Impact of the Problems and the Solution Strategy of Sainsburys - Case Study Example

SAINSBURY’S CASE STUDY Sainsbury’s Case Study The company Sainsbury’s has cycled down from being a blue eyed company to one that had to succumb to falling corporate results and losing market share. The initiative taken by John and Mary Sainsbury helped the venture to find a competitive edge in the entrepreneurial arena but the retention of this competitive strategic position became a herculean task for the management of the proceeding eras. The entire lifecycle of the company had far reaching implications for the stakeholders of the company including the shareholders, employees and the board of directors. From the auspicious events in the 1970’s to the menacing 21st century, the company stakeholders had to remain on their toes being susceptible to the fluctuating financial position of the company. Impact of the problems and the solution strategy on the Investors: It was all going favourable for the company investors till the start of 2002 when the situation began to worsen. The profit position of the company deteriorated in 2004 which initiated the warning signals for the investors. The fact that half of the Board of Directors and some of the executives had resigned created a bleaker picture for the financers of the company and hence shook the investor confidence. This must have created immense problems and communication gaps between the two parties involved. This situation demanded a huge drive towards relationship management in the company. The company management and executive board needed to minimize the communication gap and that could have been done by calling company meetings and putting up issues in the annual general meeting of the company (Kehoe 2011). To boost the investor confidence the company would have to work on promotion efforts in the public sector. On the other side, the management had started to form negative connotations of the Sainsbury family’s efforts. The implications of such a condition would have been really detrimental for the company. The goals of the employees and the executives as well as the investors of the company would have become totally wayward and corporate results would have been relegated to an inferior position. It is certainly due to this lack of confidence between the stakeholders that led to the fall of the company from being a market leader in 1990. There were also discrepancies in the financial matrices of the company that created a lot of misconceptions for the investors. The strategies that were later used by the company also impacted the investors. For example, the management spent £3bn on IT systems which certainly alarmed the investors in such troublesome times. In these times the company management badly needed to find policies that could create motivation in the investors and revise cordial relationships between the company stakeholders. All measures that had to be implemented impacted the investor directly or indirectly. Even the policy of finding a target market had implications for the investors (Shah 2012). The executives of the company had to use this concept as a yardstick in the process of decision making and strategic planning. From the case study we can easily identify that the investors wanted rapid profits at this time which obviously was not feasible. Impact of the problems and the solution strategy on the Board of Directors: The entire scenario under discussion posed serious questions on the viability of the company that should have been very worrisome for the company directors. The strategic decision making in these tough times was very difficult and each decision could have created a do or die situation for them. Hence prudence in each implementation step was needed to a lot of extent. The problems such as that of weakening financial position of the company must have led to people pointing fingers at the directors. The directors would have faced pressures not only from the investors but also from the employees. The point of losing market share must have popped up concerns for the directors. They had to delve into the current trends in the industry and the prevailing competition scenario. The area of corporate inabilities must also have posed a threat to the company’s viability. The subsequent decision making also impacted the directors of the company. Directors had to make strong and bold decisions in such a situation. The decision like that of implementing computing based inventory management system, additional expenditure in the automation process of the company, curtailing 700 jobs, all created a panic like situation for the directors who had to reengineer their policy making methodology. The point of keeping a simple portfolio of products would have been a favourable action plan for the directors as that would have simplified the situation for them and would have aided the decision making process. In a scenario where the company was facing financial constraints, the strategy of automating the business processes would have helped the directors, capitalize on the situation as the company needed an edge over its competitors (Ryan 2012). Also the policy of retaining the current business units and tapping the new avenues showed that the directors were keen to revive the strategic position of the company. Impact of the problems and the solution strategy on the Employees: In the entire scenario of fluctuating business performance cycles, the employees of the company would not have survived by just observing and evaluating the changes in the environment. The problems that popped up in the 2004 and the subsequent company strategies must have had deep impacts on the employees. To start with, the employees of the company perceived the Sainsbury family to be inefficient in running the company. This must have created a resistance between the employees and the executives and the business efforts could not have got aligned. This lack of leadership as perceived by the employees must have created problems for the employees in achieving their specified targets. Since motivated workers are profitable workers (Mcshane & Von Glinow 2007) this concepts could not have been materialized. The loss in the company’s market share despite of efforts on part of the employees must have led to employees losing confidence in the senior management of the company. The rapid loss in KPI’s must have shaken the entire corporate culture of the company and its value proposition. A disturbed corporate culture can lead to further deterioration in employee performance (Daft 2008). In its desperate drive to resolve the problems of the company, the senior management had proposed mass automation projects in the company. This must have led the employees to be taken aback. They did not have enough technical skills and required a lot of training to operate the automated systems of the company. A lot of employee time and effort must have been wasted in making the employees accustomed to the new systems. The management of the company also decided to curtail 700 jobs in the head office. This must have left the employees with immense job insecurity. The employees would have been carried away by the constant threat of getting fired and therefore would not have been able to prove their true skills (Cummings & Scott 1969). In accordance with the new corporate strategy, the company tried to make frequent changes in the product lines. This must have left assembly and value chain workers to accommodate themselves in fluctuating production methods. Since there would have been no consistency, the employees must have faced problems in the production lines. The already implemented systems, created a lot of problems for the IT workers as there were frequent problems in the systems. This would have frustrated the employees. The technical short comings must have made the business processes inadequate and nullified the employee performance (Ergin 2011). In all, the fall in the company’s progress must have shaken the attitude of the employees towards the organization and slandered their sense of organizational citizenship for the company. RECOMMENDATIONS TO JUSTIN KING: The good news for Justin king is that the company and the workforce as well as the Investors have stood against the troublesome situation with valour and courage and their consistency has inculcated a sense of self belief in these stakeholders. Justin King, being the CEO of the company will have to work upon these core values and work towards building prolific relationships between the employees, directors and Investors (Farnham 2000). He must introduce plans that would instil motivation in the employees to carry in their good work. He must take audacious steps to minimize the lack of coordination between these factions. Justin King should also work towards introducing standardized business processes so that he may bring consistency and similarity in the functional efforts. Bibliography ANNUAL REPORT. (2011), Annual Report and Financial Statements. [online] J Sainsbury Plc. Available at:  [Accessed 23 March 2012]  CUMMINGS, L. L., & SCOTT, W. E. (1969). Readings in organizational behavior and human performance. Homewood, Ill, R. D. Irwin. DAFT, R. L. (2008). Management. Mason, OH, USA, Thomson Southwestern. ERGIN, K. T. (2011). Evaluation of automated business process optimization. [online]. Stuttgart: Universität Stuttgart. Available at: [Accessed 23 March 2012]. FARNHAM, D. (2000). Employee relations in context. London, Institute of Personnel and Development. KEHOE, DALTON. (2011). Effective communication skills. Chantilly, Va: The Teaching Company. MCSHANE, S. L., & VON GLINOW, M. A. Y. (2007).Organizational behavior: emerging knowledge and practice for the real world. Boston, McGraw-Hill Irwin. RYAN, J. (2012). U.K. Retail Sales Decline More Than Economists Forecast. [online].  Bloomberg Businessweek. Available at:   [Accessed 23 March 2012] SHAH, SOORAJ. (2012). "Sainsbury’s provides staff with access to corporate data on personal devices." [online]. computing.co.uk. Available at: [Accessed 23 March 2012]. Read More