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Unit 7 SWOT and PEST Analysis Assignment Help
Diploma in Business
Unit Number and Title
Unit 7 SWOT and PEST Analysis
Strategic business policies play a vital role in the success of the business, as these business strategies are very helpful in the long run by providing direction and scope to the business. In this challenging environment, strategic planning helps in the configuration of resources for fulfilling the stakeholder expectations and market needs. In this assignment Sainsbury has been taken as the subject of study to study the various factors associated with the strategic analysis and formulation of a right business strategy so as to manage its competitiveness in the fast changing business environment. The whole assignment is divided in 4 major tasks consisting of formulation of strategic plans, their effectiveness, SWOT and Pest analysis of Sainsbury, significance of stakeholders and implementation of strategy for Sainsbury. The below mentioned tasks would be explored in the present paper:
These learning objectives would be obtained in the present research context with special reference to Sainsbury so that successful strategy adoption can be done in the organization.
J Sainsbury Plc. is a leading UK based food retailer organization offering its products into many countries around the world. Sainsbury has 455 supermarkets and 301 convenience stores across the country which helps in serving 16 million customers each week. The company is having a workforce of around 148,000 colleagues committed to deliver ‘Great food at fair prices’. Sainsbury sell almost £6bn of British food every year (Addmour & Ayish, 2005). In order to make local food available to the customers, Sainsbury work closely with small local suppliers and is successful in expanding the local network to over 3500 local suppliers. In the increasing globalization and fast growing business environment Sainsbury is planning to enter the markets of emerging countries like China, India, Brazil etc. by the way of joint ventures or partnerships.
Task 1 Understand the process of strategic planning
In the present task mission, vision and scope of objectives of Sainsbury would be discussed. Here, steps of strategic planning and the planning techniques to meet the desired objectives of Sainsbury would also be identified.
1.1 Assess how business mission, vision, objectives and goals inform strategic planning of Sainsbury.
Sainsbury main aim is to provide a world class service to the customers by incorporating quality and ethical principles in delivering the services. For determining an appropriate strategy for Sainsbury, an assessment of the mission, vision, objectives and goals of the company is essential.
Mission of Sainsbury: Sainsbury Company’s mission is to be the customer’s first choice for food, delivering products of outstanding quality and to provide great service at a very competitive cost by working on the agenda of ‘faster, simpler and together’.
Vision of Sainsbury: Sainsbury Company is having a clear vision to be the most trusted retailer for the people where they want to love to work and do shopping. This vision shows that Sainsbury focus is to improve the core UK supermarket chain’s performance and to continue to explore growth opportunities.
- Sainsbury’s major objectives are:
- High Sale turnover.
- Customer satisfaction by offering low prices.
- Motivated and trained employees for growth purpose.
- Quality product at fair prices.
- Reaching more customers through additional channels
sbury Company’s main goal is to offer great quality and service to the customers at fair prices and in doing so make the life of customers easy. Along with it Sainsbury aim is to maintain the high social, ethical and environmental standards (Arazy & Gellatly, 2012).
a) Identify the steps of Strategic planning. Briefly explain if strategic planning is a one off issue or a continuous process and review the matters involved in this process.
Strategic planning is very essential for the companies. Strategic planning process is implemented by companies in year one in which planning is conducted and then embellished in later years with activities. Thus, the strategic planning process is not a one off issue but rather it can be considered as a continuous process.
- To identify purpose and mission statement of the Sainsbury Company.
- For accomplishing the mission statement the goals of the organization is to be selected for meeting the purpose (Armstrong & Kotler, 2006).
- Specific action plans need to be identified by Sainsbury for implementation of each strategy.
- Finally, the plans are monitored and updated by getting the positive feedback from Sainsbury’s customers.
Classify the four levels of management in a diversified company and briefly show the responsibilities of each level of managers to decide and implement Vision, mission, objectives and strategies to achieve goals.
The different levels of management with their respected responsibilities for implementing vision, mission, and setting objectives and for planning strategies can be illustrated with the help of the below table:
Levels of Management
Top level Management
CEO, Board OF Directors
Controlling and overseeing the entire organization. Develop goals, vision, objectives and strategies for the business
Middle level management
Department or Branch managers
Execute organizational plans and inspire and guide the low level managers by forming individual mission statement
Low Level management
Supervisors, section heads
Guiding and supervising employees.
Ensuring quality and quantity of production
Make recommendations and suggestions to the upper level from the feedback received from workers.
Practically implement the strategies and action points by doing the work and by providing services to the customers personally.
1.3 Explain Ansoff matrix, BCG growth-share matrix; directional policy matrices as planning techniques to meet the objectives of shareholders.
For Sainsbury Company, three strategic planning techniques can be suggested to meet the objectives of shareholders.
