Unit 1 Business Environment Assignment Solution - Sainsbury

Unit 1 Business Environment Assignment Solution - Sainsbury

Unit 1 Business Environment Assignment Solution - Sainsbury


Diploma in Business

Unit Number and Title

Unit 1 – Business Environment

QFC Level

Level 4


The  business environment assignment report will discuss in detail about a scenario in Sainsbury PLC Company and the case will discuss the importance of business environment. The report will throw light on various issues which are important for the existence of the business. Sainsbury PLC is one of the oldest supermarket chain across UK and internationally and has been in business for more than one hundred forty five years. The company has maintained it image and brand value for so long and business is only growing day by day. The company is best known because of the level of quality that the company maintains in its offering and the work culture for which people dream to work with the company. The business environment assignment report will discuss all the aspects of the business environment with reference to Sainsbury PLC.

Unit 1 Business Environment Assignment Solution - Sainsbury

Task 2

P 2.1 Giving relevant examples, briefly explain how different economic systems such as: command, free enterprise, mixed and transitional systems attempt to allocate resources effectively with reference to Sainsbury PLC.

There are basically four type of economic system which has evolved over the years and different countries have given different requirements and given different priorities to different type of systems (Polak, 2013). In order to allocate resources effectively the main motive of every country to adopt an economic system which encourages the people of the country and the society to adopt a system which is best suited for the business of the country. Following are the economic system in detail: -

  • Traditional economy: - this system is family or community based economic system that actually believes and depend on customs and traditional rituals while making choices (Polak, 2013). There are various example which follows traditional economy like Aborigines, Amazon Tribes, etc.
  • Market economy: - this economic system is basically a single or consumer based economic system that only depends on the consumption of the consumers and their choices (Polak, 2013). It can also be called as capitalist economy and countries like USA and Japan follow this.
  • Command economy: - this economic system follows a system which is centrally controlled and all the decision making power is in the hand of the government (Polak, 2013). The countries who follow command economy are Cuba, China and many others.
  • Mixed economy: - in this economic system there is an involvement from the government and it one of the most modern economies (Polak, 2013). Countries like USA and Japan follow mixed economy system.

Sainsbury PLC has started its business in London and has been part of economy from last one hundred forty years. UK follows mixed economic system and the economy has supported a supported many business to boost the economy of the country (Polak, 2013). Sainsbury has been widely supported by the economy of UK and this is why, the company is one of best organisation in the country.

P 2.2 Considering Sainsbury PLC UK assesses the impact of fiscal and monetary policy on their activities.

Following is the impact of fiscal and monetary policy on the activities of Sainsbury PLC:

  • Fiscal policy: -the fiscal policies that any government follows are spending and taxing programs that the body like Congress and President acts and formulates. These policies obviously affect the business and organisations on two broader levels. The first one is legislation that changes or moves the complete economy and second one is target legislation which specifically aimed at one sectors (Davig & Leeper, 2011). To move or stimulate the economy, government follows many tactics like across the board tax cut or spreading more money in the people’s pockets. Usually government programs which aimed for spending directly affect the business and industry. Government also look into many specific projects like high speed rail and infrastructure programs and many more. Fiscal policy of UK focussed on both type of legislation and for Sainsbury it worked because all the policies formulated by the government of UK over the years helped all the business to grow and prosper (Davig & Leeper, 2011).
  • Monetary policy: - monetary policies are related with the country’s money supply and the federal reserve of the country has the complete responsibility to expand the money as much as possible also keeping the inflation in check. There is immediate effect of Fed Policy is mainly on interest rates which can also be termed as cost of money (Davig & Leeper, 2011). At the same time, the Fed also continues to follow an expansion policy and it also the enhanced supply of money in the economy decreases the interest rates, which make it very easy to borrow money for the investments in the business. On the contrary when the Fed tightens or reaches its saturation the money supply cools down and at the same time interest rate rises (Davig & Leeper, 2011).

P 2.3 Explain the impact of competition policy and other regulatory mechanism on the activities of Sainsbury PLC UK.

