Table of Contents

Task 1....................................................................................................................................................1
Task 2....................................................................................................................................................2
Task 3....................................................................................................................................................3
Task 4....................................................................................................................................................5
References............................................................................................................................................7
Task 1
The company which is considered for the analysis of business environment is Sainsbury PLC, a
leading supermarket chain in United Kingdom, the company possess a market share of nearly 16% in
the retail segment. Sainsbury operates with more than 550 supermarkets and 700 convenience
stores in UK, most of the sales were generated from supermarkets the company is diversified into
selling various products from clothing, telecom related equipments and home needs. The company
posted a total turnover of more than £32,394 million in 2020 and profit before tax of £ 586 million
(Sainsbury, 2020).

The company is a registered public limited company and is listed in London stock exchange, the main
goals of the company is to offer the customer a highly distinctive and quality products at affordable
cost in various product range covering food, merchandise, home needs and financial services. The
company is also poised to enhance efficiency in the day-to-day operations and also focus in investing
in the customers through generating better quality products and greater services. It is noted that
there exist four major competitive market structure which includes monopolistic competition,
monopoly, perfect competition and oligopoly (Sila, 2013).

The term oligopoly refers to the market structure which is imperfective competitive and are mainly
dominated by few suppliers. The markets’ structure possesses a significant characteristic as they
possess few suppliers which are dominating the market, the companies are independent and tend to
compete effectively each other in order to enhance market share and service offerings. The critical
aspect is that new companies may not be able to enter the market as the competition is high and
profit margins will be very competitive. In UK, the retail markets are many dominated by four key
players Tesco, Sainsbury, Asda and Morrison, these four players tend to possess more than 75% of
the market share (Statista, 2020).
It is further noted that the customers tend to benefit largely through the oligopolist market structure
as the companies tend to offer low price for the products, enable in delivering high quality services,
focusing in addressing the needs of the customers and enhance value for every purchase

This market structure assists the companies to a ply competitive strategy through differentiated
services, attract the consumers through lower price, high quality products. Enable in delivering the
products at their doorstep, encourage the orders through online transaction etc. Furthermore, there
is a competitive advantage among each company which tend to capitalise them in increasing the
product supply and also create better market place (Ellison, 2015). The company is highly focused in
delivering high quality services through low cost, this is considered as the core strategy in enhancing
the market share and increase the profitability of the business. Moreover, the management is
intended to protect the interest of the customers at all times, also the management tends to
procure the fresh commodities from dedicated suppliers which ensures uninterrupted availability of
the products, farm fresh so that the customers get the best products available in the market.

The dedication of the customers is very high as every individual is focusing in enriching the lives of
the customers through quality product offerings, this enables the company to be one of the leading
retailers in the country.

Task 2
Stakeholders include individuals or groups who are interested in the organization. Some
stakeholders will be within the organization and others will be external. A person who has a certain
anxiety in a company. An interested party is a person or organization that is positively or negatively
affected by the organization's activities. Thus, a shareholder can be defined as an individual,
organization or company that legally owns shares in a company. Sainsbury's shareholders expect
Sainsbury's to continue to report gains and gain an advantage in the industry each year. Sainsbury
has UK and international suppliers. Sainsbury's believes in "anti-integrity care", which can be
achieved by creating a partnership that modernizes environmental and social standards. Sainsbury's
also makes donations to the Ethics Trade Initiative (ETI).

Different Sainsbury's players have different interests, and these interests are sometimes conflicting
or overlapping. The shareholders are owners of the business and, like all other stakeholders, the
business must succeed and want the dividend to be larger than it is today, which may mean that the
team management gets the products delivered cheaper and spends less. in the organization's
operations, it does not go well for suppliers who are also looking for maximum profit and this will
affect employees who do not care about salary increases. Sainsbury strives to "make life easier for all
our customers every day by offering them high quality services at an affordable price" (Broady-
Preston, 2012).

