INTRODUCTION

Sainsbury is the envy of any family business, started from a simple family business and has smoothly transited from one generation to another even through crisis. This is however not the main source of envy, though knocked of the perch by a strategic Tesco and later by the big money Asda, Sainsbury is still a brand to identify with. The retail store that is well known for its groceries has been able to maneuver through turbulent times guided by its values which are; best food for health, sourcing with integrity, making positive difference to our community, respect for the environment and a great place to work. These values are the backbone of the company and it’s upon them that the objectives that are the recipe for success are built upon.

Task 1

ORGANIZATIONAL PURPOSE

Virgin Group Limited

Virgin group of companies is a worldwide recognized brand most notable for their air travel services under its Virgin Atlantic brand. However few people know of the small beginning of the $24 billion brand. Just like Sainsbury, Virgin has a small start however not in the line of business that it is involved in today. Richard Branson, the group’s entrepreneur invented the brand in 1970 as a record seller and the name was inspired by a colleague who referred to them as virgins in business (Milmo, 2012). This was later followed by the launching of the virgin record label in 1973 which Branson sold two decades later. The launch of one of the current and most successful brand happened in 1984, the Virgin Atlantic airline.

The brand has grown to be the leading international investment group and is involved in successful ventures in the mobile telephony, travel, music, financial services and health & wellness sectors. The company most successful ventures have however been the travel and mobile telephony brands while the wellness sector being the least known. The company which operates in over 50 countries continues to expand its operations with the most recent focus being on the Australian healthcare industry.

            Sainsbury

This is a retail business which has a number of subsidiaries and its main business is grocery related retailing in the UK. The company has recently been ranked the second largest retailer in the UK with a turnover of over £23 billion and is only second to Tesco (Rigby, 2013). The business’s success is accrued to over a century of consistent quality and freshness in their products an attribute that has not been matched over the centuries and also operates an online grocery and general merchandise operations. The company also boasts of an effective supply chain with an enviable number of networks which have been developed and nurtured through the years and are actually identical to the company.  The company is also involved in financial services and property investments. The major financial service investment is Sainsbury Bank which is a joint ownership between the company and  Lloyds Banking group and the properties partners are British Land Company PLC and Land Securities Group PLC with whom Sainsbury owns two properties.

            McDonalds

McDonalds is the world’s largest hamburger fast food restaurant chain with outlets in over 119 countries. The chain which started as a simple barbecue restaurant has made tremendous growth both in customer base and outlets totaling to over 35,000 outlets and over 70 million customers in a single day in the America’s fast food chain 74 years existence. The Oak Brook based company terms itself as the premier franchise company has over 80% of its restaurants owned and operated by independent individuals. The company offers a wide range of fast foods ranging from burgers and sandwiches, chicken and fish, salads, desserts and shakes, breakfast and beverages. The company also provides food quality and nutritional compositions for healthier customers

Just like Sainsbury, the company started small as a family business as a drive in California 1940 and since then has experienced tremendous growth just like Sainsbury. The company’s growth started slow but picked up pace after the company appointed its first franchisee and later expanded its operations to international reach. The company has however maintained its line of business and is still a fast food seller though it has expanded the variety of products on sale.

            National Health Services (NHS) England

NHS is the major health provider in England which has been in operation since 1948. The service which is funded by public funds aims at ensuring healthcare is available to all regardless of wealth and the only exceptions are optical, prescription and dental services. The service provider employs over 1.7 million people and is among the top 5 employers of the world. The main duty of the organization is to provide all health services ranging from antenatal screening, emergency treatments, transplants and end of life care for free to all UK residents. The system is attributed to a number of benefits in the health sector since it has contributed to health improvements, has ensured equal access to health care regardless of social group, ethnicity or income bracket and cost effectiveness.

            Corner Shop

The corner shop serves as one of the most important businesses in our daily lives due its level of convenient and close proximity to our residence. The businesses which are usually owned and run by one individual form a crucial part of our economy and more specifically are of importance to the city councils. The shop stocks almost everything that is needed in the households in small quantities and frequently replenishes stock. The shops can actually be referred to general merchandise however some of them are generally oriented to edible products.

Task 1.2

            Sainsbury’s Objectives

Being in business for almost a century and a half and sustaining success throughout the period is not an easy task. It takes the support and effectiveness of all the stakeholders, an occurrence that can only be guaranteed by a well drafted and followed set of organizational objectives. The company whose most efforts in the recent past have been directed towards the supermarkets as it tries to challenge Tesco for its former position is guided by a number of objectives which also form part of the strategy.

