With the help of strategic models such as Value chain analysis, BCG Matrix, Bowman’s Strategy Clock, Cultural Web etc. assist to examine that how an organization makes its strategic choices in its business. In the present report, Sainsbury is chosen as company to examine its strategic choices and for this model of Value Chain Analysis is selected. Sainsbury deals in the business of grocery sector and second largest retailer in UK. Company has its business in retail industry and operates stores through supermarket and convenience stores. Currently company has more than 1200 stores and also employs 161000 employees in its organization (About us. Sainsbury, 2015). The application of this strategic model is going represent the primary and supportive activities of
OVERVIEW OF COMPANY
Sainsbury is operating in the retail industry of UK. Company had attained the second largest position of supermarkets in UK with the market share of 16.9%. Along with the super market and convenience stores, they are also providing financial and network services to the customers. Main focus of company is in providing qualitative products to the customers at the reasonable price in order to enhance their level of satisfaction. With their good business senses they provide their best efforts to deliver the best possible shopping experience (About us. 2015). Their strong cultural values are vital part of identity. With this strategy, they are able to achieve their objectives in an effective manner. In order to manage their business operations in an effective manner, they are focused on the economic factors, social factors and environmental chain (About us. 2015). With their effective business strategies company is able to make continuous growth in their revenue and profitability. Further, their hard efforts are also appreciated by their customers and stakeholders which is noticeable through their annual reports.
VALUE CHAIN ANALYSIS FRAMEWORK OF SAINSBURY
Value chain analysis can be defined as model used for making addition in products and services of business by analysis of their business activities. By the applicability of this tool, management of commercial entities provide their efforts to make reduction in their cost and making increase in differentiation (Bolwig and et.al., 2008).
Inbound logistics: Sainsbury does not manufacture goods on its own and organization is having strong relationship with suppliers who provide different type of commodities to the firm. Goods are ordered by company as per requirement and it is ensured that condition such as stock out may not arise as it is regarded to be the most unfavourable condition for business enterprise. Finished goods received by company are stored in warehouse and commodities are sent to different stores of company as per requirement. Apart from this main focus of management is on saving cost where goods are purchased by company in bulk and it is especially beneficial in case of goods whose demand is quite high in the market. Distribution is only done by company after receiving order from its physical store (Soosay, Fearne and Dent, 2012). With an improved focus on inbound activities the management of Sainsbury is effectively designing the strategies which can provide better sustainability to operational actions. It also helps in building better relationship with suppliers which also increases the opportunities and provide better strategic capabilities to the organization. Resources can be allocated in better way which increases the efficiency and lead business to advanced strategic capabilities (VALUE CHAIN ANALYSIS: An exploratory field study. 2013).
Operations: Since Sainsbury does not carry out production process and due to this reason its operations are different from other companies. Main operation carried out by business enterprise is linked with distribution of goods where products are purchased from suppliers and they are offered to customers with the help of physical stores which have been opened by firm worldwide (Bolwig and et.al., 2008).The key operations of Sainsbury on the basis of which company is able to deliver differentiated services to its target market as per their expectations and other type of requirement. It provides better opportunity to enhance the quality of its products which will attract more and more customers towards products and allow to design effective strategies as per their needs. Number of expansion strategies can also be adopted in order to strength organizational distribution network (Value chain analysis. 2015).
Outbound logistics: It is well known fact that company like Sainsbury operates on larger basis due to which company is having large number of warehouses in many areas. This directly supports company in proper management of goods and commodities are sent as per requirement received from the physical stores (Alter, 2008). Organization is having its own transportation network through which its goods are transferred from warehouse to its physical store. Through this company is being able to save cost and time required in distribution.
Advantages and Disadvantages of value chain
It has been spotted that there are number of advantages of value chain analysis which amends the business opportunities for Sainsbury. One of great advantage is that it provide flexible strategies which can enhance organizational performance and help in gaining better competitive advantage over competitors. With an assistance of value chain analysis the business firm can also have reduction in cost of operations and bring some differentiation in operational activities. It is also beneficial for better understanding of diverse organizational issues which relates with the customer value. It allow to focus on diverse activities which can boost the organizational performance by delivering value proposition (VALUE CHAIN ANALYSIS: An exploratory field study, 2013).
On the other side, it has also been spotted that there are number of disadvantages which can also influence the overall process in negative manner. In most of situations the employees do not have proper information regarding value chain analysis which impact the organizational development and operations in negative manner. If company is not having efficient structure then it may possible that the structure needs high level of investment in order to meet standards. Value chain analysis also needs high level of communication system in order have effective flow of information regarding distribution channel which may also increase the investment ratio and impact negatively in operational cost (Case study of Sainsbury. 2015).
