Competitive Analysis And Strategic Recommendations For Sainsbury’s

PESTLE analysis

Competitive strategies are becoming more relevant in the current business scenario due to the reason that contemporary business organizations are facing more intensity of competition in the market. This is also enhancing the importance of determining the external and internal business factors for the organizations in order to operate in the market accordingly. In the business scenario of the United Kingdom, retail sector is one of the most competitive sectors in the recent time (Yee et al. 2013).  

Thus, gaining competitiveness is much important for the brands operating in this sector. Sainsbury’s is one of the leading chains of supermarkets in the United Kingdom. They are founded in 1869 and since they are considered as one of the topmost retailers in the country (Sainsburys.co.uk 2018). According to number of reports, Sainsbury’s can be termed as early adopters in initiating different marketing approaches such as adopting the self service retailing and as early as in 1922. However, the current position cannot term them as the market leader, which is taken by Tesco. On the other hand, Sainsbury’s is competing with Asda for the second place.

Thus, it is identified the competitive scenario where Sainsbury’s is currently operating and effective strategic planning can help them in regaining their lost position. This is due to the reason that effective process of strategic planning will help them to determine the positive and negative business factors and enable them to design their organizational approaches accordingly (Dibrell, Craig and Neubaum 2014). Thus, their organizational strategies will be more aligned with the business factors. On the other hand, it should also be noted that strategic planning process will further help Sainsbury’s in meeting the customer demand effectively.

This report will discuss about the external and internal business environmental factors and their impact on the business of Sainsbury’s. In accordance to the identified macro factors, internal effectiveness of Sainsbury’s will be gauged in this report. A few recommended steps will also be analyzed along with an appropriate change management theory

PESTLE analysis

Political factors	· United Kingdom is having stable political environment in the country. · Taxation rate for the business organizations is also lower. · However, the recent phenomenon of Brexit will have negative impact on the business of Sainsbury’s by reducing their market potentiality (Dhingra et al. 2016). · Adverse political relation between Qatar and the United Kingdom will have negative impact on Sainsbury’s due to the reason that Qatar Investment Authority is having 21.99 percent shares in Sainsbury’s (Goodwin and Heath 2016).
Economical factors	· Positive economic growth of the United Kingdom is having favorable impact on the business of Sainsbury’s. This is due to the reason that purchasing power of the customers will get increased (Lee 2014). · However, it is also projected that economy of the United Kingdom will get dropped in the following years. Thus, their business potentiality may get affected. · Competition is high in the retail business scenario in the United Kingdom and thus the profitability of Sainsbury’s is getting affected (Yu, Ramanathan and Nath 2014). · Global factors are also having much influence on the business operation in the United Kingdom.
Social factors	· Sainsbury’s is having huge diversity of products and this is helping them in catering to diverse needs of the customers. · However, customers are having higher bargaining power due to the high level of competition in the market (Fabbri and Klapper 2016). · Another major negative factor is the gaining of popularity of e-commerce market among the customers. This is reducing the potentiality for the offline retailers such as Sainsbury’s. · It is also identified that social preference for the discount stores is increasing in the United Kingdom and this is further posing challenges for the premium retailers such as Sainsbury’s (Ozer and Zheng 2015).
Technological factors	· Sainsbury’s is one of the early adopters of newer technologies such as self retailing service. · However, in the recent time, emergence of e-commerce changed the existing scenario and affected the traditional retailers such as Sainsbury’s (Huang and Benyoucef 2013). · Thus, it is important for them to have their equal presence in both the online and offline market. · In the current time, it is also becoming important for Sainsbury’s to change their technological approach according to the change in the market and business scenario (Piotrowicz and Cuthbertson 2014).

Thus, from the above analysis of macro factors of Sainsbury’s, it is identified that there are number of opportunities as well as challenges being faced by them. It is also to be noted that determination of the external business factors is important in identifying the key influencing elements for the business. In the current scenario, business organizations are facing the challenges of coping up with rapidly changing market trend (Pantano 2014). These changes in the market trend can be effectively determined with the help of the macro environment analysis. Thus, in the case of the strategic planning process, macro environment analysis will help in identifying the key external factors and design the organizational strategies accordingly.

