Business Strategy for Sainsbury's Assignment Sample

Analyzing Macro and Internal Environments, Strategic Tools, and Management Plans

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Introduction Of Business Strategy for Sainsbury's Assignment

The study aims to support individuals, working as managers or leaders in marketing companies with the proper development of strategic planning and thinking to enhance the company’s business value and profitability over time. Developing a proper and effective strategic management plan is very important for the retail company, Sainsbury's business environment and the business professionals as it will help to raise organizational performance and the professional skills of the managers.

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Impact of macro environment on Sainsbury's work culture and business strategies

Sainsbury's business strategic context

The business strategic context of an organization includes its objectives, mission, and vision in business. The main objective and vision of Sainsbury’s business are to establish itself as the most trusted retailer where individuals will love to shop and work. The goal of this retail company is to make the lives of all their internal and external stakeholders including customers easier every day by offering them with best quality products and services at affordable prices.

The statements that denote the company’s mission, vision, and objectives play 3 critical roles. The roles of these statements include communicating the purpose of the business of the company to all their stakeholders and informing them about the company’s strategic development (sainsburys.co.uk, 2022). The statements also allow the company to create measurable objectives and goals through which it can gauge the success of its business strategies. The business strategy of a company to all actions and decisions taken by managers and leaders to achieve larger goals and visions. Proper execution of effective business strategies can help the company to grow as the market leader in its domain. The key role of the strategy is to direct and provide the company with the scope of business and advantages over its market competitors by efficient resource configuration in the long run.

The “strategic planning techniques” of Sainsbury’s are based on 5 major pillars that help to enhance its profitability and business value. The five pillars of business strategy are stated below.

  • Understanding customers and their needs better
  • Providing the best quality products and services at affordable rates
  • Supporting stakeholders whenever they need the company’s support
  • Building a supportive, conflict-free and motivating workplace culture
  • Establishing unique values that will make the company different from its competitors.

Macro environment: analytical frameworks [P1]

The three major business analytical frameworks of Sainsbury's are discussed below.

  • Stakeholder analysis: The framework of stakeholders’ analysis helps the company to identify the important stakeholders and group them based on their level of interest, participation, and impact on projects. The framework also determines how the internal and external stakeholders of the company get involved and communicate with each other in groups to bring success to the company’s business strategic plan.
  • Stakeholder matrix: The managers of Sainsbury’s can able to plan projects with effective and efficient team members through its stakeholder matrix (Nguyen et al. 2018). The matrix helps the professional of the company to identify the groups of stakeholders who can contribute effectively to major business roles including “contributors, beneficiaries, or influencers”.
  • Stakeholder mapping: Stakeholder mapping is determined as the process through which the managers of Sainsbury’s categorize and identify all major internal and external, stakeholders, to achieve the objectives and goals of the company’s business. The major stakeholders who contribute highly to the company’s business practices include “investors, suppliers, employees, and customers”.

PESTEL analysis

Different factors Consequence
Political
  • Political involvement - 21.6%
  • Political stability index - 0.54 (theglobaleconomy.com, 2022)
  • Integrity of politics - 12.3%
Economic
  • Unemployment rate- 4.1%
  • Financial freedom rate of the UK - 72.7 (knoema.com, 2022).
Social
  • Present UK’s population - 68.8 million (worldometers.info, 2022).
  • Cultural inquisitiveness- Innovative
Technological
  • Technology improvement - Satisfactory
  • Innovation index rate of the UK - 59.8 (theglobaleconomy.com, 2022).
  • Information availability - Sufficient
Environmental
  • Crisis in climate change - 1.2%
  • The environmental safety is the Clean Air Act, (1999)
  • The act helps in environmental sustainability is the Environment Act, (2021).
Legal
  • UK government is active in legislation development (cipd.co.uk, 2022).
  • Retail loans - 34%

Table 1: PESTEL analysis of UK

Porter’s Five Forces model

The “Porter’s Five Forces model” is the most expressive model that helps the retail company Sainsbury’s to identify its rival companies and competitors in the target market segments.

The major objective of this model is to assess the entire competitive landscape of Sainsbury's business strategies (businesslibrary.uflib.ufl.edu, 2022). Each of the forces including “market access, buyers’ entry costs, supplier power, the intensity of competitiveness, market threats, and access to new markets”, usually corresponds to a vital component of “market intensity”.

“Structure-conduct-performance” model

The “structure–conduct–performance” (SCP) model usually argues that the structure of the market is the basic determinant of Sainsbury’s internal business environment, employees’ and stakeholders’ behaviours. The SCP model generally determined the business performance of the company over time and also measure the market structure where the company is operating its business (Lelissa et al. 2018). Other major factors that the SCP model also determined and evaluate include “market competitors, entry and existing level costs, and heterogeneity of services and products”.