Ansoff Matrix: Under this growth matrix four strategies can be offered to Sainsbury. As Sainsbury has an ability to serve over one million clients, so it should give customers a replacement product along with existing services. The four strategies of the matrix with different risks are:
- Market penetration – During this phase Sainsbury have to increase its market segments by marketing planning a lot of their services and attract a lot of customers.
- Product development – In this strategy Sainsbury can bring new product or services to the existing market of retailing to attract more customers.
- Market development – In this strategy Sainsbury will increase their market segments to capture new customers by getting into a new product line (Grant, 2010).
- Diversification –This strategy is applied for averting the risks by introducing new product in new market to unfold the risks related to older one.
BCG Growth Share Matrix: In this matrix 4 types of consequences that may be faced by the company can be viewed. By putting products in a BCG growth share matrix Sainsbury may face 4 different market problems as:
- Stars: High Growth and High Market share
- It will need huge funds for which management has to make decisions about source of money.
- Cash Cows: Low Growth but High Market share
- There would be small growth of product in the market but will have large market share resulting in revenues and will make money.
- Dogs: Low Growth and Low market share
- Here, the product stops making revenues and company should stop the project to move on another.
- Question Marks: High Growth but Low market share
It signifies that there would be risk in making Dog product as market share is low and company may incur loss.
Directional Policy: ctional policy matrix acts as a competitive weapon in strategic planning. It helps in allocating resources to each division or strategic business units. It also helps in assessing the future commitment levels to specific divisions. With the help of this tool, first variable that is evaluated is measuring the competitive position and the market performance of Sainsbury. The second variable evaluated under this tool is the business sector. For Sainsbury it will evaluate that whether the particular sector is growing or declining (Gudonaviciene & Rutelione, 2009). The DPM provides a different perspective from BCG Matrix as shown in the below table:
Table: Measures Used in BCG Matrix vs. Directional Policy Matrix
The BCG Matrix
The Directional Policy Matrix
Relative Market Share
Market Growth Rate
Task 2.Be able to formulate a new strategy
Under this Task, for Sainsbury an adequate strategy would be formulated considering the various factors by understanding the SWOT Analysis and PEST Analysis of Sainsbury. Also the significance of stakeholder analysis would be studied for developing a new strategy.
2.1 Carry out a current SWOT analysis (organizational audit) of Sainsbury.
In order to identify the key issues, Sainsbury Company’s SWOT analysis should be done which would help in identification of internal and external factors related to the company. SWOT means strength, weakness, opportunities and threats related with the company. In the context of Sainsbury these can be explained as below:
- Very focused and effective management and staff
- Well managed and all rounded business
- Strong Research & Development
- Effective marketing capabilities like use of self checkout machines for customers.
- Lack of awareness among customers
- Recession Problem and Legal issues
- Narrow Board of Directors
- Absence of strong sales
- Company’s overdependence on only a few key staff
- Company’s overdependence on borrowings and insufficient cash resources
- Great potential in export markets
- Increasing trend of online sales and network stores
- Distribution channels would seek for new products
- Market segment poised for rapid growth so large scope to diversify in related market segments
- Opportunity to enter the markets of emerging countries like China, India, Brazil etc.
- New emerging technologies would make products obsolescent
- Economic system slowdown in market could reduce demand
- Chances of market becoming price sensitive to certain products
- Political influence
- Stiff competition
2.2 Conduct a PEST analysis (environmental analysis) of Sainsbury.
- Due to the fact that retailers like Sainsbury helps in creating jobs in the economy, so such companies are encouraged by the government as they provide facility to the consumers.
- Government supports these retailers as they offer goods at discounted prices to the consumers even during recession time (Ivanauskiene & Auruskeviciene, 2009).
- For fulfilling government laws, Sainsbury will have to follow more and more packaging and labeling policies which will an extra cost burden on the company.
- In UK, the Government has increased the VAT from 17.5% to 20% which has increased the product prices and thereby affected the purchasing power of customers which will have a direct impact on total sales of Sainsbury’s and its level of employment.
- Retail industry is encouraged due to the huge revenue generated by this industry.
- Due to lack of money circulation in the economy consumers resist to buy luxury goods hence consumes would be more attracted towards economic goods.
- Due to rapidly increasing food prices all over the world, suppliers will demand more prices and as a result Sainsbury may increase prices for most things in the supermarket.
- Sainsbury offers incentive to the staff and a welfare system is being developed for the staff.
- Rise in fuel cost may lead to increase in cost of distribution/supply thereby leading to increase in prices.
- The major economic issue faced by Sainsbury is maintaining large pool of human resource for their operations
- Sainsbury should target consumers who are looking at low cost goods
- Rising trend of increasing demand of organic food and halal meat by more and more customers has pushed up Sainsbury’s profitability.
