Sainsbury’s Business Environment
Mission, vision, objectives, goals and core competence
Sainsbury’s chain of supermarkets is the leading store of food retailing in Britain. A single store offers approximately thirty-two thousand varieties of products among them fresh produce and own brand comprising of fifty percent total products. A variety of grocery products and quality foods are sold by the chain of supermarkets. Additionally, they offer other services and products such as petrol stations, restaurants, coffee shops, pharmaceuticals, home ware, clothing, fish, meat, and bakery. The company emphasizes on the mission of “ensuring Sainsbury regains its greatness” (Comim & Qizilbash, 2008). Following this mission, the firm has established the following goals:
Delivering a regularly improving the experience of quality shopping to clients at fair prices for great products
Exceeding customer expectations for tasty, fresh, safe and healthy food to help ensure customers’ lives are easier every day
The core values of Sainsbury include:
I. To get better every day; the business has focused its efforts on enhancing their services
II. To drive sales through great services; the provision of better services seeks to get higher sales for individual responsibility in team delivery. Although the company encourages team work, everyone is responsible to meet required service standards
III. Maintain simplicity; efficiency and simplicity in service delivery offered by the company
IV. Individual respect; every employee across the organization is respected
V. Treat the company money as your own; the company emphasizes that their revenue is aimed at improving the company and distribution
The core competencies of the business
Ensuring that the company regains its greatness is the focus of the company and the priority of the business agenda. Sainsbury attempts to get customer feedback and compare their products with rival products understanding what customers want as they eliminate obstacles. The company concentrates on dealing with factors that can enhance the company’s services through accelerated features that help them reach their goals (Browne, 2011). To recreate a global customer appeal through the provision of better shopping experiences is the primary goal of the business. The provision of quality goods appears to be dependent on improved availability of products and services. The business has organized and arranged their stores in a manner that welcomes customers in a clean atmosphere. This seeks to minimize or reduce queues as service counters become very efficient.
Therefore, the underlying objective rests on the fact that great sales are driven by great services; this is the primary priority of Sainsbury. Customers are increasing demanding tasty, fresh, safe, and healthy foods, and Sainsbury aims to improve customer satisfaction and fulfill the above demands so that they can win customer loyalty. The healthy and premium product ranges are frequently made available and in large quantities. The aim of Sainsbury is to be part of customers’ daily lives through the provision of weekly and daily grocery and food shopping needs and clothing, as well as other products. Because its size and locations, Sainsbury operates with the vision of being the market leader in the industry through the provision of products that meet customer needs (Great Britain., 2012).
For years, there has been an increasing awareness of the company that the managing of stakeholders’ interests is critical to the success of the company. Stakeholders are always interested in contributing to major company decisions. If this is not met, the company risks reputational and financial costs. Sainsbury’s treatment of its outsourced employees would precipitate consumer loyalty. Further, if the company does not take into considerations the livelihoods of surrounding neighborhoods, it would result in tremendous lawsuits against the business. Substantially, this argument proposes that if Sainsbury involves its stakeholders, the company might better decisions. They might acquire information, which otherwise might not be available, they can use local practical experiences and knowledge, moreover, the firm can ensure that cultural and social values are put into consideration (Comim & Qizilbash, 2008).
Ansoffs’ strategic planning technique
Ansoff’s growth matrix is used as a marketing plan tool by companies like Sainsbury to determine their market and product growth strategies. According to this matrix, Sainsbury’s attempts to expand rely on whether it markets existing or new products. This growth matrix generates a series of possible growth strategies likely to set direction for Sainsbury’s growth strategy. This has been summarized as follows:
This is a growth strategy whereby Sainsbury focuses on marketing existing goods in already existing markets. By adopting this strategy, Sainsbury seeks to achieve two major objectives:
I. Increase or maintain the current market share of existing goods – The business can accomplish this via combining competitive advertising, pricing strategies, sales promotions and investing more resources in personal selling.
