Strategic Management Report: Sainsbury's External Environment Analysis

This report provides a detailed analysis of Sainsbury's strategic management, focusing on its mission, goals, and values within the UK retail market. The report examines the importance of strategic planning, comparing organizational values and mission statements with current business objective...Read More

STRATEGIC
MANAGEMENT

Table of Contents
INRODUCTION..............................................................................................................................1
TASK 1 ...........................................................................................................................................1
1.1 Explaining the importance of Strategic planning in the context of Sainsbury .....................1
1.2 Comparing organizational value and mission statement with current business objectives ..2
1.3 Devising and developing appropriate goals, values and strategic objectives in the context
of Sainsbury ...............................................................................................................................3
2.1 Assessing the challenges take place in the external environment and its impact on
organizational business strategy .................................................................................................3
2.2 Analyzing the needs and expectation of stakeholders for Sainsbury and its impact on
strategic business planning .........................................................................................................5
TASK 2............................................................................................................................................5
3.1 Selection of strategy and use of tool for strategic analysis...................................................5
3.2 Evaluating effectiveness of tools available for strategic analysis.........................................6
3.3 Risk and competitive position of Sainsbury..........................................................................7
4.1 Outline a structure of the strategic plan for the company ....................................................8
CONCLUSION................................................................................................................................9
REFERENCES .............................................................................................................................10

INRODUCTION
Strategic management is highly associated with the formulation and execution of major
goals that are undertaken by the higher management. The main motives behind undertaking the
aspect of strategic management are to meet the wants and expectation level of stakeholders to a
great extent. Hence, for strategic management it is vital for the firm to develop sound strategies
and policy framework by making evaluation of internal as well as external environment. In
addition to this, strategic management is highly concerned with making optimum usage of
resources which in turn makes contribution in the attainment of organisational goals. The present
report is based on Sainsbury which is the leading British multinational retailer of UK. In this,
report will shed light on the mission, goals and values of the concerned business organization.
Besides this, it will also provide deeper understanding about the extent to which internal and
external environmental factors have impact on the aspect of strategic planning. It also depict the
position that Sainsbury has built in the highly competitive market.
TASK 1
1.1 Explaining the importance of Strategic planning in the context of Sainsbury
Strategic planning is considered as one of most significant aspect which need to be referred
by every business firm in order to have sustainable development. By having an effective
consideration of strategic planning the positive environment can be created within organisation.
In addition to this, it can be said that by having application of strategic planning activities the
business firm can have better direction in respect to meet the goals. It also assists in day to day
activities so that long term sustainability can be attained effectively. Along with this, it can be
stated that strategic planning allows overcoming environmental issues and trends (Chernev,
2012). With a help of this, better strategies can be formulated and employed. Sainsbury can have
better designing of activities that helps in improvement of sales through consideration of
strategic planning. For example, the company is looking for improvement in sales by 20 percent
and they have referred to planning activities in desired manner. It has made management
understand about the issues that impacts the effectiveness of process (Das, 2011). With a help of
such information the management has framed standards that can support strategic values. It
means the overall effectiveness of sales activities within Sainsbury can be advanced properly so
that designed goals can be accomplished.
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In addition to this, it can be said that by having an effective application of strategic
planning the retail business can have proper understanding about vision and mission. It means
the staffing and leadership can also be advanced through assistance of strategic planning. It also
indicates that strategic planning for business is significant because it promotes the standardised
work practice (Kunnanatt, 2011). Moreover, accountability of activities is getting advanced
which is beneficial for effective resource allocation.
1.2 Comparing organizational value and mission statement with current business objectives
Every business firm requires an effective consideration of mission statement so that
appropriate direction can be offered to business activities. As same by having a framing of
mission statement the Sainsbury can have better valuation of business. It assists managers and
leaders to make sure that they are focusing on specific terms in order to lead business to
impressive level of success (Mathur, 2011). In addition to this, it can be said that mission of
Sainsbury is to become a leading retail business firm in the market which offers a challenging
place to work. In this respect the company has also framed vision which is termed as to maintain
ethical retail service practice for better satisfaction among customers. With an application of
such practice the business firm is continuously having improvement in outcomes. It also allows
gaining competitive advantage over competitors in market.
Objective
 To improve operational excellence for sustainable development in retail practice
 To advance customer base by 20 percent till the end of year 2018.
 To introduce new product line by the end of year 2017.
