Sainsbury: Organisational Behavior - Case Study Example

Sainsbury – Organisational Behavior Table of Contents I. Leadership ……..…………………………………………....…2 II. Mission ........................………………………………………....2 III. Vision ..................…….………..…………………………...…..2 IV. Organizational structure and culture .................……...…….3 V. SWOT analysis of Sainsbury’s leadership ..............................3 VI. SWOT analysis of organizational structure ….............……..4 VII. SWOT analysis of organizational culture ..............................6 VIII. Suggestions ................................................................................7 IX. References .................................................................................9 Sainsbury Supermarkets Leadership Sainsbury supermarket is the second largest food retailing chain in the UK with more than 1,200 stores. It supplies products across the world. Although it mainly deals with food products, it also has general merchandise and clothing offer along with banking and financial services. Sainsbury has been in operation since 1869 and today it has around 161,000 employees. It focuses on providing the best possible services to customers, and strives to give most priority to customers’ interests (Sainsbury: About Us, 2014). Mission Sainsbury’s mission is to provide best quality foods to its customers at reasonable price. At the same time, the company focuses on paying reasonable price to its suppliers and also assuring them that their products have a growing customer base. It emphasizes on maintaining corporate responsibility by way of making proper use of resources like water and electricity. Since 2007, the company has made the necessary investments on programs that focus on reducing energy consumption and renewing energy sources. Every year the cost of energy and carbon emission are assessed by a project investment review with the goal to achieving reduction in cost and carbon reduction. Since 2005/06, the initiatives that have been taken for reducing energy consumption have been positive with the result that there has been 11.1 percent energy reduction (Sainsbury: Strategy, 2014). Vision Sainsbury’s vision is to build a strong relationship with its customers based on trust by making their shopping experience convenient. It provides opportunities for employment and career upliftment, and ensures sufficient profit for its shareholders. While making strategies for growth and development, the company gives most importance to its values which are an integral part of their success. It emphasizes on helping its customers “Live Well For Less” (Sainsbury: Our Approach, 2014). Organizational structure and culture The company maintains its stores in the manner to provide maximum shopping experience to its customers. It keeps it stores clean and welcoming for the benefit of customers. Sainbury’s online service also focuses on customers’ convenience by allowing them to make choice of non-food products and provides the ordered items at a store that is convenient for the customers to pick up (Sainsbury: Business Structure, 2014). SWOT analysis of Sainsbury’s leadership Strengths: The management body focuses on providing sustainable value to its investors. The daily task of management is executed by the Operating Board, and its chief executive designs and implements strategies after getting permission from the Board. It has a nomination committee that regularly monitors the company’s financial and liquidity position, and based on this assesses the operational capabilities of the company (Sainsbury: Management and Board, 2014). In 1996, Sainsbury launched Nectar card as part of its new loyalty program allowing its customers to collect redeemable points every time they will visit its stores. Such programs assure long term loyalty of customers (Christie, 2013). Weaknesses: Sainsbury being the biggest retail chain in UK, its management needs to focus on maintaining its brand image in this competitive market. The loyalty scheme that was launched by the management is failing to show significant positive results with customers making less use of the Nectar card. The management faces strong challenges with increasing number of discount stores by competitors. Opportunities: Being one of the top four retail chains in UK, the management has the opportunity to seek and employ the best available talents. By providing high quality products at affordable prices, it has the opportunity to make maximum profit in the fast changing market dynamics. Threats: Retail business is an extremely competitive field, therefore there is always the threat of competitors taking up larger share of the market by way of better management and marketing techniques. The UK government has increased VAT rate from 17.5 percent to 20 percent in order to increase tax revenues to cover deficits (BBC). This can put a large pressure on the UK retail industry. Sainbury has to maintain focus on providing quality goods at moderate price to ensure retaining of market share. SWOT analysis of organizational structure Strength: Sainsbury’s strength lies in delivering high quality food and non-food products to customers at a reasonable price. Morrison also has strong and efficient supply chain and distribution channels. This is a great advantage for any retail business. Being the second largest retail chain in UK, it has a reach to a large customer base thus ensuring high profit every week. Another strength of Sainsburys Supermarket is that it has more than 1,200 stores and more than 600 convenience stores with an employee base of 161,000 including part time workers according to Annual Report 2014. Sainsbury ranks third in Britain’s convenience market growth (Annual Report 2014, p.13). The company focuses on developing channels and services that act as additional benefit to their existing supermarket business. It makes necessary investments in online and convenience stores, and also by acquiring Sainsbury’s Bank the company has maximized sales to build a solid customer loyalty. In the financial year 2013-14, its online grocery store has been able to reach a target sale of £ 1 billion due to Sainbury’s focus on best quality products at reasonable price, and best customer service (Annual Report 2014, p.13). Weaknesses: Sainsbury makes investments in new ventures every year with the goal of development and expansion as part of long term strategy for the future. However, there are risks attached to every new venture with requirement of finances and sufficient time. As such, Sainsbury’s all new ventures have not progressed in the manner as expected. The company has launched a new venture jointly with Vodafone which is Mobile by Sainsbury’s. Its objective is to provide value- for- money mobile phone tariffs and handsets. In some of the bigger stores of Sainsbury, there are phone stores that provide necessary services and advice to customers. In addition, it has 300 stores that sell a wide range of handsets