- Sainsbury should expand their business in other countries to explore the new markets there.
- Increasing number of online competitors who offer products at cheaper price as they don’t have retail shops on high street and thus save cost.
- Sainsbury has developed private satellite network in order to deploy efficient supply management system in the organization (Lind, 2009).
- For reducing cost and to enhance reliability, own logistics are managed by Sainsbury from the central hub and city hub.
2.3 Develop a stakeholders mapping of Sainsbury and explain the significance of stakeholders’ analysis.
Stakeholder Mapping: In order to get initial thoughts on the stakeholder community and to form a management strategy for Sainsbury this mapping is done. It will help in identifying specific stakeholder interest against high level activities and potential outputs.
Mendelow’s Stakeholder Mapping of Sainsbury
IT managers, skilled staff, Promotional department staff
CEO , CFO, Top directors
Lower level Employees , suppliers
Stakeholder’s analysis: Generally, there are two types of stakeholders’ i.e. internal stakeholders and external stakeholders. Internal stakeholders for Sainsbury include employees, shareholders and management team. External stakeholders for Sainsbury would include customer, suppliers, government bodies, financial institutions and society. The different roles and expectations of the different stakeholders with regard to Sainsbury is explained in the below mentioned table.
Interests to defend
Managers and employees
Interest/ Pressure groups
Task 3 Understand approaches to strategy evaluation and selection
This task would evaluate all the market entry strategies related to the organic growth and substantive growth of the business organizations. The analysis would show a clear picture to adopt the most suitable approach for Sainsbury in order to gain competitive advantage in the industry and to accelerate its business management growth.
3.1 Analyze the market entry strategies for example organic growth; growth by mergers or acquisitions; strategic alliances; licensing and franchising.
There can be different market entry strategies such as organic growth, merger, and acquisition, strategic alliance, licensing and franchising which can be explained as:
- Organic Growth: When an organization accomplishes development over its own enterprise that is as equal as the beginning of association, it is renowned as organic development of that organization. It does not include any development that is profited by way of amalgamation or acquisition (Michael, 1999).
- Merger : The procedure through which two enterprises join and turns into an entity by lawful consolidation is called Merger.
- Acquisition : Acquisition is the procedure in which one accurate enterprise buys another whole enterprise and assemblies up itself as the proprietor.
- Strategic Alliance: This approach lies between the idea of organic development and connecting or acquisition. In this approach 2 or more businesses acquiesce upon kind of main objectives and share every other’s assets to fulfill those objectives.
- Licensing: It is the procedure in which a mother enterprise (licensor) permits another enterprise (licensee) for using its trademark and thus deals the merchandise or services on the basis of affirmations on many time spans.
- Franchising: It is the procedure through which an organization profits from the agreement for using another company’s trademark, enterprise kind, methods while the franchisor provision the agreement to the franchisee.
Out of the available options for market entry, Sainsbury may adopt for Franchising and strategic alliance model so that it can create its presence in foreign markets. In order to get market share overseas, Sainsbury may use Franchising approach by circulation franchises in distinct locations. Also, strategic alliance for Sainsbury would help in order to gain knowledge of overseas markets. This way Sainsbury will be able to develop business expansion opportunities by connecting to other businesses. Sainsbury can have strategic alliance with the small retailers in the area so as to enhance their presence in urban areas with their small size stores. Here, Sainsbury need to understand the consumer feedback on their newly opened small size urban stores to get favorable and positive response from the consumers for such stores.
3.2 Describe the Horizontal and Vertical strategies, their merits and demerits and select an appropriate future strategy for Sainsbury.
The horizontal and vertical integration strategies are the strategies for substantive growth of business and can be described as:
Horizontal Integration: It is procedure of integrating with the competitors or leading business providing the same goods and services. The merits and demerits of horizontal integration are as:
- Higher efficiency due to less competition and more strength over suppliers.
- Expansion in productivity due to high volume production and thus achieving economies of scale.
- Helps in international trade.
- This approach can prompt monopoly which is restricted by government
- Integration with larger companies is troublesome as they are difficult to handle.
Vertical Integration: It is the process in which the production or distribution of a product or service are controlled by a single company or entity so as to increase that company’s or entity’s power in market (Schultz, 2006). Some of the major merits and demerits of vertical integration can be described as:
- High operating efficiency due to clear lines of authority and a tight span of control.
- The employees have a clearly defined set of functions and responsibilities resulting in their high efficiency.
- Bottom employees will feel less valued than those higher up in the chain.
- Due to centralized control of power, direct impact of weak leadership at the top in the effectiveness of entire organization.
