Introduction to Strategic Management
In today’s competitive business environment organizations give much of emphasis in strategic planning so that novel ideas can be developed and ultimately business goals can be achieved. Strategic management provides a way to assess the prevailing business condition and anticipated future so that strategies can be framed accordingly (Schläfke, Silvi and Möller, 2013). Strategic management is a consistent process that helps individuals to attain resources in a competitive environment and scope of corporation so that companies can avail opportunities and meet the demand of markets and expectations of shareholders.
An organizational strategy can assist in developing fate of a corporation so that innovative products can be created and competitive edge can be attained. Here, in this study a detailed analysis has been accomplished to understand the various attributes of strategic management and its role in business (Enz, 2009). In this respect the organization chosen here for research is Sainsbury the leading retail corporation of UK. It is the third biggest supermarket company of UK which is mainly committed towards range of safe, fresh and healthy food offering in quality and fare price according to the requirements of customers.
Sainsbury has expanded its business with a range of novel combinations that includes new stores, retail services by focusing on consumer needs and it has diversified its business with range of electronic items and insurance services. This retail corporation is now focusing towards one stop shopping so that buyers can purchase all the items in one single roof and have now expanded its operations in several countries.
Task 1: Strategic issues in Sainsbury
In the current business environment every corporation has framed certain type of strategic ambitions that they wish to achieve for long term and it includes company’s mission, vision, goals and main purpose for which business is being set up (Boyd and et. al., 2012). Strategic objectives provide a vivid direction to company in order to move ahead and helps to flourish the business. In this context it has been observed that during the accomplishment of business goals Sainsbury corporation faces range of issues that impacts on business operations and need to be given due consideration prior to enforcement of any new strategy.
As the mission statement of Sainsbury states that the main motive of company to become consumer’s first choice in food, delivering goods with optimum quality and great service at a competitive cost so that work can be carried out swiftly. The core purpose of Sainsbury is to provide range of goods at an affordable price and achieve long term loyalty of consumers so that profit can be maximized. To achieve all these company has framed a differentiation strategy and it believes that includes the implicit and explicit value of company (Bettis, Gambardella, Helfat, and Mitchell, 2014).
But as the business seeks to move ahead it increasingly faces complex set of issues that need to be addressed in business on behalf of buyers. The most adequate thing to undertake business activities is not much clear and many of the time create issues. In Sainsbury management has framed a range of approaches so that information can be availed and changes can be consistently managed so that long term business goals can be achieved. The retail giant faces lots of issues that are associated with business and most of them are very complex in nature and are interrelated in nature.
Management head of organization understands that it is vital to tackle several issues as well as understand the attributes that is significant to undertake business activities. In this respect it is crucial to manage work in partnership with major stakeholders that involve government bodies as well as customers to assess the most suitable issues (Jeffs, 2008). Other than this a consistent need to manage issues which are being created due to environmental and green aspects of business. In this the problem lies in establishing a balance as bio fuel is a significant tool to manage global emission so that supply chain can be directly supported.
The operations of company are entailed towards a broader spectrum so that regulatory needs can be managed with respect to planning, competition and environmental issues over a range of goods and services. Sainsbury has faced range of issues over the years and have managed to effectively tackle them. It has involved with range of stakeholders in order to ensure that they fully comprehend issues and their view points (Santos, Mason and et.al., 2007). Other than this management also undertakes research to comprehend about major issues of its buyers and review them consistently to evaluate their impact on business and frame plans so that long term goals can be achieved.
Task 2: Importance of integration thinking and its implementation in Sainsbury
In the global market environment integration business approach plays an important role in taking most suitable business decisions and is being used to develop most prominent decisions so that corporate goals can be achieved. Integration business includes a set of business activities to work in a coordinated manner and is being built to manage in a stable business environment. Sainsbury has developed an integrated business planning process that refers to technologies, applications and associated process to connect with the planning function so that business can be improved with corporate association and managing financial performance.
This approach is being used in company in order to cross train management and its employees so that barriers in communication can be reduced and additional supplier cost can be minimized. This process helps business to streamline its entire process and lower down the overhead and personnel costs by lowering down the additional staffing costs (Wheelen and et.al., 2011). In order to acquire a detailed analysis on the company’s actual position here in a PESTLE assessment of industry has been undertaken in which the company is operating. PESTLE analysis is a framework being used to determine the organizational external business environment.
