This activity would provide adequate information on the acquisitions and business events, major relationships needed, business trends and also the comprehensive analysis of strength and weakness of companies external and internal environment. The methods chosen for undertaking environmental analysis of Sainsbury are: PESTAL analysis, SWOT analysis and Porters Five Forces. Also the utility of The Willian Finnie Model, Crook, Ketchen and Snow modelis also included.
PESTAL Analysis: The word PESTAL is the acronym for a set of factors that influences any business environment. They are listed as Political, Economic, Sociological, Technological, Legal and Environment .
The change in political system in region, introduction of new tax laws, regulations and policies like introduction of green policies, changes in the European Union business regulations are the political factors affecting the business environment. The key economic factors that influence the long term strategic planning of Sainsbury are changes in the interest rates, prevailing inflation rates, unemployment and long term growth potential based on national financial policies. The change in demographic profile with respect to the age, socio-cultural preferences, attitudes to various polices and habits, gender priorities in shopping pattern are the major sociological parameters to be incorporated in the analysis. The possible technological changes also need to be understood inorder to assess the environmental influences on the business. This could be change in logistics, change in customers travel pattern, better means of business operations, introduction of cost-saving technology in production and also advances in communication changing the business life cycle time. The physical environment of the business operation is also a vital issue influencing the business growth of Sainsbury. This is related to the waste management issues, pollution control and incorporation various sustainable business operations. One of the major legal issue that influences the business environment of the company is health and safety norms in case of any expansions, mergers or acquisitions.
The analysis of Strengths, Weakness, Opportunities and Threats of Sainsbury and its competitors taking into account both internal and external influences could give better clarity in the strategic planning process (Novicevic et al, 2004). The specific indicators identified in the case of Sainsbury are as follows (Sainsbury , 2006 b & c)
Huge number of loyal customer base.
High reputation and ability to retain the business leadership in UK operations
Better brand equity
Relatively more expensive than competitors
Limited growth opportunities
Increase in the stores across the country.
Enhancing the sales across the Internet.
Further improvement in service & products
High buying powers of Tesco, Wall mart/Asda or Morrisons.
Significant number of low priced supermarkets.
Porter's Five Forces.
They represent five independent parameters that influence any business environment (Porter, 1991).
The huge competition exist between different supermarket chain operators. Sainsbury has positioned as a high quality supplier of food products. It constantly reinvents its operation to thwart the treats raised by its close competitors