Environment analysis and strategies of Sainsburys PLC

1 (a) I would like to select Sainsbury’s PLC in as for my case study for doing this assignment. I had selected this company because of responsible retailer which has been the heart of the way for doing things towards its corporate responsibility and further more for key commitments to their customers. I was really much impressed with their goals and for sourcing with integrity. The company designs, develops and markets advanced systems for special data tracking using new technologies and for up gradation of prices to compete in a market and even for transaction processing management. Systems are distinguished from competition by the sophisticated interfaces, scalability and ease of modification which are extensively patented. Sales are made directly and through major retail outlets in the home market and investment in overseas.

1 (b) Yes, there do exist variety of theories, principles that would underlie strategic planning. The way that a strategic plan is developed depends on the nature of the organization’s leadership, culture of the organization, complexity of the organization’s environment, size of the organization, expertise of planners, etc.

1 (c) There is following critical strategies would enable Sainsbury’s PLC to develop its strategy:

By accelerating product launches with strengthening of R&D team.

Extending their links with key technology centres.

To raise additional venture capital from other sources.

Expanding senior management team in sales and marketing.

Selection and recruitment of non-executive directors.

Strengthening of human resources functions and to introduce share options for staff.

Appointment of advisers for intellectual property and finance.

To Seek new market segments and applications for different products.

1 (d) There are a variety of strategic planning models, including goals-based, issues-based, etc. Goals-based planning are probably the most common and generally starts focusing on the organization’s mission (vision and values), goals to work toward the mission, strategies to achieve the goals, and action planning. Issues-based strategic planning are often examined by the issues faced by the organization, strategies to address those issues and action plans. Organic strategic planning would start by articulating the organization’s vision and values. Action plans are to achieve the vision while adhering to those values. Some planners prefer a particular approach to planning, for eg, appreciative inquiry. Some plans are scoped to one year, many to three years, and some to five to ten years into the future and some include only top-level information and no action plans.

The strategic planning models which could describe different strategies are as below:

Model One – Basic Strategic Planning

This very basic process which would typically followed by many organizations which are extremely small, busy, and had not done much strategic planning before. The process might be implemented in year one of the non-profit to get a sense of how planning is conducted, and then embellished in later years with more planning phases and activities to ensure well-rounded direction for the non-profit. Planning would usually carried out by top-level management.

The basic strategic planning process includes:

Identify purpose (mission statement) – This statement describes why your organization exists and their basic purpose. The statement describes the client needs are intended to be met and with what services. The types of communities are sometimes mentioned. The top-level management would had to develop and agree on the mission statement. The statements would change somewhat over the years.

Select the goals of the organization must reach if it is to accomplish your mission – Goals are general statements about what you need to accomplish to meet your purpose, or mission, and address major issues facing the organization.

Identify suitable approaches or strategies that must be implemented to reach each goal – The strategies are often what change the most as the organization eventually conducts more robust strategic planning, particularly by more closely examining the external and internal environments of the organization.

Identify specific action plans for implementation of each strategy – These are the specific activities that each major function must undertake to ensure it would effectively implement each strategy. Objectives should be clearly stated to the extent where people can assess if the objectives had been met or not. Ideally, the top management develops specific committees that each had a work plan, or set of objectives.

Monitoring and updating of the plan – Planners regularly reflect on the extent to which the goals are being met and whether action plans are being implemented. Perhaps the most important indication of success of the organization would be the positive feedback from the organization’s customers.

Model Two – Issue-Based Planning

External and internal assessment are to identify “SWOT” (Strengths and Weaknesses and Opportunities and Threats).

Strategic analyses are to identify and prioritize major issues and goals.

Design major strategies to address issues and goals.

Design and update vision, mission and values (some organizations may do this first in planning).

Establish action plans which include objectives, resource needs, roles and responsibilities for implementation.

Record issues, goals, strategies and programs, updated mission and vision, and action plans in a Strategic Plan document, and attach SWOT, etc.

Develop the Operating Plan document.

Develop and authorize the Budget for year one.

Conduct the organization’s one year operations

Model Three – Alignment Model

Model Four – Scenario Planning

Model Five – Organic Planning.