The first objective is anchored on the long term visions of the company and it aims at growing space and creating property value. This is to be complemented by the second objective which is developing new businesses. The company’s third objective is provision of complementary channels and objective. This is aimed at maximizing the convenience of the consumers through the use of the online grocery or by visiting a supermarket or the nearest convenience store. The other two objectives are great food and compelling general merchandise and clothing both of which aim at ensuring quality of the products.

The above mentioned objectives are the guide of ensuring satisfaction of all the stakeholders with the customers taking the bigger share of the objectives. Customer objectives have been achieved through the consistent pursuant of quality by Sainsbury. This is evidenced by the research that has been done so as to produce the best products for the grocery as well as other merchandises such as clothes. The company is also very selective on the source of products it sells such as the potatoes from Senegal. The consumers have also been assured of convenient shopping through the various platforms that the giant retailer offers. The company has also indicated of its plan of providing a compelling collection of merchandise and clothing so as to provide the consumers with a variety which is of the highest quality. The other group of stakeholders that the company is responsible to is the group of employees. Among the company’s values, there is one that states that Sainsbury is a great place to work. This has been proven to be on the best ways of motivating the employees as it provides them with the right environment for optimum production. The company also recognizes the value of its employees and does not actually refer to them as employees but colleagues. The company does also have one of the most effective top-down communication channel dubbed “tell Justin” scheme which allows the junior employees to communicate with the senior executives easily (Allen, 2010). The employees also have the pleasure of all their suggestions being recognized and some implemented.

Being a public limited company, Sainsbury has a responsibility to all the shareholders. The shareholders main objective is dividends that can only be given after a profitable year therefore profitability is a responsibility. The company has consistently been profitable for the last decade with profits increasing year after year with last year’s profits being £275 m and the current period half year profits being 16.3% higher. The company’s share value has also improved considerably after taking a plunge in 2011 to 326.10p. The company’s 20 × 20 plan is another factor that should be fulfilling to the shareholders. The company has also taken special interest on its responsibility to the society. The company was the sponsor of the Paralympics games which was a major gesture of the appreciation. The company has also been on the lead in advocating for the use of clean and sustainable energy whereby the retailer has installed over 82,000 solar panels and uses recyclable bags from recycled material. The company has also been advocating for fair trade which ensures that the farmers are not exploited.

Task 1.3

            Responsibilities

In its website, Sainsbury identifies five key areas whereby the company shows its responsibility that also double as the company values. The first area of responsibility is food and health whereby Sainsbury indicates in its mission that it will provide healthy, fresh, safe and tasty food in its supermarkets (Dobkowski, 2010). This is backed up by the concerted efforts of increasing healthy varieties on the shelves such as British pork. The giant retailer has also gone out of its way and has labeled the amount of calories on its own brand of wines in the effort of promoting healthy living for its customers.

The second type of responsibility that Sainsbury upholds is in its sourcing procedures. The company is a great advocator of fair-trade a factor that is actually seen in its sourcing of items such as bananas. A good example is the ‘women’s coffee’ which is a product of fair-trade coffee that is actually grown by women in Rwanda. Sainsbury has also been involved in a series of campaigns to promote homegrown products which both an ecological and social aspect as well as an economical aspect due to the reduced transportation cost.  Talking of ecological aspects, the company’s environmental responsibility went a notch higher after the company launched two ‘Triple Zero’ stores which are among the most environmentally friendly stores in the world. The company has also been campaigning for reduced wastage so as to reduce the environmental pollution caused by the wastage and more importantly the pollution caused during the disposing process. The employee responsibility has also been considered as the firm has been involved in talent scouting activities to make sure they have the best talent in the market working together.  The company also involves the colleagues in sharing of the profits through share schemes with the benefits being up to £10,000 per employee.

 

Task 2

NATIONAL ENVIRONMENT

Task 2.1         

            Economic Systems

Economic systems are strategies and economic procedures that are influence the production and distribution process of goods and services which also involves allocation of scarce resources to the society. The most common economic systems classification criteria is based on the extent to which the government influences the economy either through policies or legislations. The first type is the free market economy which is characterized by minimum government involvement. Paul Samuelson described this model as one that facilitated mutual beneficial exchange between producers and consumers (1966). This economy is stabilized by the free interaction of the market forces of demand and supply. Therefore in such an economy the allocation of resources will be determined by the mutual exchange between producers and consumers or the market forces of demand and supply depending on the type of commodity.

