Today's era is clearly referring to a contending state of market that in turn necessitates the organizations to undertake certain effective measures to strategically position themselves. It is with a leading consideration of combating the intensified state of competition prevailing all over the world. It is together referred to be an ineluctable clause of globalization that has duly postulated the business organizations to take a principle support of some prompt strategies that will in turn govern their undertaken activities ((Björklund, 2011). This is basically to proceed towards a successful future ahead where the present report has together elucidated a similar agenda of Sainsbury (About Us. 2017). It is known to be one of the renowned retail based enterprise of UK where it is also recognized to be at the second most position. With a foundation year of near about 148 years, it is currently operating with more than 1, 312 retail outlets at a worldwide level.
Overview & Critique of Porter’s models of competition
Porters model is analysis framework which is used to analyse the current competitive position, and the strength of a position you're considering moving into. Conventionally this tool is used to identify whether new products, services or businesses have the potential to produce profit to the organization. In simple terms it is used to determine the power of balance of the particular company.
Sainsbury's is the second largest chain of supermarkets in United Kingdom. Sainsbury's is retail company of grocery and can be word as a complex and is having no criteria for retail companies (Cohen and Kietzmann, 2014). The company fit into the wide variety of enterprises operational in soaps, daily food items, home decor and clothing fabric. The impact of porters five forces model on Sainsbury's retail company can be analyses as :
Bargaining power of suppliers
Sainsbury's suppliers have enough power to regulate the retail industry. Th e company is has the major role in supply chain of grocery. Sainsbury's suppliers has main roles in managerial operations and background of commerce. Suppliers power is exerted by the demand of suppliers for that retails company pay a certain price for their goods (Demil, Lecocq and Zott, 2015). If the organization don't pay the price they don't get the goods for selling. But large supermarket like Sainsbury's have an stupendous advantage over small stores and shops because they can identify the price they have to pay to the suppliers. The retail company will be left with much smaller market if the supplier of the company doest not reduce the price .
Bargaining power of buyers
In grocery industry Sainsbury's the customers have the high power. During the current financial crisis consumers were very much attracted towards the low prices, in addition to this customers have compared and selected the prices and availability of product with the online retails shopping to get the best product at best price. Due to these buyers easily switched from one brand to another and get the more standardized product.
Threat of new entrants
The retail company Sainsbury's retails section has always been in the middle of disputable subject which concerns international rivalry, price wars, modifications in the plan (Dess, McNamara and Eisner, 2016). Due to this it became difficult for the company to emerge as strong player in the market and to survive in that condition.
Threat of substitutes
Sainsbury's offers a wide range of products and service offering which include bakeries, florist clothing, wine stores, books, pharmacies, electronic goods etc. Due to this assorted nature of business the company can't stop the customers to move from one brand to another but if the company offer extreme quality and excellence can stop the customer to switch.
Rivalry among competitors
Rivalry among the food and grocery market is extremely high (Drakulevski and Nakov, 2016). Competitors challenge is to come over the strategies which are currently used in market and to alter the tendencies in online transaction, customer behaviors etc. For company like Sainsbury's competition is really strong because of customer behaviors to move from one brand to another and they have been working on it for a long time -period.
Sainsbury's is a leading UK food retailer and is having interest in financial offering and services. It includes company supermarket, Sainsbury's local, Bells stores, Jacksons stores, Sainsbury's Online and Sainsbury's bank (Björklund, 2011). The decision to get assorted into convenient stores is discussed in the porters model. The company's objective is to provide customers with well services which are demanded by them and to provide stakeholders with good and maintain financial returns. The retail company ensures all its employees and colleagues to get rewarded when they contribute to the company's growth and bring the profit for the company. The company always tries its best to satisfy the communities and environments in which they conduct and run their business.
Sainsbury's serves 16 million customers each week in 455 supermarkets and 301 retail stores across UK. company sells and pound 6bn British food every year and obvious strength in SWOT analysis (Cohen and Kietzmann, 2014). Recently the company has launched new scheme which makes it easier for the small and medium sized suppliers to gain access to organization and make them produce food aviable tro the customers . This can be further get explained in the company's PESTLE analysis:
PESTLE analysis - Political Factors
Sainsbury's has got the opportunity because of increasing globalization and challenge present in the market. With that they will need to compete against the anonymous stores and they will be able to produce the best quality products and make profits from around the world. Sainsbury's has joint ventured with many companies and soon they would be able to enter in the market of emerging companies (Demil Lecocq and Zott, 2015). The recent survey suggests that price fixing among the retailer gas some negative impact to the industry but Sainsbury's has a good image in its customers mind so this negative implications might nit affect the reputation of the company.