The method which was chosen for strategy was SWOT Analysis:

Strengths:

An Initial product should evolve into range of offerings.

R & D (Research and Development) should almost be completed.

Very focused and impressive management and staff.

Basis should be laid on for strong management team.

The first major key customer should be acquired.

Well all-rounded and managed business.

It should be located near a major centre of excellence, for good business.

Well all-rounded and managable business.

Weaknesses:

Lack of awareness amongst prospective customers.

A need for relocation to larger premises.

Absence of strong sales/marketing expertise

The company would over dependant on only a few key staff.

New emerging technologies would move market in new directions.

Board of Directors are too narrow.

The company over dependent on borrowings and insufficient cash resources.

Opportunities:

Market segment poised for rapid growth.

Export markets would offer great potential.

Distribution channels would seek for new products.

There would be a large Scope to diversify into related market segments.

Threats:

The market major player might had been already entered the targeted market segment.

The use of new technology would make products obsolescent.

The market economic slowdown could reduce demand.

The currency with which the company might deal may move against the other currency where it would be dealing it with huge economy.

Market might become price sensitive to certain products.

Large Market segment growth could attract the market and leads major competition.

To build business there are four strategic marketing options that must be considered:

1) Sell existing products to existing customers.

2) Developing of new products to sell to existing customer groups.

3) Expansion of existing products into new market segments.

4) Develop new products for introducing new market segments.

There would be difficult for a business to move into a new market at the best of times. Establishing sales channels, managing customer expectations, and pre-empting competitors actions could be a real challenge, requiring a substantial amount of resources.

Strategic planning serves a variety of purposes in all organizations.

Clearly define the purpose of the organization to establish realistic goals

Objectives consistent with that mission in a defined time frame within the organization’s capacity for implementation.

Communication of goals and objectives to the organization’s constituents.

Development of sense of ownership of the plan.

Ensure the most effective use was made of the organization’s resources by focusing the resources on the key priorities.

Provision of base from which progress could be measured and establish a mechanism for informed change when needed.

Listening to everyone’s opinions in order to build consensus about where the organization was going.

Other reasons include that strategic planning:

Provision clearer focus for the organization, thereby producing more efficiency and effectiveness.

Bridges staff and employees and the board of directors.

Builds strong teams in the board and in the staff and employees.

Provides the bond like glue that keeps the board members together.

Produces great satisfaction among planners, especially around a common vision.

Increases productivity with increase in efficiency.

Solves major problems of an organization.

Why Should Strategic Planning Be Done?

Strategic planning must be done when an organization is just getting started.

Strategic planning should be done in preparation for a new major venture, for example, developing a new department, division.

Strategic planning should be conducted at least once a year in order to be ready for the coming fiscal year.

Strategic planning should be conducted in time to identify the organizational goals that has been achieved at least over the coming fiscal year, resources needed to achieve those goals, and funded needed to obtain the resources.

These funds should be included in budget planning for the coming fiscal year.

However, not all phases of strategic planning need not be fully completed each year. The full strategic planning process must be conducted at least once every three years. As seen from the above, these activities should be conducted every year if the organization is experiencing tremendous change.

Each year action plans should be updated thoroughly.

During implementation of a new plan, the progress of the implementation should be considered and reviewed at least on a quarterly basis by the board.

Again, the frequency of review depends on the extent of change in the organization.

The company was founded with the intention of helping people in poorer parts of London eat a better diet. The ‘Quality perfect, prices lower’ strap line was on the front of their first store and has remained a guiding principle throughout Sainsbury’s history. The first store was stocked with just butter, eggs and milk at a time when affordable quality food was scarce. Over the years they have remained true to their goal of offering great product at fair prices with a strong ethical approach to business.

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With over 18 million customers each week, Sainsbury’s would have a real impact on UK consumers. Even though their customers are looking to economise, ethical and environmental concerns remain important to them. Sainsbury’s takes a leading stance on a range of issues on behalf of their customers while still ensuring products are competitively priced. This had been the essence of Sainsbury’s brand for 140 years and had relevance in all economic environments.

As they look forward in an increasingly complex set of issues that we will need to address for our business and on behalf of our customers. The right thing to do was often not clear-cut as good intentions in one area often create unintended consequences in another.