II. Market dominance — attain a strong market presence by driving competitors away. For Sainsbury to achieve this, it needs to be more aggressive promotion campaigns backed up by pricing strategies that make it impossible for competitors to survive in the market
This is a growth strategy whereby Sainsbury focuses on selling existing goods in new markets. The company has various ways of approaching this strategy. First, they can export their products to new countries or geographical locations. Another approach includes designing new channels of distribution, re-packaging products and new pricing policies for the company to attract new market segments (Browne, 2011).
This growth strategy seeks to introduce new goods into current markets. For Sainsbury to adopt this strategy, they need to develop new competencies and modify their products in order to appeal to the current market segments. This strategy is precisely the most suitable for Sainsbury because they have to differentiate their products, which in turn will enable them gain a competitive advantage. For this strategy to become successful, Sainsbury must place notable emphasis on innovation, research and development, as well as be up to detail about customer demands.
This growth strategy argues that Sainsbury must sell its products in new markets. This is an out rightly risky strategy because it requires the business to shift into new markets, where they have no or little experience. Therefore, for Sainsbury to adopt the diversification strategy, it needs to formulate clear ideas of what to expect from this strategy while assessing possible risk factors.
STEEPLE and SWOT analysis respectively
The Sainsbury chain of supermarkets has been the leading food retailer in the UK market until 1996, when rivals such as ASDA Group and Tesco PLC took over the industry.
Political activities in the UK are likely to have a great impact on how businesses operate. At the moment, the consumer debts and the UK government debts are extremely high. This influences customer behavior thus businesses experience enormous pressures. Sainsbury is forced to operate in this market environment by maintaining consistent business development.
This industry is highly influenced by economic factors. These factors include profitability, cost, demand and prices. In regards to the current economic slowdown, high unemployment rates, and inflating food prices, these are the leading factors affecting the growth of Sainsbury. Because of the increasing commodity prices and rampant unemployment, it is expected that the demand for products produced by Sainsbury will go down; this will reduce its rate of production. Furthermore, this is expected to a vicious cycle fostering increments in food prices and unemployment (Browne, 2011).
Customers are developing a trend of preferring one stop shopping. Therefore, they prefer stores that offer all products under one roof. Sainsbury had induced non-food items and benefited from this strategy.
Advances in technologies have made positive impacts on business organizations. There is a potential online growth and web-based business activities. Through online operations, Sainsbury is poised to expand their growth capacities. Similarly, Sainsbury web-based food delivery service has been growing.
Various groups have been imposing great pressures on Sainsbury to adopt socially responsible practices to ensure the environment remains safe. Companies can impact the environment in both direct and indirect aspects. In this regard, the management of Sainsbury has embraced initiatives that champion their recycling and reusing philosophical approach that effectively manages recycling, packaging and waste management (Henry, 2008).
Government policies and legislations directly impact on the performance of this company. For instance, the new legislations that introduced new advertising taxes on fatty foods and highly processed foods were notable. The company adapted this tax through product modification and compliance with the requirements of the legislations.
This is a tool used to explain the position of a company relating to the environment in which the company operates in. This tool is very significant in the formulation of a strategy. It is mainly about the company makes use of its resources and outsourcing of all the operations intended to achieve objectives. This tool also focuses on the strengths and weaknesses of the organization.
Investment diversity: These are the depicted potentials and resources that the company has and are perceived to be successful. Sainsbury has embraced diversity in its business units. This usually assists to reduce the risk of a loss in a business unit affecting the intended goals.
Infrastructure of IT: The organization identifies the significance of getting hold of a bigger market through the internet. The system of online checkouts has proved a great deal after improving sales by 20% per week in the fiscal year ended Dec 2011.
Large capital investment and wide outlet network: In the fiscal year 2010/11, Sainsbury increased the space for supermarket by 15.9%. This was exactly after they opened 12 new stores. Through this move, the organization can access the customers from different areas and thus the market share increases.
Sainsbury is one of the oldest supermarkets, which started operating long before many of its competitors like ASDA and TESCO. These competitors did not use the opportunity to grow in the market share. It took a long time before realizing and deciding to make changes in strategies that are new and promising. The company faced challenges of management of supply chain and inventory management in the year 2002 that had a negative impact on its products. The same year after suffering this great loss, the company changed its management.
