Report: Macro Environmental Influences on Business (Sainsbury's)

This report provides a comprehensive analysis of the macro-environmental influences on business operations, using Sainsbury's as a case study. It begins by defining the business environment and its two key components: internal and external factors, with a particular focus on the macro environment. The report then delves into the different types and purposes of organizations, including public, private, and voluntary entities, and examines their size, scope, and range. The interrelationship between various functional areas within a company, such as HR, finance, and marketing, is discussed in relation to organizational structure and objectives. The impact of positive and negative factors on business operations is analyzed, followed by an assessment of the internal and external factors within Sainsbury's environment, including strengths and weaknesses. The report highlights the importance of coordination between departments, such as marketing, HR, finance, and research and development, for achieving organizational goals. Finally, the report provides an overview of how companies can adapt to the macro environment.

MACRO ENVIRONMENTAL
INFLUENCE

Contents
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
P 1 Different types and purpose of organization.........................................................................3
P 2 Size scope and range of different type of organizations........................................................4
LO 2.................................................................................................................................................6
P 3 Relationship between different functions of company in relation with its structure and
objectives.....................................................................................................................................6
LO 3.................................................................................................................................................7
P 4 Impact of positive and negative factors on the basis of operations of business....................7
LO 4.................................................................................................................................................9
P 5 Analysis of the environment for their internal and external factors......................................9
P 6 Interrelation of strength and weaknesses of macro factors that is external.........................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment can be defined as environment and its factor that affect performance and
success of business. Business environment has been divided in two parts that is internal
environment and external environment. Macro environment of business is part of its external
environment and impact of factors of macro environment are difficult to predict and completely
uncontrollable for business organisation. Sainsbury's is the second largest chain of supermarkets
in the United Kingdom, with a 16.0% share of the supermarket sector. Founded in 1869, by John
James Sainsbury with a shop in Drury Lane, London, the company became the largest retailer of
groceries in 1922. This report highlights issues which companies such as Sainsbury faces in
internal as well as external environment and the opportunities available to them so that they can
achieve growth (Wu, Wu and Yang, 2019). Strategies and measures implemented by the
company is also highlight with the assessment of areas of improvement.
LO 1
P 1 Different types and purpose of organization
There are different forms of organizations and they are classified on the basis of purpose
they serve. Other than that they are classified on the basis of their scale, level of investment and
their legal structure.
Public Organizations-
These types of companies are undertaken and maintained by the bodies of government.
The purpose of these types of companies is to provide services to people and the society. The
controls of these organizations are within the hands of local, state or national government.
Organizations such as NHS come under this form of company and they provide their services at
cheap rates so that they can serve and cater to the needs of more and more people. They work for
the benefit of the society and their motive is not to earn profits instead to meet the needs of
customers and satisfy them. The legal structure of this form of companies is usually in the hands
of state or national government and most of the times it is the government who owns the most
share in it (Sbihi and et.al., 2019). For instance- Companies such as NHS are entitled under this
form of company and they maintain their operations for the benefit of people.

Private Organizations-
This form of organizations are registered under the private limited entity which makes it
different from government organizations as the sole purpose of these companies is to sell goods,
increase their share in the market and earn profit to sustain their market. Government bodies do
not have any role in this form of organization they only interfere in them by making changes in
the policies which affects the business. Companies such as Sainsbury are registered under this
form and they can be owned and opened by individual or more people than that so that they can
increase the scale of their operations. The legal structure of these form of company differs
because of types of private organizations such as sole proprietorship, partnerships etc. For
instance companies such as Tesco, Marks & Spencer serves in the market with the motive of onl
earning profit.
Voluntary Organizations-
This form of organizations is not formed by government but by a group of members who
want to contribute their efforts for the people who are underprivileged so that they can provide
opportunity to them to make their life better. These types of companies are non profitable and
companies such as Oxfam comes under this aspect. These companies leave an impact in the
minds of people socially. In order to maintain their operations and activities these companies
seek donations and hosts events of charities and use that for the betterment of poor people. They
gather money from profitable organizations and engage some of their members into these
activities of social services. Legal structure of these companies is not strict as they make
volunteers as their members that are non profitable (Obati, Awino and Ogutu, 2018). For
instance Oxfam have no ulterior motive rather than working for charity and donations and
increasing them for the welfare of people.
Interrelationship between different functional areas and their role in achievement of
organizational objectives
Sainsbury’s can be contextualized for this discussion. Sainsbury’s is one of the
organization in which several functional areas are being operated such HR, finance, production,
marketing. These functional areas require to be interrelated because HR related needs of every
functional area is completed by HR department. Other than this marketing work for achievement

