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Sainsbury’s Our Customers Need North American Nation to Supply Additional Alternative

Essay by   •  July 29, 2019  •  Case Study  •  4,224 Words (17 Pages)  •  35 Views

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INTRODUCTION

Sainsbury’s, which is now involved in Argos businesses in 10 of its stores has lately give out a stated interest in the gaining of Argos. Sainsbury’s had originally made a 140 pence a share unrevealed offer to HRG in November, but was rejected.

The announcement of its interest trailed after a competing suitor for HRG, South Africa’s Steinhoff International showed little interest of the takeover race and pulled back. Mike Coupe, Sainsbury’s chief executive maintains that the purchase is chastely raised by the now critical requirement to assist customers every time and anywhere they want to shop.

COMPANY BACKGROUND

John James and Mary Ann Sainsbury's was established in 1869. At 173 Drury Lane, in what was then one of London's poorest regions, they opened their first tiny dairy store. It rapidly became popular for high-quality, low-priced goods.

VISION

        Sainsbury's vision is to be the trusted distributor that likes working and shopping. We will do this by putting the best possible shopping experience at the heart of all that we do and investing in all of our stores, colleagues and canals.

SAINSBURY'S FACTS AND FIGURES:

  • Over 1300 Stores
  • Over 161,000 Employees
  • 147 Years Old
  • £23.775 Billion Turnover in 2015

OPPORTUNITIES AND THREATS

Taking Argos has increased trading in Sainsbury.  The Sainsbury, who is planning to merge with rival Asda, reported a fifth to 302 million increase in the six-month period of profit. However, taking into consideration a host of outstanding expenses, earnings are almost halved.  The second largest supermarket in Great Britain reported that pre-tax profits of £ 132 m for 28 weeks until 22 September compared to £ 220 m a year previously.  The profit was achieved by cost associated with the management teams of restructuring stores, the integration of Argos and preparing for the Asda agreement that the watchdog still considers.

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OPPORTUNITIES

THREATS

  1. Global market expansion via online collaborations
  2. Diversification and growth of Sainsbury's bank
  3. Online groceries and convenience stores -channels of future growth

Technology analytics to help in customer insights

  1. Impact of Brexit on prices
  2. Intense competition in grocery and retail segment
  3. Loss of experienced workers apart from workers in leadership positions.

PESTEL ANALYSIS (Question-1)

The report examining how Sainsbury's strengths, chances created by a tough food retailing environment and choppy competitors such as Morrisons and Tesco both in recovery and benefit from the poor performance at Asda can be taken advantage of using PESTLE, Porters Five Forces and SWOT.

The SWOT assessment for Sainsbury in this study is based on the PESTLE assessment. A matrix displayed in the below Table was used to analyse each factor of the SWOT analysis, and four methods were given in conclusion of both types of Sainsbury's assessment.

External Opportunities (O)

1. Wide market

2. Performing economy in UK and China

External Threats (T)

1. Competition

2. Prone online platform

3. Environmental factors

5. Legislative factors

6. Political factors

Internal Strengths (S)

1. Diversified Investments

2. IT infrastructure

3. Quality human resource

STRATEGY 1

(Strategies that use strengths to maximise opportunities).

STRATEGY 2

(Strategies that use strengths to minimise threats).

Internal Weaknesses (W)
1. Inventory management
2. Weak in Globalisation

STRATEGY 3
(Strategies that minimise weaknesses by taking advantage of opportunities).

STRATEGY 4

(Strategies that minimise weaknesses and avoid threats).

Table: SWOT Analysis of Sainsbury’s

SAINSBURY’S PORTER’S FIVE FORCES (Question-2)

1. POWER OF BUYERS

Because of the accessibility of other supermarkets such as Tesco, Asda, Aldi, WM MorRisons and so on, Sainsbury clients have comparatively elevated negotiating authority. This makes it possible for clients to choose between competitive offers at the same price level. This makes the change of product expenses small. Britain's buyers are faithful only to the cost rather than to the products, so they have flown away from the Big Four to Aldi and Lidl in recent years (Mintel 2017).

2. POWER OF SUPPLIERS

Traditionally, supermarkets with low trade power are able to substitute noncompliant distributors by providing the authority of supermarkets like Sainsbury to get suppliers ' goods on the lower pricing level, thus enabling the distributors to enhance profit margin, which has led to losses on the part of providers (Rod). Supermarket companies have traditional low negotiating authority.

3. THREAT OF ENTRY/BARRIERS TO ENTRY

This Sainsbury's is considered a low threat, given that there is a high level of rivalry between other tiny supermarketes, such as Aldi, Lidl, Waitrose, and Iceland, with a retail market structure in which 69,8% of the food market share is governed by' large four' stores. Furthermore, every fresh competitor would have to deliver very high quality goods at very low rates to attract clients from Aldi and Lidl low-cost leaders who already offer goods with discounts up to 40% compared to competitors. At present the UK food retail industry has become extremely unattractive because of its intensity of competition and this is deterrent (Hance 2017).

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