Strategic positioning: Ansoff’s growth vector matrix

The “Ansoff’s growth vector matrix” can also be referred to as the products and market expansion grid that is a “two-by-two framework” that Sainsbury’s utilized for the development of its business strategic plan and improvement in the management of projects team. This matrix also helps the marketers and project managers of the company to analyze its internal and external business environments and to plan and evaluate initiatives for business growth over time. The tool also helps the marketers of Sainsbury’s to determine its business strategic position in the competitive markets and also helps the external and internal stakeholders of the company to conceptualize the rate of risks and advantages associated with various business growth and development strategies.

Figure 4: SWOT analysisSWOT analysis

SWOT analysis and benchmarking indicators

SWOT analysis of Sainsbury's helps the company to determine which business strategy will be correct for it to remain in market competition and strengthen its customer base. SWOT usually exposes the areas the company needs to improve or develop to enhance its business profitability and product value. Internal and external business environments can also be evaluated by SWOT analysis (qrih.nl, 2022). The major strength of the company is its unique promotional and product strategies that it introduced to customers via social and digital media marketing.

The weaknesses of the company are its products and services are expensive for lower economic groups and financial instability in market segments. Several threats that Sainsbury’s suffers from include covid-19 pandemic crisis, legal norms and regulations of the UK government, and threats from competitors like Tesco, Aldi UK, and Morrisons. As per the report, it can be stated that Sainsbury's ranks “17th on the Food and Agriculture Benchmark” for its best performance in providing customers with nutrition (worldbenchmarkingalliance.org, 2022). Through benchmarking indicators, the company’s marketers and business professionals are able to compare the effectiveness of Sainsbury’s business strategies with other rival companies in the market.

Internal business environment of Sainsbury's and capabilities

Internal business environment [P2]

The internal environment of Sainsbury's is a great place to work as the company allows about 185,000 employees to become the best version of themselves and thrive at every level of their work. The company has an objective to shine at all parts of its journey and become the best inclusive retailer in the world. The internal business environment of Sainsbury’s has a great workplace suture as the company celebrates and rewards its entire efficient staff for their great performance (sainsburys.co.uk, 2022). The business environment of the company also incorporates a diversified group like “lesbian, gay, bisexual, transgender and allies” (LGBTA group) to enhance the staff engagement and value of the business.

Strategic capability generally includes competencies and resources that the company uses to compete in its internal and external business environment. This also helps to measure the weaknesses and strengths of the company through SWOT analysis and determined the sources of competitive challenges and benefits over its rival companies across the world (Nogalski et al. 2021). The “Resource-based theory” can help the company to achieve several competitive advantages through innovations in business strategy. This also helps the company to achieve sustainability in competitive benefits through the accumulation and utilization of business resources to meet all customer's demands and market trends.

Figure 5: Importance of Value ChainImportance of Value Chain

“Value Chain Analysis” in Sainsbury's internal business environment is determined as the seeking tool that helps in the identification of several competitive benefits of the company’s business in target markets ( Berstad et al. 2022). This uses the systematic process of examining the status of stakeholders’ relationships and business activities of the company to identify the advantages in its competitive market. Through “Cost-benefit analysis” the company’s managers are allowed to compare the estimated and projected costs, opportunities, and benefits that rea associated with project decisions in order to determine if it makes sense from the perspective of the company’s business strategy.

Analysis of the internal business of the organisation [P2]

Sainsbury’s internal and external business environment and the factors affecting its business can be identified through the use of PESTEL analysis and SWOT analysis. PESTEL analysis helps the company’s business professionals and managers to contextualize all vital information and big data of the country it is operating its business (Tsangas et al. 2019). The information on business strategic direction, brand positioning, risks and advantages in target markets and growth targets that will enhance the company’s business value, profitability, and productivity are included in this analysis.

The SWOT analysis will help the marketers of the company to identify the company’s strengths, weaknesses, threats and opportunities in target market segments. SWOT helps the company to determine the areas it is good at and the areas it needs improvement. It also helps to critically assess the success factor of the company’s business through which it can achieve competitive benefits over time.

“McKinsey 7-S Model” helps the markets and managers of Sainsbury’s have to adapt a change in its business strategic plan based on market trends and customer demands and needs. The model aims to depict how a change in the business operational plan, products and service development is managed by the leaders of the company. It also determines the effectiveness of the interactions between 7 major elements of this framework including “structure, shared values, skill, strategy, system, style, and staff”.