At Sainsbury’s their approach is to take the widest range of information into account so that changes we make stand the test of time. Further, they want to create real and lasting difference rather than a series of short term fixes.

Strategy

As a leading supermarket retailer, they face a wide range of issues that are relevant to their business. Many of them of these are complex, interrelated and increasingly global in nature. They recognise the role they had to play in tackling these issues but understand that they cannot always do so on their own. Their approach is therefore to work in partnership with key stakeholders, including Government, NGOs, academics, as well as customers and colleagues, towards finding solutions. With over 18 million customers each week we, together with customers, could have a real impact.

They engage with stakeholders to ensure they understand the issues and their points of view in full. They also conduct research to identify and understand our customers’ key concerns. They review issues for their potential to impact on our business and set plans and commitments accordingly. They then report transparently on their progress. Through their commitment to their values and continue to ensure that they address future challenges presented by a rapidly changing world.

Targets

Sainsbury’s had changed the way they set their corporate responsibility targets this year. Their approach now had to set bold commitments that drive real change on the most important issues facing our business. Their current commitments cover issues relating to each of our five values. They have been developed by reviewing our previous targets and activity, together with the outputs of our materiality processes and customer research.

These commitments are not the only things which were focused on. They also continue to implement improvements across a broader range of issues that, for us, constitute ‘business as usual’. By setting these stretching commitments, and taking next steps across a wider range of issues, they would be better placed to continue delivering great product at fair prices to our customers, long into the future.

Their values are part of the way they do business at Sainsbury’s. This is reflected in their corporate responsibility governance structure, as shown below, whereby members of their Operating Board have responsibility for each of their five values and sit on their Corporate Responsibility Steering Group.

Being ‘A great place to work’ was rooted in Sainsbury’s heritage and values. The company also plays a crucial role in achieving our business goals. They rely on our 150,000 colleagues to deliver great service to our customers every single day.

They are committed to championing equality, diversity, inclusion and flexible working options for our colleagues. They remain committed to recruiting, retaining and engaging the best people, from backgrounds that reflect the communities we serve. They believe that every colleague, no matter where they work or the role they perform, should be encouraged to develop and make best use of their skills.

They even value the opinions of their colleagues and communicate honestly with them. They also believe in recognising and rewarding our colleagues for the vital part they play in making Sainsbury’s a great place to work.

At Sainsbury’s they take environmental issues seriously. They aim to be environmentally responsible in the way we run our business and we also want to make it easy for customers to be environmentally responsible.

Climate change represents one of the greatest challenges they face, both as a business and as a global population. They even recognise that tackling the issue involves addressing both our direct and indirect impacts. They are further even working hard to reduce our operational footprint and we continue to develop a better understanding of the carbon embodied in our products and in the construction of our buildings.

Their goal is to offer our customers great quality food at fair prices and, as a leading food retailer; we are committed to being ‘Best for food and health’. Their approach is to help and inspire customers to eat a healthy balanced diet by promoting healthy eating and active lifestyles.

They work hard to make our products as healthy as possible, without compromising on quality or taste. They are also committed to providing our customers with clear and transparent labelling, to help them make informed choices about the food and drink they buy.

The stores are at the very heart of the communities they serve. For them this is not only about providing great service and quality products. It’s also about making a positive difference to their communities and being a good neighbour.

This begins with the positive economic impact on their stores have in generating local wealth, by providing employment, using local suppliers and contractors, and regenerating the local surroundings.

Sourcing with integrity was central to their ability to deliver great product at fair prices. In practice it means working with their suppliers to ensure the sustainability of their products in the round, taking into consideration their economic, environmental and social impacts.

They are committed to offering products that are better for customers and for the environment, in a way that is also better for the animals, farmers and producers involved in their production.

They offer around 30,000 products in our stores. Only by working closely with their suppliers they could deliver great quality products for their customers whilst ensuring standards of integrity are upheld.

Engagement

They communicate honestly and openly with their colleagues to listen and respond to their concerns. ‘Talkback’, their colleague engagement survey, is one of the core mechanisms used to monitor colleague feedback, alongside our ‘Tell Justin’ colleague suggestion scheme and our Colleague Councils.

