Sainsbury

Analyse and evaluate the strain strategy that J Sainsbury Ltd. has pursued using either bowmans strategic clock or Porters Generic Strategies framework. Submission Date 28th April 2012 Word Count 1841 Introduction system is defined as how an organization and individual achieves its goals. The merchandise strategies atomic number 18 altered as well as renewed in companies in the effort to survive and overly prosper in an increasing demanding and manifold business environment (Grant, 2010, p. 270).The strategic imperatives put up shifted towards a priority emphasis in decree to develop a superior capacity to reinvest the business modeling (Cravens, 2010, p. 20). Sainsbury mission and goal is to become the first choice of its customers in terms of pabulum, deliver products which ar of outstanding quality and service available at a competitive cost by means of working in a simpler, faster and together. Sainsbury have made fundamental changes which have transformed the busin ess just in the course of action the connection has upholded true to its heritage.Sainsbury passion towards food at fair prices and its ethical approach have re importanted central for their success (J Sainsbury Plc, 2012). invention 1 Business strategy and Objectives pic (Source J Sainsbury Plc-a, 2012) Accessing Sainsburys strategy using Bowman Strategic Clock The strategy clock which was coined by Cliff Bowman encouraged the mangers to consider competitive advantage with relation to cost advantage or specialization (figure 1). It focuses on the price of the customers and their perceived nurture of the justs and services.It has been argued that Sainsbury pursue a differentiation strategy while others capability argue that it has adopted the low cost strategy. It could be however said that the organisation has adopted both differentiation and low cost strategy and can be termed as stuck in the middle (Mantle, 2012). Figure 1 Bowmans Strategy Clock pic (Source Johnson, 2008, p. 243) Theories and psychoanalysis SWOT Analysis has been performed in order to consider the internal and external factors of Sainsbury (See attachment 3).J Sainsbury has been able to tackle the problem as it has been able to build the reliance and can have faith on its customers at the worst condition. But the competition is also intense between the top side four food sellers in UK and the hard discounters. It has been noted that Tesco and Asda are the top most sellers in UK and they have expanded in almost every part of the globe and this is where Sainsbury lacks and falls butt end its current competitors (Mantle, 2012, p. 7).Sainsbury can try to overcome its weakness by applying its strength and overcome its threat by applying the opportunity. As per the TOWS Matrix, (Appendix 6) Sainsbury has a huge opportunity to angle the emerging nations with its diversified portfolio and with its satisfactory corporate image . To tackle the external environment PEST analysis has b een conducted. Sainsbury needs to consider the external environment in order to proceed successfully and take measures of the upcoming shortfalls with respect to the external environment (See Appendix 2).In order to tackle the problem, Sainsbury has adopted the policies of operating in EU and also other parts of the globe. It has joint hands with the British government to tackle the problem of obesity and have pledged to cut about 5 billion calories (retail Detail, 2012). Sainsbury has diversified its business ranging from food retail to non food retail outlets and has adopted the differentiation strategy. This adds on to the advantage of Sainsbury and dishs to maintain competitive advantage and stay ahead of its competitors.But at the corresponding time Sainsbury have many competitors who offer the same product (Appendix 5) which shows that the competition among the retail industry is quite high, but Sainsbury with its mettle competencies and diversified portfolio has been able to gain a diverse customer base. Analysis and evaluation of supporting picks and capabilities The alliance is trying hard to keep up its force level by delivering efficient service and timely service. Sainsbury online serves almost about 30,000 order per week and cover 75% of the UK which ads on to its advantage (Breitenbuch, 2004, p. 22).With advancement in technology and change in mindset, customers prefer online services rather than the brick and mortar. Thus Sainsbury competency lies with its online shop service. The capital of Sainsbury subjected in decreases in 2011 (854) as compared to 2010 (1006). But Sainsbury has invested in its R&D and other portfolios which have sown positive outgrow in the current fiscal year. But a glance at the resources and capabilities have proved that Sainsbury can well compete in the competitive retail market. Sainsburys unique resources and capabilities underpinning the Value chainSainsbury had made an investment of about multimillion pounds in