Political - The political situation in UK have a great impact on performance of business and presently in UK the rate of debts on government and consumers are consistently high. This ultimately impacts on the attitude of buyers and hence business experience increased pressure. Sainsbury has to operate in a market situation and need to develop its business consistently. However, the political situations are not much favorable and company has been able to sustain due to its varied products offered at a reasonable price. Other than this increased globalization also bring challenges in the political environment of retail industry of UK (Hodgkinson and Healey, 2011).
Economical – Economic factors in retail industry impacts on the demand, cost, prices and profitability of business. In this regard the global economic slowdown and rising inflation in food prices could be a major threat for business. With increased unemployment in business the demand for products of company might lower down and it ultimately hamper entire process of production, all this will in future increase the food prices and rate of unemployment. Other than this the leading economic factor that impacts on Sainsbury is the global credit crunch as people have less purchasing power and consumers will spend carefully (Neieborak, 2013). The rate of unemployment level in UK is also rising consistently and it can pose an increased threat to business as the labor cost need to be managed effectively.
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Social – In current market situation most of the people prefer to avail one stop shopping and like to have all the products in one single roof. For this Sainsbury has brought in non-food products items as well that has benefitted company largely. Social factors in UK retail industry also give attention on increasing female workforce that has mainly resulted into lowered domestic meal making (Amit and Schoemaker, 2012). It is the social trend that company needs to keep up with respect to consumers in business.
Technological – It has a positive impact on retail business operations as there is a significant level of growth potential available in the online market or web based operations. Technology has enabled business like Sainsbury to expand its capacity mainly in the rising demand sector. Sainsbury gives prime attention on this and has expanded its business through online food delivery services and consistently improves its services.
Environmental – There have been increased pressure on companies and management to act in a socially responsible way so that environment can be safeguarded. For this Sainsbury gives much of emphasis on its CSR activities and have implemented that approach of reuse, recycle and reduce so that waste can be minimized and recycling can be done. Other than this company can also contribute a lot in reduction of carbon emission and manage green issues (Palmer and Hartley, 2009). There are many ethical issues that are aligned with retailing such as selling of organic food items and reduce wastage.
Legal – The retail industry of UK is well bounded with different legal issues such as the wage policy of nation, discrimination and fair treatment of employees and selling of alcohol based products. Sainsbury need to manage all the legislative policies being framed by government that includes employment, competition and consumer laws. With the rising competition in UK retail market Sainsbury seeks in to respond carefully in order to manage the challenges that company is facing as the market is becoming intense day by day.
Task 3: Internal analysis of Sainsbury
The UK retail market is at a critical stage and company has to undergo through a range of issues mainly that occurred due to the global recession. There are several other brands that give intense level of competition to Sainsbury and in this respect management need to bring in novel products so that it can attract large pool of buyers (Punzel, 2011). Sainsbury seeks in to respond effectively towards the marketing challenges as well as the internal issues that company faces within the organization.
The internal attributes of a business prominently impacts on business success and approach of operations. Here, in this respect it is crucial to manage all these factors and assess the probable opportunities so that internal issues can be minimized. Sainsbury also faces range of challenges due to its internal business attributes and those needs to be given much of emphasis, here in this respect a detailed SWOT analysis of company has been carried out.
Strengths – The biggest strength of Sainsbury is that it is the biggest retailer of UK and possesses a market share of 16% in the retail sector. Company offers a range of goods in a convenient manner to buyers. It gives the buyers to avail a one stop shopping experience and also provides effective post sales customer service (Hill and Jones, 2009). Company also gives a considerable amount of time and importance on environmental issues. Other than this organization also holds a strong financial strength that ultimately gives a cash generative business and offers its customers 10% discount and develops an organizational environment in which employees can enjoy the work.
Weaknesses – One of the major weaknesses of company is that it does not give much of attention on extension plans of business and is manly concentrated in the market of UK. Due to this if any problem arises in UK retail market Sainsbury faces intense loss and many of the times it creates complex challenges for business (Sedlak, Ćirić and Ćirić, 2013). Other than this company also possess weaknesses with respect to its technological attributes and challenges is still prevailing in the online shopping mode of company.
Opportunities – As the retail market all around the world is experiencing a change there has been an increased demand for more of healthier and organic variants in food items. People mostly prefer to avail healthy food due to increased cardiovascular diseases and in this respect Sainsbury has brought range of goods in this segment. But still there are huge growth aspects through which company can attain increased growth. Other than this there is an increased opportunity for Sainsbury to foster its business in the online shopping market which is consistently rising and management needs to maximum of attention on this attribute.
