Unit 1 Assignment on Business Environment – Sainsbury PLC

Introduction

United Kingdom businesses have performed well abroad. Sainsbury PLC will be used as a case study for this assignment, and its strategies and how it treats its stakeholders will be discussed. The study will also consider the laws that organisations have to adhere to. Various market structures will also be considered under the business environment.

LO1

1.1 Different organisations have different goals in the market. To accomplish those goals, different organisations use different market strategies. Below are the different organisations and their business goals:-

Virgin Group Ltd: Virgin Group Ltd is a British company that invests in various fields such as travel, tourism, leisure, mobile, broadband, TV, radio, music, finance, and health in places such as Asia, Europe, Africa, North America, and Australia. The company does even more than these; it also invests in air transport services, rail transport services, cruise vacations, and motorbike transport services. Through its operations in various fields, Virgin Group aims to be the best in their services and to satisfy their customers (Kim & Mauborgne, 2017).

 

Sainsbury PLC: Sainsbury is the UK's second-ranked supermarket chain in the league. For the smooth running of the company, Sainsbury is divided into Sainsbury Supermarkets, Sainsbury Convenience Stores, and Sainsbury Bank. Besides this, Sainsbury is also interested in property investment, and its main motive of operation is to provide the customer with all the essentials in a convenient and cost-effective manner.

 

McDonald's: McDonald's is the world's leading chain of hamburgers and cheeseburgers. The business operates in more than 119 nations, and its objective is to provide customers with good burgers at affordable prices.

 

National Health Service (NHS): The NHS is a tax-funded government service that offers most of the health services to the population of the UK. All the services of the NHS are free, and for some services, it takes a small amount of money from individuals. Its primary goal is to provide quality health services to the UK people at a reasonable cost.

 

My street shop is "Sam's Hot Dog." It's a local food chain belonging to a local individual who produces various types of hot dogs. The general purpose of this shop is to deliver fine hot dogs throughout the UK.

 

1.2 Describe how well an organisation achieves the objectives of various stakeholders.

Sainsbury is a public limited company, and therefore, ownership of the company rests with various shareholders of the company. The decisions of the management team are taken keeping in view the concerns of all company stakeholders in order to fulfil the business requirements in an effective manner. The prime reason behind keeping the concerns of every stakeholder in view is the maximisation of profit (Gamble, Thompson, & Peteraf, 2015). Every stakeholder has their own proportion of profit in the overall profit of the company, so in order to increase the share of company, the management team is obligated to keep stakeholders' concerns in view.

 

The management team addresses a number of issues by categorising stakeholders. They start with the employees because they are very important to the company. They need to fulfil their needs adequately. The marketing management team has created different levels for the employees, and each gets different pay. This way, the company encourages its employees to work better to reach higher levels and earn more. This process encourages the employees and allows the organisation to fulfil its goals. Better services will allow the company to get more customers, increase profits, and make the customers smile. Sainsbury also has a number of aspects that make its employees secure in their jobs (Freeman et al., 2010).

 

After the employees, the customers are the subsequent significant stakeholders, and to be successful in the market, organisations must keep their customers satisfied. Sainsbury has a strategy to conduct market research to know what their customers require, what customers want from the organisation, and what will bring more customers to the organisation (Gamble, Thompson, & Peteraf, 2015). Apart from this, Sainsbury's always gives good offers to customers to give them a better alternative compared to the company's competitors and to gain a greater market share. The suppliers are the subsequent significant stakeholders of the company, and the company attempts to maintain a good relationship with their suppliers by providing them with timely payments and a better deal for goods and services. Government regulations and rules are also taken into account because they are of the greatest significance to the manner in which any business is operated.

 

1.3 Describe the duties of an organisation and the measures that are taken to accomplish them.

Every organisation is responsible to employees, society, and culture, and Sainsbury always attempts to fulfil its commitments by doing various things. Sainsbury's is aware that all people require healthy food, so it has introduced more than 60 value-for-money products that are a healthy choice in comparison to takeaways. Sainsbury is also focused on the nature and the environment and has 110 dual-fuel lorries for transportation, the largest in the UK. The organisation has also opened bee cafes and is growing scented herbs to support the bee population (Kotler & Lee, 2005).