In addition to this, it can be said that Sainsbury is currently focusing on above stated
objectives in order to provide support to its mission and vision. For sustainable consideration of
such values the business entity is having improvement in quality standards. It is essential because
through advancing quality of products and services the customer base can be enhanced. Such
valuation within organization will facilitate in improving satisfaction among customers. It also
indicates that through better operational process the Sainsbury is targeting improvement in its
market share. Company is also having a reference of frameworks in order to have better
opportunities (Ferrell and Hartline, 2010). However, business entity is focused towards
integrated working for continuous improvement. It also allows maintaining relation between
vision, values and objectives.
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1.3 Devising and developing appropriate goals, values and strategic objectives in the context of
Sainsbury
Goals, values and strategic objectives of both profit and non-profit making organization
differ to the significant level in the following way:
 Profit making organization and its strategic planning: Sainsbury comes under the
category of profit making organization whose one of the main objectives to develop
satisfaction among the customer and enhance productivity as well as profit (Flander,
2014). In this, by making focus on the quality of products or services firm develop
satisfied and loyal customer base.
 Non-profit making organization and its strategic planning: The main objectives of
NPO’s are to make contribution in the welfare of others. In this, NPO’s place high level
of emphasis on assessing the needs of others and thereby frames strategy to respond the
same.
2.1 Assessing the challenges take place in the external environment and its impact on
organizational business strategy
External factors include political, economic, social, technological, legal and
environmental that has greater influence on the aspect of strategic planning. Moreover, all such
factors are directly associated with the business activities and influence smooth functioning of
the firm. Hence, major changes take place in external environmental aspect of retail sector and
its impact on the business strategy of Sainsbury is as follows:
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 Political factors: In the recent times, corporation tax rate of UK is 28% which was lower
as compared to the former years. Hence, such lower tax rate will place positive impact on
the profit margin of Sainsbury. Thus, company has opportunity to attain high sales and
profit by expanding business operations and functions.
 Economic factors: In this, due to the rise in the cost of fuel prices of Sainsbury’s
products or services will incline in the near future. In this, if customer will not purchase
products at higher price level then it may result to low sales as well as profit (Kiptoo and
Mwirigi, 2014). In this, Sainsbury is required to make control on cost by undertaking
budgeting and monitoring tools. Thus, by controlling the cost level retail business unit
would become to offer products to the customer at affordable prices.
 Social factors: Now, customers prefer to purchase products or services from the retailer
which offers quality products at suitable prices. In this, Sainsbury needs to train its staff
so they would become able to deliver quality services to the customers and evolve
satisfaction among them.
 Technological factors: In the word of technological advancement, business unit make
use of technical aspects to manage the inventory level. In this way, for effectual
management it is highly required for the firm to upgrade with the technological aspects
and thereby take benefit from it (Hyde, 2014).
 Legal factors: Sainsbury is bound to follow minimum wage, discrimination as well as
other laws and legislation while performing the activities. Thus, by making continuous
evaluation of laws and complying with the same Sainsbury can build satisfied workforce.
 Environmental factors: Attention level of customers towards environmental aspects
increased significantly. In this, for building distinct position in the mind of customers and
attract the Sainsbury should perform activities in a eco-friendly manner.
2.2 Analyzing the needs and expectation of stakeholders for Sainsbury and its impact on strategic
business planning
There are several stakeholders of Sainsbury such as employees, customers, investors etc
who has high level of interest in the business activities performed by it. Customers expect from
Sainsbury that it offers high quality and better products at suitable price level. In this, business
plan of such retail firm must be based or focused on the aspect of cost reduction. Moreover,
without exerting effectual control on cost Sainsbury would not become able to offer product at
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affordable prices. In addition to this, employees have expectation from the organization that it
provides them with highly safe and protective business environment. In this, Sainsbury needs to
undertake all such factors while setting policies about human resources. Besides this, expectation
level of investors include high return, effectual brand image etc (Njeru and et.al., 2014). In this,
for meeting such needs of investors Sainsbury needs to lay emphasis on environment
sustainability and enhancing productivity as well as profitability. All the above depicted aspects
show that stakeholder’s expectation closely influences strategic planning of firm.
TASK 2
3.1 Selection of strategy and use of tool for strategic analysis
Ansoff's product/ market matrix is most significant tool which is used by organisation
who have main objective to increase its growth. The following method supports organisation to
develop strategies for achieving its goals and objectives. These tool is divided in four categories
for selection (Souitaris and Maestro, 2010). All these are described as follows: -
Market penetration: - It is a most significant strategy stated by ansoff matrix. Market
penetration is referred to the process with the help of which organisation enters in market with
existing products and services. It is less risky because all the customers are familiar with
existing products.
Product development: - It is also an effective growth strategy by the use of which business can
develop its existing products by making certain changes in it and then it is offered in existing
market where it operates.
