s suffer direct rivalry from associate big four supermarkets
like Tesco, ASDA, Morrisons because they offer substitute products like groceries items,
garments, electronics and many more at slightly same prices which makes merchandise
switching cost low. Therefore a purchaser can simply exchange to another brand easily due to
same cost of products.
Value chain analysis
It is a strategy that is used by companies to determine internal activity of the company. The
main motive of this analysis is to recognise that activities and operations of the company that are
most valuable to the company and which ones could be improved to offer rivalry benefits. In
context of Sainsbury, effective value chain analysis is needs respective company to realise that
all the activities or functions do not need similar scrutiny extent (Oppenheimer, 2019). In context
of Sainsbury’s the value chain analysis is mentioned as under:
Primary activities Distinctive Supporting activities Competitive
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competences advantages
Inbound logistic Good supply chain Procurement Decreased cost
Operations Services and
production operations
Technological
advancement
Enriched efficiency
Outbound logistics Effective product
delivery
Organisational
infrastructure
Better quality product
Services Pre-sales and post-
sales services
Infrastructure Reduced switching
Marketing & sales Promotional activities Human resource
management
Improved Brand
equity
Inbound logistic- It is essential to the company to make effective relationship with
suppliers so that they can support company in form or receive, provide and distribute the
commodities. Without determining inbounds logistic, the management of respective company
can face different issues in product development stages (Pröllochs and Feuerriegel, 2020). If the
companies will make focus on its inbound logistic then it can retrieving raw material, storing the
inputs and internally distributing the raw material to start manufacturing.
Operation- The importance of determining operational activities occurs when raw
material receives and Sainsbury ready to convert raw material into final product and distribute it
in market. If the management of the company will make focus on the operations of the company
like machining, packaging, testing etc. Then it will help in maximising profitability and attaining
consistent economic development in term of gaining competitive benefits.
Outbound logistic- It consist that activities and operations that deliver the product to the
consumer by passing through different intermarries. Some outbound logistics activities are
material handling, scheduling, warehousing and order processing, transporting and delivering to
the required place. The administration of Sainsbury can monitor the outbound logistic to gain
competitive edge and accomplish its business development objectives.
Marketing and sales- Some marketing and sales activities of Sainsbury are advertising,
promotional activities, channel selection and making effective relation with channel members.
For effective marketing of the products and services, the management of respective can use
marketing funnel approach to frame its marketing and sales actions (Rossini, 2019). The
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marketing plan of actions can be push and pull in nature and based on Saisnbury’s business
goals, brand image, competitive dynamic and current position in existing marketplace.
Serivices- Sainsbury offer pre and post-sale service that will play a crucial role in improving
consumer loyalty. In current era, customer considers post-sale service as essential as marketing
activities. The management of the firm must determine support activities to avoid damaging
brand reputation and maximised utilisation it as a technique to create favourable word of mouth
promotion cause of fast, timely and effective support services.
VRIO Analysis
VRIO Framework is effectively framed to provide help to companies’ term of protecting
and unveiling origins or capacities that offer the firm with competitive advantages till long term.
There are four components of this analysis which is Value, Rareness, inimitable and organisation
(Sako and Zylberberg, 2019). There are different competencies within Sainsbury’s that are its
supply chain, services and distribution operation, promotional activities and product collection
service from store. Out of these competencies, the operations of the company have been found
out as the ,ost efficacious one through VRIO analysis. The aspects of this analysis in context of
respective company are mentioned as under:
Competencies Value Rare Inimitable Organisation
Inbound logistic-
Purchase product
Inbound logistic Inbound logistic
Operations-
Distribution and
service
operations
Operations Operations Operations Operations
Outbound
Logistics-
Product delivery
Outbound
Logistics
Outbound
Logistics
Marketing and
Sales-
Promotional
Marketing and
Sales
Marketing and
Sales
Marketing and
Sales
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activities
Services- Pre-
sales and post-
sales services
Services Services Services
Valuable- It is valuable to the firm as the company’s business model is formulated
according to the procurement of product from providers and then appropriately processed to the
distribution of the ultimate consumption (Sharma, Bhattacharya and Thukral, 2019). Therefore, it
becomes as inner part of company as if any kind of problem is identified in this phase then it
would carry forward to other aspect of the business.