Wide market: Sainsbury opened new stores in Japan, one of the fastest growing economies backed up by huge populations. Products produced by the company are likely to have a high readily available market because of the huge working population in Beijing.
Prone web-based platform: obviously high rates of cyber attacks are possible threats to Sainsbury; a company that has made massive investments in this infrastructure to reach a wider clientele.
The significance of stakeholders
The stakeholders of the company choose people to chair the board of Directors who are their representatives and guide the company on which direction to head. This is functioned using a strategy with an established long-term plan. This strategy is implemented by the board of directors. At the end of every year, the board of directors account for a report to the stakeholders. This is done during an annual general meeting that is held at the end of each year.
Alternative Marketing strategies
The other strategies available for Sainsbury to make use of to attain long-term growth are listed below:
Marketing strategy 1- differentiation
This is a mechanism of marketing that organizations make use of to establish an identity of strength and uniqueness in the industry. The main function of differentiation strategy is to depict a line of difference between the subject organization and the competitors. Product differentiation and business differentiation are a good example of a differentiation strategy.
Business differentiation: This strategy has been implemented by many successful corporations. The strategy in this subject is positioning. The strategy sets a line of difference between organizations in the demographic and geographical area and an industry. If this strategy is not in existence, then all the companies in an industry will be posing competition towards each other. The market perception of the business is developed by this strategy.
Product differentiation: This is a strategy that organizations make use of to develop a new range of products but the same commodities to cut across the markets filled with different types of segments. The base product is only designed a little bit more to cater for the variety of segments available in the market. A good example of this strategy is the company coca cola, who have come up with different flavors of sodas with their base product as basic soda.
Marketing strategy 2- diversification
This is a marketing strategy with the objective of growing the organization. This strategy regards to increase in profitability through increasing the volume of sales by developing new products and cutting across new markets. Strategies of diversification include the establishment of new commodities in the prevailing market, introducing to the market current products, other organization’s achievement, other organization’s alliances, selling and importing commodities that other organizations have manufactured. Diversification strategies are many in number, but two have been listed below:
Internal diversification strategies
This strategy mainly deals with the products that exist in the new markets are coming up with new products in markets that already exist. This strategy can be attained through gaining the customers in the region the country or making the operations internationally and gaining the global customers. Additionally, another way of achieving this is by marketing new commodities in the markets that already exist (Dransfield, 2010).
External diversification strategies
This strategy regards ignoring the old and the current and introducing new commodities to new markets. Good examples of this strategy are corporate and mergers takeovers. The annual report of Sainsbury for the year ended 2009, Scotland and Wales where Sainsbury experiences less representation of activities to sustain the high quality of products, the supply and production security profitability.
Appropriate future strategies
Sainsbury should focus on adding supplements to its products by constituting non-tangible characteristics and advantages of the services after sales. This will be inclusive of free delivery, warranty, after sales services among others. A good example will be the policy of money back guarantees on the food products that are not satisfying the wants of the customer and their standards. Warranties on the non-food items like electronics are also important
The market is controlled by the price. A policy of sound and fair pricing is an assurance of profitability, customer retention, customer satisfaction, and customer demands. Therefore, it is very vital for Sainsbury to have a look at their pricing policy and make amendments with the focus on the number of pricing strategies. The two below are pricing strategies that are recommendable to Sainsbury.
Penetrating pricing strategy
If Sainsbury penetrates into a new market, this strategy will work best for them. With this pricing strategy of increasing the sales volume, price is reduced and thus capturing the biggest share in the market. This will act as a motivating factor for potential customers to opt for Sainsbury products.
Product line pricing
This strategy of pricing decides on the price of each brand of product with the same base product regarding the features and advantages of the product.
