BUSN07023 Essay: Sainsbury's Response to External Environment Changes

This essay examines how changes in the external environment have affected Sainsbury's, a major UK supermarket chain. It covers the company's background, annual revenue, and the impact of political, economic, social, technological, legal, and environmental factors using PESTEL analysis. The essay highlights threats and opportunities arising from technological advancements, such as cyber-attacks and the potential of AI and robotics. It also discusses how Sainsbury's has adapted to challenges like Brexit, the COVID-19 pandemic, and the need for environmental sustainability. The conclusion emphasizes the importance of a sustainable supply chain and ethical data collection practices, recommending that Sainsbury's continue to innovate and adapt to maintain its competitive edge. Desklib provides access to similar solved assignments and resources for students.

Business in the 21st
century in context of
Sainsbury

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK...............................................................................................................................................3
Summary.....................................................................................................................................3
Annual revenue, growth & profit................................................................................................4
External environment and how changes in the external environment impact on a business......4
Threats in Technological Factors................................................................................................6
Opportunities in Technological Factors......................................................................................6
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
This essay will investigate the ways in which the external and internal business
environment affect its day to day working which businesses are very prone to in terms of
operational disruptions. Business helps to improve the quality of life in two ways. Firstly, it helps
the people in acquiring things for their comfort, health and enjoyment (Boone, Kurtz and
Berston, 2019). Secondly it offers opportunities to the people that is related to employment
through which they can generate money and improve the quality of their lives. Now-a-days
businesses have increased the use of technology to a great extent for the purpose of new and
innovative ideas (Boyce and Ville, 2017). use of technological resources to such extent help the
economy, of the country, to grow. In this report, the organisation is taken into consideration is
Sainsbury. It is one of the largest supermarkets in UK and was established by John James
Sainsbury in 1869. This report covers the introduction as well as the overview of the chosen
company. After that it summarize the external environment and its impact on business. At last,
the project report covers the external environment over the last three years and the opportunities
and threats faced by the company.
TASK
Background and justification of choosing Sainsbury
Sainsbury is the second largest chain of supermarkets in the UK. It was established in 1869
by John James Sainsbury. The company offers a huge variety of groceries, clothing, electrical,
financial serves, homewares and many more products. The company's main focus is on providing
great value food and convenient shopping in stores as well as online. It has over 1400 stores
across the world. Sainsbury wants to reduce the impact drawn by various environmental factors
on business and work with growers, farmers and suppliers all through the supply chain. They
operate with millions of customer transactions every week. Sainsbury have a large number of
employees and suppliers as it is a very big supermarket. Further, the organisation focuses to
ensure that the brands contribute a significant amount in their own right. The organisation
renders the customer’s various products to satisfy their needs. This help the company to make
profits, grow and stand strong in the marketplace.

The core purpose of Sainsbury is to provide quality food at a reasonable price. The
organisation believes in satisfying the needs of its customers, environment and suppliers. The
reason of their growth and success is their clear marketing strategy and clear brand
communications that have helped the retailers to maximizing profit.
Annual revenue, growth & profit
Revenue refers to the sum of money inherited by the company and received from its
customers in exchange of products and services. To earn revenue is the main aim of an entity and
grow in the market. All the costs and expenses are deducted from the revenue earned to calculate
the net revenue or income earned by the company.
Annual revenue of Sainsbury approximately, for 2021, was $38.004B. It enhanced by 3% as
compared to the previous year, 2020.
External environment and how changes in the external environment impacted Sainsbury
External environment are the outside factors of an organization, they can affect the
business operations, revenue and personnel directly or indirectly. They are uncontrollable as they
are outside factors (Nurmi and Niemelä, 2018). There are various external factors which may
influence the working of an organisation. But these all factors directly or indirectly affect the
company's operation and their development.
The PESTEL Analysis in Relevance to Sainsbury are discuss below:
 Political Factors: The political factors include government policies, tax policies and
labour laws etc. Brexit is one of the major political factor which influence the functioning
of Sainsbury to a great extent. Brexit is the exit of British from the European Union. This
imposed various restrictions on the import and export through the British ports. This lead
to an increase in the prices of the products and services due to increase in taxation and
other costs such as shipping cost. This may result in a loss of customers as the
competitors can easily influence them by offering products at a relatively low cost.
Sainsbury is operating in the political factors that are mostly contributing to business and
adjust its business and market policies as well.

 Economic Factors: These factors are including taxation rate, exchange rate, economic
performance etc. As compared to the GDPs of other nation, UK have a vast economy and
is the sixth largest all over the globe (Mnif Sellami and Gafsi, 2019). The variable
exchange rate of UK can impact the Sainsbury's investment plans both on short term and
long run. Covid-19 pandemic affected the nation in every sense, especially the
economies. A sudden rate of fall in the income of citizens was noticed because of losing
jobs. Further, the employers cut down the salaries of their employees because the
consumers stopped shopping products other than food and beverages. As Sainsbury is a
brand, it is quite costly and so the consumers switched to a cheaper brand. This may
severely affect the profits and operations of Sainsbury.
 Social Factors: The age distribution, population, lifestyle are involved in the social
factors. Several initiatives taken by Sainsbury in recent years in response to social change
and demand (Munro and Belanger, 2017). Media plays an important role in influencing
the general public. Whether social media or traditional media, both are increasing at a fast
pace in UK. The company takes advantage of this for the betterment of its position in the
market.
 Technological Factors: Some of the technological factors are involves innovation in
customer’s services, supply chain disruption, technological awareness etc. (Kelders and
Howard, 2018). Technological issues coming up very often with new systems and
innovations. Retail industry is quite dynamic and thus faces highest level of changes.
Marketing through social media platforms is one of the most creative and useful
inventions ever made in the retail industry. Sainsbury keeps an eye on the increasing use
of such platforms by the consumers so that the organisation can get the most benefit from
it.
 Legal factors: Legal factors include various laws and policies imposed by the
Government of the country on the operations of businesses. Sainsbury will be impacted
by legal factors if they are not follow the legal protection of patents, copyrights,
intellectual property or other rights in UK. These factors highly influence the working of
an organisation, their costs and the products demanded
 Environmental factors: In recent time the people and the government of any country
wants an environmental friendly organization. Sainsbury has various policies set to make