and SIM cards. However, this entire venture has shown a slow progress and yet to yield the expected benefits (Annual Report 2014, p.17). Sainsbury has self-service checkouts in 220 stores which were placed with the goal to reduce queues. However, this investment has apparently failed to impress customers with “48% of Britons thinking self-service checkouts are a nightmare, neither quick nor convenient” (Winterman, 2009). Opportunities: Since Sanisbury Supermarkets focus on delivering best quality products at a reasonable price, therefore the company has great opportunities to continuously increase its customer base. This is especially a good opportunity to secure more customers during economic recessions as during these periods customers are inclined towards best value at low cost rather than premium quality goods. Such customers can be satisfied by Sainsbury thereby increasing profit. Online shopping of grocery items is increasingly becoming popular among customers. Sainsbury has invested in online grocery store which allows customers to make own choice of products and then select stores from where they can conveniently pick up the ordered items. Sainsbury has 14,000 personnel who effectively and with dedication manage the online operations (Annual Report 2014, p.13). Threats: Since retail sector is intensely competitive, therefore there is always the risk of wrong strategies reducing the trust level of customers. Increasing structural costs can reduce the gross profit of the company. SWOT analysis of organizational culture Strengths: In Sainsbury, each employee receives due respect. The company spends much of its revenue. Senior executives who have made significant contributions towards the success of the company are rewarded with long term incentives. There are “all-employee share plans” that allow people working for the company to become shareholders (Annual Report 2013, p.59). Sainbury’s internal culture reflects its mission or vision statements as every strategy is made by keeping customers’ interests in consideration. It has transparent culture wherein all its employees are aware of organizational goals. The company’s strength lies in the fact that its vision statement provides the guidelines to make important business decisions and conduct daily activities. Weaknesses: Sainsbury makes regular investments in new projects and technologies which for which employees need to be duly trained and updated. Unlike, its competitor Morrisons, the company does not have in-store food preparation facilities, and therefore it has to maintain steady sales to ensure fresh products to customers. Opportunities: Since, Sainsbury mainly deals with food products and groceries therefore the company focuses on keeping the price level that is affordable by people from all social and economic backgrounds, which means it has great opportunities for growth of sales since groceries have a market for customers from all sectors of the society. Top supermarkets like Sainbury can conduct marketing research all the time. The company can keep track of their daily sales with their barcode scanning. With this information they can estimate how much stock they should maintain to cater local customers. Sainsbury also conducts market research to understand preference level of its products according to demography. For maintain quality service in its online activities, Sainsbury has been declared Online Retailer of the Year in two consecutive years in 2012-13 and 2013-14 (Annual Report 2014, p.13). For a retail chain like Sainsbury, one particular benefit is that customers need not have to waste time standing in queues to make their purchase which happens when their visit physical stores. Through its online store, customers can place their order at the click of a mouse thus saving the time of traveling to the store. An online website can also provide growth opportunities to the companies since potential investors can know everything that needs to be learnt about the company from the website. Internet also establishes two-way communication since customers can write their feedback and the company can add varieties to their products or improve their services according to those feedbacks. Threats: With growing competition from the other UK retail giants like Tesco and Morrisons, Sainbury’s focus is always on providing best customer service which can put pressure on the company’s revenue. Also, inefficient stock management can run the risk of losing customer loyalty is there is possibility that goods will not be available in store according to demand, which means more chance of out-of-stock items. Suggestions Sainsbury needs to focus on its pricing strategy since gross profit has been steady in the last 5 years, and emphasis should be on increasing gross profit rato. This means less cash in hand which can be a major drawback since a supermarket company is dependent on suppliers. Sainsbury is operating in a cordial economic infrastructure since UK government is adopting positive steps to increase the spending power of customers. During recession, the company has performed well because of its fresh supply of diversified food products. Currently, Sainsbury has its operational base in the UK and so its focus must be on expanding its business in other countries with emerging markets. Since the target customers belong to all economic and social backgrounds, therefore strategies should focus on expanding its products and services. Another suggestion is to focus on training programs of employees to create awareness about new technologies and customer oriented projects. Finally, being a large entity, Sainsbury should focus on a transparent internal culture with efficient communication system between management and employees. References Auunal Reports (2013, 2014) BBC (January 4, 2011) VAT rate increases from 17.5% to 20%, BBC News, retrieved on November 12, 2014 from: http://www.bbc.com/news/business-12099638 Christie, S. (August 30, 2013) Tesco Clubcard vs. Nectar: Best Loyalty Schemes, The Telegraph, retrieved on November 12, 2014 from: http://www.telegraph.co.uk/finance/personalfinance/household-bills/10273842/Tesco-Clubcard-vs-Nectar-Best-loyalty-schemes.html Sainsbury: About Us (2014), retrieved on November 12, 2014 from: http://www.j-sainsbury.co.uk/about-us/ Sainsbury: Business Structure (2014), retrieved on November 12, 2014 from: http://www.j-sainsbury.co.uk/about-us/business-structure/ Sainsbury: Management and Board (2014), retrieved on November 12, 2014 from: http://www.j-sainsbury.co.uk/about-us/management-and-board/ Sainsbury: Our Approach (2014), retrieved on November 12, 2014 from: http://www.j-sainsbury.co.uk/responsibility/our-approach/ Sainsbury: Strategy (2014), retrieved on November 12, 2014 from: http://www.j-sainsbury.co.uk/responsibility/our-approach/strategy/ Winterman, D. (December 9, 2009) The problem with self-service checkouts, BBC, retrieved on November 12, 2014 from: http://news.bbc.co.uk/2/hi/8399963.stm Read More