Comprehensive Business Strategy Analysis for Sainsbury's Retail Chain

This report provides a comprehensive analysis of Sainsbury's business strategy, focusing on its internal and external environments. It begins with a brief introduction to Sainsbury's, the second-largest supermarket chain in the UK, highlighting its diverse operations and financial strength. The report then delves into an organizational audit, utilizing benchmarking and SWOT analysis to assess Sainsbury's strengths, weaknesses, opportunities, and threats. An environmental audit is conducted using PESTLE and Porter's Five Forces models to evaluate the political, economic, social, technological, legal, and environmental factors impacting the company, as well as the competitive forces within the retail market. Finally, the report emphasizes the significance of stakeholder analysis, illustrating how Sainsbury's can effectively manage relationships with key stakeholders such as customers, suppliers, shareholders, and government to achieve its strategic objectives and ensure future growth. The report concludes with a summary of findings and references.

Business Strategy

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Task 2...............................................................................................................................................1
1. Brief introduction of Sainsbury...............................................................................................1
2. Analysis of the strategic position on Sainsbury by carrying out organizational audit.............1
3. Environmental audit of Sainsbury...........................................................................................3
4. Significance of the stakeholder analysis .................................................................................5
CONCLUSION................................................................................................................................6
references.........................................................................................................................................7

TABLE OF FIGURES
Figure 1: Stakeholder analysis.........................................................................................................5
LIST OF TABLES
Table 1: SWOT analysis..................................................................................................................1
Table 2: Porter’s five force model...................................................................................................4

INTRODUCTION
Each and every business organization needs to focus on future planning and formulation
of business strategy for improving growth of the company. The current research will focus son
Sainsbury, UK (Siddle, 2014). Study includes internal and external audit of the organization
using different tools and techniques.
TASK 2
1. Brief introduction of Sainsbury
Sainsbury is the second largest chain of supermarkets in United Kingdom. It has strong
financial position in the market and wants to expand its business at international level. Regarding
this, company needs to focus on future planning and different business strategies which can help
in attaining goals and objectives of the organization (Aldehayyat and Khattab, Anchor, 2011).
Supermarkets and convenience stores are major operations of Sainsbury but it operates in
different fields such as bank, mobile by its own phone network, fuel, online internet shopping,
etc. Store portfolio of Sainsbury has reflected that it has total 1312 stores in UK.
2. Analysis of the strategic position on Sainsbury by carrying out organizational audit
Organizational audit can be defined as an analysis of internal environment of the
organization. It helps in determining strength, weakness, resources and capabilities of the
organization (Germano and Stretch-Stephenson, 2012). Organizational audit can be conducted by
different models which are described as under:
Benchmarking: It means evaluation of Sainsbury by comparing performance of the company
with industry standards. It helps in identifying that whether the performance of firm is strong or
weak as compare to the competitors. It reflects the clear picture where the improvements are
needed and how to make business operations more effective. Evaluation has reflected that
Sainsbury has used new mid low pricing strategy for reducing the price of products and services
for its competitors (Al-turki, 2011). Comparison has reflected that Sainsbury has developed a
new benchmark pricing for Tesco and Asda.
Swot analysis:
Table 1: SWOT analysis
Strength: Weakness:
 Inappropriate management of
1 | P a g e

 Diversified investment.
 Use of IT infrastructure.
 Large capital investment. Skilled and experienced human
resources (Hensmans, Johnson and Yip,
2013).
inventory.
 Supply chain management issues.
 Disappoint investment in China.
Opportunity:
 International expansion of the business.
 Wide market in high population
countries such as China and India, etc. High purchasing power of customers in
UK and China due to stable economic
position of nation.
Threat:
 High competition from existing
retailers and new entrant.
 Online retail stores.
 Regular changes in technologies
(Gkliatis and Koufopoulos, 2013).
Organizational audit has reflected that Sainsbury has strong position in the market which
will help in attaining business opportunity in effective manner (Abraham, 2012). Along with this,
strong financial position play important role in augmenting future growth and development of
the organization.
Strength: Skilled and experienced human resources is a big strength of Sainsbury because firm
offers wide range of training and development programs to its employees. Along with this,
various additional welfare services also provides to staff members. Due to this, workers like to
work with the company for long time.
Opportunity: International expansion of business is an important opportunity for Sainsbury'
because in recent time, in many developing nations, the retail market is growing stage. In
addition to this, in these countries, the demand of the products and services are increasing
because they are having high population.
Weakness: At present time, Sainsbury is facing poor inventory management issue that is a major
weakness of company. The reason behind this, due to operate the business in different location,
the existing inventory systems of various outlets not integrated with the central warehouse. So, it
is difficult to manage the inventory level.
2 | P a g e

Threat: Increase high competition in retail sector and entry of new competitor in market is a
major threat for Sainsbury. The reason is retail industry is growing very fast and taste as well as
preferences of the customers are continuously change. To meet the demand and supply gap in
market, new retail organizations are coming in this market. Along with this, the existing
competitors of Sainsbury are adopting various techniques and methods to raise their market share
with different intentions.
3. Environmental audit of Sainsbury
PESTLE analysis:
It is an important tool for analysing external environment of Sainsbury. It includes
different factors which can influence financial and other performance of the organization. All
these factors are described as under: Political factors: Increasing globalization, rules and regulation of UK government, rate of
corporate tax are considered as important factors which can affect business operations of
Sainsbury (Elbanna, 2010). Economic factors: Increasing global food crisis, fiscal and monetary policies, exchange
and interest rates and purchasing power of customers influence the financial performance
of Sainsbury. Social factors: Promotion of healthy food, changes in taste and preference of customers,
daily lifestyle are considered as social factors which has positive as well as negative
impact on overall production process of Sainsbury. Technological factors: Changes in technology, online supermarkets and other techniques
augment the level of competition and investment of Sainsbury (Aldehayyat and Khattab,
Anchor, 2011). Legal factors: Stringent laws on food and drinks, packaging and labelling policies, other
legal scrutiny are included in legal factors which have direct and indirect impact on
organizational policies of Sainsbury.
 Environmental factors: Sainsbury needs to focus on different policies regarding carbon
footprint and energy efficiency for maintaining sustainable development of the
organization (Germano and Stretch-Stephenson, 2012).
For Sainsbury's, the most important factor from above mention PESTEL elements is
technology. The reason is with the use of new technologies, company improves the experience of
3 | P a g e