the environment quite appropriate and sustainable for the operating business. The
competitors operate their business as well in an eco-friendly manner. Eco-friendly
products help the company to conduct its business smoothly in an effective and efficient
manner to satisfy the needs of its customers. Sainsbury is also working to reduce its
carbon stuff in operations.
Threats in Technological Factors
From last three years, there are many threats found in the technology because
technological issues coming up very often with new systems and innovations. Being a large
industry, retail industry faces various changes which makes it quite dynamic. Companies faces
threats like information security incidents, password theft and cyber-attacks etc. Sainsbury also
face issues related to cyber-attacks and it is a major threat to the company (Hassan, et.al., 2018).
Customers not feel safe and confident in using those latest technologies. Security issues is
increasing day by day. Online customers are increasing because of this online crime will increase
too such as online banking frauds, passwords theft and hacking into email accounts etc. The
company is taking suitable actions to reducing technology risk and prevent the data security by
servers and wireless networks.
Opportunities in Technological Factors
Sainsbury should be enhancing their business by artificial intelligence and robotics. The
development of machines that can substitutes for humans, multitasking etc. They should take
advantage and invest in the development of the cyber and data security. It is the good way to
acquire customers towards the company. If the company wants to enhance their business, then
they should follow the new ways to increase in technology. Innovation in technology leads to
easier access to information, provides better learning techniques, cost efficiency etc.(Song, Kim,
and Lee, 2017). By creating online channels Sainsbury will easily know the taste and
preferences of customers and make changes accordingly. Another opportunity that technology
can bring into Sainsbury is reduced language and cultural barriers. By using online translator,
they can easily translate different languages and understand the needs of customers. The
company can have accessed sample within days without visiting industry because they can sign
contracts electronically.

The way Sainsbury adapted to the identified challenges
The external environment of UK has affected Sainsbury in various ways as the company has
been quite diligent to adapt to the required changes as it is a major player in the UK’s retail
industry. Some major ways in which Sainsbury’s got affected by these changes and the way it
overcame them has been listed herein.
 In order to become more proficient with modern technologies, Sainsbury has brought
forth major changes to its workforce with the use of smart retail systems in many of its
stores which are helping employees work in a more productive manner
 The supply chain and distribution network of the company got hit terribly hard due to the
combination of the COVID-19 pandemic and Brexit as it hampered the capability to keep
the stocks shelved with the needed products. In order to combat this adverse change,
Sainsbury has partnered with more suppliers and has made operational changes to its
supply chain to make it more agile to deal with external changes in a better way
 One of the major challenges for Sainsbury has also been its outlook towards
environmental sustainability which is a major global trend which needs attention. In order
to become more sustainable, Sainsbury has made carbon emission reduction targets and
made better means of packaging
CONCLUSION AND RECOMMENDATIONS
From the above report it has been concluded that the business is defined as an entity
established to operate some commercial activities and some strategic recommendations for
Sainsbury can also be highlighted to achieve better performance and overcome the identified
challenges which are listed herein.
 The firm should look to make its supply chain more sustainable as it is a major source of
emission and should look into alternate means of good transportation
 The company should also ensure that it should completely stop the use of non-
biodegradable means of packaging and labelling
 In order to be more technologically ethical and responsible, the firm should develop
robust standards of data collection guidelines and should not use sensitive data for any
commercial purposes Name two key sources of reliable information relevant to
workplace processes.

External environment and the changes in the external environment impact on the company's
business. The Brexit had an intense impact on the organisation. Technological issues coming up
very often with new systems and innovations. An increase in technology, helps the country to
expand globally. Social Media marketing is quite crucial and creative invention in the retail
industry. At last, the threats and opportunities of the technological factors are being analysed.

REFERENCES
Books and Journals
Boone, L.E., Kurtz, D.L. and Berston, S., 2019. Contemporary business. John Wiley & Sons.
Boyce, G. and Ville, S., 2017. The development of modern business. Bloomsbury Publishing.
Hassan, S.S., Bibon, S.D., Hossain, M.S. and Atiquzzaman, M., 2018. Security threats in
Bluetooth technology. Computers & Security, 74, pp.308-322.
Kelders, S.M. and Howard, M., 2018. Opportunities of technology to promote health and well-
being. In eHealth Research, Theory and Development (pp. 48-68). Routledge.
Mnif Sellami, Y. and Gafsi, Y., 2019. Institutional and economic factors affecting the adoption
of international public sector accounting standards. International Journal of Public
Administration, 42(2), pp.119-131.
Munro, M.M. and Belanger, C., 2017. Analyzing external environment factors affecting social
enterprise development. Social Enterprise Journal.
Nurmi, J. and Niemelä, M.S., 2018, November. PESTEL analysis of hacktivism campaign
motivations. In Nordic conference on secure it systems (pp. 323-335). Springer, Cham.
Song, K., Kim, K.S. and Lee, S., 2017. Discovering new technology opportunities based on
patents: Text-mining and F-term analysis. Technovation, 60, pp.1-14.