Market development: - The following strategy is also known as market expansion. By
following these organisation can sell its existing products in new market place. It also supports in
entering into new segment by which they can earn good revenues (Cinquini and Tenucci, 2010).
Diversification: - These strategy states entry of firm into new market with introduction of new
products and services. It involves high risk because the market is unknown for organisation as
well as products are new for customers. Thus it may led to losses for the organisation.
Selection of strategy for growth of Sainsbury’s: -
Sainsbury's is an leading retail business which operates it activities within the economy
of United Kingdom. It is important for firm to adopt best strategy which will help it in attaining
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the objective of its growth. The best strategy for its growth determined from the ansoff tool is
being stated as follows: -
Product development: - According to the following strategy organisation will develop its existing
products. And these developed products will be introduced in its existing market. It will
significantly support Sainsbury’s in attracting new customers towards its developed products and
assist in retaining interest of existing consumers. These supports organisation in increasing its
profitability with more sales (Kinicki and Kreitner, 2012).
Market development: - It is also an best suitable strategy of growth which can be adopted by
firm. With the help of following Sainsbury’s can expand its business in new market place by
introduction of its existing products. It help business in increasing new customers towards its
present goods. It supports business in expanding its operations in new countries by which they
can earn foreign currencies. All these aids in the growth of organisation.
3.2 Evaluating effectiveness of tools available for strategic analysis
Effectiveness of tools available for strategic analysis :
Sainsbury had prepared its strategic plan focusing around food at fair prices, acceleration of
growth of complementary products, reaching products through channels, growing supermarket
and active management. These are marked for customers its strong brand which makes it
different from its competitors (Greco, Cricelli and Grimaldi, 2013).
The tools for strategic analysis adopted by the company are ANSOFF matrix and BCG matrix.
Among these Ansoff's matrix can be proved as an effective tool for analysing the alternate
growth strategies for the organization. This includes market development, market penetration,
diversification and product development.
Market development : in market development strategy, the company focuses to grow by targeting
their existing products in the new markets. The market development strategy of the company is
achieved by launching new stores nationwide. It has developed chain of online retail stores
which has created a strong market for the company (Luo, Sun and Wang, 2011).
Diversification : in diversification strategy for the company, the new markets are developed for
new products. The company has used this strategy effectively to develop a range of products and
expanding its business to new markets (Hyde, 2014). The examples for diversification in context
of Sainsbury are bank, home heating services, online movie streaming service, real estate
business etc. This has helped the company in generating revenue.
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Market penetration : in this strategy, the company focuses on generating market share in the
existing markets of the firm. The company uses this strategy to increase its existing market share
in UK by adopting level pricing strategy for groceries. This enables the company in attracting
more customers and gaining market share. The company in order to interact with its customers,
has launched its mobile application (Martinet, 2010).
Product development : in product development strategy, the company develops new products for
the existing market. This strategy helped the company in developing and introducing the basic
range of product in the market. The company can therefore attain high profitability by launching
its own brand products. This helped the company in attracting more customers towards its brand
and make them brand loyal towards the product and building trust through customer satisfaction.
3.3 Risk and competitive position of Sainsbury.
Sainsbury is very effectively carrying out their operations and functions in market.
Although all its activities are going in a very smooth manner there are some of the factors that
are affecting its operations. Company is facing some risk in performing their functions. One of
the major issues that has been faced by company is the employees. The manpower who are
working in this organisation is not as much qualified and skilled they are less trained compared
to the other organisation serving the same category of products and services.
Another factor of risk that is been faced by it is the offering, no innovative and new
services and products are availed to the clients. Customers get more attracted towards the
services that are very different and unique in market. That kind of offerings are not made by the
company to customers (Shah, Malik and Malik, 2011).
One of the biggest aspect that may lead company to face many problems are lack in
experience. Company is not much experienced with the operations and functions in the retail
industry. It at present faces many issues and problems related to its functions. This is a risk for
company as if it does not gain proper experience and knowledge in market they it would face
challenge in surviving and competing in market (Simon Fischbach and Schoder, 2014).
4.1 Outline a structure of the strategic plan for the company
Strategic plan is helpful for every business organisations, in order to achieve their goals
and objectives from competitive market. It provides direction to the activities and operations of
the company. It involves course of actions which are necessary in resources implementation in
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all overall business organisation (Ferrell and Hartline, 2010). So as managers of Sainsburry
needs to follow up these steps in order to develop or create strategic plan: -
Identification of all stakeholders – It is main step of strategic plan. At the time of strategic
implementation managers needs to find out their stakeholders. Customers, employees, suppliers,
creditors etc. are the main stakeholders of the company. So as it is very essential for top
management to understand the interest and expectations of stakeholders. This will help them to
develop an effective strategic plan (Flander, 2014).
