Applied Corporate Strategy: Sainsbury's Plc Case Study

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Applied Corporate Strategy
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Table of Contents
Introduction......................................................................................................................................3
Q1. Carry out the external analysis to identify a set of Opportunities and Threats and assess
industry attractiveness.....................................................................................................................4
Q2. Analyse the resources and key competencies of the organization and indentify core
competencies..................................................................................................................................10
Q3. Choose one strategy that the company implemented recently and evaluate it using SAFe
criteria............................................................................................................................................15
Conclusion.....................................................................................................................................17
Reference List................................................................................................................................18
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Introduction
Corporate strategy is the hierarchical strategic plan of an organisation, which depicts it goals and
objectives to make their management strategic and systematic. The strategies can improve the
corporate and competitive structure of a company improving the overall position of the company
in the competitive field. The values of the stakeholders and the shareholders are increased by the
corporate strategy, which is beyond the company resources. The study will analyse the internal
and external environment of the organisation taken in these study to analyse the suitable strategy
for the company. The organisation, which will be incorporated here, is Sainsbury Plc and it
external and internal environment will be analysed here to evaluate the suitable corporate
strategy of the company.
Sainsbury is the largest supermarket with numerous chains and branches with near about 16.9%
share in the United Kingdom (Sainsburys.co.uk, 2019). The company was established in the year
1869, which is planning to take over Argos. The study here will give the strategic path for the
company to gain success.
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Q1. Carry out the external analysis to identify a set of Opportunities and Threats and
assess industry attractiveness
The analysis of the external environment of a particular company is very essential to identify the
new threats and opportunities. The latest technological trends and the competition among the
various retailing organisations have increased. Therefore, to keep track of the risks and threats
the continuous monitoring should be done. The constant monitoring and controlling will help in
building up new strategies. The PESTLE and the Porter’s five forces will be used analyzing the
company external environment.
PESTEL analysis for Sainsbury
Components Description
Political The political factors are very important for a
UK based company like Sainsbury; the
political factors leave a mark on the
organisations of the United Kingdom. The
corruption of the United Kingdom has led the
company to limited resources. The level of
crime has increased by 14% due to the lack of
employment and career opportunities. The
recent political factor, which is the Brexit
impact, has led to vulnerable situations. The
sales of the retailing companies has been
reduced to near about 4% due to the Brexit
impact t, this has been stated by the reports of
the retail traffic register(Wadsworth et
al.,2016). The country that has been affected
by the Brexit is the Northern Ireland,
Yorkshire, England and Wales and they have
decreased their income by 15%.Therefore,
Sainsbury Plc will have huge problems
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scattering their businesses in the United
Kingdom and the political factors of UK will
deliberately be a threat to the company.
Economical The Brexit impact has also affected the
economic standards of the retailing
organisation operating in the United Kingdom.
The real per capita income level has reduced
due to the Brexit impact. The GDP has been
decreased to 2%, the inflation rate has been
increased by 1.7%, and the overall economy
stands for £70 million pounds (Un.org, 2019).
Due to this reason, the cost of the retailing
products including the food and dairy products
will increase which will not cater to the
demands of the customers. There are many
people employees in the retailing sectors,
which will also affect their career. Due to the
recession, the Sainsbury processes can be
affected and the economic standards will be
affected. The recession of the United kingdom
in the economic fields has been increased to
4.2%.The customer power will be affected
adversely as the products prices will be
increased. This will result in less competitive
advantage and profit for the organisation.
Social United Kingdom is considered one of the
richest countries in the whole world. Its
population comprises of 69 million
approximately. The employed people in the
country is half of the overall, population
leading to 32.53 million and they get
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opportunities for working in the retailing
organisations and serving the people in a much
better way. The modernisation has led to
people becoming more health conscious and
Sainsbury target to the health conscious people
and have recently launched their range of
healthy products. These strategies will help the
organisation to attract more people and prove
its impression of socially concerned
organisation. The company has recently
merged with many companies leading to their
partnerships with near about 100 companies to
make promotional campaigns and
advertisements their products in a much better
way (Hopkins, 2016). The company has even
withstood their legacy by contributing more
than 400 million pounds to the society and the
people. The strategies and steps they have
taken have improved their corporate structure
relevantly. Therefore, the company can earn
more profits and competitive advantage by
being customer oriented.
