Strategy and Entrepreneurship: An Analysis of Sainsbury's Business

This report provides a comprehensive strategic analysis of Sainsbury's, a major UK supermarket chain. It begins with an introduction to strategic management and entrepreneurship, highlighting their importance for business success. Task 1 focuses on analyzing Sainsbury's external environment using PESTLE analysis, examining political, economic, social, technological, legal, and environmental factors. It also employs Porter's Five Forces model to assess the competitive landscape within the supermarket industry. The internal analysis, covered in Task 1, utilizes value chain analysis to evaluate Sainsbury's primary and support activities, identifying key areas for value creation and competitive advantage. Task 2 delves into identifying strategic options and presents a detailed business model for Sainsbury's, culminating in a conclusion that summarizes the key findings and strategic recommendations. The report provides a thorough examination of Sainsbury's strategic position and offers valuable insights into its operations and future prospects.

Strategy and
Entrepreneurship

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1. Analysing the external environment of Sainsbury.............................................................1
2. Industrial analysis...............................................................................................................3
3 Internal analysis...................................................................................................................4
4 Swot analysis.......................................................................................................................7
TASK 2..........................................................................................................................................10
1. Identifying set of strategies for company.........................................................................10
2 Business Model.................................................................................................................14
Conclusion.....................................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Business are as vital Or overlooked as that of developing a strategy for success and
growth. Entrepreneurs are seemed to be overflowing and enthusiasm to launch their business
uncertain for failures because hey never stop to define a workable strategy that sets them apart
from their competitors. Strategic management refers to the continuous planning, monitoring,
analysing and assessment of all that is essential for an organisation to meet its goal and
objectives.
Strategic entrepreneurship is a unique, distinctive construction through which enterprise
are enabled to create wealth.
The Sainsbury's company is being selected for conducting this study. The Sansbury is the
second largest chain of super market In UK. This organisation is being selected in order to
explain the concept of strategy and entrepreneurship.
The aim of the study is to demonstrate the critical awareness of current issues in the field
of strategic management. The research will have focus on analysing various information in order
to evaluate relevance and synthesis in the context of new business development and stratergy. It
objectives is to develop understanding about the way of translating strategies into coherent
business model.
TASK 1
1. Analysing the external environment of Sainsbury
The PESTLE analysis can be used to analyse the effect of various external factors on
Firm. The external environment may have positive and negative effect on Enterprise. This tool
helps business unit in minimising the negative effect of these factors. This technique assists
business unit in exploring and capturing new opportunities in the environment (Hudson, 2017.)
The various external environment factors are :
Political: The main political forces are tax, government policies, Code of conduct related to
business, Political stability. These all are the factors that have effect on business activities. Due
to ongoing financial instability in country, governments motivates and provides support to
Entrepreneur to conduct their business in smooth way. The legal authorise does so by framing
linen t policies and code of conduct for business. For instance UK government has recently
adopted the VAT tax that affect the Sainsbury, Rise in the tax rate for the enterprise has negative
impact for the Organisation. Such kind of changes and modification by the government has
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direct effect on firm performance and also the profitability that is generated by the Sainsburry.
Positive impact is like update the strategies and plan of marketing depends on the updated
policies.
Economic: An economic growth has the positive impact on Sainsbury business activity as it is
dealing in supermarket that is the main industry. The economic instability in the country may
have negative effect on the financial performance of organisation. The forces have direct
consequences on the firm purchasing and selling power. The company can measures its
performance on the basis of the current economic situation. Various economic forces include
method of income distribution, Exchange rate, income level of individual etc. The income of
individual have great influence on customer behaviour. This has great effect on the company
profits. Recently the increase in exchange rate has given opportunity to Sainsburry to increase its
profit margin. On the other hand earlier the inflation in prices of products has forced
organisation to reduce their profit margin and transactional benefit for firm.
Social:The various social factors include population, market trend, fashion, culture etc.
Decrement in morality and birth rate has been analysed in last few years. Changes in taste and
preference has been identified with an account of Sainsburry. The people have adopted and
giving more preference to online shopping. This has lead to the decrease in demand for company
product.
Technological:Technology factors play significant role in supply chain and logistic management
in business unit. Technological factors have direct effect on the productivity and quality of
product. The Saisburry has adopted new and advanced technology that has assisted organisation
in increasing their production capacity and enhancing their quality of product. This has enabled
organisation to produce innovative product. This has allowed firm to differentiate their product
from that of its competitor and to gain competitive advantage. The negative effect this factors is
that increase in price of machinery can add higher cost for business unit.
Environment:The environmental factors include both internal and external factors. The internal
factors that have effect on business are: employees relationship, workers behaviour, organisation
culture this forces have great effect on organisational performance as well as on its reputation
and position in the market.
Legal:The legal factors include various forces such as government policies, laws, etc. this may
have effect on business operation and on its sustainability. There are many laws that have effect
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on the enterprise as it is dealing in many products and services. Complying with all laws and
rules it will help business entity in improving their performance in the market. These factors may
affect business operation in great depth.
2. Industrial analysis
Porter 5 forces model can be used in order to for analysing competition of business. It
can assist sainsburry in identifying its competitors and their strategies. It draws from industrial
organisation economic to drive five forces that can help enterprise in evaluating the intensity of
competition. Saisburry five forces model intends to examine five separate forces that judge
extend of competition in supermarket industry.
Sainsbury is a leading supermarket in UK with its competition mainly Tesco, Asda,
Morrisons PLC. These competitors are having large market share. The significant reason for rise
in their market share is continuous consolidation of supermarket segment.
The grocery market is defined by low margins, as the food section is prostrate to fierce
competition. The grocery retailers have been able to gain customer loyalty by delivering their
product at reasonable price.
The big competitors like Tesco have large scale of operations. There are barriers to entry
for new organisation are generally low, however scale of operation can play significant role in
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Illustration 1: Pestle Analysis
Source: (Marketing Theories- Pestle Analysis, 2017)