Sainsbury's purpose and vision inform its suppliers, the community and other interested parties. Its
vision of being "the most trusted retailer, where people love to work and shop" leads to an attitude
of integrity, ethics and excellence. It also encourages its participation in society to achieve its goal of
"making the lives of all our customers easier every day with high quality service and available
services". Sainsbury's long-term strategy continues to promote quality, value and service and has led
to good sales and sales growth over the years (Fassin, 2012). Customers are very important and end
users of Sainsbury's products. Due to online shopping, Sainsbury's customers cross borders. It is in
the customer's interest to continue to receive good quality products from Sainsbury 'at an affordable
price.
Task 3
PESTEL analysis

Political: The government is very strong and are focused in revamping the economy post covid 19
pandemic situation. Through the efforts of the government, the unemployment rate has fallen from
around 17% in April 2020 to less than 5% in April 2021. Also, the government is focusing to have
better relationship with Euro Zone and other Arabian nations like Qatar etc, this assists the business
to enhance its presence in the country and also focus in expanding the operations in an efficient
manner.

Economic: The economic growth of UK post pandemic situation looks highly promising, the nation
registered a sharp decline in GDP by -9.5% in 2020 due to Covid 19 lockdown, however with the
steps taken by the government related to vaccinations and other measures the country is slowly
opening up for business and the increase in employment level provides more disposable income to
the individuals and therefore, the purchasing power slowly increasing for the individuals. Sainsbury
focuses in capitalising the current market opportunity by offering lower prices for the goods, provide
better offers and discounts for the consumers

Social: The company main stream of revenue is generated from the food products, also many
consumers are now focusing to hold more stock of food and daily essentials, this provides increased
opportunity to deliver better goods to the consumers at cheaper prices. There is an increased
change in the consumer behaviour as they are now focusing in purchasing high quality organic foods
so as to enhance their health and wellbeing, increase immunity level in order to stay healthy against
harmful viruses. The company need to deliver organic food products at lower prices in order to tap
the growing market in the country. The organic food market is currently valued at £2.4 billion and is
expected to grow to £3 billion by 2022. (Minchin, 2021)

Technological: The introduction of e-commerce business has assisted the company to cater to the
need of the customers during pandemic situation, the company has registered an increase in sale of
more than 7% during the lockdown period between May to July, this clearly shows that the
investments in online shopping have enabled in increasing the sales of the company and also enable
in meeting the growing needs of the consumers (Butler, 2020)

Legal: The company needs to abide by the overall rules and regulations as stated by the government
from tm to time, the pandemic situation has forced the company to hold permissible limit of
employees and customers at a given point in time, also the company need to have a protected
environment for all the stakeholders t access the products. Moreover, the management need to
strict adhere to competition law and price discrimination act while performing the normal activity of
the business. (García-Pérez, 2015)

Environment: The country has set an ambitious target of reducing the emission of harmful gases by
75% in 2035 when compared with 1990 levels, therefore its advisees many companies to follow the
stricter norms in reducing the emissions and look for installing various renewable sources of energy
in the office and store premises. The management of Sainsbury has made a target of net zero carbon
emission by 2040 and is focused to install various renewable sources of energy in the premises. Also,
the company so reducing the food wastage in the organisation, use recyclable plastic and reduce
water usage in the store and office premises (Sainsbury, 2020).

Porters five force model

Threat of new entrants: The retail industry is highly competitive with the large players like Sainsbury,
Asda, Tesco and Morrison; hence the threat of new entrants is low. The new companies may find
more difficult in achieving the economies of scale and to compete effectively with the major players
where the profit margins are very low. Moreover, the retail industry requires more capital and hence
new players tend to avoid the industry. Sainsbury tends to focus more on innovation and offer better
value products, the management also invest in technology in order to achieve better economies of
scale and also assist in catering to the needs of the customers (Fitzgerald, 2014).

Bargaining power of suppliers: There are large number of suppliers for the retail industry, since the
products are homogeneous with very less differentiation, the company can enable in choosing many
options for supplying the goods. However, the management focuses in working with the suppliers
jointly in order to provide better products at affordable cost. The company possess better supply
chain system which can enable in movement of goods at faster pace, also the management
encourages small suppliers to provide the goods and thereby supporting the communities. The
company has entered into contract with the suppliers in order to get farm fresh foods at competitive
ricing so that the same can be passed on to the customers (Glasson, 2013).