Figure 7: The VRIO FrameworkVRIO framework

The VRIO framework generally deals with some major elements including “Valuable, Rare, Inimitable and Non-Substitutable”. The framework is widely used by organisations as well as Sainsbury’s to determine the business strategic capabilities and to evaluate its business value proposition in the competitive market (Ariyani et al. 2018). VRIO analysis includes strategic planning tools that are utilized in order to help the company to identify certain capabilities and business resources that will provide the company with sustainable advantages in the competitive market.

Outcomes of analysis of the internal environment of Sainsbury's

Analytical models and tools [P3]

The internal and external business of Sainsbury’s can be analyzed with the help of a balanced scorecard that generally helps the company in drafting its effective business strategies. The balanced scorecard usually explains what is vital for the company to increase its revenue and business popularity and value in the target market. This also includes several important metrics such as “reporting production, program operations and service delivery” will allow the company’s managers to determine the business progress. It will also help the managers to identify the areas the company need to improve to achieve its mission and vision.

“Porter’s Five Forces model” has helped Sainsbury’s to understand its position in competitive markets and determine the major competitive forces that influence its internal and external business environment. This model has also helped managers of the company to pinpoint Sainsbury's business strategies that need improvement so that the company can achieve profitability and strengthen its customer base in the upcoming years.

Figure 8: Stakeholders Analysis Model stakeholders analysis

The “power-interest grid model” of stakeholders’ analysis helps the company to determine the value and importance of all its external and internal stakeholders and also helps the managers understand the stakeholders’ impacts on the business and their needs (forbes.com, 2022). The internal stakeholders of the company include suppliers, managers, employees, customers, project managers, contractors, and shareholders. The external stakeholders of the company include legal bodies, banks, and local communities. This grid format is associated with the Ansoff matrix that helps all stakeholders of the company to identify the challenges and opportunities to grow the business revenue. Revenue growth can be achieved through product and service development when the company is penetrating into new market segments.

Measurement of strategic outcomes [P4]

Sainsbury’s business goals and objectives can be achieved through the implementation of “Strategic Performance Indicators” (SPIs). The SPIs help the managers of the company to measure and determine the effectiveness of business policies that reveal all management levels have the potential to develop and improve the strategic outcomes (Rathore et al. 2021). SPIs are generally derived from SDP diagnostics and “rigorous descriptive analyses” that are performed by SDP on general issues set. In such cases, existing business big data are utilized by the marketers and project managers of the company to identify the business progress and profitability in the competitive market.

Strategic management plan development

Strategic management planning [P6]

The planning of strategic management is determined as the process through which Sainsbury’s set its business strategies, goals, objectives, and process of development of its services and products. This strategic management plan helps the company to become more competitive and enhance its business performance and profitability in the share market. It also effectively deploys employees and business resources of the company so that it can achieve all its long and short-term goals in the upcoming days.

Sainsbury's also uses the “business model canvas” to plan its business strategies. This “business model canvas” is an effective tool that helps the managers and marketers of the company to understand the models of business in a structured and straightforward manner. The canvas will help the company to lead the insights of the stakeholders it serves. It can also be used to determine the business value propositions that are offered to all stakeholders through effective channels to generate high revenue. The “Business Canvas Model” is also used by the company’s project managers to “visualize, assess, and change models of business”.

The roadmaps are the major elements through which Sainsbury's can develop its business strategic plan. It also helps the company’s project managers to visualise its “long-term business strategies and objectives”. The roadmaps also help in bridging the gap between the company’s “actions and visions” (erptherightway.com, 2022). It provides the project managers of the company with an effective timeframe and principles through which they can execute their business practice plan.

Strategic choices and directions

The objective of and long and short-term goals of Sainsbury’s can be achieved over time through the incorporation of a “fit-for-purpose strategy” that is associated with corporate agendas. Organisational sustainability can also be enhanced through this strategy as it includes Human resource strategy and business development strategy that helps the company to enhance business values and raise business profits over time.

Concepts of theories, models, and other strategies [P5]

The business strategic development of Sainsbury’s can be done through the incorporation of “Porter’s generic strategies”. This includes “cost leadership strategy, differentiation strategy, and differentiation and costs focus strategy”. A hybrid strategy can also be used during business strategy development as it helps with low-cost pricing approaches in the company’s business prcatices (Aalbers et al. 2021). This strategy also helps in “strategic positioning” as it is associated with an extended “Bowman’s Strategy Clock” model. Ansoff’s Matrix has helped the company in resolving the issues and challenges of diversification in competitive markets. “Mergers and acquisitions” include the process of combining two companies from the same industry into one to raise business value and profits.