Identify the resource requirements – This steps refers that managers requires to find out the
availabe sources which will be used in strategic plan. A company needs these resources at the
time of strategic planning, such as – human, physical, technological and financial. Identification
of available resources can be done through SWOT analysis of the Sainsburry; it could also
assists in recognised the strength, weaknesses, opportunities and threats of the company (Das,
2011).
Develop and communicate the plan – After this, the overall plan is developed by using various
market research. Market research helps to know needs and wants to customers in target market.
Along with this, if managers are able to understand customers' desires; as they can easily achieve
the aims and targets of strategic plan. After this, the overall plan will be communicate in all over
the organisation in order to take initiative corrective actions. In business entity, the plan is
discussed to employees; with which managers can improve the plan and can make it easily
attainable.
Monitoring and evaluation – At last, the overall plan is monitored and evaluated by the
managers. It is necessary to understand that the plan is effectively work or not and whether it is
able to achieve goals and objectives of the company (Chernev, 2012).
CONCLUSION
From the above report it is being concluded that strategic planning is most significant for
organisation. It benefits business in creating positive environment within it. Apart from these it
supports organisation in setting up directions towards achievement of desired goals and
objectives. The report also conclude that it is necessary for firm to compare its values and
missions with its objectives by which they can set direction to activities towards its growth.
Apart from this, reports states that entity must develop appropriate goals which can be attained
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within a period of time. At last report conclude that organisation must adopt significant strategy
by analysing it with use of tools which will support in its growth.
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REFERENCES
Books and Journals
Chernev, A., 2012. Strategic Marketing Management. Cerebellum Press.
Cinquini, L. and Tenucci, A., 2010. Strategic management accounting and business strategy: a
loose coupling?. Journal of Accounting & organizational change. 6(2). pp.228-259.
Das, T., 2011. Strategic Alliances in a Globalizing World. IAP.
Ferrell, C. O. and Hartline, D. M., 2010. Marketing Strategy. 5th Ed. Cengage Learning.
Flander, J., 2014. Great strategists say “no”. Strategic Direction. 30(4). pp.31 – 32.
Greco, M., Cricelli, L. and Grimaldi, M., 2013. A strategic management framework of tangible
and intangible assets. European Management Journal. 31(1). pp.55-66.
Hyde, M., 2014. Technology is reinventing your business. Strategic Direction. 30(4). pp.1 – 2.
Kinicki, A. and Kreitner, R., 2012. Organizational behavior: Key concepts, skills & best
practices. McGraw-Hill Irwin.
Kiptoo, J. K. and Mwirigi, F.M., 2014. Factors That Influence Effective Strategic Planning
Process In Organizations. IOSR Journal of Business and Management. 16(6). pp. 188-195.
Kunnanatt, J., 2011. Global business chain and twin advantage: Strategic opportunities for
developing countries. Competitiveness Review an International Business Journal. 21(4).
pp.352 – 368.
Luo, Y., Sun, J. and Wang, S.L., 2011. Comparative strategic management: An emergent field in
international management. Journal of International Management. 17(3). pp.190-200.
Martinet, A. C., 2010. Strategic planning, strategic management, strategic foresight: The seminal
work of H. Igor Ansoff. Technological Forecasting and Social Change. 77(9). pp.1485-
1487.
Mathur, U., 2011. Global Business Strategies: Text and Cases. I. K. International Pvt Ltd.
Njeru, N. E. and et.al., 2014. Analysis of factors influencing formulation of strategic plans in
Embu North District, Embu. Global Business and Economics Research Journal. 2 (5). pp.
116-129.
Shah, H., Malik, A. and Malik, M. S., 2011. Strategic Management Accounting-A Messiah For
Management Accounting?. Australian Journal of Business and Management Research.
1(4). p.1.
Simon, D., Fischbach, K. and Schoder, D., 2014. Enterprise architecture management and its role
in corporate strategic management. Information Systems and e-Business Management.
12(1). pp.5-42.
Souitaris, V. and Maestro, B. M., 2010. Polychronicity in top management teams: The impact on
strategic decision processes and performance of new technology ventures. Strategic
Management Journal. 31(6). pp.652-678.
Online
Ansoff Growth Matrix – Four Ways To Grow A Business. 2011. [Online]. Available through:
<http://www.differentiateyourbusiness.co.uk/ansoff-growth-matrix-four-ways-to-grow-
a-business>. [Accesed on 27th July 2017].
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