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Question :
Description
Internal business environment is the set of component which affects the working of the Sainsbury. These are the conditions, events, entities and the factors which influence organisational working. Sainsbury is the retail supermarket in the UK.
Questions
This assessment will cover following questions:
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Evaluate the macro and micro-environmental impact on business Sainsbury.
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Analyse strategic tools in the analysis of the internal business environment
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How forces and theories in the macro environment have shaped the business performance.
Answer :
INTRODUCTION
Internal business environment is considered as the element of business environment that consist of several factors present inside of an organization which may impact on workplace and their decision making (D'Aquila, 2013). A firm may adopt numbers of model in order to conduct analysis of their internal business environment such as value chain model which that is developed by Porter. Organization selected for this assignment is Sainsbury which is public limited company operating in retail industry at United Kingdom. The main aim of conducting this report is to enhance knowledge about value chain model and its effectiveness. Report will also include information about respective company as well as it will also describe about evaluation of internal environment of Sainsbury.
MAIN BODY
a) Value Chain Model
Value Chain Model is also known as Porter's Value Chain Analysis which is a business management concept that is developed by Michael Porter in year 1985 by his book named Competitive Advantage. Michael Porter defined respective model as a collection of activities which are generally performed by an organization in order to create value for their customers at potential marketplace (Daspit and et. al., 2013). Value Chain model helps in creating additional value through that firm can gain competitive advantage as well as high profitability at marketplace. In respective model an organization is split into two parts i.e. primary activities and support activities and it is essential for management to consider both the parts while developing decision. Through respective model a company management able to understand how they can add values to their products or services so that they ask more than the cost for the additional value, that help in generating profit margin.
Along with this there are several sub elements are there which are included in two parts of respective model like primary activities include inbound logistics, operations, outbound logistics, marketing and sales as well as service. On the other hand support activities include sub elements like procurement or purchasing, human resource management, technological development and infrastructure. Value chain model also help in representing the internal practices of a firm that are engaged in transforming inputs into outputs so that company can attain their desire goal and target effectively as well as successfully. In addition to this there are numbers of benefits which are gain by a company when they adopt value chain model such as they can improve their logistics, enhance customers order management, it also lead to increment on return on investment (Drogalas, Karagiorgos and Arabatzis, 2015). Along with this, there are also several other benefits attain by a firm such as enhance competition, create high profitability, lead globalization of supply and productions and many more.
But there are some major limitations of value chain model which are faced by a firm when they adopt respective model such as some time organization structure is not connected along with value chain which impact on procedure. In addition to this respective model is also too linear and sequential, it is not able to fit in all situation and company structure, value chain model also use info tech and feedback, they also not give due information and many more. So it is essential for company management to conduct proper analysis of own business structure as that will help in developing decision related to implementation of value chain model.
b) Company
Sainsbury is listed as third largest supermarket chain at United Kingdom. It is founded by John James Sainsbury in year 1869 at Holborn, London, U K. It is a public limited company operating their business operations and functions at retail industry and its head office is located at Holborn, London, EC 1, United Kingdom. Respective supermarket offer their products and services through several medium or store such as forecourt shops, hypermarkets or superstore, supermarket and convenience shop. There are also numbers of subsidiaries of Sainsbury's such as Nectar, Sainsbury's Supermarkets Ltd., Argos, Sainsbury's Local, Habitat and Sainsbury's Bank. Vision of respective retail store is to be one of the most trusted supermarket, where people love to shop as well as work (Our vision, 2020). They make it possible by keeping their customers in heart of everything they do as well as investing at their stores. Moreover, respective supermarket and their colleagues also to offer best possible shopping experience to their customers.
Sainsbury believe that their values makes them different and there values are their colleagues make the different. Furthermore, another values statements of respective company are they offer great products and service at fair price as well as they also appraise their customers and consider them valuable. The respective company operate their business function and operation in retail or supermarket industry due to which they faced huge competition through several competitors such as Aldi United Kingdom, TESCO, Morrisons and Associated British Food. There are major two shareholders of respective company i.e. Qatar Holding LLC and Black Rock Inc. (Major shareholders, 2020).
c) Internal environment
Internal environment is consider as component of business environment that include numbers of elements which are present insider a company and that will impact on the the decision making of management (Ketata, Sofka and Grimpe, 2015). This will include factors like culture, machines or equipments, work, climate, members, management practices, management and many more. Along with this, there are also several elements which influence internal environment of a firm such as vision, mission, value system, human resource, organization structure and many more. In context of Sainsbury's also conduct evaluation of their internal environment as well as for that they adopt model i.e. value chain because that will help them in focusing on their primary and supporting activities in effective manner. Evaluation of value chain model in respect of Sainsbury is given below:-
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Primary Activities
- Inbound logistics: The respective procedure related to receiving, storing as well as distributing inputs internally. It also consider relationships with suppliers in order to create value at market (Kuratko, Hornsby and Covin, 2014). In respect of respective company they have hubs of regional warehouse as well as they outsource their supply chain by expert firms like Unipart, Allport DHL, CEVA Logistics and so on. They also implement Just in time model for maintain their supply chain.