Conclusion

The study highlights the impacts of the macro environment on Sainsbury's work culture and business strategies. The internal business environment and capabilities of this UK-based retail organisation have been analyzed through McKinsey’s 7S model and VRIN framework in this study. Evaluation of Sainsbury's business environment has been made through several “strategic management tools and models” including “Porter’s Five Forces model and Ansoff matrix analysis”. In the end, a strategic management plan has also been developed by incorporating “Porter’s generic strategies and Business Canvas Model”.

References

Journals

Aalbers, R.H., McCarthy, K.J. and Heimeriks, K.H., 2021. Market reactions to acquisition announcements: The importance of signaling ‘why’and ‘where’. Long Range Planning, 54(6), p.102105.

Ariyani, W. and Daryanto, A., 2018. Operationalization of Internal Analysis Using the VRIO Framework: Development of Scale for Resource and Capabilities Organization (Case Study: XYZ Company Animal Feed Business Unit). Asian Business Research Journal, 3, pp.9-14.

Berstad, D., Gardarsdottir, S., Roussanaly, S., Voldsund, M., Ishimoto, Y. and Nekså, P., 2022. Liquid hydrogen as prospective energy carrier: A brief review and discussion of underlying assumptions applied in value chain analysis. Renewable and Sustainable Energy Reviews, 154, p.111772.

Cox, A.M., Pinfield, S. and Rutter, S., 2018. Extending McKinsey’s 7S model to understand strategic alignment in academic libraries. Library Management.

Lelissa, T.B. and Kuhil, A.M., 2018. The structure conduct performance model and competing Hypothesis-a review of literature. Structure, 9(1), pp.76-89.

Nguyen, T.S. and Mohamed, S., 2018. Stakeholder management in complex projects. In The 7th World Construction Symposium (pp. 497-506).

Nogalski, B., Nguyen, H.T. and Kuc, B.R., 2021. Comparative analysis of internal business environment of Van Lang University and Van Hien University using IFE matrix. International Journal of Advanced Multidisciplinary Research and Studies, 1(1), pp.10-15.

Rathore, R.S. and Agrawal, R., 2021. Success and Operative Factors for Technology Business Incubations in Indian Higher Educational Institutes. BUSINESS RESEARCH AND INNOVATION, p.199.

Tsangas, M., Jeguirim, M., Limousy, L. and Zorpas, A., 2019. The application of analytical hierarchy process in combination with PESTEL-SWOT analysis to assess the hydrocarbons sector in Cyprus. Energies, 12(5), p.791.

Websites

businesslibrary.uflib.ufl.edu, (2022), Porter's Five Forces Analysis, Available at: https://businesslibrary.uflib.ufl.edu/c.php?g=114635&p=746436 [Accessed on: 31st October, 2022]

cipd.co.uk, (2022), PESTLE Analysis, Available at: https://www.cipd.co.uk/knowledge/strategy/organisational-development/pestle-analysis-factsheet#gref [Accessed on: 31st October, 2022]

erptherightway.com, (2022), ERP Application Strategy Roadmap for Maximizing Long-Term ROI, Available at: https://erptherightway.com/2011/07/02/erp-long-term-roi/ [Accessed on: 31st October, 2022]

forbes.com, (2022), What Is a Stakeholder Analysis?, Available at: https://www.forbes.com/advisor/business/what-is-stakeholder-analysis/#:~:text=a%20stakeholder%20analysis%3F ,The%20purpose%20of%20a%20stakeholder%20analysis%20is%20to%20outline%20the,the%20project%20from%20the%20start. [Accessed on: 31st October, 2022]

knoema.com, (2022), United Kingdom - Index of economic freedom, Available at: https://knoema.com/atlas/United-Kingdom/Index-of-economic-freedom#:~:text=United%20Kingdom%20index%20of%20economic%20freedom%20was%20at%20level%20of,by%20our%20digital%20data%20assistant. [Accessed on: 31st October, 2022]

qrih.nl, (2022), SWOT analysis and benchmarking indicators, Available at: https://www.qrih.nl/en/tools/benchmarks-and-swot-analysis [Accessed on: 31st October, 2022]

sainsburys.co.uk, (2022), About Sainsbury’s Company, Available at: https://www.sainsburys.co.uk/ [Accessed on: 31st October, 2022]

theglobaleconomy.com, (2022), United Kingdom: Political stability, Available at: https://www.theglobaleconomy.com/United-Kingdom/wb_political_stability/ [Accessed on: 31st October, 2022]

worldbenchmarkingalliance.org, (2022), Segment ranking summary of Sainsbury’s, Available at: https://www.worldbenchmarkingalliance.org/publication/food-agriculture/companies/sainsburys-2/ [Accessed on: 31st October, 2022]

worldometers.info, (2022), the Population rate of the U.K., Available at: https://www.worldometers.info/world-population/uk-population/ [Accessed on: 31st October, 2022]

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