Appropriate Future strategy for Sainsbury
In alignment to perplex the market, Sainsbury needs new notions which can be cooperative for them to flourish the market. So for contemplating future concern they can enquire their market need and come up with some development of the new merchandise so as to diversify their services. Sainsbury should follow the vertical integration by connecting with the suppliers and vendors. Six important strategies can be implemented for Sainsbury as a new strategy and these strategies would include development of a strong brand in retail industry, using data management for having customer oriented culture, keeping cost very low, customer should be heart of marketing, deal suppliers with strategic context and focus on fast & strengthening partnership (Weygandt, 2009). To make benefits through the proposed strategy of Sainsbury it is highly important that staff and other technical resources are enhanced in the organization and proper training is provided to the human resource for their performance improvement.
- For attaining above mentioned end results Sainsbury need to adopt below mentioned stages:
- Sainsbury needs to explore urban markets even with the lesser space stores. These stores could be medical store type and would contain 4 staff members in the store.
- Human resource functions would be strengthened for bringing more efficiency in work.
- Small size store would attract more customer frequency of purchase by offering unique value to the customers and focusing on fast, clean & friendly concept.
- For enhancing customers trust on Sainsbury, consumer safety should be the major agenda while selecting suppliers along with low cost goods.
- Strengthening of R & D Team for accelerating new product launches.
- Final step would be to cut price, enhance volume, add value and attract new consumer segments.
Task 4 Understand how to implement a chosen strategy
4.1 Compare the roles and responsibilities, evaluate resource requirements and discuss timescales.
Roles and responsibilities of master strategist and personnel
CEO of Sainsbury has the responsibility to turn the ideas into reality and to articulate the transcending goals by considering the vision. Director’s role is to lay down high performance standards for each functional unit viz. operational, human, financial and marketing division. Managers’ responsibility is to inspire and influence the workers to execute the policies undertaken with efficiency and effectively. They should well communicate with their subordinates to encourage them to develop their own strategies and to involve them in the successful implementation of strategic plan. Such communication may help in satisfying the accomplishment of targets resulting in worker satisfaction and coherence in job surroundings.
Estimated resource requirements
To understand and evaluate the resources of Sainsbury, the organization has to decide the precise materials and their place within the right departments. This estimation can be done by Sainsbury through cost analysis. In the strategy implementation cost evaluation helps in evaluating the gains and losses from the relevant activities. With the help of assessment, the limited or minimum resources can be utilized fully (Lind, 2009). The cost analysis would help in identifying the resources which will be needed to deliver the interventions. This analysis will help in estimating the direct cost of service provision. Direct cost can be capital cost or operating cost related to service, delivery or other factors. Sainsbury being a leading company within industry must choose the effective materials to confirm the sturdiness and safety of the customers along with timely delivery of services.
Timescales for implementation: The timescale for strategy implementation would be as:
- Quarter 1: Sainsbury needs to explore the outcomes from the implemented strategy and this can be done through customer feedback. Such feedback would help in assessment of their brand strength and impact of implementing the concept of small stores in the urban areas. In the strategic division, line managers would monitor it on monthly basis and the required changes would be implemented.
- Quarter 2:In the second quarter, Sainsbury need to develop the product development strategy by testing it on the urban markets consumers for estimating the revenue generation through this strategy. The response of customers toward the strategy would form the basis of decision making regarding the future of such strategy implementation from Sainsbury.
- Quarter 3: This is a crucial time as Sainsbury have to gather information regarding the end results of the implemented strategy. The outcomes may show that there are gaps in the expectation and actual results. Such difference needs to be sort out by Sainsbury by revamping the strategy or by effective control techniques (Grant, 2010).
- Quarter 4: Sainsbury may organize a education program for the employees in which training would be imparted to them along with the essential resources so that they can perform in accordance with the organization expectations and helps in achieving the objectives.
- Quarter 5: After arriving at the strategy consequences Sainsbury can re -create and modify their strategy. Then Sainsbury need to initiate the events with the training of the workers.
Present paper has explored the evaluation of the strategies implemented by Sainsbury for achieving their strategic objectives. The whole analysis as shown in the present paper has explored the relevance of strategic planning process in defining the aim, vision, mission and objectives of Sainsbury. Moreover, the study shows the issues faced by Sainsbury in strategic planning and various strategic planning techniques suitable for Sainsbury have been well evaluated. In the present paper, stakeholder analysis for Sainsbury has been carried out to understand the different perspectives of the stakeholders. Strategy evaluation has been done by exploring various market entry strategies for Sainsbury. Also, the roles and responsibilities of personnel charged with strategy implementation has been evaluated and the resource requirement estimation has been made for Sainsbury with the timescale required for implementing the strategy. All the assessment has been devised For Sainsbury to enhance the brand image and to explore new market segments in the industry by implementing appropriate strategy for Sainsbury.
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