its make out chain technology which has helped the company to reduce the amount of un-bought food by 15% during hard times. This technology was created by Sainsbury and helps to reduce wastage of food which would then help in the reduction of emission from CO2 to about 1400 tonnes. Thus it can be said that the company can react to changes in the buying public figure (Brittain, 2010). (See appendix 9) Value chain has been identified and upgraded in order to widen the system of suppliers, network and the buyers i. e. hrough the value system, and the importance of each individual and the discrete activities which are performed by the firm to achieve competitive advantage. Sainsbury has developed different supply chain channels to manage the complexity heartd due to different put in formats such as country town, Sainsbury local. Sainsbury believes in continues improvement and aims to achieve it in many different ways. Sainsbury recognise the importance of its people who plays a m ajor employment in delivering excellent business. The logistic staffs of Sainsbury tend to work in flexible and well maintained environment.One of the collaboration of Sainsbury is to focus on the demands of the consumers and maintain a hygienic relationship with the suppliers and other partners. Above all Sainsbury is committed in reducing the impact of its operation towards the environment (J. Sainsbury Plc-b, 2002). Appendix 9 Value Chain (James,Rowland-Jones& Obrian)pic A exceptional tangible source resource would be Sainsburys land bank, they created an agreement with British land in 2008, as a result of losing the beleaguer to Tesco in land management , and therefore currently own 10,5 billion in real estate (Mantle, 2012)This gain value and addresses a key determinative achievement factor in the industry (Grant,2010). As position is important to offer convenience and a deep assortment, An extra unique intangible resource would be their brand representation and customer lo yalty, this is vital since it can attract or attract consumers and it could be obligatory to build the brand image . Mintel has inform that Sainsburys achieved top amongst the big four for the best brand reputation, improving this by supporting charities such as fareshare and active kids(J Sainsbury PLC,2012)A core capability would be Their online shopping has evolved over the years and with a change in customers mind set and lifestyle, and is mostly dominated by the major food retailers (Mintel, 2011). It is the second largest food online retailer in UK and its business grew by 20% over the years (McGrath, 2012). Sainsbury is also trying to develop a presence in the drugstore stratum but it would result in huge risk for the company as Boots has already acquired a majority of the market share (Data monitor, 2002). Has Sainsbury got the potential resources and capabilities?Feasibility decompose the firm positing of the resources and capabilities necessary for their given strategy (Johnson,Scholes & Whittington,2008) Sainsbury core competencies and resources (See Appendix 4) have enabled Sainsbury to achieve the third position in UK retail market and strengthen its value chain through investing in new technology (Appendix 9). Sainsbury core capabilities (Appendix 4) lie with their online shopping service which is often regarded as better than its competitors and at the same time hard to imitate.Other capabilities of Sainsbury include its logistic, loyalty programs and its own labelled products. But the disadvantage lies that its competencies are same as its competitors and are very easy to imitate. life-sustaining challenges that Sainsbury faces in the expansion plan Most critical driver in the grocery industry would be the attractiveness of new rising market, such chinaware whose market was expected by Euromonitor in 2010 to reach ? 418 billion(Johnson, Scholes & Whittington,2008 ). furthermore globalisation is a key factor for merging competitors.One cri tical challenge Sainsburys face is how compatible or distant the national market is with the company, therefore they must consider compatibility before they get into the market(John, Scholes &Whittington,2008). This can be done using the batting cage model, which looks at cultural, administrative and political geographical and economic distance between the markets. For instance cultural distance is very important in the supermarket industry. As mentioned in the SWOT analysis (Appendix 3) one of the major critical challenge with Sainsbury is the market of UK which has matured over the years. (Grant,2011)Sainsbury has adopted both the low cost strategy and also the differentiation strategy. The retail food section of Sainsbury offers food at a cheaper rate and also its product line offers a variety of services and products therefore following the differentiation strategy (See Appendix 3). One of the risks involved associated with the hybrid strategy is that the company is trying to diversify into various sectors which might not result in breadability in the long run, may result in failure. This is because Sainsbury is following two generic strategies cost leadership and differentiation strategy and it might result in a drawback in the long run.Does the strategy adopted by Sainsbury is attractive in terms of financial return and timescale required for its online orders? Sainsbury main rival is Tesco in terms of market share. The market share of Tesco has slipped from 30. 