Threats – Company faces intense level of threats from several other competitors that are providing services at a competitive price (Keupp, Palmié and Gassmann, 2012). This wide range of competitors present in the market brings intense level of challenges as well as threats for Sainsbury. Other than this there needs to be consistent investment on diverse environmental issues that other players are already undertaking and have acquired a positive brand management in the market.
From the analysis it has been found that the Sainsbury clearly articulates its mission in its strategies and uses a unique approach to achieve organizational goals (Harrison and John, 2013). The company needs range of resources like financial, human and marketing in order to acquire its strategic goals and every need can be attained. It truly articulates about the customers and employees needs and also helps to motivate the workforce and achieve long term business goals.
In this regard company truly articulates its mission statements that give attention on enhanced food items at a suitable price. Other than this its mission also states to accelerate growth of non-food items and services, increasing space for supermarket and achieve maximum number of customers (Larsen, Tonge and Lewis, 2007). The leaders of company play an important role in achievement of long term business goals and possess adequate competencies as well as skills to manage business issues.
In order to sustain in the competitive business environment Sainsbury possess a valuable and unique resources and gives attention on competitive edge while enforcing its strategy. In this respect it has been found that strategic capabilities and competencies help to manage the resources effectively. Sainsbury possess a threshold capability in order to sustain in the sector and it is mainly associated with the overall success of business. Other than this Sainsbury need to provide a customer friendly atmosphere that will help to attract large number of consumers.
Moreover, core competencies are the prime ability of Sainsbury to develop a chain within the corporate structure of company (Kenny, 2012). The major resources and success factors are the important attributes that gives direction in achievement of a competitive edge and have a strong influence on the marketing and distribution aspect of company.
Task 4: Strategic choice for Sainsbury
Presently, Sainsbury provides a range of products and services in its segment, but in the target Market Company needs to increase its sales and productivity level. This retail corporation is facing intense level of pressure from the increased globalization as well as needs to undertake consistent analysis so that suitable pricing strategy can be framed (Six coordination mechanisms, 2013). Sainsbury possess the strength of market leadership and is operating in a competitive business environment.
The increase globalization pressure have brought several challenges for company and it has ultimately resulted into increased purchasing cost for company and it has directly impacted on the supply chain management of company that mainly leads to increased competitiveness. Sainsbury also faces intense level of challenges from its competitors and as it is only popular in the UK market due to its unavailability in other segments (Hussey, 2000). With the changing business environment it has become crucial for company to give attention on its available strategic choice and attain a leading position in the industry need to give attention on its strategic abilities so that novel choice can be made.
Sainsbury need to give much of emphasis on bringing novel products in new segments that will serve as an opportunity to encourage business activities. Other than this there is an increased environmental factor that needs to be given priority like reduction in carbon footprints and rising energy efficiency. The tools of structuring business and framework of strategy are the main key to evaluate prevailing business conditions. There are ranges of options available that can provide as an important factor for strategic ability and Sainsbury’s strategic options are based on primary market goals that gives focus on diversification and development with the advent of novel goods (Lumby, 2000).
The market development strategy of company acts as a key driver for growth in business expansion and the market tend to reflect to about the rising retail business. Sustainability of the business with market development strategy is one of the best approaches and it is associated with possible level of business. Other than this the Ansoff Matrix also provides approaches for strategic choices and it need to be considered to manage business and realize that domestic development will help to manage issues.
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Sainsbury need to develop adequate strategy in order to acquire a competitive edge in the market. In this regard there is a need to frame strategic direction within company so that retail corporation can acquire assistance, it can be done by implementing adequate business strategy models like BCG and Ansoff matrix (Katie, 2013). This approach includes range of growth strategies through which precise mission of company can be attained. In this respect here in Ansoff matrix of Sainsbury have been discussed.
Ansoff matrix is a useful tool that will provide a way to structure the different options available, while applying this in Sainsbury the strategic options can be seen as organization need not to shift in a diverse quadrant matrix. On the basis of prevailing situation in Sainsbury, it can be said that there are two pathways for company to adopt i.e. through product and market development strategy (Rhodes, 2011). In product development strategy Sainsbury has a huge loyal customer base and it suggests novel service product through travel and tours that offers these consumers to utilize another approach in service with trusted name.