The next type of economy is the command economy also referred to as the controlled economy. In such an economy, the government is responsible for making economic decisions and planning the direction of the economy e.g. Cuba. The plans are implanted through laws regulations and directives which have to be followed to avoid sanctions (Amadeo, 2014). Allocation of resources of resources in such an economy is done by the government a situation which mostly leads to biasness and discrimination. The other type of system is a blend of free market and the command economy whereby the government controls certain sectors of the economy while the others are determined by market forces. In such economies, scarce resources are allocated by the government guided by the market forces. This is the most widely applied economic system as it ensures independence of the market and keeps the government relevant.

Task 2.2

            Fiscal and Monetary Policy Impact

Fiscal and monetary policies are economic procedures that the government uses so as to control or stabilize the economy. Monetary policy involves the use of various economic tools such as open market operations and interest rates to reduce or increase the supply of money in the economy. Fiscal policies, on the other hand involve the use of tax rates by the government so as to influence the direction which the economy is taking (Hansen, 1958). The two policies can either be expansionary or contractionary depending on the intended duty. When the level of inflation is quite high due to high supply of money the government uses contractionary policies which can be inform of sale of open market operations or an increase in interest rates while the opposite is done when an expansionary monetary policy is implemented. Fiscal policies are used to fund government expenditure and therefore a deficit budget may result to increased taxes while a surplus budget may lead to reduced taxes which is usually rare unless when reversing a previous tax increase (Hansen, 1958).

Sainsbury being a retail business, the nature of the economy is usually a determinant of the level of sales that the company will make. The company is also subject to UK taxation rules and is therefore affected by the fiscal and monetary policies that the government may adopt. The application of expansionary monetary policy translates to increased money supply thus resulting in increased sales while a contractionary monetary policy reduced to a decrease in money supply hence reduced sales. Fiscal policies on the other hand will have an impact on the company’s profits or sales if the taxes are imposed directly on the products leading to increased prices that reduce sales.

Task 2.3

            Impact of Competition Policy and Other Regulatory Mechanisms

The completion policy aims at maximizing the level of competition in the market through promotion of an independent market and fair market practices. This ensures that prices are determined by the market forces and consumers are not exploited and there is no unfair competition.  This is policy is guided by four key principles which are; market liberalization, state aid control, antitrust and cartels and merger control.

Sainsbury being among the leading retailers in UK may not feel the impact of unfair competition since it is the pacesetter. However the company has been involved in fair-trade which aim at paying the input providers the right price. The competition policy also ensures that the three leading retailers (Asda, Sainsbury & Tesco) do not form a cartel that may exploit the consumers or make it impossible for small competitors to succeed in the market either by raising the prices or lowering the prices beyond reason. Other regulatory mechanisms may involve the government controlling the sale or specific items or lobby groups which may demand specific actions from the company therefore influencing its activities. A good example is the Food Standards Agency of Ireland that alleged the presence of horse DNA in some of products sold by Sainsbury forcing the company to withdraw a list of burgers from its sales line (Glotz, 2013).

Task 3

IMPACT OF ENVIRONMENT ON ORGANIZATION BEHAVIOR

Task 3:1

            Market Structure Influence on Organizational decisions

In a report written in 2009 by Alan Reilly and Peter Davis, sales proceeds from groceries accounted to over £110 billion in 2007 and the sales were made in over 100,000 grocery stores in the UK. However what was is of interest is that over 65% of the grocery sales were made by the 4 leading grocery retailers in the UK namely; Tesco, Sainsbury, Asda and Morrisons. Another interesting fact also emerged indicating that about 20% of the remaining sales were made by another 4 grocery retailers namely; Somerfield, Co-op, Waitrose and Marks & Spencer. This means that about 85% of grocery sales in the UK were made by a group of 8 retailers which in effect means that the UK is an oligopoly market.

The decisions that Sainsbury takes are therefore guided by the oligopoly market structure. In an oligopoly market there are number of sellers are more than one but the number is not large enough for the prices to be determined by the market. This therefore means that any decision made by any one of the 8 key retailers will affect the marginal revenue, demand and profits of the other firms. Therefore any decisions made by one firm are determined by the rest of the retailers since the managers decisions are made after predicting how the other retailers will react to the decision that he will make (Thomas & Maurice, 2011). Therefore, the prices of Sainsbury are dependent on the prices of the other key competitors.