Strengths

Strengths	· Sainsbury’s is one of the oldest retailers in the United Kingdom and thus they are enjoying the positive branding in the country. · Higher degree of product diversity is also helping Sainsbury’s in catering to larger customer segments (Bykadorov, Kokovin and Zhelobod’ko 2014). · They are also known for their extensive and innovative marketing activities and this is helping them in penetrating in the existing market and managing their brand recall value.
Weaknesses	· Sainsbury’s is having presence only in the United Kingdom and thus, the market potentiality is limited for them. · Profitability of Sainsbury’s is reducing in competing with the discount stores. This is affecting their long term business viability. · Brand differentiation of Sainsbury’s is lower with their competitors and thus they are getting affected by means of brand switching of the customers (Gupta, Czinkota and Melewar 2013).
Opportunities	· There are opportunities for Sainsbury’s to grow in the tier II and III cities of the United Kingdom. These regions are also witnessing steady growth in demand for the branded products. · There are number of countries where the retail market opportunities are high. Entering in these countries will help Sainsbury’s to enhance their business potentiality (Jin, Jeong and Yoon 2015). · Average growth of the global economy will further help Sainsbury’s to increase their business potentiality.
Threats	· Emergence of economic recession will cause adverse impact on the business of Sainsbury’s. This is due to the reason that purchasing power of the customers will get hit by this (Cowling et al. 2015). · Rapid change in the taste and preference pattern of the customers will also pose threat for Sainsbury’s due to the reason that they are operating in the fast moving consumer goods and this sector is vulnerable to very fast change in the trend. · Entry of new global competitors will further pose threat to Sainsbury’s by affecting their market potentiality.

The above micro factor analysis identified that Sainsbury’s is having the capability in tapping growing opportunities in both the national and international market. Determination of the micro environmental analysis will help in aligning the internal effectiveness with the external factors.

This is important due to the reason that organizations should have the capability to tap the external opportunities and overcome the threats. Thus, determination of the internal business factors will help in effectively aligning the business strategies. On the other hand, determination of the internal business factors is important for the organizations due to the reason that it will enable the upper level management to design the strategic intent of the organization accordingly.

Evaluation of micro analysis

The above micro analysis identified that one of the major strengths for Sainsbury’s is their positive and extensive brand image in the United Kingdom (Zhang 2015). This is due to the reason that they are operating in the market of the United Kingdom from more than last 100 years. Thus, it is easier for them to push the sales of new products in the market. In addition, it is also identified that product diversity of Sainsbury’s is high and it is helping them in targeting larger customer segments.

In addition, larger product diversity will also help them to target the foreign markets (Park and Han 2013). However, on the other hand, it is also identified that Sainsbury’s is facing the issue of reduction of profitability in their business. Thus, it is important for them to identify the new income sources to enhance their business viability. The above analysis also identified that lack of differentiated approach is also hurting the business exposure of Sainsbury’s in comparison to their competitors (Ray Gehani 2013). Thus they are having the need for enhancing their differentiating factors in order to gain competitive advantages in the market.

Recommendations 

It is recommended that Sainsbury’s should initiate the product differentiation strategy in order to enhance their business potentiality. This strategy refers to the process of introducing distinctive products and existing products with differentiating elements. This will help Sainsbury’s in gain competitive advantage by offering different value proposition to the customers over their competitors. It is also recommended that private label brands should be given the major concentration due to the reason that Sainsbury’s cannot initiate differentiation by reselling the end products. Thus, they can introduce more unique and distinctive private label brands. This will help to enhance their value proposition to the customers.

