Business Strategy Analysis: Sainsbury's Macro and Internal Environment

This report provides a comprehensive analysis of Sainsbury's business strategy, examining the impact of the macro-environment on its strategy formulation and decision-making. It delves into the company's profile, vision, mission, and objectives, followed by a PESTLE analysis to assess political, economic, social, technological, environmental, and legal factors influencing its operations. The report also conducts a SWOT analysis to evaluate Sainsbury's strengths, weaknesses, opportunities, and threats. Furthermore, it explores the internal factors affecting strategy formulation, including Porter's value chain analysis, which assesses inbound logistics, operations, outbound logistics, marketing, and sales. The report also analyzes the company's structure, systems, staff, style, skills, and shared values. A VRIO analysis is used to evaluate the company's resources and capabilities. Finally, the report evaluates the competitive marketing environment using Porter's Five Forces model, providing insights into the competitive landscape and strategic planning.

UNIT 32
BUSINESS STRATEGY

Table of Contents
INTRODUCTION.......................................................................................................................4
The application of macro environment to analyze and influence the impacts of strategy
formulation of the company....................................................................................................4
Internal factors to analyse and influence the impacts of strategy formulation of the
company..................................................................................................................................8
Evaluation of the competitive marketing with use of Porter's five forces model.................11
Description on use of theories, concepts and models to produce strategic management plan.
...............................................................................................................................................13
CONCLUSION..........................................................................................................................16
CONCLUSION..........................................................................................................................17
REFERENCES..........................................................................................................................18

INTRODUCTION
Business strategy is understood as course of action along with set of objectives which
have proper assistance by entrepreneurs to have achievement of specific business objectives.
It is considered as master plan which is implemented by company to have securing of
competitive position in market by carrying effective level of market operations towards
desired end of customer demand. This is considered as integrated level of framework which
equips top management to discover and analyses benefits of business opportunities (Vargas-
Hernández and Garcia, 2019).
Sainsbury is one of UK largest retailer present in different level of towns along with
cities and retail operates across UK. In this report, there will clear discussion on impact of
macro environment of strategy formulation and decision-making of company. On other hand,
there will be critical level of analysis of internal environment over structure and skill set of
company which helps company to have appropriates strategies to improve competitive edge of
Sainsbury. At last there will be production of strategic management plan which have
implementation of tactical strategic priorities to been objective of Sainsbury.
The application of macro environment to analyze and influence impacts of strategy
formulation of company.
Company profile
Sainsbury is leading supermarket retailer, company have recently overtaken ASDA in
order to become UK second the largest supermarket in sales at Walmart in order to gain more
level of competitive advantages over it major rivals. Company is majorly focusing as strange
and balanced business to be focus on long term strategy to have building of sustainable
business over up comping years.
Vision
Sainsbury wants to be more trusted retailer where people will love to shop.
The company is a more way to have harnessed existing level of talents along with
development of creativity and diversity in order to have assurance of customers to have
receiving great services every time they shop.
Mission

The mission of Sainsbury is to be consumer first ever choice in terms of food along
worth delivery outstanding quality along with great services atcompetitive cost through
working at faster pace, simpler and all to other to have further level of developmental.
Objective
 To provide amazing customer experience to all the buyers of company
 To satisfy needs of consumers by offering them high quality goods and services
 To increase competencies profitability by implementation competitive strategy in
business development.
Pestle analysis
The company have analysis macro environment is playing an important role in
strategic formulation in development of company. There is general layer which is consisting
of braid level of environmental factor's which is operating business of Sainsbury.
Political factor
The company is majorly effected bydecision-making of Brexit which have
unsurprisingly had sparked off cascade level of effects which have major inclusion of inflation
devaluation of pound value along with coupled up effects of wage growth depression (Manly,
2016). This has resulted in sluggish economy in consumer expenditure declines. This turned
out to have negativism impacts of Sainsbury which is turning to be both political and
economic of upheavals in uncertainty for short term UK ecosystem. Inflation affects
investment strategy of business and by this way return of business unit get minimized which
affect its revenues to great extent.
Economical factor
Due to Brexit value of pound sterling has turned at its lowermost against dollar which
is been identified as financial turmoil. Due to these effects Sainsbury have expansion of
business by takings over Argos turned to be financial headache in coping up be currency
hedges. At the end Argos dollar prices import have hiked up prices upon catalogs. On other
hand, rise in inflation have resulted in change in buying behavior of consumers, by altering
their shopping habit (Kapiszewski and Karcher, 2019). This has results in decline of growing
stage rate of Sainsbury. Company have implemented strategy of price penetrating by
benefiting consumer which is squeezing margin and profits of Sainsbury. By this way import
and export activities of business get affected to great extent and operational strategies of

