Corporate Profile: J Sainsbury plc - Assignment Example

Corporate Profile: Sainsbury plc. Sainsbury plc. Is a UK based food retail chain store. The company was established in 1869 and it is currently thelongest standing United Kingdom food retail store. The company in 2008 generated corporate sales of 19,267 million pounds (Sainsbury, 2009). The company since its inception has concentrated in operating as a specialty type food store that sells fresh products and wide variety of food items. The firm has a total of 504 supermarkets, 319 convenience stores, and the Salisbury Bank. Due to the high traffic of customers which amounts to 16.5 million customers per week the company has been able to achieve economies of scale that have allowed the firm to lower pass on those savings to the customers. The five principles core values of the firm are: the best food and health, sourcing with integrity, respect our environment, making a positive impact towards our community, and a great place to work (Sainsbury, 2009). Sainsbury Stakeholder Analysis The stakeholders of an organization are the groups that have interest or are affected by the operation of a business entity (Kotler, 2002). The major stakeholders groups include customers, government, employees, lenders, investors, community, suppliers, and the environment. Salisbury plc prides itself in having great relationship with its stakeholders. A potential conflict of interest of the company among the stakeholders groups is the lender group. The company has its own bank, thus is possible for the company to manipulate its finances as far as using the bank to manipulate the earnings of the conglomerate through inter-company loans at either extremely low or high interest rates. The financial managers must follow the principles of conservatism and consistence to prevent these types of irregularities from occurring. The investors are another important group. The firm has many investors since it is a public company whose shares are trading the London Stock Exchange. The government is another stakeholder that affects the operation of the company. One of the agencies that directly regulations the operation’s of the firm which belongs to the food industry is the Food Standards Agency. Another way the government affects the operation of the firm is through its taxing policies. Corporate taxes in the United Kingdom are high in comparison with other countries across the world. The customer is an extremely important stakeholder group for the company. The customers are most vital stakeholder group because they are the ones whose actions are directly correlated with firm revenues. Salisbury has great relations with its customer base. The community is an important stakeholder every firm must consider. Sainsbury engages in activities throughout its supply chain that are good for the community and the environment. For example the company purchases from fair trade operations, a practice that benefits the farmers because they received higher prices and other support such as technological transfers. PEST Analysis A PEST analysis is analytic tool that dissects four external environmental factors that affect a particular business firm. The four factors that the analysis focuses on are political, economical, socio cultural, and technological factors (Marketingteacher, 2009). The United Kingdom government is a constitutional monarchy. The citizens of this nation enjoy liberties and have a legal system that product their human rights. The country has political stability, thus the location is good place to perform business. The UK has allies across the world and has close political relationship with the United States. The tradition and heritage of Salisbury is a characteristic that has helped the company obtain a loyal customer base in the UK. The second environmental force is the economical force. In the United Kingdom the nation is facing the negative impact of the economic global recession. In these types of economic environment the governments are more willing to offer incentive and subsidies to keep firms from closing operations and as consequence the loss of jobs for the citizens of a region. The executive team of the company has an opportunity to exploit the government willingness to provide incentive in order to negotiate governmental incentives such as tax deductions, job generation incentives, and access to government grants or loans. Due to the recessionary forces in the economy Salisbury has to adjust its price structure in order to provide its customer with greater selection of items that provide greater value for the customer. Due to the industry the company belongs too, the food industry, the firm is not as affected by recession as others. Food is a basic necessity, thus people independent of the state of the economy will continue to buy the food items they desire and need to survive. The company is able to differentiate itself from the competition because it has greater selection of food items and their product offering consists of fresh groceries. A negative factor that is hurting one of the divisions is the worldwide credit crunch. The Salisbury Bank has endured during the last couple of trimester less volume of loans because the market forces have limited the amount of loans a bank can approve. The bank operation of the company can be utilized to increase the firm’s value offering to its clientele company credit cards to that increase the purchasing power of the customers. The credit card can be linked to a rewards program that gives customers automatic discounts when the credit card is used to purchase items at any Salisbury establishment. The amount of disposable income in the economy determines the customer’s inclination towards participating in consumer markets. The third letter of the PEST analyses refers to socio-cultural factor. The United Kingdom is a culturally rich society in which people believe in traditions. The firm heritage provides them with a competitive advantage that can be exploited in a marketing or public relation campaigns to attract new customers by taking advantage of the brand equity of the firm. In United Kingdom the people are inclined to purchase products that are good for the environment. Salisbury plc has a wide variety of organic food products and well as supporting fair trade practices. The combination of these two factors increases the overall demand in the UK for the product offering of Salisbury plc. The company exploits well the market opportunity associated with the purchasing behavior of the customer which preferred high quality food items. The firm should close attention to the aging demographics of the country in order to target the elderly population which would benefit from the quality and healthy food items offering at Sainsbury. The fourth environment factor of a PEST analysis is the technology factor. The use of technology in the 21st century has become imperative towards achieving business success. A new technology that could be implemented in the operations of the company to improve its logistics is radio frequency identification (RFID). RFID is technology that allows tags to be inserted packaging of items which can be monitored from a remote location. The application of the technology can be utilized to improve the company monitoring of its inventory of its non-food items, a category of items in which the company has been able to exploit for far. Doing so would improve the overall revenues. The company has already implemented technological solutions that have improved the operations of the firm. An example of one of these application is the firm’s offering of an internet based shopping service in which the customer purchased their desired food item through an online store and the items are subsequently delivered to the person’s home. The firm has 147 stores that have the internet based delivery service operational (Annual Report: Sainsbury, 2008). The utilization of technology could also be applied in the company banking service offering. Online banking application can be added to the product portfolio in order to attract more customers to the bank. The online service offering could include a new smart credit card that provides customer will purchase discounts when the product is utilized at any Salisbury establishment. The smart card component of the card provide the company with valuable information about the purchasing behavior of the customer which can then be used to send the client special offers via-email on their preferred items among the 30,000 products the company offers. A potential technological application that the company could utilize to improve the marketing function of the firm is mobile technology marketing applications. The UK is high population of mobile users. Marketing directly to these customer’s cellular phones would increase the store’s customer traffic. References Kotler, P. (2002). Marketing Management (11th ed.). New Yersey: Prentice Hall. Sainsbury.com (2009). Annual Report 2008. Retrieved April 27, 2009 from http://www.j-sainsbury.co.uk/index.asp?pageid=14 Marketingteacher.com (2009). What is PEST Analysis? Retrieved April 28, 2009 from http://www.marketingteacher.com/Lessons/lesson_PEST.htm Read More