‘Talkback’ is their colleague engagement survey and is an important tool for understanding the opinions of our workforce. Response rates demonstrate the value that colleagues would be place on the opportunity to express their views. Their Colleague Engagement Index (CEI) uses the responses from ‘Talkback’ to measure the levels of engagement across the business. In 2008 they made significant changes to ‘Talkback’, considerably stretching the measures used with the aim of raising the bar on our own performance. In 2008/09 they achieved an annual score of 73% which, while 2% lower than the previous year, represents substantial progress taking into account the stricter criteria of what they are now applying.

There saying ‘Tell Justin’ scheme invites colleagues to put forward their suggestions on how to improve our business. To date they had received over 25,500 suggestions through the scheme. Many of these have been implemented as a result of suggestions ranging from the simplification of store processes and changes to depot delivery routes, to improvements to colleague recycling and measures to improve customer service.

Colleague Councils exist at every Sainsbury’s location and comprise colleague representatives who look everything from colleague facilities to charity fundraising activities. The councils are at the heart of their business, acting as a consultative body and a voice for colleagues.

For the first time in 2008, they held an ideas contest entitled ‘The Big Pitch’. They were delighted to receive 585 submissions from colleagues, demonstrating their enthusiasm for the opportunity to contribute new ideas for the company’s development. Twelve finalists were selected to present their ideas to a judging panel led by Justin King, CEO from which two ideas are being taken forward for implementation in their stores.

During periods of uncertainty or organisational change such as the restructuring of their head office, there approach is to communicate directly and regularly to ensure that people understand what is happening. Decisions which have an impact on colleagues’ lives and livelihoods are never taken lightly and they always seek to communicate transparently.

Talkback colleague engagement score graph:

Talkback’ colleague engagement score chart 2009 Figure: Graph showing colleague percentage vs year

Sainsbury’s are committed to providing competitive pay and benefits to their colleagues. In recent years, 120,000 colleagues will share a bonus of £60 million, bringing the total amount paid out over the last four years to over £210 million. The bonus scheme was linked to the delivery of great service and product availability as well as overall sales and profit measures. Their colleagues also had access to a wide range of voluntary benefits through there You Choose programme and we offer a colleague discount of 10% in our stores for all eligible colleagues.

An important part of their total reward package is pension scheme. The company also offers all colleagues the option to join a contributory pension scheme, the J Sainsbury Stakeholder Pensions Plan. Shining Stars Award programme recognises the fantastic work of all the colleagues to do every day in going the extra mile when needed.

They pay all colleagues competitive rates for the jobs they hold. Their adult pay rates are in excess of the National Minimum Wage from the outset of employment. In addition, colleagues receive a further increase in salary after 26 weeks, when they reach fully up to the competent level of performance.

In recent years they have continued to improve both our health and safety performance and our overall safety culture. They had reviewed and revised their official Health and Safety Policy to integrate best practice into everyday business activities. They recognise that there managers are crucial to demonstrating how to make a safety culture part of our everyday business so we have introduced a new two day Managing store health and safety course for all of our store managers and have extended our Safety in Sainsbury’s for Senior Executives training to more colleagues.

They also launched our Safe n Sound programme across all of our Retail stores, which require all their managers to promote their safety culture and check that the necessary health and safety training programmes are in place. Progress would be monitored by a system of store audits. They had also improved our standard training for all colleagues, meaning it is now equivalent to the Retail NVQ level 2 unit for health and safety.

Within their Logistics division they even identified a risk associated with the potential movement of vehicles while colleagues were still working on them. To address this they had rolled out a programme called ‘Lock on Dock’ to all of the depots we run.

With the aid of these initiatives, they had reduced the number of colleague accidents by 8.2% in 2008, representing a cumulative fall of 26.4% over the last 3 years, and they reported no work related fatalities in 2008/09. Results from there ‘Talkback’ survey also demonstrate their strong performance in the number of colleagues who believed that health and safety is taken seriously in the workplace.

Further, they continue to work closely with the Department for Work and Pensions and the Health and Safety Executive on many of their campaigns to help colleagues return to work after a period of long term sickness absence.