Marketing and Sales: It is regarded as one of the most important activity carried out by Sainsbury with the aim to enhance its customer base and this provides long term benefits to the business enterprise. In order to promote range of commodities different effective techniques have been undertaken by business such as advertisement with the help of television and social media (Walters and Rainbird, 2007). Sainsbury carries out its operations in the market where competition level is quite high and due to this reason main focus of firm is on marketing of its goods so that large number of customers can be easily attracted with the help of this. Apart from this, to boost sales promotional techniques have been employed such as discount and other type of offers which are also beneficial for company.
With an assistance of value chain analysis the management of Sainsbury can easily maintain good relationship with its suppliers which will provide better allocation of resources and effective accomplishment of goals. In other aspect, it can be said that the value chain analysis also improve relationship with its distributors which will enhance the sales of organisation and lead business to impressive success. Moreover, it can also be stated that the Sainsbury can also have better advancement in its operations and facilitate in effective marketing of its goods which will also provide better competitive advantage. Sainsbury is having wide range of suppliers like, Jones land lassalle, IBM, prudential, Coca-cola, etc. It has been spotted that these organizations offers various kinds of raw materials. The classification of raw material can be as ingredients, packaging and machinery (Case study of Sainsbury. 2015).
Service: Sainsbury provides direct support to its valuable customers where feedback is taken from them on continuous basis (Neilson, 2008). Further, firm provides 24*7 hour assistance through which queries and other type of doubts of customers are resolved. So, this also assists in enhancing satisfaction level of target market.
Infrastructure: The infrastructure of Salisbury play a major role in the success of company\ however, it leads to the competitive advantage of business. The infrastructure of company includes different layers of management as well as accounting and quality monitoring departments. The company is committed to provide quality services to the customers therefore; it follows a proper system of quality assurance. Each and every level of management employees is committed to perform the duties in an effective manner. It has been witnessed that the company has designed an Executive Committee for assisting Board of Directors and governance. On the other hand, there is also a committee that is designed for appointments and remuneration related affairs (Fearne, Garcia Martinez and Dent, 2012). As well as, to handle the financial affairs, organization has designed internal audit and risk assessment procedures. The health and safety policies are important for making a safe infrastructure where people can work freely (Bolwig and et.al., 2008).
Human Resource Management: The human resource management is the supportive function of the organization that ensures the management of workforce in the organization. There is a human resource department in Sainsbury which is responsible for recruitment, selection, motivation and training of people who are working in the organization. The major aim of human resources department is to develop and retain a talented team who can contribute in the success of company (Rich and et.al. 2011). There are approx 70000+ employees in Sainsbury who are working at national and international levels. The company conducts recruitment process after having a proper job analysis and skill analysis so that a best candidate can be placed at the different level of the organization. The company is witnessed for providing effective training to the employees with the purpose of improving their job performance as well as providing them career opportunities. To motivate people in the organization, the management of Sainsbury provides them intrinsic and extrinsic rewards. The company provides opportunities to people for going abroad and having an international exposure (Ramirez and Rainbird, 2010).
Technology development: The major and most important aspect of business to lead the market through innovation. The technical development is the major area that defines the success of company. Sainsbury is witnessed for using improved technology in the job process. The organization is taken intangible intellectual assets of the firm or patents for the services provided by the Sainsbury. The company is known, has used technology to improve the ‘knowledge’, innovations as well as their protections (Rich and et.al., 2011).
Procurement: This support activity is related to the ways in which the resources are procured as well as they are sustained in the organization. Sainsbury has adopted strategic approach that deals with managing and reducing the wastage of resources. In addition to that the company manages good relation with the suppliers so that better and long-term relationships can be managed (Blocher, Chen and Lin, 2008).
In order to have better sustainability it is necessary for management of Sainsbury to focus on various monitoring process. In this respect, the management of Saisnbury can focus on VRIN analysis. In the initial stage it is necessary for management to have focus on sources which can measure the value in terms of relative costs and benefits. With an improved focus on VRIN the management of Sainsbury can easily attain better competitive advantage and improve the operational opportunities (J. Sainsbury Plc. 2015).
After undertaking value chain analysis it has been found that Sainsbury is efficient enough in managing its key activities and it has supported company to become one of the most popular brand in the retail sector. Management strongly focuses on activities such as marketing and sales, service, human resource management and technological development and it has supported company in gaining competitive advantage. It has also been spotted that the competitive advantage is a advantage that company have over its competitors which is mostly gained by offering high quality of goods and services. With an improved focus on competitive advantage the business organisation can easily have better success and accomplish organizational goals in better way. Apart from this through effective marketing business is strengthening its customer base and it will surely benefit Sainsbury in long term especially at the time of dealing with major challenges present in the external business environment.
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