The main motive of the competition policy is to promote competition at all levels and also to make the market a better place for the organisations. It also contributes in the improved efficiency for the individual markets and also increased competitiveness of the organisation in UK within the EU individual market. The main aim of competition policy is to make sure that there are larger consumer choices, also there is technological innovation which also encourages the efficiency in diverse felids and it also helps in effective and efficient competition in prices between various suppliers (Agoraki et al, 2011).
Sainsbury is the part of UK economy and following are the four important factors of competition policies in UK: -

  • Antitrust and cartels: according to this policy, the economy needs to eliminate the agreements that are working like roadblocks for competition and which also includes price- fixing and other issues that any organisation faces which become a part of dominant market situations (Agoraki et al, 2011).
  • Market liberalisation: liberalisation also includes introducing new competition in the sectors which practice monopoly like energy supply, mobile and telecommunications and transportation via air (Agoraki et al, 2011).
  • State aid control: competition policy also analyse various examples and cases of state aid measures to make sure that these factors does not affect competition in the single market situations (Agoraki et al, 2011).
  • Merger control: - according to this policy, there should be mergers, acquisitions and take overs between and among the organisations. The merger can be a wise decision if the two companies will dominate the market (Agoraki et al, 2011).

Task 3

P 3.1 Explain how market structures determine the pricing and output decisions of Sainsbury PLC UK.

To start with the report will first understand how the market structures determine the pricing and the output decisions. There are various types of markets in different marketing intelligence, economies, or goods. So at many times, outcome and pricing decision are of various types and are categorised under various heads (Baldwin & Scott, 2013). At the same time, outcome and pricing decisions are very much dependent on each other leaving an exceptional case of perfect competitive market. So in perfectly competitive market, an individual organisation is usually small in comparison to the market which will not be affected by prices. So in this case the price must be accepted which is given and the company must focus on quantities which are needed to be supplied. So basically the price is equal to the marginal cost of production. On the other hand, in case of monopoly situation is completely different and changing of the price can be done very easily by the monopolist since he is the single provider of the services or product (Baldwin & Scott, 2013). But in this case also, when the price of the product or service increases the demand of that product decreases to an extent. So while deciding the price, the monopolist can take everything into consideration. There are other market situations as well like oligopoly where the setting a price is a complicated process and in this case it is completely dependent on the strategic interaction of the organisations.

P 3.2 Illustrate how market forces shape Sainsbury PLC UK responses using a range of examples.

Market forces are major factors which affect the organisational responses or the outcome. Market forces basically included supply, demand, and marketing the consumer. As far as supply is concerned, it is the amount of the goods and services which is available in the market. There are situation when a product is placed in the market like for example soda and the supply of this product is greater than its demand (Leung et al, 2005). This is why, in this particular case the demand and supply are inversely related to each other.
Every organisation wanted to reach a point which is termed as equilibrium where the demand and supply are at par and it is also termed as ideal market situation. It can also be measured by price. Marketing is a function that can completely change the point of equilibrium because it can be responsible for increased demand and therefore the equilibrium may shift and this point where demand is more than the supply is a point where supply and demand meets the need of customer (Leung et al, 2005).
Sainsbury PLC is in situation where the company can change the demand and supply and change the shift easily. The complete focus of the company is meeting the consumer needs and for which the company is trying to meet the supply pressure since the demand of the products provided the company is huge.   

P 3.3 Explain how the business and cultural environments shape the behaviour of Sainsbury PLC UK.

Culture in in itself is a broad subject and it can refer as the way norms and values which become a guide for the people in general to understand the manner in which they need to behave in a society (Leung et al, 2005). When culture is discussed at organisational level is termed as organisation culture and at the society level it is termed as national culture.
Organisational culture is very important for the any business since it shapes the value, beliefs and also people learned different and their own way to do business. This can easily be reflected in the structure of the company and in the people who work for the organisation. The culture of the organisation can also be decided from its vision and mission of the business and its past and present manner in which the employees are handled. Every organisation is unique and different in its own way and every organisation will have a culture which is different from of the world. So the analysis of culture is very important as it may affect the overall outcome of the organisation.
Sainsbury PLC culture is very rich and has a long history since it is into existence from more 145 years. The company is known to be a best working place for employees and the company also focus on providing the best quality product to its customer (Leung et al, 2005). The culture has impacted the overall performance of the business and the sustainability of the business because of which the company has been in business for so long.


The report have discussed in detail about business environmentand various situation in the business which the company have to face. Also the complete report was discussed with reference to the Sainsbury PLC. Business environment plays a very important role in the life of the organisation and the points discussed in the report should be taken into consideration while establishing any policy or strategy for the business.


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