Bargaining power of buyers; The buyer’s power is very high in the UK retail industry; the major four
companies intend to control 75% of the market and hence the buyers possess various alternatives to
move from one shop to another where they get better products at lesser prices (Balassa, 2014). Also,
the companies sell homogenous products with less differentiation hence the buyers can choose any
retail companies for meeting their daily needs and requirements. Sainsbury focuses on
differentiation and uses technologies in servicing more customers, this enable in reducing the
waiting line in the stores, also provide door delivery to the orders which are made through online.
The company holds nearly 16% of the market share and serves to more than 1 million customers
every day. Moreover, the management is contemplating in increasing the customer loyalty through
offering various programmes so that the customers intend to attach with the company for a long
period of time (Buchanan, 2014).

Threat of Substitutes: The threat of substitutes is high in the retail industry as there are various
products available to meet the needs of the customers. The management is poised to providing
better quality products at lower prices, this will motivate the buyers to purchase more products and
increase the profits for the company. Also, the management is looking to expand the product
offering through little differentiation so as to enhance the service delivery, also this will render
unique benefits to the customer and thereby creating competitive advantage to the company (Allen
2016).

Competition As discussed in the previous section, the number of competitors in the retail industry is
less, the top four players controlling the majority of the market. However, the companies intend to
compete effectively in order to increase sales and profits by attracting more customers. The fixed
cost is high in the industry and the management is looking for various ways in cutting down the cost,
unlike other industries the companies cannot pass on all the cost to the customers as it may lead to
higher prices on the products and the customers may move away from the company (Harper, 2015).
The management is using various competitive advantage like low pricing, artificial intelligence tools,
easier shopping through online and other promotional offers in order to increase the revenues and
gain more loyalty of the customers (Hamilton, 2015). The industry is slowly progressing after Brexit
and pandemic situations; hence it is vital for the business to attract new customers, retain the
existing customers and thereby gain more advantage over their competitors.
Task 4
The major key performance indicators of Sainsbury are to enhance profit before tax, generate higher
free cash flows from retail sectors, increase sales growth, maintaining better balance sheet, reduce
water usage and cut the emission of greenhouse gases.

Though the analysis of the annual reports, it has been noted that the company has fairly performed
better based on the KPIs the profits before tax has decreased marginally to 586 million in 2020 when
compared with 601 million in 2019, this is mainly due to the pandemic situation and the nation has
went into lockdown, however the management has taken essential sites in delivering quality
products to the customers, the management has used the online shopping tool in delivering the
goods to the door steps of the customers and also assisted in providing better embayment
opportunities to the communities. The company has lowered the price of many products to 60
pence in order to support the communities and customers so as to enable in making the products
more affordable for them during the pandemic crisis (Fassin, 2012).

The management has also introduced new product lines in the food sectors covering frozen foods,
fruits and vegetables s as to support the immunity of the customers. Various loyalty programmes
were introduced by the company o as to reach many customers and offer them the needed support
and assistance, this has resulted in increasing retail free cash flows to 611 million in 2020 when
compared with 456 million in 2019, the management has used the technology and other artificial
intelligence tools in reaching more customers so that their needs can be addressed promptly. The
company has recently rolled out a new technology which enable in delivering the goods at more
convenient manner, also the customers tend to shop using their own smartphones (Sainsbury,
2020). The technology “SmartShop” enables in increasing the sales by nearly 20%, also the
management is focusing in upgrading 3,500 self-checkouts for making easier payments. The recent
customer scores have stated that the overall loyalty of the customer has increased, the easier
checkout has increased more sales from low value products.