Task 3:2

            Environment’s Impact on Decisions

Having identified the market to be oligopoly in nature, the most influential environmental factor is the competitors. The level of competition especially in the groceries has been quite high and Sainsbury are not leaving anything to chance in their pursuit of regaining the top spot. This has been evident in the advertising trend that Sainsbury has adopted. The company positive trend in the market share has prompted the company to relaunch the Sainsbury’s basics which is one of the decisions that the company has made based on the market forces. However the catch is on the advert; the company has opted to highlight the ethical and value credentials between the company and rival retailer Tesco. The same scenario also played in 2013 when Sainsbury and Morrisons went to Advertising Standards Authority complaining of Tesco comparison of own-brand prices, a complaint that was rejected (Lawson, 2013). The interesting thing however was that Sainsbury soon launched its own advert comparing Tesco products and Sainsbury products but focusing on the quality rather than the price.

Task 3:3

            Impact of Cultural and Business Environment

Sainsbury re-invention has been quite successful especially under the leadership of Justin King who has helped the company regain its lost glory. The playing ground and rules have however changed; the company has really found the going really hard in the pursuit of a larger market share. This has seen the company result to more indirect approaches towards gaining a bigger market share. Most notable developments made by Sainsbury have actually been made on cultural basis. The sponsorship of the Paralympics games, the adoption of fair trade and the promotion of British products have all been culturally motivated but with some resulting in economical gains. The Sustainability policy is the only major decision that can be said to have been influenced by the business environment.

TASK 4

INTERNATIONAL FACTORS

Task 4.1

            Significance of International Trade

Sainsbury is no stranger to international trade, as a matter of fact international trade has been one of the most socially responsible activities that Sainsbury has engaged in through fair-trade. Sainsbury imports its products from all over the world with well established links in Asia, Latin America, Africa and parts of Europe. The variety of products in its stores is dependent on international trade. Therefore fluctuation of prices in the international markets is a cause of concern for the company and that’s why the company resulted to fair-trade. This trade not only ensures that the farmers get their fair share of the products price but also shield the company from frequent price fluctuations.

International trade is not only of importance in reference to imports but also in terms of international investments. The company acquired Shaw, a supermarket chain in US New England market though the venture was not as successful (Randal & Seth, ). The importance of international trade in Sainsbury’s success cannot be over emphasized as it forms a crucial part of the entire business operations. The trade might also soon become more important to the company as it joins the rest of Europe elites in international investments.

Task 4:2

            Impact of Global Factors

In the current world, no large company can exist in isolation; the global economy is at the nerve of every business especially those involved in imports and exports. Global economic occurrences such as the recent recession cannot be avoided. Fluctuations in food prices due to natural calamities such as drought will affect the operations of Sainsbury yet the calamities do not affect UK in any way. Political instability such was the case with the Arab spring could also be a factor that will affect the operations of Sainsbury.

The factors are not only limited to political or global economy only but encompass all aspects of business but on a larger scale. Social trends and concerns in terms of climate change have actually led to the company investing a huge chunk of its finances in order to have a better tomorrow. This is through creation of environmental friendly ways of production, reduction of wastage through recycling and the triple zero stores among other initiatives. Energy security is another global issue that Sainsbury has taken with a lot of concern and has embarked on a project of installing about 100,000 solar panels for an alternative source of power.

           

Task 4:3

Impact of European Union laws

Britain being a member of EU it is almost inevitable that Sainsbury would be affected by the EU laws in one way or another. One of the laws that have had a direct impact on Sainsbury operations is the EU landfill directive which directed the government to ensure that the amount of biodegradable waste that goes to landfill has been reduced by 50% by 2013 compared to the 1995 amounts (Stuart, 2011). This has been the main reason why Sainsbury has been on a campaign of reducing the amount of waste as well as being the first company to ensure that all its waste goes to anaerobic digestion (AD) (Stuart, 2011). Another EU law that has also influenced Sainsbury’s activities is the law barring feeding domestic and catering waste to pigs meaning that Sainsbury has to send all its waste to AD which is more expensive. A further EU law that is bound to have an effect on the activities of Sainsbury is the law requiring the labeling of high caffeine foods and drinks which may result in the sale of such products to children being banned.

           

           

 

 

                                    CONCLUSION

The business environment is of great influence to the success or the direction which the business takes. A fact emphasized by the fact that in retail business the customer is the boss so the business has to customize its products to the consumers needs. The business world is however not made up of sellers, buyers and products only. It involves a number of other partisan parties such as the government, competitors, international regulatory bodies and pressure groups among others. The business activities also do not include selling only but includes other social and business activities such as charity work, advertisements and socially responsible activities. It is therefore quite fascinating to learn how Sainsbury has successfully juggled all the above mentioned factors and combined them to become not only a successful business but also among the most socially responsible companies that we have in Europe today.

 

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