The structure and marketing management of Sainsburys
The main purpose of this assignment is to consider an organisation and thereafter compile a report upon the organisation chosen. The main objective of the report is to conduct relevant research into different areas of the organisation and analyse the following: the organisational structure, sources of finance, marketing management, quality and the supply chain.
The case study which I have chosen to compile a report upon is “J Sainsbury PLC which is one of the leading food retailers in the UK” (checkSURE-2011). The main company of J Sainsbury PLC is Sainsbury’s Supermarkets Ltd or more normally known as Sainsbury’s. Sainsbury’s are the second largest chain of supermarkets behind Tesco in the UK. Overall Sainsbury’s has a 16.6% total UK share in the supermarket sector after recently overtaking ASDA by increasing their market share by 0.3%. “The organisation is the UK’s longest standing major food retailing chain” (Bized-2002). Furthermore J Sainsbury and Lloyds Banking Group equally own Sainsbury’s Bank. Also it has joint dealings with Land Securities Group PLC and The British Land Company PLC having two joint property ventures.
In the 142 years of Sainsbury’s history the organisation first store was opened in 1869 after it was founded by John James Sainsbury and his wife Mary Ann Sainsbury, in one of London’s poorest areas on Drury Lane. The shop quickly became popular with the locals for its “high quality products and low prices” (Sainsbury’s Our History – 2011). Since then the company has grown into a multi-million pound organisation and today Sainsbury’s controls 547 supermarkets as well as 343 convenience stores, with a total number of 890 stores. Thirteen years later in 1882 Sainsbury’s started selling their branded products. Their first branded product was their smoked bacon which was smoked in their store smoking ovens. Their own brand had a major affect in the years to come as by the 1960s it accounted for more than 50%of their turnover. During the First World War in 1914 was when the business started to recruit its first female workers to cover for their staff shortages as the men were sent to help fight the war. In 1922 J Sainsbury’s was a private limited company (Ltd) and after over 50 years later it was placed on the London Stock exchange in 1973 after it converted into J Sainsbury’s PLC. In the 1950s Sainsbury’s converted its first store into a self-service store in Croydon. The final conversion of its last store was completed in 1982 and the reason of these conversions where to end the endless queues at the counters. Two decades later Sainsbury’s were the “first to introduce bakeries, fresh fish counters, petrol stations and coffee shops in stores” (Sainsbury’s Our History – 2011). In 1975 Sainsbury’s were expanding and brought in non-food products in to their store and opened their first Sava centres, so that shoppers don’t have to go elsewhere to shop. Finally in 1994 Sainsbury’s where the first supermarket to sell Fair Trade food in the United Kingdom. By 1998 there range had expanded to tea and coffee and many other products.
J Sainsbury’s is a Public Limited Company (PLC). All PLC’s have limited liability this means that if the company gets bankrupt then the shareholders are only liable for the amount that they have invested into the company and their personal possessions will remain untouched. A PLC should have at least 2 shareholders and meet the legal requirements to issue shares to the public. The value of the share capital should be £50,000+ before the company can start trading. J Sainsbury’s has four major shareholders and the latest figures on 1st July 2010 show that: Qatar Holding LLC holds majority of the shares with 25.999%. Whereas Lord Sainsbury of Turville holds 4.99%, Judith Portrait has 4.09% of the company shares and finally Legal and General Group PLC holds 3.99%. According to statistics in March 2010 Sainsbury’s has 121,432 shareholders and has issued 1,860,610,824 shares.
J Sainsbury’s are within the private sector this where businesses are owned and controlled by individuals or groups of people rather than the Government. The objectives of this sector are to create profits. Last year in 2010 Sainsbury had a 17% increase in annual profits which they distributed £80million worth of bonuses shared between 127,000 staff. Also last year with the profits they created Sainsbury’s opened 38 new supermarkets, opened or extended a further 100 stores and have targeted convenience stores as a key way to expand the organisation, and have planned to open 100 new stores within a year.
J Sainsbury’s PLC is a Tall Organisation as it has a large number of levels of management hierarchy but has a narrow span of control. Span of control is the amount of personnel that a manager or supervisor have at their disposal. The advantage of having a narrow span of control is that Sainsbury’s has a greater degree of security and control. On the downside is that Sainsbury’s labour expenses will increase as they have more levels of management and they receive higher salaries. Sainsbury’s highest level of management (board of directors) is made up of 6 non-executive directors, a senior independent director, a group commercial director, a group development director, a chief financial officer, their chief executive Justin King and the Chairman of the board David Tyler. As Sainsbury’s has a lot of directors each one can monitor different aspects of the business and scrutinise if they see any flaws so that the organisation can improve and be the best in their market.
The structure style adopted by J Sainsbury’s PLC is a Matrix structure. The matrix structure is flexible and this allows Sainsbury’s to adapt to different situations such as; if employees want a pay rise or can adapt in matters of price etc.; to compete against their competitors by using the matrix structure. The structure gives Sainsbury’s employees greater security in the task they undertake as their objectives are well instructed to them. So whether they are planning a product launch or entering a different market altogether this allows the employees to focus on their task. Sainsbury’s number one priority is their customers, so by using the matrix structure it gives them flexibility so that they can provide what their consumers want. On the downside the structure that Sainsbury’s use can cause conflict between staff as this structure helps to develop opportunities for staff members, so jealousy could arise and cause distress between employees if they are not chosen for the new position.
Sources of Finance
One of the ways in which J Sainsbury PLC is financed is through the share capital that it raises when investors buy shares. Sainsbury’s have issued over billion shares with over 124,000 people investing.
Sainsbury’s are currently making profit, as it has been reported they have increased their profits by 17% from last year. The company have made £10 million more than they expected with “pre-tax profits of £610million for the year to march 20” (Daily Mail Reporter- 2010). Across the organisations it has increased its total revenue by 5% as it came up to £21.4 billion. A reason for this is that Sainsbury’s are now serving a million more customers than they did last year with 19 million people shopping at Sainsbury’s every week. The figure is also 5 million people more a week than it was 5 years ago. Another reason is that Sainsbury’s have opened 38 new supermarkets, opened or extended a further 100 stores. By opening new stores or expanding stores has given consumers more chance that they will go to Sainsbury’s rather than their competitors as Sainsbury’s will have a lot more stores then them, so therefore are enhancing more profit.
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