In case of non-financial performance, Sainsbury is the first retailer to get higher rating on the Climate
disclosure project for 6 years, the management has reduced the overall carbon emission by nearly
40% in the previous 10 years, whereas the increase in usage of assets has increased by more than
45%. The company is committed in reducing the overall carbon emission and focused in net zero
emission by 2040. The management has also intended save more water and replenish the water
back to the society (Sainsbury, 2020). Sainsbury's management has set a net target for zero carbon
emissions by 2040 and will focus on distributing a variety of renewable energy sources. In addition,
the company reduces food waste in the body, uses recyclable plastic and reduces water
consumption in stores and offices. The company focuses strongly on providing high quality services
at low cost, which is considered a key strategy to increase market share and increase the company's
profitability. In addition, the management always strives to protect the customers' interests, and the
management also tends to deliver fresh products from specialized suppliers, which ensures an
uninterrupted availability of fresh products on the farm so that the customers get the best products
on the market. Customer loyalty is very high, as everyone invests in enriching their customers' lives
with a range of quality products, which makes the company one of the largest retailers in the
country. The introduction of e-commerce helped the company meet the needs of customers in the
event of an epidemic, the company managed to record more than 7% growth during the lockout
period May-July, a clear indication of the growth of its online business investment sales and also
helps meet consumer growth needs. The company has a better supply chain system, which allows
goods to move faster, and management also encourages small suppliers to deliver goods and thus
support communities. The company has entered into agreements with suppliers to obtain
competitive prices for fresh agricultural feed so that it can be transferred to customers.

References
Statista. (2020). Grocery market share in Great Britain 2017-2020. Retrieved from:
https://www.statista.com/statistics/280208/grocery-market-share-in-the-united-kingdom-uk/

Trading Economics. (2020). United Kingdom GDP Growth Rate1955-2020 Data | 2021-2023 Forecast.
Retrieved from: https://tradingeconomics.com/united-kingdom/gdp-growth

Minchin, Joshua. (2021). Organic sector booms in the UK as online sales increase by a third.
Retrieved from: https://www.newfoodmagazine.com/news/137823/uk-organic-market/#:~:text=The
%20Soil%20Association%20Certification's%20Organic,outperforming%20the%20non%2Dorganic
%20sector.

Butler, Sarah. (2020). Sainsbury's expands Chop Chop delivery service to 20 UK cities. Retrieved
from: https://www.theguardian.com/business/2020/may/14/sainsburys-expands-chop-chop-
delivery-service-to-20-uk-cities

Allen M., (2016). “Analysing the Organisational Environment”. Select Knowledge Limited: New York.

Broady-Preston, J. & Steel, L. (2012).Employees, customers, and internal marketing strategies in LIS.
Library Management, 23, 384-393.

Balassa, B., (2014). Resolving policy conflicts for rapid growth in the world economy. PSL Quarterly
Review, 31(126).

Sainsbury. (2020). Annual report of Sainsbury PLC

Sila, I. (2013). Factors affecting the adoption of B2B e-commerce technologies. Electronic commerce
research, 13(2), 199-236.

Buchanan, M. A. (2014). CSR and the Social Contract: New Lenses for Stakeholder Analysis and
Strategic Management.

Ellison, S.F., Snyder, C.M. and Zhang, H., (2015). Costs of Managerial Attention and Activity as a
Source of Sticky Prices: Structural Estimates from an Online Market. Mimeo, Massachusetts Institute
of Technology.

Fassin, Y., (2012). Stakeholder management, reciprocity and stakeholder responsibility. Journal of
Business Ethics, 109(1), pp.83-96.

Fitzgerald, D. and Haller, S., (2014). Pricing-to-market: evidence from plant-level prices. The Review
of Economic Studies, 81(2), pp.761-786.

García-Pérez, G., Boguñá, M., Allard, A. and Serrano, M., (2015). Rethinking distance in international
trade: World Trade Atlas 1870-2013. arXiv preprint arXiv:1512.02233.

Glasson, J., Therivel, R. and Chadwick, A., (2013). Introduction to environmental impact assessment.
Routledge.

Hamilton, L. and Webster, P., (2015). The international business environment. Oxford University
Press, USA.
Harper, C., (2015). Organizations: Structures, processes and outcomes. Routledge.