Technological The technological advances in the market and
the inclusion of their services have made
services better and the communication among
the customers and retailers have increased. The
technological advances also increased the
competition among the retailing organisations.
Nevertheless, customers being more
technologically oriented retailers applying the
strategies to further develop their services.
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Online services are most preferred than stores
as customers are getting their products and
services handier. According to a survey, more
than 88% customers prefer online services than
buying products from the stores. The
technologies like RFID (Radio Frequency
Identification) and the R & D technology have
popular in the retailing sectors. RFID will help
Sainsbury analyse and keep control in their
sales data. The company can become
strategically hierarchical and gain customer
preferences and competitive advantage as well
Environmental The Carbon footprint has incremented to 10
tonnes in the recent year of 2018.The UK
government have taken many measures to
lower the carbon emission by making control;
over the automobile companies, Many
companies has also taken initiatives in
producing low emission cars. The retailing
organisations have also taken initiative in
making climate control; program to their
processes so that they balance their operations
as well as be environmental friendly. The 9685
offshore and onshore wind turbine in the
United Kingdom has cleared that government
has taken initiative in using renewable energy
resources. The Just in Time Inventory
management system (JIT) also helps in waste
management and even make the organisational
activities processed. The company has taken
measures to start a biodegradable packaging
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system. This will help in developing their
Corporate social responsibility (CSR) and
improve their corporate image eventually.
Legal There are many Employment legislation act
that every company should follow while hiring
new employees and maintaining their already
existing employees as well. The Working time
regulation act 1998, Employment rights act
1996, National Minimum Wages Act 1998
and Equality Act 2010 , all this needs to be
followed the company to make a better work
field (Freedland et al.,2016). The rules if
violated in any other way can be punishable
under the rules of the government. The
company should also follow the Packaging
and labelling act and the General product
safety regulation (Wilson et al., 2017). The
violation of these laws can make their
operations risky and can hamper their
corporate image.
Table 1: PESTEL of Sainsbury
(Source: Created by the learner)
Porter’s Five Forces Model
Competitive rivalry: The globalisation and the rapid urbanisation have made the competitive
more tough for the retailing organisations. There are more potential competitors of the company
Sainsbury, which have developed products and services. The companies like Tesco, ASDA and
Marks & Spencer are the most competitive brands in the United Kingdom. They compete to
produce products that cater to the preferences and demands of the customers to gain maximum
market share and profits. The companies are customer oriented and they provide products and
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services, which will prevent them from deviating them to other brands of the same sector. The
competitive rivalry in this will be high for Sainsbury.
Threats to new entrants: The new entry brings moiré innovation to the market. The new
entrants will not be so successful in attracting the customers by applying the competitive
advantage as the strategy have been applied by the most competitive brands and the customers
prefer the products. Therefore, the company has low threat regarding new entrants, as it is
already established company.
Bargaining power of suppliers: In case of the Sainsbury, the power of the suppliers will be low
and the threat will be comparatively low. The company has numerous suppliers and that they
have built a good relation with the suppliers. The suppliers are much eager to stay connected
with an established brand Sainsbury and increase their product demand as well to get more good
companies. They have also managed to buy raw materials from their suppliers in low cost.
Bargaining power of Customers: Sainsbury is a customer-oriented company and therefore they
hold high power over the company. The company uses competitive pricing policy to make their
products render to their customers in reasonable prices. The customer also prefer product quality
to prices, therefore the company has successfully produce products, which are reasonable in
prices as well it is of quality (Crowther and Seifi, 2018). The customers are vulnerable and
therefore the companies are providing high quality products in reasonable prices, to prevent the
customers from deviating to other potential brands.