Sainsbury has affected. By this way it has to make changes in its pricing strategies so that kit
can sustain in market for longer duration.
Social factor
There is direct level of economic factor which is causing dramatic changes in shopping
habit of people which is driving retail sector. This has resulted as abounding big weekly
shopping of big weekly food. There is having preferences of spending money to tours and
traveling through discounters and internet shopping. company have advantages in developing
online shopping along with operation of 900 convenience stores which have impact in
increased sales of 6% as compared to another super market.
Environment factor
Sainsbury have raised major level of corner over rise in ethical and environment
consciousness among consumers such as paper packaging along with using of recycled
materials. Increasing demand of zero wastage has affected the firm. This is turning out to be
major challenges in for food retail industry. As enterprise has taken step to resolve the wastage
problems, this has affected operational strategy of firm because it has decreased operational
cost. Now recycling is being used so that wastage material are reused again that enhance
productivity of firm greatly.
Legal factor
New sugar is being introduced by UK government in order to control over uses of
sugar in drink which have impacted Sainsbury in different aspects. UK government have also
implemented new rules for banning advertising high sale, sugar and fats to children who are
below 16 to have restriction in marketing and promotional efforts. This law has affected the
manufacturing strategy and entity now has to ensure to use minimum sugar so that it can
conduct operations legally.
Technological factor
Now Sainsbury has started using advance technologies such as POS system, online
payment services etc (FATRICIA, 2016). This has resulted as 80% increase in order along
with 20% increase in customer to have proper level of coping in changing customer behavior.
This has impact on operational strategy of firm because this has improved the working
efficiency and has reduced workload of employees as well.
SWOT

Strength
Diversified business with having strong market
share.
The existence of strong balance sheet with
having consistent profitability.
Weakness
Emphase more on single market
The food business have low level of
business margins and higher risk.
Threat
The company have negative impacts of Brexit
of business developmental.
There is increase in intense competitions in
grocery along with retail segment.
Opportunities.
The company is grasping online
collaboration with global market
expansion.
There is existing of diversification and
growth of Sainsbury banks.
Development of online groceries long with
convenience store as channel of further
growth.
Technological personalities in helping
consumer insights.
Internal factors to analyse and influence impacts of strategy formulation of company.
Porter's value chain analysis
It is chasing of activities of series in industry in order to have organizations to have
conveyed to importance of products (Bentham, 2018).
Inbound logistics
There is inclusion of various approaches by Sainsbury as logistic loom which have aim
to connects current stores of geographically in order to have reduction in miles. Company
have introduced double Decker lorries in order to carry more loads at single cost. Company
have proper level of developing proper training, so that drives can have more proficiency in
driving.
Operations
The company is trying to have reduction in CO2 discharges as primary operations in
order to unfilled trackless along with collection among drivers with delivering services back

to store. On other hand, secondary operation has major focus of way of transportation s which
have led major lee of improvement of around 1.5 %.
Outbound logistics.
The company rising over various sources of delivery for options in non goods such as
click and collect, delivery on Saturday and standard delivery and so on. time of being
customer of 3 PL providers, company have established network of more than 20 centers.
Though competitor firm such as Asda and Tesco is also had developments of third party
logistics.
Marketing and Sales as company is trying to have development of 20*20 level of
sustainable plan which is beings announce to have promotions of brand as well as better
servicing to customers and employees. This is developmental as worker benefits which is
majorly contributing in success.
Services is such as company long strategy to have Providences of broad shopping
services. Firm is paying contribution of finances in order to have improvements to bring
commercial advantages in division of logistics.
Mickeys 7's
Shared value is stated as major level of objectives along with behalf about company
values. The main objective of Sainsbury is to provide maximum satisfactions to customers
which quality products as well as increase in share of market with profit. Sainsbury ensures
that it gives respect to all its workers so that people feel happy. It maintains dignity of
workers so that behavior of workers remain positive.
Strategy is concerned with method which is adopted to have achievement of specific
goals and objectives. Sainsbury is adopting various strategy such as online outlets to have
increase in sales such as reduction in co 2 discharges as primary operations introduced
double Decker lorries in order to carry more loads at single cost. Sainsbury focuses more on
long term strategy so that it can sustain in market for longer duration. That is the reason that
Sainsbury is able to deal with complex situations effectively.
Structures as company have development of better structure in order to bring out best
outcome for production and operation. Sainsbury has flat structure where people have rights to