7pc to 30. 5pc. However the supermarket, Tesco was not be able to keep a track with the level of pretentiousness at the current rate of 6. 2 c in the grocery industry. In comparison to Sainsbury, sales growth was recorded 4. 2 pc (Wallop, 2011). The financial report of Sainsbury has also shown a positive growth rate in its operating profit which amounted to ? 851million in 2011 as compared to ? 710 million in 2010.The gross profit recorded for the year end 2011 was also quite impressive as compared to the previous financial years (See Appendix 8). Conclusion Sainsbury strategy has helped it to become among the top retailers in food and non food items in UK and has been able to achieve a decent market share along with gross profit which resulted in a higher rate than its competitors Tesco. But with respect to international strategy, Sainsbury would face challenge from the intense competition from its competitors as they are globally situated and are fictive to be bigger brand than Sainsbury and has captured most of the market share outside UK.And secondly, due to economic slowdown, consumers have started to cut cost and prefer the small retail shops rather than the giant retail outlets. This would hamper the working of Sainsbury in the process of international expansion. Therefore it can be said that Sainsbury should expand only when the conditions are in favour of the company. Reference Breitenbuch, M. V. , 2004. Online Food Shopping Consumer Perception and Retailers commercialize Approach, Contrasting the Markets UK and Germany. GRIN Verlag. Brittain, N. , 2010. Sainsburys tries something new with supply chain technology. Online.Available at http//www. computing. co. uk/ctg/news/1834835/sainsburys-tries-supply-chain-technology Accessed 23 April, 2012. CBI, 2004. Sainsburys. Pdf. Available at http//www. article13. com/CBI/CBI%20CSR%20Case%20 meditate%20Sainsburys%20August2004. pdf Accessed 19 April, 2012. Cravens, D. W. , 2009. Strategic Marketing 8E. New York Tata McGraw-Hill Education. Data Monitor, 2002. Sainsburys putting the Boots in. Online. Available at http//www. datamonitor. com/store/News/sainsburys_putting_the_boots_in? productid=E22D4126-72D1-4FF4-B2B3-1CAB1AF4E9A7 Accessed 19 April, 2012.Grant, M. , 2010. Contemporary Strategy Analysis Text Only. John Wiley and Sons. IGD, 2012. IGDs 2012 Sainsburys Trade Briefing. Online. Available at http//www. igd. com/index. asp? id=1&fid=2&sid=1&cid=2083 Accessed 19 April, 2012. J Sainsbur y Plc, 2012. About US. Online. Available at Accessed 18 April, 2012. J Sainsbury Plc-a, 2011. Annual report and Financial Statement. Pdf. Available at http//www. j-sainsbury. co. uk/media/171813/ar2011_report. pdf Accessed 19 April, 2012. J Sainsbury Plc-b, 2002. Sainsburys. Online. Available at http//www2. sainsburys. o. uk/sid/info_sc_osc. htm Accessed 26 April, 2012. Johnson, G. , 2008. Exploring Corporate Strategy Text & Cases, 7/E. South Asia Pearson Education India. Just Food, 2011. UK Morrisons, Sainsburys gain market share. Online. Available at Accessed 20 April, 2012. Mantle, P. , 2012. Case Study J Sainsbury Ltd January 2012. McGrath, T. , 2012. Sainsburys Second largest UK online food seller. Online. Available at http//www. eway. co. uk/ecommerce-news/post/2012/03/14/Sainsburys-Second-largest-UK-online-food-seller143. aspx Accessed 19 April, 2012. Mintel, 2011.Food Retailing UK Online. Available at Accessed 18 April, 2012. Moon, H. C. , 2010. Global Business Strategy Asian Perspective. Singapore World Scientific. Morning Star, 2010. Sainsbury Lacks Competitive Edge. Online. Available at http//www. morningstar. co. uk/uk/660/articles/94693/Sainsbury-Lacks-Competitive-Edge. aspx Accessed 19 April, 2012. Pisanello, D. , No Date. SHORTCOMINGS IN ENFORCING EU FOOD uprightness. WHAT DOES EU FOOD LAW STAND FOR? Pdf. Available at http//regulation. upf. edu/dublin-10-papers/2F4. pdf Accessed 20 April, 2012. Retail Detail, 2012.British food industry pledges to cut calories. Online. Available at Accessed 18 April, 2012. Verweire, K. , 2004. Integrated Performance Management A Guide to Strategy Implementation. SAGE. Wallop, H. , Tesco loses market share. Online. Available at http//www. telegraph. co. uk/finance/newsbysector/retailandconsumer/8937822/Tesco-loses-market-share. html Accessed 19 April, 2012. Sainsbury Strategy clock Sainsbury Appendix 2 PEST Analysis policy-making Sainsbury adopted the international strategy and thus the political