Sainsbury's Business Strategy Analysis
|✅ Paper Type: Free Essay||✅ Subject: Marketing|
|✅ Wordcount: 2752 words||✅ Published: 23rd Jun 2017|
Sainsbury is a one of the largest chain based supermarkets in theÂ United Kingdom nowadays. But it was first established in the year 1869 by John James Sainsbury and is wife Mary Ann, when he was a 24yrs old, they both together opened a partnership retailer store at no 173, Drury Lane, in Holborn. Initially, it began as a diary shop, later on they expanded into a a fresh foods and packaged groceries such as sugar and tea.
Drury Lane was one of London’s poorest areas in old days, Sainsbury got quickly popular for offering a good and high quality product at a low cost.
John and his wife, Mary, had both probably saved a few pounds in selling a diary products, which they used to buy a shop equipment. And his details of events were extremely modest. They shared with three of his family member of cramped accommodation of the above little shop.
History of Sainsburys
They rapidly grew during the Victoria era as a largest grocery retailer in London, they started sell their own brands name in the year 1882. The first own label name was bacon, its shown them as a best ways of offerings choice and good value to customer. They had good reputations and strong relationships with suppliers to show that our customers always have the fresh foods items available for sale in their retail shop. Still there are supplies its meat to till day, the relationship was since 111 years was first forged.
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So they joined together with supplier to reduce the numbers of additives, where in particularly in the children foods and they are the first retailers to remove all of them to the own brand of soft drinks. In the First World War, for a first time women were use in the stores to run the business. They went to new coaching school for specially set up at a black friar.
Sainsburys change with Technology
Then this was the first food retailers to be a computerise one to supply the goods to its stores, and later on they took over a punched card system for distribution. In 1960 company turnover was 50% of its profit in single products in their Sainsbury’s own brand lines accounted.
Sainsbury’s strengthens its new style network by connecting all the existing cities in the region and expanding further product like non foods products. Saints buries focus on the developing a new products frequency and also adding recycled materials. they introduced the first bakeries, fresh fish counters, petrol stations and coffee shops, restaurants, book shop, bike shop, music store, clothing shops, banks & finance, florists and nursery or community facility, newspapers and the electrical & electronic products.
The supermarket chain operates three main store formats:
- Main Mission (‘Regular Sainsbury’s stores’)
- Mixed Mission Sainsbury’s Local and Sainsbury’s Central (convenience stores and smaller supermarkets in urban locations -)
- Sainsbury’s ‘Main Plus’ (hypermarket) stores. Sainsbury’s does not employ a separate brand for its hypermarkets, having phased out the ‘Sava centre’ fascia several years ago
Traditionally, the majority of Sainsbury’s stores were located in the areas around London and south-east England. The company acquired the Midlands-based thorough good in the 1930s. Expansion since 1945 has given the company national reached.
Sainsburys Strategic Planning
Definition of Strategic Planning:
It’s an organization’s process of defining its direction or strategy and decision making on allocating its resources to pursue this strategy, including its capital and customers.
What is the Purpose of using Strategic Planning?
Strategic planning is the formal consideration of an organization’s future course. All strategic planning deals with at least one of three key questions:
- “What do we do?”
- “For whom do we do it?”
- “How do we excel?”
In business strategic planning, the third question is better phrased “How can we beat or avoid competition?
In many organizations, there is a process viewed for determining where the organization is going over to the next year or more than typically 3 to 5 year, although for some extended vision for 20 years.
To analysis or to determine, where it is going and known’s the organization needs exactly where its stands and analysis where it want to go and how it will get there. The resulting document is called the “strategic plan”.
Strategic Planning Applied in Sainsburys:
The Sainsbury’s strategy plan is, the focusing around there five areas at its centre. This areas are has to be mark for the Sainsbury’s customers his strong heritage and brand which consistently sets it apart from major competitors.