Rare- The operations that are accepted by the firm are effectively patented and it is
highly unlikely that any other retail company could copy them within their structure. Therefore,
this devises these operations rare in reference to the organisation.
Inimitable- The Company has a unique and long history in the marketplace and due to
have presence in different social complexities, the framework of Sainsbury in reference to
services and distribution operations permit the company to enjoy inimitable tendencies within all
its activities.
Organisation-the company emphasises on technological advancement in term of online
shopping and for the better service. Moreover, the company also relies on the same to emphasise
effectively on the production and delivery of their products to their customers.
Resources
Tangible resource- Tangible resource refers to physical items that are visible and touch by
someone. For example, cash, inventory, machinery, land, labour, building and many more. In
context of Sainsbury, tangible resources are Products, CEO, Workforce, distribution etc.
Intangible resources- It mention to that assets that lacks physical substance in contrast to
physical assets. An intangible asset is usually very hard to evaluate. In reference to Sainsbury,
intangible resources are Brand, reputation and publicity.
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EVALUATION
INTERNAL ANALYSIS
SWOT analysis
It is a strategic framework which is used by the companies to determine the strengths,
weaknesses, growth options and threats to the organisations (Morrison and et. al., 2019). SWOT
analysis of Sainsbury’s is mentioned as under:
Strengths Weaknesses
 The business philosophy of the
company help consumers live well at
less. By using low cost strategy the
company attract number of customers.
 The company has offerings for all kinds
of consumer and there are number of
brand and expensive products available
for all higher income segments.
 The company use innovative promotion
strategy like Brand Match promotion.
 Maximisation in the food prices all
over the world has affected sales of
Saisnbury at higher pricing.
 There is stiff competition in each
segment of the retail industry.
 Customer is switching to another brand
due to change in their preferences
which are challenging to retain
consumers (Niero and Kalbar, 2019).
Opportunities Threats
 Saisnbury can expand its business in
other nations with the help of joint
venture and partnership to explore new
market.
 By making technological innovation
like self check out machines will help
in opening stores 24 hours which assist
in maximisation of the sales.
 By expanding business in developing
economies like Asia and Africa etc.
 The level of competition is high due to
number of retail organisation like Aldi,
Asda, Lidl etc.
 Modifications in government rules and
regulations create challenges to operate
business in different nations.
 Maximization of globalisation
generates issues for business
operations.
TOWS analysis of Sainsbury
SAINSBURY STRENGTHS (S) WEAKNESSES (W)
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INTERNAL
ANALYSIS
 Adaptive organisational customs
 Successful R&D dissection
 Strong allocation and Sales Network
 Association of technology to efficiently
determine environmental problems
 High dependency on
UK markets
OPPORTUNI
TIES (O)
 High requirement for rising markets
within the UK
 Increment in technologies like
Automation and Artificial Intelligence
 transformation in
demographic wants of
people in UK
THREATS
(T)
 Less importance on environmental
fortification
 Political hesitation
after Brexit
 Drastically changing
regulations
Strengths/opportunities-there is diverse expansion option available to the firm like
maximisation in the use of artificial intelligence, along with it, increase demand of different
emerging market in retail sector of the UK. For instance, Sainsbury is adaptive; furthermore, it
possesses an effective R&D function that would help the company in developing the capacity of
use of technology like AI, in addition to aligning itself in reference to emerge markets in the UK.
Apart from it, with collaboration of technology and innovation would also assist the firm in
earning a rivalry benefit and could be formed as its effective strengths cause of such effective
back up in the organisation.
Strengths/threats-the main threat that is exist in the market for Sainsbury is that it is ignorant
regarding the rising environmental concerns that could be direct to minimise in its market share.
If the company will implement effective technology in proper manner then it can help in making
contribution in environmental protection, this can be strength of the company and help in
developing the business of the company in appropriate manner.
Weaknesses/opportunities- On of the main weakness of Sainsbury is that it is highly
dependent on UK markets. So there are more patented commodities with the company that has
permitted to earn distinguish market share in the nation. Incontetx of overcome to the weakness,
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the company must emphasis on the demographic needs in the market of different age group
population.