 

In addition to these activities, the organisation also actively contributes to several charity schemes in the local community, where all the employees are eligible to nominate a charity scheme to help. So far, Sainsbury's has contributed more than 6 million pounds to several UK charities. Sainsbury also conducts its annual games for its employees, where different sporting activities are arranged for the employees; this action helps the organisation to promote its employees towards physical fitness and sports enthusiasm. Sainsbury, along with David Beckham and Ellie Simmonds, has invited more than 400 schools in the UK to purchase sports equipment, where Sainsbury will contribute a substantial amount for the sports aids to the schools (Idowu, Schmidpeter, & Fifka, 2020). In addition to these activities, the organisation is also engaged in several other steps that the organisation believes are its responsibility and is serving society on a continuous basis.

 

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LO2

2.1 Describe how economic systems try to allocate resources efficiently

Economic systems play a vital role in facilitating the smooth operations of activities within any organisation. Organisations have to formulate their operational approach in the context of different economic systems. One such is a command economy, where the government creates rules that dictate with whom organisations trade, what products they have to produce or deal in, and to whom the eventual user of such products is. Command economies are usually found in communist countries, where the government forces organisations to work within the context of government policy. Sainsbury, however, is in the United Kingdom, a country where the government places no such constraint on organisations (Gilpin, 2016).

 

There's also the free market system, whereby the government intervenes as little as possible, and most of the resources are owned by private businesses. Price determination is mostly left to the private businesses and is set by the needs of the market. Any organisation is at liberty to play in the market provided it can afford it and provided it can.

 

The second area of focus is the mixed economy market, whereby there is wide government and private organisation control in shaping domestic market forces. There is a high level of private organisation decision-making power despite the fact that government agencies put in place some regulations that ensure the sustainable conduct of business activities in the market (Zimbalist & Sherman, 2014). This form of market economy considers the interests of consumers and suppliers, thus ensuring balance in the market. Sainsbury operates in a mixed economy system, which is one of the major drivers of its high level of reputation in the market.

 

Finally, the transition economy market is considered. A transition economy can be described as a market that is always transforming from a command economy to a free market system. In these transition economies, the problem of increasing unemployment is an issue, since private firms will employ fewer workers than needed and compel the available human resources to work more than their capacity (Gilpin, 2016).

 

2.2 Examine the impact of monetary and fiscal policy on business activities and companies.

Fiscal and monetary policies are key determinants that influence the operational dynamics of organisations. The operations of Sainsbury's are also influenced by the fiscal and monetary policies implemented in the United Kingdom. Higher fiscal policies are likely to lead to high interest rates and lower levels of capital investment. The net impact of such an environment is likely to contribute positively to the overall growth of the revenue of Sainsbury PLC. Nevertheless, a long-term period of low investment and capital stock is likely to lead to a decline in future revenue (Gu & Kitano, 2018). Therefore, Sainsbury should consider such government fiscal policies carefully before further investing in the market because careful analysis of the policies will help enhance the profitability of the company.

 

On the other hand, monetary policies are a relatively inexact policy instrument, affecting different areas of the economy in different ways. Changes such as a drop in interest rates are likely to stimulate fixed capital spending, thus changing the country's prevailing equilibrium. In the case where the exchange rate falls, Sainsbury might face negative effects, as the business would get less money for offering the same product. Sainsbury might, in this case, be forced to change the prevailing prices of its products. But if the exchange rate rises, Sainsbury might face increased profits from overseas sales of its products (Zhou & Welch, 2025). A reduction in taxes would then reduce the company's operational costs and boost revenue, while an increase in taxes would otherwise reduce revenue and boost operational costs. The management team needs to monitor these policies continuously and make necessary adjustments in business operations to ensure sustainability and competitiveness in the market.