share their feeling without any barriers, communication is done in systematic manner. This
structure supports business in running operations significantly.
System as termed Sainsbury to perform daily activities in very efficient and effective
manners in order to have stratification in customer. Mangers involve people whenever any
changes are implemented in the company, managers of Sainsbury ensure that all employees
give their concern for change. This help in getting acceptance of them and minimizing
conflicts and negative behavior at workplace.
Staff is concerned there are more than 301000 employees in Sainsbury in UK along
with 50000 for overall in remaining 12 countries. Staff are being trained time to time and they
get incentives which encourage them to be loyal and perform well in the firm.
Style is about reflection of cultures as Sainsbury is operating in unique cultures to
have operation of business in more effective and efficient manner. Leaders and mangers have
democrative style of leading employees, managers of Sainsbury involve employees and
empower them so that they support management.
Skill is concerned Sainsbury is providence full on job training to employee to increase level of
knowledge to provide better delivering of services and maximize contribution in profitability.
Entity ensures to give task to all workers according to their skills and capabilities.
Viro analysis
The VRIO Analysis of Sainsbury s will look at each of its internal resources one by
one to assess whether these provide sustained competitive advantage (Murcott, 2018)). The
Sainsbury s VRIO Analysis also mentions at each stage whether these resources could be
improved to provide a greater competitive advantage.
Valuable Rare Imitable Organization
Financial
resources
Yes No No Yes
Diverse food
products
Yes No No No
Pricing strategy yes No Yes Yes
Distribution
network
Yes yes No No
Organization Yes No Yes No

structure
Human resource Yes No No No
Technology and
IT investments
Yes No No Yes
Inventory
management
yes Yes Yes yes
Evaluation of the competitive marketing with use of Porter's five forces model.
Porter five forces termed out as tool that aids to understanding competitiveness of
business environment and this also allows to investigate strategy that has potential
profitability (Sari, Afifah and Sueb, 2019). It is useful in understanding strength of the
enterprise and also determines current competitive position. This is analysis that uses five
industry forces that determines intensity of competition and also helps to enhance profitability
levels of enterprise.
Therefore, the Porter's five forces outlined in below context as-:
The threat from new entrants- The economies of scale is typical to achieve within
industry in which Sainsbury operates. This makes easier for enterprise that produce large
capacities to have cost advancement (Bocken, Smeke Morales and Lehner, 2020). Due to this,
threat of new entrants becomes a weaker force. Thus, differentiation within commodities is
also strong within this enterprise and they use to sell different commodities rather than use of
standardised commodities. In addition to this, legal policies within industry needs strict
licensing and legal requirements in order to get fulfilled all the necessity before company
starts selling. It is typical for new entrants to join industry and makes threat of new entrant
weaker force. Thus, Sainsbury can tackle this issue with taking advancement of economies of
scale has within industry. This can be improved with putting focus on innovation that aids to
differentiate commodities from that of new entrants.
Bargaining power of suppliers- The number of suppliers within industry under which
Sainsbury operates is high as compared to buyers. Therefore, this means that suppliers has
less control over price and it makes the weaker force to suppliers power of bargaining.
Henceforth, commodities that supplies offer are less differentiated, fairly standardised and also
have low cost to commodities (Panda, 2019). In addition to this, industry in which Sainsbury
operates can be important customer’s for their suppliers. It defines as industry profiles are