PESTLE analysis - Economic factors
Sainsbury's cost of purchasing has increased because of continuously increasing global food crisis all over the world. It will impact on the edges of the company's and might lead them to pass over the consumers by increasing prices of all the products available in the supermarket. The recent credit crunch have impacted the purchasing power of consumers but they will still buy the essentials they may be more cautious (Dess, McNamara and Eisner, 2016). Rivalry competitions within every segment of the retail sector has lead the company retailers giving lot of encouragement to the consumers.
PESTLE analysis - Social factors
In recent time the consumers are emphasizing more on fresh, easy style of cooking. This makes an opportunity for the Sainsbury's to motivate and encourage new recipes and homey eating. The government is also paying more attention to promote healthy eating because the level of purchasing is increasing within UK (Drakulevski and Nakov, 2016). This has lead the consumers of UK to move towards the healthy eating habits. Due to this Sainsbury's has got the opportunity to stock their stores with healthier food at cheaper price so that customer can buy them easily.
PESTLE analysis – Technological
Now a days internet usage is growing rapidly in the western countries. It is foretasted that by 2012 the Europe will have reached European, with British Shoppers accounting more than a third of all the profit. If Sainsbury's can make use of this internet culture to promote their business. They can put their business online to make purchasing of goods for customers more convenient (Ethiraj, Gambardella and Helfat, 2017). This will prove great for the consumers because they will not have to stay up in the queues in supermarkets. By using the technology the Sainsbury's can run their business 24 hours of day.
PESTLE analysis - Environmental factors
Western companies are giving more and more priority to reduce carbon footprint and increasing energy efficiencies. So Sainsbury's have to focus more on environmental issues and invest more on green issues (Gans and Ryall, 2017). The growing importance of ethical issues like sale of organic food and the ethical treatment of animals clearly effect Sainsbury's on different levels. This is serious issue and the company have to balance their public stand on environment without losing their consumers.
PESTLE analysis - Legal factors
Laws are very strict on food and drinks in UK, so Sainsbury's will have to follow the regulations and labelling policies which will make financial burden to the company. Due to its interests in financial services, there is ever more legal inspections in the operations of Sainsbury's bank which means there is more responsibility regarding legal compliance and other risk measures.
SWOT analysis of the company
SWOT analysis is tool used to analyse the strength, weakness, opportunities and threats of the company. Following are the SWOT analysis of Sainsbury's company:
Strengths of Sainsbury's:
Sainsbury's has had 13 straights quarters of growth expressing the real turnover in its business. Sainsbury's seems to be very well placed in dealing with environmental issues because its has started new initiatives like buying fair trade bananas (Hamilton and Webster, 2015). Sainsbury's is the supermarket which has a clear celebrity sanctioning products which are leading to increased sales.
Weakness of the company :
The takeover bid by Qataris private equity firm last year can have some implications because people are moving towards British companies and the prospect of Sainsbury's being governed by a foreign company can lead to consumers switching loyalties.
Opportunities of the company :
Sainsbury's have lot of alternative businesses which presents a great opportunity for further growth and development (Morden, 2016). Online sales are great opportunity for Sainsbury's since its online edging are higher investments are not large.
Threats for the company:
Sainsbury's operation are subject to wide range of spectrum of regulatory needs with respect to planning, relation, competition and environmental issue employment and law of tax in terms of regulation over the groups product and services (Pham, Segers, and Gijselaers, 2013). So the Sainsbury's needs to do heavy investments in ethical and environmental issues.
Practices of theory
Sainsbury's is one of the leading retail company is UK. The company is expanding their business at international in which they are expanding their market share by introducing the new products in the market ((Björklund, 2011). For this the organization make Scan it external environment in which they make analysis on the different factors which make impacts of business and its activities.
The retail company is engaging in making different types of products in order to attract more customers in business. By making porter's five analysis, SWOT analysis and Pestle analysis company is able to identify the main force which impact on firm's activities. The main reasons of using SWOT and Pestle analysis is that with the help of this two frameworks company make its strategic planning (Cohen and Kietzmann, 2014). By using this Sainsbury's using these critical tools to assess opportunities and challenges. This theories work and make practices in organization which helps to them for making their strategic more effective and helps to company for targeting their customers. Following are working of these strategics in organization which are as follows.