 

2.3 Evaluate the impact of competition policy and other regulatory policies on the operations of a selected organisation.

Sainsbury's has been successful in holding its market leadership position. But, ever-increasing competition in the market keeps on affecting its business operations on a frequent basis. It becomes necessary for Sainsbury's management to study the strategies that its competitors are following to define its business operations so that it can overpower the competitors. Sainsbury's major competitors in the UK are Morrison and Tesco. Morrison and Tesco's business operations have a great effect on Sainsbury's sales, as if Tesco lowers the price of its products, then its customers will automatically shift their preference because Tesco also possesses a strong brand name in the market. So, it becomes necessary for Sainsbury to react instantly and provide their customers with a better deal or offer than Tesco. A study of their marketing strategies also becomes necessary because marketing planning has a significant impact on the sales of any company. Observing Tesco and Morrison's marketing campaigns will assist the company in observing the current trend of the market and what differences they can utilise to attract target customers (Porter, 2008). Till now, Sainsbury has been successful in growing its market share in the past 12 weeks, and it is due to the proper analysis of the strategies of its competitors by Sainsbury's management team.

 

Regulatory mechanisms are part of the other determinants that are vital to the efficiency of Sainsbury's performance and, as such, require the management to come up with a timely reaction to facilitate the smooth flow of business processes. The employees' conflicts, strikes, system failure, and risks will most likely impede organisational performance, and thus, the requirement of having well-defined strategies to counter the challenges (Gamble, Thompson, & Peteraf, 2015).

 

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LO3

3.1 Describe how market structures influence Sainsbury PLC UK's price and output decisions.

The establishment of the market price of a commodity and the respective quantity that an organisation must produce is a critical question that is driven by the market structures available in the markets. The most common market structures include oligopoly, monopoly, and perfect competition.

 

Perfect Market Structure: Perfect Market Structure refers to a perfect market structure in which there are numerous companies in the business of a market segment. There are numerous buyers and sellers of a product in this condition. Therefore, the trend of demand and supply is identical. No company can influence the market structure with its strategies and policies.

 

Monopoly Market Structure: Monopoly for a particular product is said to exist when the supply of the product is controlled by a few firms. The firms control the product's supply and price mechanisms. Because there is no competition for the product in the market, the prices of the products can sometimes be high or out of the economic affordability of the average consumer. In most cases, profit margins are higher in a monopoly market structure (Piketty, 2020).

 

Oligopoly Market Structure: There are a few firms manufacturing a similar commodity in an oligopolistic structure. The prices of the firms are determined by two main considerations: one is the price at which the dominant firms supply their commodities, and two is the prevailing demand patterns (Investopedia, n.d.). Firms lower their prices in order to gain some portion of the market share to attain share. It is easier for new firms to enter the market by doing so.

 

Sainsbury PLC, a supermarket industry giant, is an example of a Perfect Market Structure. Sainsbury PLC determines the market demand and establishes how much product to sell. The selected volume ensures Sainsbury PLC's profitability. The two primary drivers of Sainsbury PLC's pricing are the prices offered by the competitors and the prices the customers are willing to pay for the products. An amount that is out of reach of the average consumer will surely lead to a decrease in the sales of the products.

 

3.2 Offer a variety of examples to illustrate the effect of market forces on Sainsbury PLC UK reactions.

Different market forces drive large-scale companies like Sainsbury and influence their strategic actions. The core forces are the actions of potential consumers, economies of scale, price and quantity determination, and demand and supply relations in the market. It is possible that consumer actions are a core force of business success for any company. Due to the influence of changing consumer tastes and buying habits, Sainsbury's must track product price changes. With increased consumer consciousness and greater focus on quality, the company must improve product quality and expand the range of offerings to customers.

