Comprehensive Strategic Management Analysis of Sainsbury's Operations

This report offers a comprehensive strategic management analysis of Sainsbury's, a major UK retailer. It begins with an introduction to strategic management and then examines Sainsbury's strategic direction over the past five years, highlighting its evolution and development of strategic thinking. The report delves into an industry analysis using PEST and Porter's Five Forces models to assess the external environment and competitive landscape. It then identifies Sainsbury's organizational competitive advantages. The analysis further investigates strategic drift faced by Sainsbury's, along with its mission and vision statements. It also includes a VRIO analysis to assess the company's strategic capabilities and internal resources, along with a Business Canvas Model. The report concludes with a discussion of possible strategies for defending Sainsbury's core business, an evaluation of resource implications, and recommendations for the business. This detailed analysis provides valuable insights into Sainsbury's strategic positioning and future prospects.

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Strategic direction along with development of strategic thinking in past 5 years.......................1
TASK 2 ..........................................................................................................................................2
Analysis of industry for reviewing external environment ..........................................................2
Organisational competitive advantages.......................................................................................4
Probable industry scenarios facing the entity within its existing market domains......................5
TASK 3 .........................................................................................................................................5
Strategic drift faced by Sainsburys..............................................................................................5
Mission along with vision statement of Sainsburys.....................................................................5
Organisational strategic capabilities............................................................................................6
Business canvas Model................................................................................................................7
TASK 4 ..........................................................................................................................................8
Possible strategies followed by Sainsburys for defending core business....................................8
TASK 5 .......................................................................................................................................12
Analyses and evaluation of resource implications and recommendations that business has to
address........................................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Strategic management is characterised as managing resources of the entity for attaining
objectives. It basically denotes management branch concerned with developing strategic vision,
setting goals, analysing competitive environment, analysing internal entity, evaluating strategies
and ensuring roll out tactics and strategies of management across the business. With this concept,
organisational managers identify key practices so to allocate resources with the aim to
accomplish tasks and sustain fro long run (Ansoff and et. al.,2018). It is extended to external as
well as internal communication practices and tracking, that ensures the business to accomplish
activities as per stated in strategic management program. To understand strategic management,
Sainsburys is considered which was established by John James in 1869. The headquarters of the
entity are situated at Holborn, United Kingdom. It executes operations within retail industry. At
present, the company mainly deals in forecourt shops, superstores and convenience shops by
employing more than 186000 people and earns revenue of around £28.456 billion. The
assignment includes strategic direction followed by the entity and ways through which developed
its strategic thinking within last years. It further includes detailed analysis of industry wherein
key activities are performed along with analysis of organisational strategic capabilities by using
various tools with techniques. In addition, it also discusses possible strategies followed by the
company in order to defend its core business. At last. It evaluates implications of resources and
recommendations for the entity are also discussed in this assignment.
TASK 1
Strategic direction along with development of strategic thinking in past 5 years.
Strategic direction includes utilisation of concepts together with ideas in order to develop
consistent strategy for achieving objectives. It includes detailed information about vision,
mission, internal culture addition to ideologies that are distinguish from other companies but
improves future of organisation. It plays significant aspects as it provides directions together
with helps in outlining measurable goals (Cordell and Thompson, 2019). It addition, it also
maintains stability for the company in which they uses explicit potentialities for carry forwarding
operations towards enhancing overall performances and attaining predetermined outcomes. In
context to Sainsburys, it is one of supermarket chain that effectively provides retail services as
per the requirement of market. Strategic direction helps management of Sainsburys through
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providing guidances to make decisions for day to day activities and evaluating progress addition
to changing approaches while moving forward. The loyal customers uses products offered by the
brand because of its supreme quality along with wide variants in its offerings to the clients. All
these are result of strong vision along with strategic direction which assist the company to
expand operations within diverse geographical areas of UK and other countries.
Sainsburys is performing its operations with vision to become most trusted retailer in
which people love to shop as well as work. It harnesses diversity, creativity along with talent of
its colleagues so to ensure that customers gets great services all the time they shop with the
entity. It is considered as one of modern addition to innovative organisation that has won heart of
local residents and applies international skills. The managers of the entity had clear terms
regarding its strategic directions (Sainsburys, 2019). Such as, in past 5 years as well as from the
initiations, it has adopted strategy so to provide its customers the money value as well as
maintains product quality that ensures customer retention. The company has practised
competitive pricing strategy as to provide gains in market proportions for short duration only. As
time changed, it followed bvarious strategies with the help of which they were recognised as
strong players in all the products they sell. In addition, the management have build strong team
which benefit them in creating values for customers through which they employed loyal.