factor s along with globalisation have affected the expansion. EU has been stringent in matters of food in order to protect the customers (Pisanello, n. d) and thus the food retailers have to comply with various standards which have affected the profit with is predicted to hamper the future growth. Economical Affects the buying decision of the customers as with recession hitting the country the residents are likely to cut cost and save for future needs. The people might prefer the next door retail outlet to shop for and this would indirectly affect Sainsbury. The economic recession has affected the people residing in UK and this has ultimately resulted in affecting the retail food sector.People forget not stop eating due to poor economic situation like global crises or rescession but they would obviously cut cost which Retail industry prone to negative economic condition and can affect the future growth Social Social trends have been changing with the development in the countries me ttlesome consumer debt level with negative savings rate. Technological Adoption of online retailing Supply chain management Adoption of electronic Point of Sale (PoS) Appendix 3 SWOT Analysis Strength Sainsbury is the third largest retailer in UK with 16% of the market hare (Just Food, 2011). Sainsbury has a diversified range of products it has a good corporate image Online shopping Weakness J Sainsbury Plc is uncovered to the UK business cycle to a great extend. Opportunity gain opportunity in the online shopping market Demand of good quality of food and healthy food Growth opportunity in the emerging countries. developing presence in the druggist and drugstore kinsfolk Threat Intense competition from Tesco, Asda and Morrison Mature UK Market Appendix 4 Core capabilities and resourcesFigure 2 Resources and competencies of J Sainsbury PLC pic (Source Mantle, 2012) Appendix 5 Porters quintuple Forces Figure 3 Porters five force of Sainsbury Appendix 6 TOWS Matrix Strength Weakness Sainsbury is the third largest retailer in UK J Sainsbury Plc is exposed to the UK business with 16% of the market share cycle to a great extend. Sainsbury has a diversified range of products it has a good corporate image Online shopping Sainsbury being the third largest retailer Sainsbury can overcome its weakness by Opportunities could make use of its corporate image in the utilizing its opportunity and create demand for Growth opportunity in the online shopping emerging countries and with the online shoppingits food and non food items. market market it can further strengthen its growth Demand of good quality of food and healthy foodopportunities. Growth opportunity in the emerging countries developing a presence in the chemist and drugstore category Threat With its diversified portfolio it can stay Sainsbury needs to tackle its problem as its Intense competition from Tesco, Asda and ahead of its competitors and along with its too e xposed to the UK business cycle and as a Morrison corporate image can easily tap the mature UK result the rivalry is quite high. Mature UK Market market. Appendix 7 Stakeholders Mapping Figure 4 Stakeholders mapping A B Minimal Effort lay aside Informed Shareholders C D Keep Satisfied Key players Environment, Community Customers, suppliers, employees Keep informed the shareholders of the organisation should be kept informed about the happenings and decision taken by Sainsbury. It is the duty of the company to make the shareholders know about every step that the company takes. Keep Satisfied The community and the environment falls under the category of C where the company should satisfy these stakeholders.The community is important as it is a place that Sainsbury operates. The environment is also important as sustainability issue raises with the environment thus it becomes incredibly necessary to keep satisfied these two stakeholders. Key Players The key player s consist of the customers, suppliers and the employees. It is through these stakeholders that Sainsbury is able to operate its business. The employees form an integral part of the organisation. The strategies adopted by Sainsbury depart directly affect thee stakeholders. Appendix 8 Financial Statement of Sainsbury Table 1 Financial performance pic (Source J Sainsbury Plc, 2011) Table 2 Tesco Financial rehearsal pic Source Tesco, 2011) Hybrid Threat of Substitute Low -Medium Low in case of food items and medium for non food items For clothing is high Rivalry among Competitors High More competitors such as Tesco, Asda and Morrison Retail market is extremely competitive. Buyers Power High Many competitors in the industry give the buyer the power to quite a little Threat of Entry Low Requires huge capital investment Sainsbury and other big retail giants accounts for nearly 80% of the retail market share Suppliers power Low As the position of Sainsbury is strengthen and are able to negotiate to get the lowest price from the suppliers.