A Comparison of the roles and responsibilities for strategies
The life cycle of a product via graphs and trends are a good pointer for the homogenous goods that are non-customized, and the graphs give a clear depiction of the demand in the market for goods and the general overview of how the organization is supposed to attain its goals and objectives. These graphs are a representation of the company’s performance and also show the strategic position of the company. This is the advantage in competitive terms that determine the difference between the cost and innovative leaders from others and a potential competitive advantage can be innovative indeed (Dransfield, 2010).
Sainsbury is very focused in making expansions with its activities to keep up with the competition; it is very significant for the company to invest in new brands of products and better service delivery to capture the demand of customers. Sainsbury is a customer-friendly supermarket chain that relies on loyalty to develop new products and diversify them. The main product that Sainsbury deals with is food. However, one can find a lot of useful information about other products that are not food (Sainsbury’s (Firm), & In Boswell, 2009).
Sainsbury is coming up with new brands of products regarding the loyalty of their customers and retention in a bid to cut across the new markets. Sainsbury Direct is a shopping catalog service which has developed brands including Argos catalog. Sainsbury is offering food products at quite a competitive range, but they are sure of one thing; their ability cannot control the cost of producing electronic gadgets. For instance, it is very difficult for someone develop a new laptop brand in an industry characterized with competition from big firms such as Dell and Compaq. For Sainsbury to remain competitive, they will have to buy computers at the competitive cost (Henry, 2008).
Organization’s resources and capabilities
Some approaches have been instituted to tackle the issue of lack of motivation among employees. The approaches include, implementing a new system for rewards towards standards in store and also availing products and services to the customer that in the past years been a focus point for failure (Comim & Qizilbash, 2008). The main objective of the approach was to develop a culture in the organization that the concentration of the customer, stores, and their function will not take any exception. The employees will also have the chance to make participation in the suggestion scheme accompanying it with recognition and rewards to better the suggestion scheme. The central support benefit is an issue to question as the number of competitors is being outnumbered by costs. We have seen the head office count being reduced and still will expect it to make further reductions of about 750 staff in early 2005. In the year 2004, the company announced a new sales recovery that was as a result of a business review. With their objective of restoring profitable growth, the company is now thinking of focusing all efforts in three different areas like competitive costs, great service delivery, and outstanding quality and choice (Dransfield & Needham, 2005).
The importance of monitoring the targets or business objectives
From Sainsbury’s point-of-view, setting up a holistic system of monitoring the business objectives is fundamental for the success of the company. The design of this system would be based on the Sainsbury’s manufacturing strategy required to achieve their resources, activities, and goals as key indicators of success. To ensure that the production processes remain flexible and transparent, Sainsbury must re-evaluate its procedures in real time for the purpose of making quick decisions. Business objectives are the basis for determining the success of the company. Therefore, Sainsbury’s performance monitoring systems, operational plans and production objectives must be in a holistic harmony on the basis of the specificity of the company’s activities. This will be fundamental in evaluating the effectiveness of major processes and company performance (Grundy, 2012).
Target tracking systems would help Sainsbury to design a specific model of decision making. This model would be useful to the business because it helps in maintaining flexibility and reacting fast to environmental changes because the current market is rapidly changing. The objective monitoring models would be beneficial because they assist the company in making quick and appropriate decisions, new plans, as well as adjust existing plans. This will enable Sainsbury to have an all time overview of their production (Henry, 2008).
Browne, D.J. (2011). Heinemann business studies for AS level. Oxford: Heinemann.
Comim, F. & Qizilbash, M., (2008). The capability approach: Concepts, measures and applications. Cambridge [etc.: Cambridge University Press.
Dransfield, R. (2010). Applied business: AS level for OCR. Oxford: Heinemann.
Dransfield, R., & Needham, D. (2005). Applied business: AS level for OCR. Oxford: Heinemann.
Great Britain, (2012). Social Care: Fourteenth report of session 2010-12. London: Stationery Office.
Grundy, T. (2012). Demystifying strategy: How to become a strategic thinker. London: Kogan Page.
Henry, A. (2008). Understanding strategic management. Oxford: Oxford University Press.
Sainsbury’s (Firm), & In Boswell, J. (2009). J.S. 100: the story of Sainsbury’s. London: J. Sainsbury Ltd.
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