By using the pestle and SWOT analysis the company can make reassessments of their work and make reassessment of their work. Sainsbury's can detect emerging strengths and opportunities as well as other external factors which might effects on company (Demil, Lecocq and Zott, 2015). The company was planned to open its new store is Middle East, but making SWOT analysis they identify that they need to make reassessment of their plan and open their new stores in the Asian countries which is more profitable for the Sainsbury's and it has created more expansion in its business. With the help of this analysis frameworks they can understand the economics condition and social shifts along with the technological changes. In the retail sector the braining power of buyers is very high so it is important that produce only cost effective products with wide range so it helpful in market expansions ( Dess, McNamara, and Eisner, 2016)
Identifying a target market, developing a business format and building sustainable competitive advantages are three major components of a thorough business strategy. By making proter's five analysis it helpful for the marketing team of Sainsbury's to make identification of their rivals level. These frameworks also helps or organization to make and explore the possible sustainable advantage in the business (Drakulevski and Nakov, 2016) Similarly, by monitoring trends in the environmental issues of PESTLE firm can take advantages of their trends and make involved with them. Alog with this the company is also considered all these benefits which helps to them for gathering more customers in its business.
Avoid major mistakes
By making the external environment it helps to organization to make different types of strategics and they can avoid major mistakes which can taken by them during the capturing the market. The organization make analysis on the pricing strategics and get knowledge about their weakness (Ethiraj, Gambardella and Helfat, 2017)With this regrading to organization can make their products development as per their consumers preferences in which assist to them for making their products more benefits in the company.
In order to make practices of this framework it helps to organizations for making the strategic planning. It helps to Sainsbury's to make their evaluation more effective and advances in order to expanding their business. For taking the practices of strategics framework the organization take Ansoff's matrix which helps to them for expanding their business (Gans, and Ryall, 2017). Following are the growth strategics of the Sainsbury's.
At this stage the organization expand their business in existing market with existing approach. At present the company is producing all types of retail products for their customers in order to make advantages of market share they can expand their business in UK with producing new products (Hamilton and Webster, 2015) With the helps of this approach they can make their business more attractive and gain more customers in their business plan for the non food section the Sainsbury's. can manage more attractive products.
At this stage the company expand their business with their existing products in new market. The company is making different types of retail products which helps to them for expand their business. With the helps of such type of market strategics the company can expand their business easily. From the conducting the SWOT analysis it is identified that emerging economics are more benefits for Sainsbury's. and their political environment is also helps to expand their business in their own countries (Morden, 2016). In order to expand the business in other countries it is important that to use of advance technology which helps to them for gathering more customers in its business.
Company tries to create new products and services targeted at its existing markets to achieve growth. It helps to company for expanding their business and gain more profits in their business. In order to develop their products Sainsbury's is using different types of techniques such as making investment in research and development products which helps to for gaining market share (Pham, Segers and Gijselaers, 2013). By assessing the Pestle analysis it is identified that they should develop their research and development techniques in order to gather market share.
In the diversification the company introduced new products in new market. The company can new products in order to expand their business in new market which helps to the for expanding market (Staude, 2013). By making Pestle analysis it is identity that there are various types of products whose demand is rapidly increases such as more expensive gadgets. In order to expand the market it is important it is important that organization need to represent their actives easily.
The above report has summed up a strategic approach of Sainsbury to run its business related practices where it is a well known retail establishment of UK and is positioned as the second biggest supermarket of UK. However, an intensified competition among the retail based organizations of UK is a resultant agenda of this report where Sainsbury is too acknowledged to deal with a rigorous rivalry from some other analogous players operating in this industrial sector. These are TESCO, ALDI and ASDA, etc., where even the small scale retailers are equally competing these large scale organizations due to an effortless tact of entry. In context to which, this report has duly assessed the existent status of Sainsbury as a way of ascertaining its recent techniques and procedures. This has been done by referring to two leading models namely SWOT and PESTLE. It is where the former one has apparently assisted in revealing the inner dimensions of Sainsbury by interpreting its strengths, weaknesses, future possibilities in business such as the opportunities and some upcoming threats that could hinder their undertaken measures.
It is then followed by another analytical tool called PESTLE to evaluate its macro environmental factors or the external dimensions of Sainsbury as a way of determining those influential factors that could either obstruct or construct their business in a definite way. On whose basis, certain reassessments has been conducted as a way of identifying some sustainable benefits to Sainsbury by together avoiding any big mistakes while practicing their business activities. Lastly, some growth related strategies have been concluded to Sainsbury as a way for extending their business to a prosperous level. This has been done by referring to another strategic tool named Ansoff matrix and with the help of its four leading strategies. Out of which, market development is considered to be one of the most suitable measure for them to enlarge their existent business operations in some other proposed marketplaces.
By conducting the Pestle and SWOT analysis it is identity that Sainsbury's. Need to make focuses on their diversification. With the help of this the company can expand their business easily and they can also gather more customers in its business. However, for applying this strategics on the market the company need to make investment in their research and development which-is very high risks steps.
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