Productive as well as hard working manpower (Kantur, 2016). As compared with the past,
Sainsburys has changed various policies by keeping the mind the customers requirements.
Hence, practices as well as modifications determines that competent strategic direction is one of
useful exercise for the organisation in context to satisfying demands and preferences of huge
audiences efficaciously. In addition, organisational strategic direction was to gain dominance
within the market that helped in becoming third largest supermarket chain of UK which has
enriched as well as fulfilled overall demand in prompt manner.
TASK 2
Analysis of industry for reviewing external environment
Industrial analysis is one the framework with the help of which organisational owners
understands distinct dimensions of the market along with uses them to gain contending benefits.
External analysis is primarily reviewed through PEST analysis which is core management
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technique helps in assessing external factors that majorly influences their operations while
enjoying competitive advantages. PEST analysis for Sainsburys is as follows:
Political: Trade regulations, political conditions, systems and ideologies are part of
political factor. In the country like UK, political system is fair as well as stable. Sainsburys
performs its key activities in retail sector as well as operates at global market which impacts
positively on its market share and operations through international political dimensions. The
government supports growth and made various provisions for development of such industry and
selected entity makes fuller utilisation of subsidies, taxation rate while performing which impacts
positively.
Economic:The dimensions of economic factors are per capita income, infrastructural
development, inflation rates and economic policies (Johnsen, 2016). The UK has most globalised
economy and it is market oriented. Economic factors have potentiality to affect buyers
behaviours as well as increases costs of transportation and others means. Sainsburys while
working in such economy carefully accounts all the relevant costs and manifest activities such as
lower profit margins as well as favourable consumer price tags that impacts positively on its
profitability.
Social: Dimensions such as family background, occupation, prestige and wealth are some
of social factors. In present scenario, UK's population go with bulk shopping addition to one stop
shopping and for this they needs all the products available at one location or under oner roof. For
surviving in such social environment, Sainsburys has opened various convenience shops along
with forecourt shops wherein all types of commodities that customers demand are available at
one place that drives attention of the market audiences for the entity and meeting their demands
positively.
Technological: The technological environment of UK revolves around new analytics in
technology and online shopping options. Company like Sainsburys uses advancements in
technological analytics and offers options of online shopping to its wide distant located
consumers. The company uses home delivery and self service checkouts options also as per the
convenience as well as ease for customers which eliminates the labour and managerial costs that
helps in energising efficiency of Sainsburys to fulfil objectives.
3

Organisational competitive advantages
The businesses despite of working effectively with capabilities and beneficiary strategies,
faces competitive rivalry (Kunz, Siebert and Mütterlein, 2016). To gain knowledge about core
competition, entities uses framework of Porters five forces model. The model helps in
understanding the leverage that a company has on its competitors. In context to Sainsburys, the
model of Porters five forces is defined underneath:
Competitive rivalry: The presence of competitive rivalry in the retail sector is very high
with crowded market. Various entities are trying to expand their legs in this sector and at same
time there are some companies which have made their prime position in the retail sector.
Companies like Asda, Tesco and Aldi that are main competitors of Sainsburys.
Barriers for entry: the entry barriers are extremely high in retail market because of
presence of certain factors such as requirement of huge investments, proper knowledge about
retailing customers and many more. As Sainsburys has hired effective manpower that has proper
knowledge about local residents and their demand with retail companies helps in making a
unique position in the market.
Threat of substitute: The substitute threat is low within retail sector as customers have
specific views for the specific product. Sainsburys is trying to assimilate addition to converge
new innovations so to make shopping for customers more pleasure experience which makes
difficulty for others to make substitutes like the company offers.
Bargaining power of Buyer: Buyers of retail industry generally have high powers
because of presence of various companies selling same commodities. Price differentiation and
consumer loyalty provides the buyers more powers (Oh, Yang and Lee, 2012). As vast choices
or options are available to the buyers and high switching cost, Sainsburys adopts differentiation
strategy for covering customers from the whole market in successful manner.