closely tied to suppliers. This issue can be tackle if chosen entity purchase the raw material
from suppliers at lower cost. It is one of the effective way that can aids to ensure efficiency
within its supply chain.
Bargaining power of buyers- The number of suppliers to industry is high than
number of enterprise product commodities. It means that buyer has few enterprise to choose
from and they also do not have effective control over the prices(Sulich and Grudziński, 2019).
This is term that makes bargaining power of buyer’s weaker force within the enterprise. Also,
differentiation within commodity is high and this means that entity can able to find out
substitute of a particular commodity. Thus, the quality of products plays crucial role and this
attracts buyers and make frequent purchases. Henceforth, there is no any significant threat to
buyers that combine backwards. It can be tackle if chosen enterprise focus on innovation and
this differentiate products to attract the more buyers. Thus, power of buyers is moderate.
Threat of substitute product and services- There are very few alternatives that are
avail for commodities and this needs to be produced within industry in which working of
enterprise operates. Thus, substitute that are avail are produced with low profit earning
industries. Henceforth, few substitute are avail that is of the high quality but this more
expensive and this means that buyers are the less likely to switch shift to substitute
commodities. On the other hand, chosen firm needs to put consideration on to providing
greater quality within its commodities and this also provides greater quality at lower price as
compare to alternative products that offer advanced quality at high price (Huang, Lumbanraja,
Dalimunthe and Hasibuan, 2019). In addition to this, this can be stated that retail market is
seeking to meet and absorb invention in relation to nutrient merchandises in term to do
shopping to have the highly enjoyable experience.
Rivalries among existing firms- The number of competitors that operates within
industry is very low. This means that enterprise in industry not makes moves without being
unnoticed (Song, Mu and Wu, 2019). Also, there are very less competitors who has large
market share. It means enterprise needs to get engage in competitive actions that helps to gain
strong position and allows to become market leaders. It is term that aids to make rivalry
among existing firm a stringer force within enterprise. In addition to this, product produced
within this entity is highly differentiated and this is also difficult for enterprise to have
customers of each other because each firm has some effective level of uniqueness within their

commodities. Also, strategy of this enterprise can be termed out as diverse because each one
is following some unique advancement of plan of action that aids to gain competitive
advancement (Alam and Wulandari, 2019). Therefore, it makes rivalry among existing
enterprise strong force within industry. In order to tackle issue as rivalries among the existing
firms chosen entity needs to conduct effective market research in order to understand situation
as supply and demand within market and this also aids to prevent overproduction.
Henceforth, this can be stated that with use of information within quoted enterprise
strategic planning to firm can able to understand that how different components affects
profitability of enterprise. Thus, strong workforce has high and advance level of profitability.
Therefore, firm can focus on following competitive strategies as-
 Cost leadership- If the quoted firm focus on effective capacity utilisation, high
technical advancement, high innovation can able to accomplish cost leadership.
 Differentiation leadership- With help of adoption on the unique features the entity can
able to creates the differentiation strategy. Therefore, consistent promotional activities
build brand advancement.
 Cost focus- For the specifics market segment as poor people the entity needs trio keep
the product price low.
 Differentiation focus- By using organic and healthy ingredient in commodities the
entity can able to reach health conscious customers. It aids to meet out the demand of
customers.
Description on use of theories, concepts and models to produce strategic management plan.
Strategic management plan to enterprise termed our as the document that mainly
used to communicate within enterprise. Therefore, enterprise needs to put the core focus
on organisation goals, put major focus over energy, setting of priorities and strengthen
firm operational performance (Strategy – Ansoff’s Matrix, 2017). Strategic plan to firms
are key that assist firm to accomplish goals and also define effective values to
enterprise. Henceforth, this has been outlined in following manner as are-:
Vision The vision of Sainsbury is to be organised within the market as the
most trusted and reputed retailer, where people wants to work and
shop (Bocken, Smeke Morales and Lehner, 2020). It aids to
harnessing creativity, diversity and talent of colleagues that helps to

