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Report: Strategic Evaluation
EXECUTIVE SUMMARY
The objective of this report is to address the strategic management process and its relationship
with the retail sector. J Sainsbury PLC, the third biggest supermarket chain in the United
Three main parts are included in Strategic Management, firstly, Strategy Analysis, then
Strategy Formulation, and finally Strategy Implementation. There are different kinds of
strategy analytical instruments to be used to detect the strength, weakness, opportunity and
threats of an organization in strategic management since all organizations face glory and
trouble.
In the retail sector in general, Strategy management is the prevalent plan to explore issues or
Few chosen tools such as Porter’s PESTLE Analysis, Five forces, Value Chain Analysis, VRIO
Analysis, and Strategy Process were further explained and supported in this report.
Report: Strategic Evaluation
A. COMPANY INTRODUCTION
JB, Online Sainsbury, and Bank Sainsbury. A Porters 5 forces analysis further in this report
Its strategy is to work reasonably with all of our providers to recognize the shared
advantages of customer satisfaction. It is a notion which is taken into account in the five-
piece assessment of Porter. They also strive to meet obligations towards the groups and
Sainsbury's goal is to offer "excellent service to clients and thus offer excellent and
sustained economic returns to shareholders. They seek to make sure everyone has the chance
to develop their skills and are rewarded for their contribution to the business's achievement”.
In the UK, the retail industry is concerned with some of the recent significant
2. At the end of December 2009, the retail sector employed more than 2.9 million people.
3. Retailers are 9 percent of all VAT companies in Britain, with a total of 192,600 presently.
The five forces analyses of Sainsbury are taken on board in this section of the report.
We will also address the goal in which the five Sainsbury armies function, a subject which is
insights
Most of the factors that could affect a certain company likely exist. These factors
challenge will be to compete with unknown forces and provide the world's best quality /
financially viable products. Through joint ventures or partnerships, St. Sainsbury can
explore these fresh markets on the markets of emerging companies, although there are no
plans to do this.
2. The continuing pricing research of the four large distributors in the UK may have an
adverse effect on business as a whole as Sainsbury is at the forefront of this claim. While
Sainsbury is very well known among customers, such claims can lead to an adverse
3. In the United Kingdom, the government is set to reduce the corporate tax rate from 30%
to 28%, thereby saving large businesses, such as important funds from Sainsbury.
1. The fast-growing global food crisis has boosted worldwide food prices and will lead to
higher cost purchases for Sainsbury. This would affect the organization's margins and
Report: Strategic Evaluation
could lead to an increase in prices for most products in the supermarket overriding the
costs for customers. In addition, the increased cost of petrol will have consequences
2. Credit crunch may affect Sainsbury twofold as it also works as a financial service
business with HBOS. The credit crunch can decrease the buying power of consumers and
can still be more cautious, even though they buy something vital. You can also spend less
on luxury products, which Sainsbury has a higher profit margin. The credit crunch in
Sainsbury impacts its capacity, particularly as it is not established in the financial services
3. Strong rivalry across all retail segments has led distributors to offer customers many
incentives. This will affect Sainsbury, because prices must most of the time be reduced.
1. Nowadays, fresh and easy cooking appears to be more emphasized. This provides
2. Government support for healthy eating has been highly emphasized, mainly because of
the growing obesity in the UK. Many customers have therefore shifted to healthier foods.
This offers Sainsbury the chance to stockpile healthier and safer products than other
1.2.4. TECHNOLOGICAL
that the internet retail market will reach Eur263bn in 2011, with more than one-third of all
grows quickly. When cleverly used, Sainsbury can benefit from the internet. Competitors
such as Tesco effectively use their own model for internet delivery. However,
Report: Strategic Evaluation
2. The queuing system clients are often at the checkout, is one of the downsides to
supermarket shopping. Asda and Tesco use automatic check-out machines, particularly
for clients who have only to queue for very few things can assist to fix this issue. In
addition, in the opening magazines of Sainsbury, self-checkout machines could assist for
3. Although not yet popular, RFID technology can be used for significant benefits for the
Sainsbury supply chain. When this technology is used the supermarket companies will
inventories.