Bargaining power of suppliers: In retail market, Sainsburys holds strong position in
context to loyal customer base addition to market shares. Having high recognition values as well
as wide distribution network, suppliers have low bargaining power which provides significant
advantages to coordinate with multiple suppliers in order to get quality materials fro executing
key operations.
4

Probable industry scenarios facing the entity within its existing market domains.
In UK, Sainsburys is fastest evolving organisation in context to retail industry. It has
gained huge success by selling grocery and non food products with the retail sector of domestic
market. In order to portrait unique image, such organisation adopted differentiated strategies in
which they have faced the constraint regarding the ways they can position the image of brand in
customers mindset (Ertek and et. al, 2017). For this regards, they have considered the segment of
customers falling under middle as well as higher income group. However, various competitors
such as Tesco and Asda have gained market profitability because of their pricing strategies. It is
essential for Sainsburys to constantly yield awareness within its customer segment about the
products so to expand its activities and operations efficaciously.
TASK 3
Strategic drift faced by Sainsburys
Strategic drift is characterised as gradual decline of contending actions whose outcomes
are seen as failure of company to acknowledge addition to respond towards dynamisms within
business environment. Such situations occurs when entity is unable to handle changes that are
arising within contiguous environment. Sainsburys has initiates activities for expansions of
business operations in various cities of UK along with global market. For this regards, huge
number of large stores and convenience stores are opened at various places. These stores adds
operating cost to the company and creates huge pressure on the management team to increase
product prices so to cover the costs. Due to increase in prices, shoppers have shifted towards
local purchasers addition to online purchasing. Sainsburys has faced this strategic drift due to
which its operations and profit margins are suffered to huge level.
Mission along with vision statement of Sainsburys
Sainsburys is working with mission of deliver high quality services to potential and
targetted customers along with maximising or providing excellent financial returns to all
stakeholders. In this regards, all stakeholders are served with huge quality commodities
according to their preferences and demands. Sainsburys is serving wide products to gain huge
level of satisfaction among targetted customers.
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In long run, Sainsburys has vision of becoming the mostly trusted retailer with which
individual lovers to shop as well as work. The puts their customers, colleagues and channels at
heart of all the things they perform and invest in stores so to provide best shopping experiences.
Organisational strategic capabilities
For analysing strategic capabilities and internal resources of Sainsburys, VRIO analysis
framework is performed wherein all available resources are assessed to gain sustainable benefits
in completion. VRIO analysis in context to Sainsbursy is as follows:
Resources Valuable Rare Imitable Organised
Distribution
network
✔ ✔ ✘ ✔
Manpower ✔ ✔ ✘ ✘
Patents ✔ ✔ ✔ ✘
Local produces ✔ ✘ ✘ ✘
Financial
resources
✔ ✔ ✘ ✔
Valuable: According to the above table, Local produces, distribution network, financial
resources and patents of Sainsburys are valuable. With these resources, organisation makes
investment decision in well manner, serves market with best products along with have high
loyalty and retention of manpower. In addition, competitive interference is also reduced through
reaching to more number of customers with effective distribution system are achieved.
Rare: The rare resources of Sainsburys are manpower, distribution network, financial
resources as well as patents are rare due to their unique availability. Local produces are not rare
for the company as these are also available with the competitors too. With all these resource,
company gain competitive advantage due to rare availability in the market.
Imitable: The capabilities of Sainsburys that falls into such criteria are patents, financial
resources and manpower. The financial resources that Sainsbury have are hard to imitate by
others (Davis, and et. al., 2016). In addition, Patents are also hard to imitate due to having
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characteristic of not allowing others to use organisational patents. The company has developed
its distribution network and invested significant time and money so to contact with huge
customer base for solving their needs.
Organised: Sainsburys have well organised financial resources and distribution network.
In context to financial resources, investments are made after analysing the returns and grabbing
more opportunities. In addition, distribution system of the entity helps in reaching to mass people
in minimum duration.
Business canvas Model
Business canvas models refers to one of strategic management tool which helps in
quickly defining addition to communicating business concept in impressive manner. It is nothing
but a one page representation that works by covering fundamental elements connected with
business and helps in structuring idea coherently (Doane and Franzon, 2013). The model
provides advantages of structuring discussions, developing great portfolios of ideas and making
intuitive decisions. With this model, existing together with new business ideas are properly
developed so that business functions are smoothly performed. The important variables of
Sainsburys are demonstrated by using canvas model which provides deep understanding addition
to leads towards innovation. The canvas model in context to Sainsburys is as follows:
Key partners
 Associatio
ns.