- Operations: It include transforming activities which change inputs into outputs that are sold to customers (Leonidou and et. al., 2017). This will help in creating value to operations system. In respect of Sainsbury they process raw materials so that they get end products which they can launch into market.
- Outbound logistics: This will include activities related to deliver of products and services to potential customers. It include storage, collection, distribution system and many more which may be internal or external to company. Outbound logistics of Sainsbury include several activities which help them in delivering of products to potential customers after passing through numbers of different intermediaries. Their respective activity include handling of material, warehousing, scheduling, processing of order, transporting and at last delivering of products.Â
- Marketing and sales: This will include practices related to marketing products so that customer prefer their products instead of competitors. In context of respective company their sales agents as well as marketers plays an essential role because they convince customers to purchase their products. This firm also use highly attractive and innovative marketing and sales channels.
- Service: These are consider as activities which are related to maintaining value of products or services in front of customers after they purchase offerings. The respective supermarket provide both pre sales as well as post sales services which help in developing strong customers loyalty.
Secondary Activities
- Procurement or purchasing: This activity will include finding vendors as well as negotiating for the best price (McFarlane and Curran, 2016). In respect of respective supermarket they do effective activities as well as they also have their professional employees who deal with vendors in order to get best price.
- Human resource management: It define how an organization conduct recruitment, hiring, training, motivation, reward system and so on which help in retaining employees and improving their work quality. Sainsbury have experienced HR team who recruit right person at right job as well as they also conduct appraisal, motivational and training session on regular basis which help in enhancing employees engagement and performance.
- Technological development: This is related to managing as well as processing data and protecting firm's knowledgeable information (Nyakundi, Nyamita and Tinega, 2014). In context of Sainsbury they adopt new and advance technology which help in providing quality services as well as products to potential customers.
- Infrastructure: These are mainly consider as support system of a company which help in maintaining daily activities or operations like accounting, legal practices, general management and so on. In respect of Sainsbury they conduct their business operations and business in proper as well as legal manner which help in attaining objective successfully.
d) Reflection on Value Chain Model
Value chain model is effective for every company because through it they can understand as well as evaluate their internal business environment in successful manner as well as that will also help in developing proper decision. In respect of Sainsbury, by implementing value chain model they also attain several effectiveness,from which some major are given below:-
- Improve flow of materials and products: By adopting value chain management at respective company management able to improve flow of materials as well as products because they able to do accurately forecast of sales and demand of products. Along with this it will also help them in conducting proper inventory management which minimise delay.Â
- Seamless flow of informations: At marketplace customers demand for real time response as well as they also want easily access to products and services offer by company by maintaining their supply chain effectively. So when Sainsbury implement value chain model effectively they able to improve flow of information which help in fulfilling gap successfully.
- Enhance flow of finance: Supply chain management is not consider as improving flow of products and services but it also consider flow of cash (What Are the Benefits of Value Chain Management?, 2020). In respect of this, respective company adopt value chain management which help them in dealing with challenges that are connected with financial flow. Along with this that will also help management in figuring out appropriate solution of issues that are occur at workplace related to finance.
- Improve vendor management: By implementing value chain model at workplace Sainsbury able to synchronizing design as well as source teams along with vendors which help them in ensuring effective outsource of components and subsystem (McFarlane and Curran, 2016). That are conducted by respective company in order to meet quality, performance, schedule and many more. This will also help in avoiding several issues which are related to inventory, design flaw and wastage.
- Standardized procedure: By implementing value chain model respective company able to effectively evaluate procedure as well as that will also help in effectively management of process by ensuring customers feedback and expectations get meet successfully. Along with this it will also help them in minimising overall operational waste as well as inefficiencies.
- Improve profitability: By adopting value chain model respective company able to enhance their profitability ratio because it will help in minimising wastage, cost of production or process and time. Through which Sainsbury able to enhance their revenue and profit margin that lead to overall success.
- Better product research, planning and development: By implementing value chain model at respective supermarket they able to create cross functional team strategies which are related to plan, development and deliver of services and products which help in fulfilling need as well as requirement of customers in successful manner.
These are some of the main benefits of value chain model which are gain by Sainsbury by analysing their internal environment by respective model.
CONCLUSION
By conducting analysis of above discussed points it can be summarise that for every company it is essential to conduct evaluation of internal environment because through it they can understand their effectiveness at the marketplace. For that an organization management may adopt numbers of theories as well as model such as Value chain analysis which is majorly used for the evaluating internal environment of a business. Through this management of a firm able to get numbers of benefits for example it help in reducing time frame of conducting work, it also help in minimising operating costs and many more.
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