In the market development strategy Sainsbury can venture through international market but the step could not be that to keep away and acquire huge success in global market. Sainsbury could venture into global expansion by considering in mind the rising and unsaturated Asian markets (Germano and Stephenson, 2012). Sainsbury can seek in towards novel sectors of business in new product development strategy as it will give a positive effect on the portfolio of company by rising profitability and strengthening the business. Innovation in business will essentially add value and will lower down the negative impacts. Sainsbury can innovate in business by exploring new markets and offering customers innovative services. This approach will provide prominent results as companies need to innovate effectively to achieve a competitive edge in business.
Task 5: Resource implications for implementation of recommendation
By attaining assistance from the Ansoff model precise strategic options can be chosen by Sainsbury so that it can sustain in the competitive market environment. It is through this approach the company can attain several benefits. From the different types of assessment it can be said that through diversification strategy most of the issues can be resolved within management (Mason and Sanders, 2009). It is because with the help of this approach retail company can offer its customers valuable services and can easily target varied age group people and enhance their existing market share.
In market development strategy Sainsbury can expand its operations into areas that are similar to products and services but need to offer goods in a novel market. In similar context by bringing products in new segment customers can be targeted easily with an increased profitability in business. Other than this to effectively accomplish the identified strategic options, Sainsbury would probably require support from other resources as well. It is with the help of these resources the strategic goals and objectives of company can be achieved. Some of the major resource implications for Sainsbury is as discussed below;
Financial – It is one of the most important resources in a company as it helps to manage business finance and direct their efforts in terms of enforcement of new market development strategy in a suitable manner. Appropriate finance will be required in both new product and market development approach to accomplish business activities effectively. In similar way the requirements of buyers can be fulfilled with the demand of finance so that external and internal resources can be utilized (Dess and Gregory, 2005). Finance can be attained with the help of internal resources through which retained earnings can be managed and by issuing debentures and shares to the public so that external sources can be managed.
Marketing – This is one of the most prominent tools in a retail store that helps to undertake the process of communication effectively. In this respect Sainsbury can promote its new products and for novel segments with the help of different marketing tools. In this regard corporation can utilize both traditional and online approach of marketing that helps to advertise about their new services (Linn, 2008). By complying with such type of practices several consumer base can be attracted towards the company that leads to increased profitability and sales in business.
Human resource – For the given strategic option there is a need to be associated with the human resource that might arise. It is mainly because with the help of a competent workforce a prominent service can be delivered
In Sainsbury there is a need to develop strategies and shape them accordingly so that entire corporation can attain prominent benefits and by properly administering them issues can be managed. Strategic management of this retail corporation need to give attention on developing prominent managerial abilities so that increased benefits can be acquired. In this respect Sainsbury need to be competent enough in a identifiable market and carefully manage all the activities as it gives an aspiration for company goals and includes a set of skills so that firm can operate effectively (Dana and Vignali, 2000).
The structure of Sainsbury is divided in such a manner that contains discrete units and various informal elements of corporate activities so that long term business goals can be achieved with an efficient combination of range of elements to create better value in business. Sainsbury being in the third top most retail companies of UK need to develop suitable business model icon so that range of issues in novel geographical locations can be managed with several products and services. In this regard the corporation is seeking to be a value oriented corporation that mainly aims to satisfy customers and enhance level of sales in business.
From the above study it can be articulated that Sainsbury holds a strong leadership position in its sector and company is obligated to pursue its process with the differentiation and cost leadership approach. Sainsbury has been consistently seeking to achieve both with the help of its prominent supply chain management and have effectively developed a positive brand image within corporation. With the expansion approach Sainsbury has achieved a leading position in the industry with increased competition all around world and company is consistently investing to attain increased market share. The analysis provides a deep insight that Sainsbury is one of the biggest retail corporations in UK and in order to remain in this position organization need to enter into new market as well as bring some innovative products so that demand of consumers can be fulfilled with increased profitability.
This study provided immense knowledge on various approaches of strategic management which basically helped to manage resources and develop business activities. In this aspect there is a need to give attention on financial, marketing and HR unit of corporation so that process of strategic management can be streamlined properly. Through a prominent business strategy Sainsbury can initiate diverse plans and ensure that open communication is being maintained the firm as well as effective leadership. Other than this by setting up a prominent framework in order to set up the goal framework proper decision can be made that will further help in making required changes so that progress in strategies can be consistently monitored.
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