customers. In this context, firm is starting investment in many areas such to speed up supply
chain between warehouse to store, improve self service checkouts to minimize queuing time etc.
These initiate with effective use of technologies increases the sales of services, profit margin and
raise customer satisfaction level.
Porter’s five force model:
Table 2: Porter’s five force model
Forces Description
Competitive rivalry
(high)
 Large number of retailers in UK.
 High competition from Tesco, Asda, Marks and Spencer.
Bargaining power of
supplier (Low)
 There are large number of suppliers.
 Brand name of Sainsbury is very strong so, each and every
supplier wants to supply their raw materials to this company.
Bargaining power of
customers (High)
 Large number of retailers in UK so, customers can switch to
other retailers.
 Customers can purchase products and services form other
retailers also (Elbanna, 2010).
 Little difference in price.
Threat from new
entrant (medium)
 Investment of retail industry is low as compare to others.
 But strong brand name, innovative techniques of marketing
helps Sainsbury in reducing threat from new entrant.
Threat from substitute
(high)
 Availability of the substitutes of food products and services is
high which increases threat from substitutes for Sainsbury.
External environment analysis has reflected that Sainsbury has strong competitive
position in the market but needs to focus on different global factors for improving future
performance (Gkliatis and Koufopoulos, 2013).
The competitive market of Sainsbury in retail sector is very high. Its competitors are
bringing new services and huge product portfolio to attract the customers. The advantage of this
highly competitive market for the organization is Sainsbury is now trying to take steps in the
direction of increase the shopping experience of the customers. Along with this, new promotion
4 | P a g e

and advertisement techniques are using for attracting huge traffic of consumers to increase the
sales. But the negative aspect of this high competitive retail market for Sainsbury is company is
trying to conduct a business in new areas which not come under its core competencies. In
addition to this, for raise the sale and profit, organization reduces prices of the products to attract
more and more customers. It decreases the profit margin of the enterprise as compare to previous
years.
4. Significance of the stakeholder analysis
Stakeholder analysis is significant for determining needs and interest of different
stakeholders towards Sainsbury (Stakeholder Analysis (Stakeholder Matrix), 2016). It helps in
developing future strategy. Analysis of different stakeholder is as follows:
Figure 1: Stakeholder analysis
As per the above diagram Sainsbury needs to pay low attention towards competitors
because these stakeholders do not have sufficient power and interest to influence organization’s
business activity. But, on the other hand Customers, suppliers and shareholders have high power
and interest in different activities of Sainsbury. So, organization needs to pay attention towards
all these stakeholders because these are considered as strong player of the company. Including
this, stakeholder analysis have reflected that society, government and employees of the
5 | P a g e

organization can affect financial and overall performance of Sainsbury so, organization needs to
maintain appropriate communication with them. It will help in developing strong relationship
with these stakeholders (Hensmans, Johnson and Yip, 2013). Along with this, Media and NGO’s
do not have high level of interest but have high power to affect the overall brand image of the
organization. So, organization needs to satisfy needs and requirements of these stakeholders.
CONCLUSION
The current research project has concluded that Sainsbury has strong position in the
market which will helps in attaining future opportunities in more effective manner. Along with
this, for future growth company needs to focus on needs and requirements of each and every
stakeholders which will help in augmenting the level of performance of Sainsbury.
6 | P a g e

REFERENCES
Books and journals
Abraham, C. S., 2012. Strategic Planning: A Practical Guide for Competitive Success. 2nd ed.
Emerald Group Publishing.
Aldehayyat, S. J. and Khattab, A. A. A., Anchor, R. J., 2011. The use of strategic planning tools
and techniques by hotels in Jordan. Management Research Review. 34(4). pp.477–490.
Al-turki, U., 2011. A framework for strategic planning in maintenance. Journal of Quality in
Maintenance Engineering. 17(2). pp.150–162.
Elbanna, S., 2010. Strategic planning in the United Arab Emirates. International Journal of
Commerce and Management. 20(1). pp.26–40.
Germano, A. M. and Stretch-Stephenson, M. S., 2012. Strategic value planning for libraries.
Bottom Line: Managing Library Finances. 25(2). pp.71–88.
Gkliatis, P. E., and Koufopoulos, K. D., 2013. Strategic planning practices in the Greek
hospitality industry. European Business Review. 25(6). pp.571–587.
Hensmans, M., Johnson, G. and Yip, G., 2013. Strategic Transformation: Changing While
Winning. Palgrave Macmillan Publication.
Online
Siddle, R., 2014. Sainsbury's switches benchmark pricing from Tesco to Asda in new mid-low
pricing strategy. [Online]. Available through:
<http://www.harpers.co.uk/news/sainsburys-to-switch-to-a-mid-low-pricing-strategy-as-
sales-continue-to-fall/372079.article>. [Accessed on 18th March 2016].
Stakeholder Analysis (Stakeholder Matrix). 2016. [Online]. Available through: <
http://www.dse.vic.gov.au/effective-engagement/toolkit/tool-stakeholder-analysis-
stakeholder-matrix>. [Accessed on 18th March 2016].
7 | P a g e

8 | P a g e