of overall organizational objectives and remains in close relation with sales, finance and HR.
production department require assistance of marketing and financial department along with
purchase department. This way all functional areas are dependent on other functional areas and
their collective functioning contribute in achievement of organizational aims and objectives.
Advantage and Disadvantages of working together
Advantages
 Working together with other functional areas bring effective results for overall
organization
 Working together with other functional areas facilitates working for example- working of
production finance department will help production department in developing and
maintaining their budget. Other that working together with HR will help in getting skills
and suitable workforce for production activities
Disadvantages
 Working together with other functional areas can affect individual interest of the
functional areas
 Conflict in functional areas can affect interest and effectiveness of Sainsbury’s as an
organization
P 2 Size scope and range of different type of organizations
Basis Micro Medium Large

Objective Micro or small
companies start up their
venture with limited
amount of capital and
their objective is to
make their name in the
market and make people
aware about the service
or products they offer so
that they can keep
earning substantial
amount of profits.
Medium scale
businesses or firms
maintain their
operations with one
motive to achieve a
level of growth every
year. This is necessary
so that with time they
avail all the
opportunities which
helps them to convert
their scale of business
into large scale.
These companies are
known for their giant
scale strategies and
operations and their sole
objective is to increase
their share in the market
by keeping the level of
competition behind and
satisfy the customers by
offering them products
and services as per their
needs.
Stakeholders Small or micro
companies do not have
many people as their
stakeholders only the
owners and employees
representing the firm are
the stakeholders of the
company (NJERI and
SUSAN, 2018).
Stakeholders of
companies maintaining
their operations on a
middle level are their
employees and
customers.
These companies have
many parties involved
in the list of their
stakeholders such as
board members,
suppliers, consumers
and all the parties they
maintain their relation
with in order to deal
with the business.
Profit Volume The volume of profit of
these companies is very
low because they are not
able to implement new
strategies and methods
and because of the less
power of workforce
they are able to take out
limited level of
earnings.
Medium scale
businesses have the
reach to take out profits
which satisfies their
basic needs. It can be
increased if the
management of the
company increases the
level of funds invested
in the business as then
they will be able to take
These companies the
highest amount of
profits because they
incur high revenues
from their services as
they have established
their base of operations
in many different
countries.

out more profits from
the business.
Legal Structure The structures
implemented by these
firms are limited
liability as it is flexible
to their nature.
The structure of
companies operating on
a medium level is
usually limited
partnership.
Large scale businesses
implements the legal
structure of legal entity
which is undertaken by
their owners.
Size The size of their
operation is similar to
trading or retail business
on a small level.
Size of these companies
employs around 250
employees or more than
that and they have a
establish base in the
market.
Size of these companies
are the largest as they
maintain their
operations on an
international level.
Scope Scope of these
companies is less due to
fewer resources.
If they avail their
resources in the right
manner with the right
network they can
achieve growth.
They have large scope
as they have many
resources and can raise
money easily from the
market.
Companies that are maintaining their business on small level has to perform as per the needs of
the market and present something unique if they want to attract consumers to them.
Medium scale business needs to assess the sources which can help them to invest and put more
money into the area so that they can use them into increasing their scale of operations and
improving their quality of services (Mansuy and et.al., 2019).
Large scale companies needs to conduct a research before entering into markets that are
emerging so that they can assess the rate of success there with the potential of the market.