 

Moreover, economies of scale tend to go hand in hand with the mass production of products automatically. If Sainsbury is to produce a huge quantity of products, it has to consider this factor seriously. Strong and healthy economies of scale can help the organisation with the mass production of products. Furthermore, supply is dependent on demand for a product, i.e., demand is proportionate to supply. For attractive products, i.e., frozen food products, Sainsbury has to satisfy this demand by supplying an adequate supply of corresponding products. On the other hand, the organisation makes output and pricing decisions based on sales projections, profit projections, and product demand. Sainsbury's decisions and actions are influenced by existing market forces.

 

3.3 Assess how Sainsbury PLC UK is influenced by the business and cultural environments within which it competes

The business and cultural environment define the activities of an organisation. For discussing and knowing the defining factors, PESTEL analysis has to be performed. It stands for Political, Economic, Social, Technological, Ecological, and Legal factors. The stable political conditions enable the organisation to make more effective policies and decisions. As the EU rationally legislates and implements soft laws, Sainsbury is in friendly association with the political factors. The economic factors, however, imply the GDP, inflation rate, and employment rate. The organisation follows all the economic policies of the government and operates effectively. Furthermore, social factors are also very important to the organisation because they encompass customer expectations, demands, and tastes. Any shift in customer demand and tastes directly affects the supply chain of the company. Furthermore, the technological factor highlights the speedy evolution of technology. In order to be competitive in the market and to bring the most recent line of products, Sainsbury must update itself on the latest technology. The ecological factors are associated with environmental issues, whereas legal factors require the organisation to comply with all the laws established by the European Union. Therefore, various cultural factors must also be dealt with by Sainsbury in order to have a strong presence in the UK market.

 

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LO4

4.1 Describe the significance of international trade to Sainsbury PLC UK.

International trade, in the past decades, has grown significantly. The movement of goods and capital from one nation to another in the world has grown immensely due to globalisation. A business like Sainsbury enjoys several benefits from international trade, enabling it to operate in various places or nations without the restrictions of trade barriers. This supermarket owner can rightfully open its supermarket chains to new markets. Sainsbury has become a global operating firm, expanding its operations in various regions, specifically in the member nations of the European Union, where it enjoys unrestricted operations. In fact, the firm has managed to outsource its business operations and activities to other nations in a bid to improve the quality of the products while cutting costs at the same time. Thus, Sainsbury can provide their customers with a broader and superior range of products by importing products that are not local products.

 

Significance of international trade: In the absence of international trade in the United Kingdom, the Sainsbury revenues will be highly impacted. The organisation will be unable to market its grocery items in the rest of the world, and even economies of scale would not matter. In addition, the company will be advantaged by the theory of competitive advantage, which is founded on the advantage of one nation by specialisation and the other by cost reduction. Since Sainsbury has established its shops in new places due to the existence of international trade, it has highly enhanced the employment of the locals. This simply implies that with its own advantage, the organisation is in a position to do well for the entire society. In addition, it is only through international trade that Sainsbury is in a position to maximise the use of all the available resources to the fullest, hence contributing to the growth of the organisation as a whole.

 

4.2 Discuss the influence of global factors on Sainsbury PLC UK.

There are a number of global factors that have a strong influence on organisations. Some of these are higher levels of multiculturalism, higher international trade, and internationally connected national economies. These can be explained with the help of the PESTEL analysis, which comprises political, economic, social, technological, ecological, and legal factors. Political factors are global trade policies, the political stability level at the global level, and the UK's tariffs on other countries. A higher global tariff rate is a challenge for Sainsbury in competing with companies from those specific countries. Economic factors also comprise global economic recessions, fluctuations in the stock market, higher levels of outsourcing, and implications of globalisation. Changes in consumer purchasing behaviour and higher societal concerns are part of social factors, on the other hand. A large department store like Sainsbury's needs to continuously study customers' tastes and adjust its product offerings accordingly. It is the requirement of the organisation to adjust its product supply in the face of changing consumer purchasing behaviour.