gaining competition by Sainsbury firm. The entry of big enterprise can create mobility barriers
for medium and small firms due to advantages in buying and distribution power. Generaly small
enterprises does not have ability to compete on the basis of price, products, offering and
geographical factors.
3 Internal analysis
Value chain analysis refers to the strategical tools used for examine internal
organisational activities. The aim of this technique is to identify which activities are most
valuable and that can generate more opportunities for organisation .It also includes determining
the activities that could be improved for gaining competitive advantage.
Primary activities
Inbound Logistics
The Saisburry inbound logistic activities include complex process and involve supply of
much quantity of product categories. Saisburry have its 1415 retail stores in global market.
Economies of scale due to its large scale of operational activities is the major source for value
creation. The organisation has the potential to make investment in order to increase its capacity
of logistics so that advantage of economies of scale can be gained to a greater extend. The
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Illustration 2: Porter Five Forces Model
Source:(Porter Five Forces , 2013)

organisation has the history of poor supplier treatment under the previous leadership that
includes the case of delay in making payment to suppliers that has lead to decrease in firm
profits. The unjustified fines and unnecessary obligation have to be beard by Sainsburry. This
factors also have negative implications on various aspect of supply chain practices. However the
new manager has committed to form effective strategies and strategical relationship with its
suppliers (Zostautiene, Zvireliene and Susniene 2017)
Operational activities
Sainsburry is dealing in supermarket and offering number of products to its customer. Its
has to perform number of operational activities, Its operation can be categorised into two
formats
Format Number Total space
Supermarket 598 21,190,9000(AGM 2014)
Convenience stores 714 1629000
TOTAL 1312 22819000(AGM 2014)
:
1. Convince stores :This unit indicates the main activities of Sainsburr. With more than 20
million shopping trips made a thousand of Sainsburry shops in more than 11 countries
globally. The company has extensive scope of its operation. It also operates sainsbury
Online internet shopping services and consist of portfolio of E 8.6 billion. It is the second
largest supermarket chain in UK. The organisation operates stores in following format:
Metro: The enterprise has established their food stores mainly in developed countries. The firm
metro store are offering wide range of food and smaller portion of general food items.
Express: They have established smaller size of stores that intends to deliver fresh food as close
as possible to home and work.
Extra: The organisation has established the largest stores to offer customer the greatest choice of
products. These stores sell all type of products such as electrical equipment, clothing, hardware,
heath and beauty services and goods, financial services, etc.
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Superstores: Store of this type of format offers a wide range of food and other products and
services. These stores also include bakeries and fresh food counters.
2. Supermarket segment:In 2010 Sainsbury has opened its one of its largest store in UK and
it is the largest store in UK. The stores in Supermarket category all have similar design
and operational activities. Recently company has opened a new departmental store
format that is established in New Nine Elms carrying store concessions like Habitat,
Aggro, Sushi Bar, and Food Hall.
Outbound logistics
Cost effectiveness delivery and flexibility are the two major factors that are assisting firm in
generating value. The Sainsbury offers several home delivery options for making online
purchase directly from the company. This process include delivery of GBP subject to availability
of stock, It also offers saver plan that include free grocery delivery for one week and next day
collect plan. The organisation also offers home delivery serve only in case purchase is being
made by customer from Sainsburry physical stores.
Marketing and sales
Little support to single customer assist firm in developing brand image in the market. Sainsbury
marketing strategy tries to associate the brand with competitive prices , wide variety and range
of goods and best quality balance. The main objective of marketing strategy of Saisbury is to
increase its market share and gain customer loyalty. The firm can achieve this objective by
adopting product developmental and market diversification strategy. Product development
strategy will help business unit in attracting more number of customers and retaining existing
customers. Product development strategy includes developing product, adding more
characteristics in existing product, and introducing innovative good. The diversification strategy
enable firm to increase their market share and explore new market opportunities. Using this
strategy The business entity can launch its existing product into new market and launch new
product in existing market.
Service
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Customer loyalty that is based on frequency OF shopping and an average weekly spend has
increased during 2016. There is no doubt that change in leadership has played significant role in
increase in demand for organisational product and services.
Sainsbury business strategy emphasizes on cost reduction, improving customer services and
quality of product. But it is very difficult for sainsburry to reduce the prices of their product and
services.
From the above analysis it has been identified that in case of convenience store format the
organisation can establish large stores that offers wide range of services and products to the
customer. This will help business entity in gaining competitive advantage.
In the formant of supermarket similar design is used by the organisation. However, the launch of
new departmental format can assist business unit in reducing competition.
Outbound logistics can be used by firm for increasing their profit and revenue as compared to its
competitors product. This method will allow organisation to develop innovative item in order to
eliminate competition. It allows firm to make effective strategy in order to gain competitive
advantage.
Effective marketing and advertising strategy can support enterprise in winning over competitors.
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Illustration 3: Value chain Analysis
Source:(Value chain Analysis,2013)