1. The role of large businesses to reduce the carbon footprint and increase energy efficiency
has been highly stressed by Western businesses (Bream 2008). The problem is no longer
backburner, and each company will have to show that it reduces its environmental effect,
which means that Sainsbury will need to invest more in green problems.
2. Sainsbury has obvious implications for other significant ethic problems, such as the sale
of organic food and the ethical treatment of livestock. These problems are becoming ever
more important and must be addressed to both those customers and the price-specific
customers. This is a delicate problem because they will have to balance the public's
1. Sainsbury's will have to follow increasingly rigorous regulations on food and drink in
order to cope with packaging and labelling, an economic burden for the business that will
add to it.
2. Due to its interest in the financial services sector, the activities of the Sainsbury bank
continue to be subject to increasing legal scrutiny, which implies that there is more legal
After analysing PESTLE on Sainsbury, it can be concluded that the firm is influenced
significantly by the outside setting, because the two primary variables are elevated inflation
and increasing unemployment. The efficiency of the company's initiatives against these
The five analytical forces of Michael Porter are called sector evaluation factors. These
1. With a very crowded market, the retail industry is highly competitive. More and more
industries.
2. Sainsbury's market share in 2007 was 14.9%, and has been steadily growing since its
reorganization program began in 2004. This is a favourable trend but it is well behind the
3. The other 3 large supermarket chains in the UK's retail industry are Tesco, Asda and
Morrison. They all have a competitive advantage over their rivals. The reach of Sainsbury
4. Banks and construction companies compete with Sainsbury Bank, but Sainsbury does not
1. There are a number of variables that make access barriers exceptionally high on the food
retail industry. Firstly, organized retail is among the most advanced industries in the
United Kingdom and requires important investment, together with important brand
growth. Secondly, in Britain and most of the Western globe, retail is also developed, so
2. In the food retail industry, local expertise is highly important, which foreign companies
find hard to reproduce. The existence of a few worldwide stores in the United Kingdom
confirms this.
1. In food retail sector, the risk of replacements is narrow merely because customers see it as
3. The only significant risk of a replacement is an inner threat to the sector, which allows
1. The purchasing power in this sector is high merely because so many of the rivals sell the
2. With a further recession in the economy, the demands of customers are likely to increase
1. The strength of the supplier is generally more complex because categorization is hard.
themselves are large firms with enormous brand attraction, such as P&G, Unilever,
Cadbury and others. However, if large companies ' goods do not reach supermarkets, their
2. Because of its sales volumes of these supermarkets, the supplier strength of smaller
overview of how the company's profitability in the retail sector affects. They can recognize
changing trends soon and can react quickly to take advantage of the emerging chance.
Sainsbury PLC’s executives can shape these forces in their favour through a detailed
3. Rising food prices over for sustainably sourced animal industry brings employees
own labelled products. animal products origins e.g. and delivery assets.
position. S3+T2: Can afford to prepare grow own brand, offer more
share scheme. It proposes to finance its “cash contemplation… through its current debt
services and resources, to be completely refinanced at a future date through the planned
transfer of HRG’s Financial Services business to Sainsbury’s Bank”, and share deliberation
Sainsbury’s seems to have surface with a wily financial plan to lessen the cash
payment. This includes overseeing the £200 million profits from HRG’s sale of Home-based,
and exhausting £250 million in cash from Argos’ balance sheet (Hope K 2016). It will
increase another £600 million from investors in its own bank to credit a book of “buy-now-
pay-later” finances from Argos in view of boosting Sainsbury’s Bank’s balance sheet.
Erstwhile to the statement of interest, HRG issued two profit warnings in three months as
Argos’ sales clashed amongst dangerous rivalry (Denicolo 2016). The hybrid cash-share
attainment of Argos ‘by disbursing with impartiality of the newly amalgamated group’
proposes that Sainsbury’s is trying to evade threats by procurement liquidity, at the same time
as guaranteeing that Argos undertakes some of the risks presented by the endeavor.