 

Even technological developments influence the business. Since technology is changing day by day, Sainsbury needs to keep itself updated with it. Application of the latest technology is the only way to compete with competitors in this intense market competition. There is a constant emergence of superior communication technologies and industry-specific technological developments in the case of the global factor technology (Olsen, 2021). The ecological factors influence the business due to global warming, an increase in pollution, and increasing sensitivity towards 'green'. Here, Sainsbury needs to comply with all the environmental laws and maintain environmental concerns. Finally, legal factors force the organisation to follow all the laws and rules developed by the European Union. In the event of non-compliance with the government laws, the organisation will be fined heavily.

 

4.3 Discuss the impact of European Union policies on Sainsbury PLC in the United Kingdom.

As Sainsbury was an EU member in the UK, it was directly impacted by the policies and legislation of the EU. To begin with, the EU Liberalisation Policy in 1993 compelled all UK-based organisations, as well as all EU member organisations, not to charge any tax on goods imported between EU nations. In addition, as per EU policies, those organisations whose total turnover is above a particular level of sales as per the EU definition and that are looking to merge need to obtain approval from the EU. Cartels, state aid, and others are other policies that impact organisations like Sainsbury. The inflation policy asks Sainsbury to maintain prices at low levels. In this regard, Sainsbury's has emphasised Fair Trade, under which it sells high-quality products at low prices.

 

EU policies: EU training and education policy provides a chance for people to undergo training and development under the government-sponsored programs, while the employment policy is based on increasing the employment rate. The policy is aimed at developing the region with acute unemployment and helping locals achieve a living standard. With more and more Sainsbury stores growing, the local people are provided with a chance to work. The EU actually sets the rules of the game, i.e., it regulates the whole import and export within and outside the UK (Olsen, 2021). It has the authority to prohibit the products that are being imported into the nation or are being exported out. This directly impacts the profits of the organisation. Sainsbury has to keep in mind all the policies; otherwise, it will be categorised as a breach of the agreement of the EU member states. Until recently, the popular department supermarket had been following all the policies, and the same was expected from it.

 

Conclusion

Global trade has provided business organisations with various opportunities for expansion. Fiscal and monetary policies are the most significant determinants of the strategic directions of organisations. Sainsbury PLC has followed business regulations and European Union regulations, thus becoming successful in meeting stakeholder needs.

 

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References

• Piketty, T. (2020). Capital and Ideology. Belknap Press: An Imprint of Harvard University Press.

• Porter, M. E. (2008). On Competition. Harvard Business Review Press.

• Kim, W. C., & Mauborgne, R. (2017). Blue Ocean Shift: Beyond Competing – Create New Markets. Hachette Books.

• Zimbalist, A., & Sherman, H. J. (2014). Comparing Economic Systems: A Political-Economic Approach. Academic Press.

• Zhou, X., & Welch, I. (2025). The effects of exchange rate movements on publicly traded US corporations. China Business Knowledge (CUHK Business School)

• Gilpin, R. (2016). The New Global Economic Order. Princeton University Press.

• Gamble, J. E., Thompson, A. A., Jr., & Peteraf, M. A. (2015). Essentials of Strategic Management: The Quest for Competitive Advantage (4th ed.). McGraw-Hill Education.

• Idowu, S. O., Schmidpeter, R., & Fifka, M. A. (Eds.). (2020). Current Global Practices of Corporate Social Responsibility. Springer.

• Kotler, P., & Lee, N. (2005). Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. John Wiley & Sons.

• Olsen, J. (2021). The European Union: Politics and Policies (7th ed.). Routledge.

• International Monetary Fund. Fiscal Policy: Taking and Giving Away. International Monetary Fund (IMF) Publications.

• Freeman, R. E., Harrison, J. S., Wicks, A. C., Parmar, B., & de Colle, S. (2010). Stakeholder Theory: The State of the Art. Cambridge University Press

• Investopedia. Oligopoly: Meaning and Characteristics in a Market. Investopedia.

• Gu, J., & Kitano, N. (2018). How does fiscal policy affect monetary policy in emerging market countries?. Eldis / Institute of Development Studies UK.