LO 2
P 3 Relationship between different functions of company in relation with its structure and
objectives
Marketing with HR-
The department of HR has many different duties and if not looked properly companies
such as Sainsbury cannot achieve their goals and objectives. They have the duty to hire and
select those employees who are best for the company so that they can explore the needs of the
market and find out new opportunities through which they are able to improve the performance
of the company. The department of HR has to look after the training and development of
employees and evaluate them on the basis of their performance so that they promote them or
offer them incentives on the basis of that which will keep them satisfied. It is necessary that both
of the departments work in coordination because team of marketing will be the one which will
help them to promote the process of recruitment so that they get more and better candidates in
interviews and it will be the team of HR which will select who is viable to carry out the activities
of marketing (Okeke and Onyemechara, 2020). If the department of marketing does not work
with HR in coordination then they will not be able to achieve their goals.
Marketing with Finance-
Finance is considered as the most crucial and important aspect of the business because
without it company won’t be able to carry out their activities. This is why Sainsbury keeps a
keen eye on this department so that there are no errors which can lead to high amount of losses.
It is the department of finance of the company which sets the budget for every department which
includes department of marketing also. The activities that they carry out for promotional aspects
costs high amount of money which is sanctioned by the department of finance. The marketing
process has to be done under the budget and they need to work together because if not then they
won’t be able to work effectively. If the department of marketing does not work with the team of
finance in coordination then they will not be able to achieve their goals
Marketing with Research & Development-

The management of Sainsbury can take help from this department and put their attention
on those areas which can help the business to increase their share in the market. This is why
management of the company has taken initiatives to invest more in this department so that they
can serve their purpose and find ways to offer more level of satisfaction to their consumers. With
the help of this marketing team can also put their efforts into those markets which are found to be
viable and profitable by the team of R & D. This way they will be able to form the strategies
under the guidance of R & D team which will reduce the errors in them and they will be able to
deliver them effectively (Salami, 2016). If the department of marketing does not work with R&D
department in coordination then they will not be able to work with new approaches which will
lead to failure.
LO 3
P 4 Impact of positive and negative factors on the basis of operations of business
Political Factors-
This factor is concerned with the level of control government has on business by their
decisions. Currently the management of the company is facing many issues because of the
decision of Brexit. This is because it is created difficulties for them to import the product from
other countries and if the rate changes then the price then consumers will have to pay more
which will affect the business of the company. The positive factor for this aspect is that it is
beneficial for the business in long run but the negative side is the rate of tax has increased and
exports have decreased.
Economic Factors-
This factor looks after the rate of growth for business in a country so that investment can
be made according to that. The management of Sainsbury is concerned about the increasing cost
of fuel which will make transport more expensive and the increased cost will lower the margin of
profit. Another concern for the company is that employees are expecting a rise in salary every
year but in times like this such as the pandemic of Covid-19 it is getting difficult for the
management of the company as the level of profits has been reduced and they are not able to bare
the operating cost. On top of that the level of competition they are facing is high and fierce from

the companies such as ASDA, Tesco etc. they are affecting the business of the company (Klein,
Puck and Weiss, 2019). The positive aspect of this is due to covid whole market has been reboot
and if they come up with something new they will be able to gain competitive advantage and
negative aspect for this is if they do not come up with something new then they will not be able
to survive.
Social Factors-
This factor is concerned with the values, beliefs and culture of people. If this is not
followed then people will not accept the offerings launched by the company. It also looks after
the changing trends in the market and currently people are caring for their health because they
want to keep their immunity strong so that they can stay safe. In order to fulfil their needs they
are offering healthy snacks and food items as Sainsbury is known for adapting the trends at fast
rate. Other than this they want these products to be fairly manufactured so that they are assured
that it is safe for them. Positive side is till they are working as per the needs of people they will
have their support and negative factor is that the moment they start something which is against
their mindset they will lose it.
Technological Factors-
This factor helps the companies such as Sainsbury to work with modern approaches and
advanced methods so that they can offer more convenience to the customers. With the help of
this aspect Sainsbury has been able to sell their products by using online platforms to increase
the level of comfort for customers and increase their sales. Other than this they can take this
aspect to build a model which helps the company to reduce the level of waste and increase their
profits which will help the company to sustain their forces in the market (Khan and et.al., 2019).
Positive aspect is that level of waste will be reduced and the negative aspect is that in order to
change their methods they need to invest a huge amount of money.
Legal Factors-
This factor is concerned with the legal aspects such as laws and regulations made by the
government which is necessary for the management of the company to follow so that they are
allowed to serve their business in the country. Sainsbury has maintained their reputation in a nice