1. Great food at fair prices.
To lead the customer in a long stretch of a food products. By sharing customers passion for healthy, fresh, safe, and tasty foods. Sainsbury’s act to continue the innovation and provide the leadership of delivering the quality of products at fair prices, sourced with integrity. Then the World’s largest retailer of Fair-trade goods by value.
2. Accelerating the growth of complementary non-food and service.
To continue the acceleration development of non food and services following the principle of quality and the value and to provide a longer shopping experience for the customers .complementary non food growing three faster than food sales and continue a good range of star performer in the clothing fields. Then our child wear products range is now one of the largest volumes in the UK market
3. Reaching more customers through additional channels.
To the reach of Sainsbury’s brand extension by opening new convenience stores and developing the online operations. And the groceries online business growing rapidly with a good sale just under 20 per cent, within the UK house holds product nearly reach of 90 per cent of the market sales. Now non food online business launched over 8000 products now it’s available in nationally.
Growing supermarket space.
4. Growing supermarket space
Opening a no of new super market with including all products of foods and non foods items and the extensions of super market to tracking their targets of increasing gross space by15 per cent over the two years.
To expanding the company store estate and the developing pipeline of new stores and extending the largest under developed store portfolio to provide an even better food offer while also growing space for non food ranges actively seeking
5. Active property management.
Market value of our free hold property port folio increased in large no. the ownership of the property assets will provide the operational flexibility and the exploitation of potential development opportunities will maximize the value
Goals and Values:
i. Sainsburys’ Goals:
In their super market, they aim to exceed customer expectations for fresh, healthy, tasty foods and as well as safe in their lives easier every day. In their store they will deliver an ever improving quality shopping experience for our customers with the great products at fair prices
ii. Sainsburys’ Values:
The Sainsbury brand values are passion for healthy, fresh, safe, and tasty foods, our focus so on delivering great products at fair prices, the Sainsbury has to be a history of innovation and the always leadership of strong regards for the ethical, social, and the environmental effects of our operation have continued to stand the test of time.
Sainsbury’s consists a chain of 537 supermarkets and convenience stores of 335 and the Sainsbury bank. Their target is price sensitive customers are to lead cost leadership. And to sustains its business strategy by providing a low cost than its competitors. It helps them to allow clear picture of their ability. Their main competitors between Tesco and asda. But it different from others by low cost and broad target.
Sainsbury’s Supermarkets is the UK’s longest standing major food retailing chain, having opened its first store in 1869.
Our online food home delivery service delivers over 100,000 orders a week, and is available to nearly 90 per cent of UK households.
We have a significant portfolio which includes 297 freehold and long leasehold properties and 43 properties within joint venture arrangements.
Sainsbury’s Bank, a joint venture with HBOS (part of Lloyds Banking Group), provides a range of quality products including insurances, credit cards, savings and loans.
Strategic Position of Sainsburys:
Every organisation requires strategy for a long run process, so for that Organizations summarize their goals and objectives to transform their vision into a reality, then mission states to provides the details of what is done and where are they standing in the marketing status with their competitors.
The Sainsbury’s business strategy is mainly focussed on cost leadership. This section of report will deal with overall current business strategy of Sainsbury’s. The following PESTEL and SWOT analysis will clearly explains current business strategy of Sainsbury’s
Before we can make any recommendations for Sainsbury’s, we have to understand and establish Sainsbury’ core business activity. Clearly Sainsbury’s is in no need to specialize, cut down, on their core business activities as they are financially sky high. We need to look at how Sainsbury’s can introduce an innovative type of business activity that will be favoured by customers and other stakeholders.
Currently Sainsbury’s has an electronic range of goods and services that they offer, but one thing they lack is affordable laptops. So far, Dell and PC World are the leading retailers of affordable laptops. Sainsbury’s needs to buy quality laptops at a competitive price to maximize sales and increase productivity.
The target market that Sainsbury’s aims at is vital in maximising sales and productivity. Sainsbury’s can’t aim affordable laptops at middle-class customers as these people will have enough money to buy sophisticated laptops at expensive prices. So, the target market is working class customers as they are more in need of affordable laptops with good quality assurance. We now need to differentiate the target market to ensure the right brand and specifications of laptops are available.