Weaknesses/Threats- The political scenario of the UK is highly uncertain and there are
threats and risks connected to changes in rules and regulations of the nation cause of the events
of Brexit. It might direct to withdrawal of the company from single markets in addition to
limitations in free movement of its offerings within the UK markets that might be worse for the
organiation.
SAF criteria
It is a critical action for administrators to determine and measure the plan of action
accepted by them. Therefore, the determination of Sanisbury to go into a joint venture with
Argos is also very hard to be measured. The reason of purchasing Argos to expand the product
range, minimise its dependence on the highly aggressive grocery marketplace and obtain Argos
online delivery business. Therefore, in order to efficaciously determine the similar, SAF criteria
can be implement that can be effectively measure the plan of action (Shehata and et. al., 2019).
This criteria is describe as below:
Sustainability- in reference to effectively determine the sustainability, it is appropriate that
it is evaluated with the help of SWOT analysis defined as above. There are different growth
options find out in that analysis in context to the emerging market and making innovation in
technology. For Saisnbury, the strengths of the company is effective pricing strategy of products,
number of brand and products for all income group consumers. Thus, these components assist
Sainsbury with Argos to make development in its business and make capable Argos to gain
competitive advantages or developing customer base.
Acceptability- it is most essential and important for the companies to efficaciously
measure the plan of action in form of acceptance from stakeholder of the organisation (Shrestha
and et. al., 2019). It states evaluation of different complexities related to approach and proceeds
which are generally to be analysed by the company for this new enterprise. There are different
shareholders of the organisation which are defined under Stakeholder power index:
INTEREST LEVEL
POWER
LEVEL
High Low
High Employees, Investors Government
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Low Customers Suppliers
Apart from all the stakeholders existing in the enterprise, there are three shareholder
groups that could be majorly influenced by this strategy. All these stakeholders are defined as
beneath:
Investors- these are main individuals that provide their monetary value in the company and
suppose a high return from its procedures. They are important to be analysed in reference to
company is preparation to make expansion in its business activities with the organisation.
Sainsbury and Argos both operate in retail sector and the merger will surely assist these firms in
capturing large market share and size, maximising profit and gaining competitive advantages.
This will help in proving better returns to the capitalists.
Employees- they are main resource and entity who support company to accomplish its goals and
running the business activities and operations in effective and efficient manner. They would
analyse an instant influence on the strategy that accepted by the firm (Smallwood, 2019). Apart
from it, after the merger, it is majorly likely the workforce is changed with artificial intelligence
in the firm. However, intensity of this occurrence is low because certain amount of employees
would be needed to the business to compact with the suggestion of amalgamation.
Suppliers- they are influenced with the new strategy of the firm because both companies share
effective supply chain and with the help of this merger, there are various kind of changes
occurred in the framework that introduced by the enterprise which might create impact their
inbound activities. The firm might be capable to minimise their procurement finance which
would accomplish more profit margin to organisation.
Feasibility- in order to measure feasibility of the strategy, there are different competencies that
would be required in order to effectively complete merger like negotiation and analytical skills.
Apart from it, due to diligence would also come in to play because fair and good goodwill would
be shared (Sperry, 2019). With the help of this analysis, it would be definite that the plan of
action is quite better in form of feasibility. To make it more successful, fiscal assists would be
needed to Saianbury’s to negotiate better buying consideration with Argos’s administration.
Stakeholder mapping- It is an activity of finding out the key shareholder of the company. This
process consist finding out all people who have an interest in the project result. Once the
management of the firm find out its stakeholder, the manager must map is categorise them as per
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different levels of involvement like the level of interest and the level of influence. It is crucial for
the success of the company because when the firm have mapped its stakeholder it will help in
better managing their expectations.
CONCLUSION
This has been concluded from the preceding define content that all the business
enterprises needs authentic plan of action to accomplish short and long term goals of the
company. In order to monitor growth options and threats that are connected to the business
environment, PESTEL analysis is organised by the management. At the time of planning to
monitor rivalry in particular industry porter's five force model is implemented. With the help of
VRIO model actual capabilities of a company can be analysed so that internal strengths and
weaknesses can be evaluated. SAFe system is utilised by various entities to frame better
approach for the business before using a new tool and technique.
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Online
Sainsbury’s PESTLE Analysis. 2020. [Online]. Available Through:
<https://www.mbaskool.com/pestle-analysis/companies/17990-sainsburys.html>.
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