2.2. VALUATION
The relationships of the contract remain unaffected from Sainsbury’s planned offer,
nevertheless the estimate of HRG is no longer based on the final price of Sainsbury’s shares
on February 1. Sainsbury’s will pay 55 pence in cash and 0.321 of the joint business’ share
for each of HRG’s share, valuing HRG at £1.2 billion, or 143.7 pence a share based on its
HRG stockholders are allowed to a distinct dividend of 25 pence a share from the
£200 million return on its Home-based sale and 2.8 pence per HRG share in place of a final
dividend for the financial year that ended February 27, subject to HRG board resolutions.
A proper £1.4 billion bid for Argos has thus been issued, in lieu of approximately 74
per cent to the closing price of 98.7 pence per HRG share on January 4. With usual premiums
being 30-50 per cent, Sainsbury’s may be eager to pay up to 75 per cent premium in sight of
the collaborations.
The HRG’s board has decided to indorse Sainsbury’s bid to its shareholders in
contemplation of the offer, which is made provisional on gaining 90 per cent of HRG
shareholder provision and controlling approvals from the Financial Conduct Authority, the
Competition and Markets Authority and the Guernsey Financial Services Commission.
Sainsburys also faces a number of hazards from brand switching, just like most retail
products. Despite loyalty schemes and promotions. Sainsburys finds the retention of clients
still difficult.
Argos would allow Sainsbury to speed up non-food deliveries and extend its
electronics, devices and toys range. The shutdown of some Argos shops, the sale of the
Sainsbury products in others and the opening of more Argos concessions in its supermarkets
As competition in the retail market grew and online retailers increased risk, the
majority of distributors lost volume. Sainsbury tried to cut expenses and maintain rates below
The retailer also has to invest in the shopping experience, which is a key factor
technologies are a fundamental precondition, along with large narrow alleys, multi-story
parking facilities, trained and well informed retailers, each at an additional cost.
STRENGTHS WEAKNESSES
employees
store teams and makes Sainsbury’s, the second largest player within the sector, less
Combining Sainsbury’s and Argos can forge a bunch providing over one hundred,000
product from a pair of,000 stores, larger than the united kingdom consumer goods and
general merchandise business of Tesco (TSCO.L), Britain’s biggest distributer, John Lewis
[JLP.UL], Marks & Spencer (MKS.L) and Amazon (AMZN.O), that is quick increasing into
“Our customers need North American nation to supply additional alternative, that
option to be quicker than ever, driven by the increase of mobile phones and digital
Sainsbury’s puts forward the opinions that obtaining Argos will support it to improve
sales growth, increase its total number of sites to 2,000 as well as businesses and click and
collect points, gain innovative admittance to delivery networks and deliver the chance to sell
their merchandises to each other’s clients. Chief benefit of all specialists say, could be
In late 2012, Argos exposed its operation to re-form itself as a “digital retail leader”
through its progression of technology-based catalogue. In 2015, Argos benefit from £10
million into additional increasing its delivery services to bid same-day delivery.
The agreements of around 40 per cent of Argos’ stores are in line for renewal in about
four to five years. Sainsbury’s recommends to shut and move about half of these stores into
adjoining Sainsbury’s stores. It says, that this will increase synergy recognition by £160
million by cutting property savings, legal, and organisational costs. Coupe recommended that
In comparison with significant rivals in its identical activities, the Sainsbury value
chain analysis is shown in the table below. Sainsbury posted net profit last year of £614
million and total revenue of £23.6 billion. As described in the following porter’s value chain
table, Sainsbury sells a variable variety of products, including food products, clothing,
QUESTION-3
STRATEGY EVALUATION
Anthony Henry (2008) mentions that Suitability, feasibility and acceptability can help
managers to be explicit about any assumptions that may underpin their strategies.
Suitability: The plan is or is not an organization appropriate for the modifications that
assist the organization overcome problems or that assist to enhance the organization. An
organization will assess how well the approach meets the requirements recognized in its
strategic assessment. The strategy, the possibilities in the external setting, the
organization's resources and capacities and organizational goals should be coherent (Juha
Kettunen)
guarantee that it has the resources and skills needed to execute the strategy, such as
Acceptability: This acceptance criterion deals with the stakeholders ' reaction to the
approach proposed. It must clearly be supported by those who will be the most impacted
In short, the next step will be the application of the strategy after the strategy has been
finalized. Usually implementation after the strategy has been formulated is regarded,
DELAY
The UK's competition regulator has indicated that it will investigate the HRG
"substantially less competition within any market or markets in the UK for goods or
Report: Strategic Evaluation
July 25.