ensures customers to get great service.
Mission The mission statement of the Sainsbury is to be first choice to
consumers for food and to deliver commodities that has outstanding
quality and great service at competitive cost.
Core values Sainsbury core value us to bringing up effective level of innovation
that has strong sense of social, environmental and economic
responsibility that helps to enhance success to organisation.
Objectives The objectives of Sainsbury termed out in following manner as
are-:
To offer high quality services to customers and to maximize the
effective financial return to stakeholders.
To exceed the level of customer’s satisfaction for healthy, safe,
fresh and tasty food to make lives of customer free and easier.
To take initiatives that can aids to expand business activities to
global level and helps to enhance profitability by 20%.
To enhance base of customer up to 25%.
Strategies Porter five forces-
Power of buyers- Sainsbury customers has relatively high
bargaining power due to availability of other supermarket such as
are Tesco, Asda, Aldi etc. It makes product switching cost very
lower and also gives power to customer to select between rival
offers within same price range.
Power of suppliers- The super market suppliers has low bargaining
power due to existence of many suppliers within the retail firm
(Sari, Afifah and Sueb, 2019). This gives supermarket power to get
commodities from suppliers at lowest prices in terms to improve
profit margins.
Threats of substitute- The threat of substitute within grocery
market is high and this enterprise has market that can offer food
and drink to the high consumer but they also offer non food

commodities such as electronics, clothing and furniture etc.
Competitive rivalries- The chosen enterprise faces intense
competition from supermarket such as Tesco, Asda and Morrison
etc. To cope up with it, entity must offer discount on the
commodities so that they can allow to survive with cut-throat
competition within United Kingdom retailing industry.
Barrier to entry- It taken as low threat by quoted enterprise due to
retail market culture at where lump sum 70% of grocery market
share controlled by the biog four supermarkets. There is intense
competition has been existed among other small supermarkets as
Also, Lidi etc. Therefore, the intensity of competition has made the
UK food retailing firm unattractive.
Ansoff matrix There are number of option that enterprise needs to adopt. It gives
the model strategic growth that is highly based on enterprise
position.
Market development- It is term that is mainly based on to search for
new market for existing product and services. This is inclusive
of undertaking identification for new customer’s for existing
commodities.
Diversification- It can be termed out as risky chance of growth.
Therefore, diversification can be done in both product and
services. It can be one of effective strategy as this leads to
enhance the profitability.
Market penetration- This is term that inclusive of enhancing
market share. It can be accomplished with number of selling
points, to find out customer’s within existing market and to sell
commodities to established customers. Such plan of action
needs high marketing and huge capital. With use of
promotional tools such as media advertisement and online can
be effective way to get reach to customers in effective cost.

Product development- In order to have effective level of
advancement the chosen firm can use organic ingredient that
can aids to meet target of the current market. Thus, new
product development needs to have high change of business
growth and development. By developing the commodities with
use organic ingredient can assist to bring product development
and attract customers.
Tactics (use of
marketing mix)
Sainsbury offers wide range of the commodities to customer at the
lower cost and they focus on product and price elements of market
mix as product, process, promotion and place etc.
Marketing mix Product- This enterprise is taking initiatives to offer organic
commodities that is good for health.
Place- It is enterprise that is using diversification strategies to
diversify the product and services to have business expansion in
new market.
Promotion- This enterprise can market their commodities with use
of social media, TV, newspaper etc.
Price- This is firm that is using price skimming strategy as this calls
for setting the high price for new product.
Implementation of the
plan of action
The resource allocation and measuring to have effective control
needs to be taken as this define that how resources within enterprise
is needs to be allocated and adopted in terms to have effective
utilisation of resources.
Evaluation After, new product development within the enterprise and by taking
the sets to create innovation in existing commodities entity needs to
undergo to process of evaluation to identify gaps between existing
and planned performance of firm.

CONCLUSION
From above report the above report it can be summarized that business strategy termed
out as course of actions that assists entrepreneurs to achieve business objectives. Therefore,
business strategy is planning of an enterprise that aids to accomplish vision, prioritising
objectives and optimize financial performance with use of business model.
The present study has covered business activities of Sainsbury, it is second largest
chain of retail sector that deals in groceries and clothings to electricals, home-wares etc.
Furthermore, assignment has covered activities as application of frameworks that
influence the macro environment, study has covered internal environment and capabilities of
enterprise of using appropriate frameworks. Thus, SWOT analysis aids to firm to get
successful development within future course of action. In addition to this, Porter's five forces
model is very effective to Sainsbury in order to get strategic analysis. Lastly, the number of
theories and concept has been applied to interpret strategic planning for organisation.

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Strategy – Ansoff’s Matrix. 2017. [Online]. Available through:
<https://slideplayer.com/slide/7730800/>