Weaknesses

On the other hand, it is also identified that Sainsbury’s is facing the issue of limited market potentiality. Thus, it is recommended that they should initiate the market development strategy. This includes targeting the tier II and III cities in the United Kingdom and a few potential countries. Sainsbury’s is facing highly competitive scenario in the United Kingdom but entering in potential foreign countries especially the developing countries will help them to have larger target market. In addition, the developing countries are having higher economic growth compared to the United Kingdom. This will enable Sainsbury’s to have larger target market area and global brand exposure.

It is also recommended that Sainsbury’s should follow a particular approach of positioning. This is due to the reason that they were being positioned as a premium brand in the market, but reducing the price levels in competing with the discount stores is diluting their premium image. Thus, it is recommended that Sainsbury’s should follow the positioning of premium and quality brands. This will ensure that the average profitability per unit of sales will be more for them.

Moreover, this will also differentiate their brand from the emerging discount stores. It is also recommended that within the next 5 years, Sainsbury’s should introduce a sub brand for catering to the mass market customers with having affordable products. This strategy will help Sainsbury’s to target the extended customer segments along with their primary segments of premium customers. Market adaptation strategy should also be followed by Sainsbury’s in tapping the foreign market opportunities. This is due to the reason that in the global market, customer preference pattern will be different in nature. This challenge can be effectively overcome by adapting the trend and pattern of the target markets.

The above analysis identified a few determining factors in the business operation of Sainsbury’s and a number of recommended steps are also being stated. Thus, it is important to have an effective change management plan in place to manage the employees in the period of strategic change. In this case, it is recommended that Lewin model of change management will be the most effective for Sainsbury’s due to its conciseness and easy to implement steps.

Unfreezing  

The first step in the Lewin model of change is unfreezing the existing process and practices in the organization. In this step, it is important for Sainsbury’s to identify the key gap areas in the current affairs and communicate them to the employees. This is due to the reason that employees will have favorable impression about the change process only if they are communicated about the outcome (Cummings, Bridgman and Brown 2016). Lewin model of change management also states that in the unfreezing step, employees should also be involved in initiating the change process. They should be motivated in coming up with new ideas. This will ensure the higher degree of engagement from the side of the employees. In addition, it will also ensure that change management approach will be designed in accordance to the feedback of the employees and probability of emergence of resistances from the side of the employees will be low.

Opportunities

Change process 

The next step in the Lewin model of change is change process. In this step, the change process is being designed and implemented. It is recommended that Sainsbury’s should implement the change process in accordance to the identified gap areas in the previous step. This will ensure that change process will be effective. In addition, in this step, Sainsbury’s should implement the change process in phased manner. This is due to the reason that employees can have issues with the implementation process and in the case of phased implementation; issues can be determined and solved in the initial stage itself (Erakovich and Anderson 2013). This step also require effective involvement of the employees due to the reason that it will help in alignment of the change objectives with that of the employees

Refreezing

The last step of Lewin model of change management is refreezing. This refers to the process of stabling the new process after the implementation of the change. Employees will take time to get adjusted with the new process in the workplace and with the help of the refreezing process; things will again get sorted in place. In this step, it is also important for the change managers of Sainsbury’s to initiate the monitoring and evaluation plan for their employees.

This is due to the reason that employees will face a number of issues with the new processes and practices. Thus, it is important for the managers to gather feedback from them and resolve accordingly. On the other hand, it is also important for the managers to monitor the performance of the employees with the new processes and practices. This will enable them to identify the effectiveness of the change process and to what extent it helped in enhancing the organizational performance.

Conclusion 

This report concluded that there are number of external opportunities and challenges being faced by Sainsbury’s in their business operation in the United Kingdom. This report also identified the internal effectiveness of Sainsbury’s in aligning with the external factors. It is identified that Sainsbury’s will have huge potentiality if they can enter in the foreign countries. In accordance to these opportunities, this report recommended a few steps that will help Sainsbury’s in enhancing their strategic viability in the long term. In addition, this report also stated Lewin change model as the ideal change process for Sainsbury’s. An ideal change plan is discussed in this report, which will help Sainsbury’s in effectively implement the changes in the workplace without having the resistances from the side of the employees.

Threats

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