 Suppliers.
 Local
joint
ventures.
Key activities
 Buying as
well as
selling
consumer
commoditi
es.
 Warehousi
ng and
Logistics.
 Gathering
feedback
addition to
Value
proposition
 Safe
online
purchasin
g.
 Convenien
t
shopping-
no lines.
 24*7
shopping
experience
Customer
relationship
 Listening
customers.
 Long term
relationshi
ps.
 Attracting
wide
located
consumers
.
Customer
segment
 Housewiv
es.
 Subscriber
s.
 Middle-
high
income.
 People
with
traditional
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suggestion
s.
 Effective
distributio
n system,
.
 Wide
selection
of
market .
 Home
delivery.
lifestyle.
Key resources
 Accounts
on distinct
digital
platforms.
 Warehous
es and
logistics.
Channels
 Blackberr
y's
website
 Convenien
ce store
 Dedicated
websites.
 Megastore
s.
 Mobile
applicatio
n
Cost structure
 Capital expenditure.
 Manpower.
 IT infrastructure
Revenue streams
 sale of commodities.
 Delivery at customer footstep.
TASK 4
Possible strategies followed by Sainsburys for defending core business.
For an organisation it is important to take the competitive advantage to ensure their
survival and for this they need to consider various factors which has influence on the operations
of the company. With the help of the various models the Sainbury's can sustain themselves in the
competitive position. The models which can facilitate them are:
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Porters Generic model: Porter proposed this model which suggest four strategies which
can adopted by the company to gain the competitive advantage. The strategies in this model
consider the scope of the business activities which can either be narrow or broad and the extend
to which the products of the company are differentiated with that of the competitors.
Illustration 1: Porters Generic Model
( Source: Porter's Generic Competitive Strategies, 2019)
As per this model the following strategy are following are suggested:
 Cost Leadership: As per this strategy the objective of the company is to be the cost
leader by providing the goods and services at the lower cost. This can be done by
producing the goods at the large scale as the production at large scale reduces the per unit
cost of the goods. Cost leadership can be availed by the company with effective
utilisation of the capacity, by using bargaining power to negotiating the prices with the
suppliers etc. Sainsbury's can use this strategy as they are operating at large scale and the
products which they offers are quite similar to other so they can be provided little
differentiation.
 Differentiation: According to this strategy, the business targets the market with the aim
of taking competitive advantage by providing differentiated products and services
(Vitolla, Rubino and Garzoni, 2017). Such differentiation can be created on the basis of
the quality of products and services, branding, channel of differentiation etc. Sainsbury's
use use this strategy by adding some unique features to their products and services.
 Cost Focus: As per this strategy the lower cost advantage can be taken by the company
from a narrow market segment. This induces that the product which is offered by the
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company will be similar to that of the highly priced product but can be accepted by a
large number of customers. Sainsbury's can use this strategy to target market for some
general products in which differentiation is not required.
 Differentiation Focus: In this strategy the aim of the company is to provide the
differentiated product but only to a narrow segment (Wudhikarn, 2016). This can be
applicable on few products which are used by some specific group of people. Sainsbury's
can use this strategy for the products which can be used by the specific class of people.
This is a classic niche market strategy with which the company can charge higher prices
for specific products with differentiation.
The Sainsbury's can use cost leadership strategy to gain the competitive advantage as
with the help of this they can provide their similar goods at reduced prices which will make them
easy to attract more of the customers. Along with this it will facilitate them to increase their sales
and thus it results in increase of market share of the company.
The other strategy which can be used by the company to sustain the business in the
market is Ansoff matrix which can be efficiently used by the company. The strategy is given
below:
Ansoff matrix: Ansoff matrix is also referred to as market expansion matrix which is a tool
used by companies to analyse and planning of their strategies which is related to growth. There is
a matrix which is used for analysing the risk associated with each strategy in this matrix. There
are four strategies which are discussed and are part of this matrix:
Illustration 2: Ansoff Matrix
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(Source: Ansoff Matrix, 2019)
 Market penetration: This is a strategy which is concerned with increasing the sales of a
product which is already company is dealing into and the market is also exiting. Which
means in this strategy no new product is being launched or no new market is being
targeted. This is a initial strategy of the Ans off matrix. Sainsbury's can use this strategy
By increasing their sales of exiting product in the present market in which they are
already dealing.
