J Sainsbury plc is a leading UK and US food retailer with interests in financial services and property. The group comprises Sainsbury’s Supermarkets and Sainsbury’s Bank in the UK and Shaw’s Supermarkets in the US. Sainsbury’s Supermarkets was established in 1869 by John James and Mary Ann Sainsbury and is Britain’s longest-standing major food retailing chain. Sainsbury’s Supermarkets employs over 145,000 people, including Savacentre. Of these, 60% are part-time and 40% full-time. 62% of employees are women. A large Sainsbury’s Supermarket offers over 23,000 products, 40% of these are Sainsbury’s own brand.
In addition to a wide range of quality food and grocery products, many stores offer bread baked on the premises, delicatessen, meat and fish counters, pharmacies, coffee shops, restaurants and petrol stations. Sainsbury’s Supermarkets serves over 11 million customers a week and as at June 2002 had 463 stores throughout the UK. Nearly 60% of our stores are in town-centre or edge-of-centre locations, many of these built on previously derelict sites. Sainsbury’s belongs in the private sector because its main aim is to make a profit.
Without profit, Sainsbury’s cannot keep its shareholders happy and improve its products and services. Sainsbury’s will also find it difficult to plough back money into research and development and to invest in new technologies. It will not have money available to give to charities and it will not be able to increase the rewards to its employees. Of course, if Sainsbury’s make a loss, it is possible to borrow, but lenders will look very carefully at Sainsbury’s profit potential before parting with their funds.
It is a basic fact of Sainsbury’s life, therefore, that profit is important.
Comparatively, there are several different types of business ownership. Depending on the type of ownership, the owners have different responsibilities and involvement in Sainsbury’s. One aspect of this is who bears Sainsbury’s risk and whether the owners have limited or unlimited liability. All businesses, such as Sainsbury’s can be classified in different ways. Sainsbury’s is different from a sole trader or a partnership. This is because if sole traders become bankrupt, the owner may have limited funds and will find it difficult to borrow more money.
In addition, the owners are personally responsible for paying its own business debts, though the responsibility is shared in partnerships. It is different from co-operatives because members are working for themselves and are motivated to succeed. They often join together to make decisions, to work and to share profits. It also differs with charities because they have to rely on voluntary donations and the income is used to fulfil charitable aims, but do not have liability. Finally, it differs from franchises because this grants permission to sell a product and trade under a certain name in a particular area.
Sainsbury’s Benefits and Constraints of being a plc Sainsbury’s is categorised as a public limited company. This is because it offers their shares to the general public, often through the Stock Exchange. It is the shares of Sainsbury’s that are displayed inside the daily newspapers or press. One of the main advantages of Sainsbury’s forming a public limited company is when shareholders have limited liability. For example, if Sainsbury’s goes bankrupt because it is unable to meet its debts, the shareholders or owners will not be liable or responsible by law, to lose their possessions to pay the money that is owed.
The maximum amount they could lose is the amount they have put into their shares. Another benefit for Sainsbury’s being a public limited company is easy access to different sources of finance. This is because when Sainsbury’s becomes a business, it is able to draw on a much wider range of sources of finance. Not only does it have access to more sources of finance, but it will also find it easier to raise finance because it is seen as being more financially secured. Sainsbury’s are able to raise capital through shares, bank loans, overdrafts, mortgages and many other sources.
Generally speaking, Sainsbury’s will be able to borrow money more cheaply, i. e. at lower interest rates than smaller companies. Sainsbury’s can also keep the use of profits because shareholders may receive a benefit from owning shares in two ways. Firstly, they may be paid a dividend upon the shareholding, which is expressed as a return on the face value of the shares. Secondly, they may receive income by selling their shareholding at a value above that which they originally paid for it. The main danger for Sainsbury’s being a public limited company is control.
This is the case because now the shares can be traded on the Stock Exchange and individuals or groups of individuals can take over other companies by buying up shares. In the real business world, Sainsbury’s can be bought and sold too frequently because existing shareholders are often tempted to sell by an attractive offer to buy shares at an inflated price by another business or interest group, such as Tesco, Asda or Safeway. The first objective suggests that Sainsbury’s have many fully qualified and trained staff and abilities to satisfy customer needs effectively.
Sainsbury’s recognises this because they understand the need of different customer wants and enable to offer responses to them through products, facilities and services. Sainsbury’s need to be able to provide excellent customer service because if they do not and a customer is disappointed with the service, they would not want to come back and shop at the supermarket againThe second objective demonstrates that Sainsbury’s can facilitate to open and timely communications to all its investors and shareholders. This is achieved by producing corporate profile and dividend details at the end of each financial year.
Dividends are sustainable payments paid every two years and are made to Sainsbury’s shareholders out of its profits. Dividends are important for Sainsbury’s shareholders, as they provide them with a regular return in the form of profits upon their investment. If Sainsbury’s are losing many of its customers, then their shares will decrease and the shareholders will be dissatisfied with the outcome. Objective 3: “It aims to ensure all colleagues have opportunities to develop their abilities and are well rewarded for their contribution to the success of the business”.
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