4 Swot analysis
Swot analysis can be used by business unit for analysing its internal strength and
weakness. It also assists enterprise in identifying various threats and opportunities. This
technique enables organisation to transform their weakens into their strengths. It also includes
helping firm in exploring and capturing various opportunities. The main objective of using this
method is to allow business entity to adopt various measures in order to reduce various threat
and make appropriate use of their strength for gaining competitive advantage. It aids manager in
taking accurate and effective decision. Swot analysis is the effective technique that helps firm to
identify their position in market in relation to its business environment in which the business is
operating. It allows enterprise to allocate their resources in effective and efficient manner. It
provides the way in which organisation can allocate resources in order to achieve their goals and
objectives. The swot analysis prove business entity to develove understanding about itself in
terms of strategies and resources.
Strength :
 It is positioned as the UK third largest supermarket.
 The organisation is one of the big four supermarket chains in UK.
 It has highly experienced leadership team.
 The company has formulated and implemented effective marketing and advertising
strategy.
 It has 550 supermarket stores and 350 convenience stores located at highly populated
area.
 The enterprise each store typically stock around 30,000 lines own labelled products.
Others strengths are:
Diversified Investments- The enterprise consist of diversified individual business unit that are
not correlated. This has allowed organisation to reduce risk of loss in individual business unit. It
has enabled firm to anticipate various threats that may have great impact on organisation
performance.
IT structures-The Sainsbury has knowledge about the significance of reaching a wider market
by making use of affordable and wide platform of internet. By using of technology such as
online checkout system it has increased sales by 20 percent in present financial year. It has
introduced promotional strategy which includes Click and collect in 160 outlets In case
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consumer buy company product online. The outlets store has enabled business unit to increase
profits margins and earn revenue.
Large capital investment and wide stores network:Large capital investment has allowed firm to
increase its supermarket space. It has provided benefit to reach its customers as soon as possible
and increase its market share as well as enhance market growth.
Quality human resource:The supermarket understand the importance of human resource
management and invest lot of money in providing training to its employees. The organisation
has own employees training college. The qualified and skilled employees provide services to
their client in professional manner which helped firm in attracting new customers and reating
existing clients (Pitelis. and Runde. 2017)
Weakness:
 The organisation is charging high prices for food. The inflation in the country has
forced Sainsburry to increase the price of their food items.
 Lack on competitive strength
 The company being the oldest supermarket has started operations ahead of
competitors like AsDA and TESCO and it has not exploited the opportunities to
grow and maintain their market share.
 The organisations has taken a long time to make changes and modifications in
strategies. Due to this the firm has to face many issues related to inventory and
supply chain management that has negative effect on its quality of products and
on customers services.
 It has changed its leader and management style after suffering loss.
 The organisation has not made sufficient investment in international markets
Specifically in China. The company do not have understanding about the trends
and business environment as compared to its competitors.
Opportunities:
 The business entity has the opportunity and potential to enter into new market.
 Sainsbury can develop self checkout machines in order to continue its operation for 24
hours.
 As the business unit is offering online shopping option to its customer it can increase its
market share and number of customer by just adding new effective services.
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 It has opportunity to expand their business in growing economic countries like Africa,
Asia etc.
Other opportunities are:
Wide market- The organisation is operating in many fast growing countries that have huge
population. They are offering variety of product and services in wide market. It has opportunity
to increase its supermarket space and reach customer.
Performing economy In UK and China- In these countries' food prices that have great impact on
Inflation are stable. This indicate performance Of the economy and affordably of food
commodities. The organisation has opportunity to increase its profit margins. UK and China are
having the sixth largest economy that indicates the high purchasing power of the consumer in
particular country.
It has opportunity to increase its sale by providing healthy and quality food.
Organisation is in very god position to benefit from wide demand of healthy food.
Company has opportunity to provide online facility to its customer.
It has opportunity to expands its core business activities.
Threats:
 Various economic factors such as rise in prices of product, increased tax rate, economic
recession in the country have direct impact on financial performances and profitability of
firm.
 Increasing globalisation can be a major challenge and can also create opportunity for
enterprise.
 Bargaining power of buyers and suppliers.
Other threats are:
Increase in Globalisation,
Great influence of social factors.
High competitive industry.
Hard yo achieve high profitability.
Rising cost of organisation.
Legal and environmental laws.
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