 Product development: This is a strategy in which focus is on introduction of a new
product by the company, but the target market is not changed and new product is
launched in the exiting market where company is already having their presence.
Sainsbury's can make use of this strategy by introduction of some new products to their
exiting range of products.
 Market development: this strategy of ans matrix has a major focus on usage of exiting
products for targetting a new market (Kleibrink, Gianelle and Doussineau, 2016). In this
strategy the market which is being targeted is completely different from the present
segment of customers which company is having. This strategy always leads to increase in
the sale of any company ad there is no new product which is being launched is strategy is
also very cost effective as expenditure is only doing for promoting the products of
company in the new target market. This strategy can be developed by Sainsbury's if they
are having a new target market in which the can launch their exiting range of products by
usage of wide promotional tools.
 Diversification: This is a strategy in which both the market and the product are new
which means in this strategy there is a complete transformation of the product which is
being introduced for the first time and also in terms of market where the new -product is
getting launched. This results into a completely new strategy which is being adopted by
the company in course of their business which can help them in having more growth an
development by increasing their overall sales and profits. This strategy can be adopted by
Sainsbury's if they are having availability of huge sources of finance a this needs large
amount of investment as both product and market is new.
From above discussed strategies it can be said that the best course of strategy for
Sainsbury's is Market development a sin this strategy exiting products are used for a new target
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market and new segment of customers which can help in increasing sales and profitability
without much investment which leads to increase in effectiveness in the company.
TASK 5
Analyses and evaluation of resource implications and recommendations that business has to
address.
Business expansion is greatest opportunity that a company can grab so to contact more
markets addition to satisfy wide customer base in order to generate more quantity of revenues
(Marra, Ho and Edwards, 2012). In context to Sainsburys, business activities are expanded on the
basis of well developed marketing policies and strategies. While expanding, huge resources are
required for such purposes. Key resource area concerned with Sainsburys are technology,
operation, human resource, marketing and finance. All these are interrelated to each other and
executes activities together so to gain best results. The implications of resources are as analysed
and evaluated:
HR and Marketing: With in the competitive scenario, various techniques addition to
tools are applied by Sainsburys in order to implement effective marketing strategies by the
human resources. As per the marketing strategies, the requirement of number of human resources
are communicated or informed to HR department and further manpower is hired to implement
the strategy in prompt manner.
Operations and marketing: These two areas plays key role in performed all the set
activities of Sainsburys. The operational department of the entity designs activities which are
required to be executed by various departments such as technological department and marketing
department. In regards to marketing department, all the activities from initial phases till last
phases are properly designed and clearly mentioned by operations department. It benefits in
executing all the marketing as well as operational activities in prompt manner (Meiling,
Backlund and Johnsson, 2012.). At same time, mack of communication becomes hurdles among
workings of the both areas.
HR, technology and finance: Within the procedures of expansion, these three
resourceful units plays significant role in achieving success for the business and all are
interlinked with each other practices. For instance, Technological areas of Saninsurys develops
technological aspects for meeting competition criteria and introducing innovative technology for
12

operations department and influences budgets of finance department. In addition, to launch
technological developments, effective humans resources are required and proper research is
needed. With this, Sainsburys can achieve success through effective coordination among the
departments. At same time, such interrelation creates confusions regarding who has to perform
what activity at what time.
CONCLUSION
As per the above report, it has been concluded that strategic management encompasses
plans addition to actions that are required to be placed in appropriate place so to work for
achieving organisational vision to enhance future. Strategic direction assist business units to
devising plans and implementing strategies for gaining successive results. The strategies that an
organisation chooses determines the development in competing scenarios. Through the concept,
goals and objectives are formulated after carefully analysing real circumstances pertaining in
external factors. Method of PEST analysis was choose to review external environment in which
the company is residing. Through Porter's Five Forces framework, competitive advantages of the
entity are discussed. Business canvas model was used to portray and describe logics about the
ways company creates and captures values within the market. Various strategies are followed by
entity so that they can defend the core business.
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Sainsburys. 2019. [Online]. Available through: <https://www.sainsburys.co.uk/>
Porter's Generic Competitive Strategies, 2019. [online] Available through:
<https://www.ifm.eng.cam.ac.uk/research/dstools/porters-generic-competitive-
strategies/>
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matrix/>
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