Some customers prefer branded laptops like Sony, Toshiba, and Advent etc. whilst others just prefer quality goods at competitive rates – it is vital Sainsbury’s gets these demands right.
Before any changes can be incurred, Sainsbury’s needs to have a small goal based on sales, productivity, reducing costs etc. Sainsbury’s will hope to make their new and improved stocks to have maximum sales otherwise they will lose a bit off profit. Now we need to look at the scale of recommendation, will it be just one local store of Sainsbury’s to see popularity of goods or will it be on a national scale where their goods are available by the majority of the public.
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The good thing about choosing to do the recommendation of business activity on a small scale is that you can easily see if the commerce is successful and you can clear stocks quite easily, however, because the stocks are not bought in large bulks, the profits of selling goods is unlikely to be excellent. The good thing about choosing to do the recommendation of business activity on a small scale is that you can buy large bulks at competitive prices and make good profits. The other positive things are that the goods are likely to have maximized sales and productivity and eventually the costs of business activity will be covered.
One flaw of recommending this business activity is that it will be in direct competition against Dell, PC World and even eBay. These businesses can also too easily reduce their prices and the competition will soon inevitably will become unbearable.
Therefore, to give Sainsbury’s an edge over the competitors, they can make this recommendation of business activity last for a limited period thus making this recommendation seem exclusive, this results in a massive increase in impulse buys leaving stocks sold out. As a result, competition against rivals and critics are solved and Sainsbury’s generates a massive profit in a short period of time leaving them to discuss further ventures of business activities.
A core business activity is the one which is the most important for the business and usually generates the largest amount of income; Sainsbury’s core business activity is selling grocery on a wide scale as it is a supermarket. Two things a business can do to inflate their business are to: choose to diversify their core business activity or they may just choose to do the opposite, and specialize in what they’re good at.
Extending the number and types of activities undertaken by the business. This can help to spread the risk because, if one area of the business is struggling, the other areas may still be profitable. This means the business as a whole, is not a risk.
Reducing the number and types of activities undertaken by the business, usually because some are making a loss or because the costs of a particular activity are too high.
An example of a business which has diversified its commerce is Boots; it has now introduced Wellbeing services (such as reflexology, aromatherapy, dentistry etc.), it has opened its business to men and provides successful services for them. Thus, Boots recommendation to diversify its service and products has not only introduced a wider target market but it has also enabled them to increase profits.
An example of a business which has specialized its commerce is Easy Jet. Easy Jet’s owner has expanded his empire with Easy Car, to provide car.
Sainsbury’s is ever expanding its business in order to keep up the competition to a very high level, so therefore, it is vital that Sainsbury’s invest in new services and products so that customer’s demands are met. A Sainsbury’s customer is one of the most imperative stakeholders of Sainsbury’s. Customers are stakeholders because they have an interest in a business and also because the actions of customers can directly affect a business.
As mentioned earlier, Sainsbury’s have two choices of recommendations, either diversifying their commerce or to specialize in their current business, we have established that diversifying a business core activity has no risk in terms of a whole business, however, we have also learn that specializing a business is due of loss of profits in commerce so therefore businesses need to reduce their types of activity.
Through this piece it can be seen through the type of analyses; PESTEL and SWOT analysis, that Sainsbury’s is an iconic British food brand, well loved by its consumers. It had been suffering but since 2004 its image, and importantly profits, have improved tremendously. However, it is not insulated to many outside risks like recession and rising material costs as highlighted in the PESTEL analysis. Although it has shown steady growth it is important for Sainsbury’s to go the next level by challenging Tesco, and asda as a competitor identified in this markets, either by thinking of international expansion or on price. This in conjunction with its increasing property portfolio and alternate businesses should help in continuing the strong growth path, as well as tiding over threats (SWOT) in its external environment.
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