The agreement is submitted to finalize in the third quarter of the year, presuming that
there is no significant involvement of the CMA. There are however concerns that the deal
may be crazy by a long wait for regulatory approval is obtained. HRG's finance director
Richard Ashton said that any feedback will likely be some time in August, therefore, the
effect of jeopardizing the finalization of the agreement by the end of the summer.
MARKET COMPETITION
Sainsbury's has suffered an anticlimactic fierce market competition, as Aldi and Lidl
have enticed customers with their discounts. It is warned about the imminent hard times after
the announcement of a fall of 14 per cent in underlying profit. Sainsbury's made £587 million
in the year to March 12, down from £681 million last year, and £798 million in the year
before that. Kopp indicated that he does not perceive an end to the price war, "as the market
is extremely competitive and it will remain so for the foreseeable future". This evidence of a
compatibility risk as it begs the question of if Sainsbury's is running its business well to add
Amazon recently launched its pantry-next day delivery service, which currently deals
only in domestic needs, but an expected entry in the grocery sector this year, possibly
entering into full grocery delivery (Davey 2016). The Economist Intelligence Unit's chief
retail and consumer products analyst, Jon Copestake suggested that Amazon can do the
conversion in a big risk "offer(ing) a whole host of different products". It can impel 'Big Four
SALES REDUCTION
Report: Strategic Evaluation
its online delivery services by using Argos’ pre-existing infrastructure “...could solve
profitability challenges, and persuade more people to adopt a multichannel grocery shopping
PROFIT UNCERTAINTY
April 27, HRG listed a fall of 28 per cent annual profit, and an underlying pretax
profit of £94.7 million for the year to February 27, down from £131.1 million in the previous
year, resulting in tight markets and increased investment. It exceeded, however, the analysts'
average forecast of £93 million (BBC News Business 2019). HRG's sales fell 1% to £5.67
billion, its shares, which were up 71 per cent this year, went down 0.6 per cent to £169.3
Pence, and even further down to £166.9 Pence on 31 may; well below the operative £172
The benefits of the deal to Sainsbury's clear appears. In particular, some analysts is
considered, the more the estimated price tag as well as the Argos' slow selling and outdated
concepts as The elements that affect the basis for the occupation (Bruslerie 2016). Coupe
recently disregarded the trepidations that Argos will take Sainsbury's down market, stating
that there exist plenty of links between both institutions' customers and that a small number
INTEGRATION STRATEGY
Coupe intends to clear run as Sainsbury's and Argos, but insinuated during a press call
on March 18 that due to the administration's strategy is to a head office for both agencies to
avert duplication of roles. Despite the uncertain prospects for persons with head office role,
he also stressed that "(Sainsbury's) preceding more jobs, not less jobs".
Report: Strategic Evaluation
Head office promotion of the group strategy, with strong management of strategic
business units which are expected to realize this strategy. The removal of certain head office
roles might be harmful to either of the joint institutions of major success. An example is
Morrisons and Safeway (Fenton S 2016). The loss of Safeway's key management staff of the
individuals, especially with expertise on, among other issues, made it difficult to integrate the
two businesses and the performance of the group was deeply impaired.
DIVERSIFICATION
The above is a direct link with the Ansoff's matrix the concept of diversity. The
strategy of the plan can apply the theme or if the entity to risks in the emergence of new
markets, the need to create new products. Although both institutions belong to the retail
industry, they deal mainly in various goods. It is a condition that there are major
administrative staff of either the entity that understand the business, and possess the expertise
and know-how.
RECOMMENDATIONS
My advice is that Sainsbury's appropriate due diligence on the profitability of the deal
is required. This can be done by opening more than a handful of discount stores to evaluate
Sainsbury's needs to ensure that it retains both entities' key management to ensure the success
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Report: Strategic Evaluation
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