manner in the market as they have not involved in any frauds or scandal. Positive factor for this
is that this will maintain their reputation and negative is that if not followed legal action can be
taken against them.
Environmental Factors-
This factor is concerned with looking after preserving the nature and sustains the forces
of it. This is why Sainsbury has taken an initiative to reduce the use of plastic by making single
use plastic and ask customers to bring their own carry bags and containers. Other than this they
are focusing on reducing the level of carbon footprints which is released from the stores and the
use of transporting goods so that they can contribute for the betterment of the environment
(Grzelak and Ghajar, 2017). Positive factor is that it will sustain the environment and change
their image in the eyes of people and negative is that it will make their process of distribution
expensive.
LO 4
P 5 Analysis of the environment for their internal and external factors
Strength-
Company is known for their right implementation of strategy at the right time. As they
have started from many small and few resources and with right strategies they build their base
strongly. Currently they are in the second position of chain of supermarkets in UK. They have
been always able to retain their customers because they follow the strategy of low cost which
helps to serve people from all segments of income. Other than this they have made their outlets
as retail stores through which they sell many products that are branded so that they can satisfy
the needs of high income level group. Company is also known for their other services such as
wholesale and retail banking it is in a different sector but it has helped the company to diversify
their portfolio and reduce the level of risk. The strategies they use are innovative and they are
known for brand match promotion where they clearly announce that no other competitors of
them can sell this product at lower price than them. Their strategy of allotting coupons is
different as they offer it on the basis of behaviour of the shopper and the data is compiled from
their scheme of Nectar Loyalty card.

Weakness-
The company is facing the issue of brand switching which is because they are not able to
many of their loyal customers as they have many alternatives available to them. Other than this
they have seen a reduction in sales after the introduction of online channels and in order to keep
them attracted to them they have to reduce their share of profits. Other than this in order to
improve the level of shopping experience for customers they need to invest in their retail stores
and keep it updated with enabled technology and sales person to help people which is getting
difficult for the company to bear the cost (Golubkina and et.al., 2020).
Opportunities-
Company has the opportunity to tap into the rural markets as it is that sector which has
seen rise in the line of grocery business and that is why it is viable for the company to claim this
opportunity. This will help the company to establish their base in smaller markets. Other than
this they have the scope to enter in other emerging markets in different countries in order to
increase their revenue (Fridel and Zimmerman, 2019).
Threats-
Sainsbury do not face many threats but one of the biggest threat they face is the high
level of competition in the market from big giants in this sector such as ASDA, Tesco Aldi and
Lidl and they are affecting the growth of their business.
P 6 Interrelation of strength and weaknesses of macro factors that is external
There are various similarities and differences between pestle and SWOT analysis and the
reason behind that is it helps the companies such as Sainsbury to gain insight of both internal as
well as external environment and on the basis of that they make their moves and measures
through which they increased their chances of success. There have been many cases where both
the forms of analysis have related with one another. There is difference between both the aspects
such as with the help of Pestle analysis the company is only able to take out and gain
whereabouts of external market whereas with the help of SWOT management of the company is
able to collect the knowledge of both internal as well as external market. The different factors
covered in pestle analysis helps the company to look after the decisions and power of