Threats of Substitutes: Sainsbury provides both edible and non-edible products. The threat is
that the customer choices are vulnerable and they are easily switching from one company to the
other. The products from other brands can be a high threat if they produce moiré quality
products. Therefore, threats of substitutes are relatively high.
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Q2. Analyse the resources and key competencies of the organization and indentify core
competencies
There are certain factors that affect the business internally, which is also termed as SWOT
analysis. The SWOT analysis of the Sainsbury PLC is shown in the table down below:
Strengths Weaknesses
 Sainsbury PLC is known to be UK’s
second best supermarket, after
competing Asada.
 The business strategy that the company
follows has made the existence of the
company more strong than the previous
years.
 Argos and Sainsbury achievement has
brought innovative techniques in the
market that are unique amongst the
other companies.
 The critical aspect of Sainsbury that
has made it so successful over the
years is their reasonable pricing
strategy. The company also applies
the pricing strategies comparing
them with other branded
commodities like Tesco and Asada.
The customers that are loyal to the
company have made them believe on
Sainsbury they being the best
products at the most reasonable
prices (Butler 2016).
 Sainsbury is a complete solution to all
 TESCO PLC is giving a good
competition to Sainsbury market share.
The growth of the rate is very slow in
pace, which is matter of serious
concern for the company.
 The growth of Sainsbury as seen in the
study is less than 5%. This implies that
the company still has to be more
conscious about their position in the
market. The company must implement
certain techniques to take its position at
a higher level.
 The growth rate of the company shows
that the company has not yet attained a
fixed rather secured position in the
company.
 The issue of Brexit has also affected the
business of all the companies in UK.
The economical condition was brought
down due to the issue of Brexit. The
company has to deal with the problems,
cope up with the economical condition
of UK, and make the business moiré
powerful and effective in the market.
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the problems. Customers find all their
requirements under one roof that makes
the customers happy and satisfied. In
the high street of UK, Sainsbury is the
biggest retail company that as provided
its customers with all possible products
that can cater to their demands.
 Sainsbury has its wings spread almost
in maximum areas of UK. They have
almost 1415 stores in various locations
of UK.
 Sainsbury tries to maintain its customer
loyalty by providing them various
offers and discounts. They also provide
seasonal offers. The discounts or offers
they provide attract more customers.
 Sainsbury knows the right process of
expanding of its business both
nationally and internationally. It has
collaborated with ASDA and many
others. The main gain of the company
is achieving Argos.
Opportunities Threats
 Market expansion is a big scope for the
company ensure its existence. The
company must try increasing its outlets
in countries like Asia and Africa where
market expansion is high.
 The company can spread its wing in
other countries both nationally and
internationally to make the company
 Heterogeneity in customers is a very
serious issue in the market. Customer
tends to buy from companies that
provide them products in low price.
 The global recession is a major issue
that threatens the company in losing its
existence.
 The increase in the production cost and
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available to all customers across the
world.
 Sainsbury has the opportunity in
investing in foreign direct policy to try
other sectors other than retail industry.
chain of supply is causing a threat and
the company has more probability of
suffering from loss.
 The ever-increasing competition in the
market is a huge threat. Competitors
tend to avoid the reasons that can cause
customers to change their brand by
studying the market.
Table 2: SWOT Analysis
(Source: Created by the learner)
The recognized threats and opportunities of Sainsbury UK is listed down below:
Strengths (S) Weaknesses (W)
Opportunities (O) Strategic options of SO
Sainsbury must utilize its huge
customer base for selling and
producing its products and use
its brand image to reach other
sectors other than retail to
increase its customer base.
Strategic options of WO
The company must apply new
strategies to enter new sector
of the market and plan new
collaborations with other
foreign companies and make
proper use of the resources.
Threats (T) Strategic options of ST
Sainsbury must pressurize on
their promotion techniques,
quality and innovative
designs.
Strategic options of WT
The company has to observe
the policies and regulations of
the government. Placing the
brand in an new way.
Table 3: Matrix of TOWS
(Source: Created by the learner)
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