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Applied Corporate Strategy Objective

University: University College London

  • Unit No: 8
  • Level: High school
  • Pages: 16 / Words 3993
  • Paper Type: Assignment
  • Course Code: N/A
  • Downloads: 273
Question :

This sample will let you know about:

  • Discuss about the External analysis of industry.
  • Discuss abou the resources and key competences of organisation.
  • Discuss about the TOWS Matrix.
Answer :
Organization Selected : Sainsbury and Asda

INTRODUCTION

Corporate strategy encompasses corporate action of firm with aim to accomplish objectives of company with aim of achieving competitive advantages. Moreover, corporate strategy estate a clear define long term vision which an organisation set, seek for creating corporate values as well as for motivating staff to apply appropriate action for gaining satisfaction of customers (Foucault and Frésard, 2019). In simple terms, corporate strategy is continuous procedure which need constant efforts for engaging investors in trusting business firm with their money because they help in increasing equity of business.

This report is based on case study of Sainsbury and Asda merger. Sainsbury's which is part of retail industry founded in 1869 and its founder was John James Sainsbury. Its headquarter is located at London, United Kingdom and also serving in UK. Assessment will going to conduct external analysis for identifying opportunities and threats available for them in business environment. Along with this, industry analysis will also conduct by using porter's five force model. In addition to this, internal analysis of Sainsbury and Asda merger will conduct for identifying strength and weakness of company. Unique capabilities of company will demonstrate by linking it to competitive advantages using VRIO model. Furthermore strategic evaluation will also going to conduct.

MAIN BODY

1. External analysis to identify opportunity and threats and assess industry attractiveness

External analysis means examination of industry environment of an business firm. This involve factors like competitive position, competitive structure, dynamic, history and many more (Köhler and Zerfass, 2019). Primary purpose of conducting external analysis is to determine opportunity as well as threats within industry and also any segment which result in growth, profitability and volatility for organisation. For external analysis PESTEL will going to conduct by company which is based on merger of Sainsbury’s and Asda :-

  • Political – It have wide impact on working of an organisation because at the time of merger there are several rules as well as regulation which Sainsbury’s and Asda have to follow. Thus, changes in these law result in reduction of usage of raw materials that effects the selling of various products. Sainsbury and Asda merger is going to be affected because of this as availability of certain product may fall in shortage which results in loss in selling of these products. Along with this, low minimum wages result is higher profit for company and result in higher chances of merger survival.
  • Economical – This factor include inflation rate, foreign exchange rate, interest rate, gross domestic product and many more. Emerging market work as opportunity for merger of Sainsbury's and Asda because emerging market have potential customers who has rising disposable income which will boost their affordability. Thus, establishing stores in emerging market result in increasing demand of such products within population and result in adding profitability of business.
  • Social – The social factors that impact Mergers and Acquisitions are a direct reflection of the society that Mergers and Acquisitions operates in, and encompasses culture, belief, attitudes and values that the majority of the population may hold as a community.The class distribution among the population is of paramount importance: Mergers and Acquisitions would be unable to promote a premium product to the general public if the majority of the population was a lower class; rather, they would have to rely on very niche marketing. Moreover, digital marketing is an opportunity for Sainsbury's and Asda merger as they can also facilitates customers through online shopping (Oppenheimer, 2019). As it will help customer who have mobility issue by providing flexibility to them as they can purchase daily needed products by sitting at home.
  • Technological – Digital market is technological factor which work as an opportunity for Sainsbury's as they can also facilitates customers through online shopping (Oppenheimer, 2019). As it will help customer who have mobility issue by providing flexibility to them as they can purchase daily needed products by sitting at home. For example, Sainsbury's products are available in some selected outlets across United Kingdom. However, same brand can be purchased easily online through their websites.
  • Environmental – Merger of Sainsbury’s and Asda may get impacted through environmental factors as it will be difficult to manage transportation of both resources finished and raw material. This may affect delivery dates product such as unexpected monsoon. It is important for both the organisation to focus on environmental factor while doing merger because now a day’s people are more aware about environment.
  • Legal – This factor include laws which design by government bodies for retail industry organisation and they have to follow these for conducting daily basis operations in more effective manner. Liability laws differ from country to country and this may lead to various kind of changes regarding claiming of liabilities (Ntene, Azasu and Owusu-Ansah, 2020). Sainsbury and Asda may have face lot of claims regarding products sold by it which may happen because of the changes in policies of claiming compensation.

Industry analysis – It is an business function which which completed by owner of company as well as other person for assessing present business environment. In simple term, industry analysis is the tool which assist company in understanding their position relative with other organisation who are producing same products or services (Waverman, 2019). Sainsbury's and Asda have to conduct industry analysis by using porter's five force model as this observe five force that have significant impact on profitability of business firm which they will gain after merger. Explanation of five forces which involved within this are as follows :-

  • Competitive rivalry – Retail industry is highly competitive as it have high crowed market and now more companies are trying to enter within non food sector. Thus, merger of Sainsbury's and Asda will face high competition from several supermarkets such as Tesco, Morrisons and many more. As they are also dealing within similar products such as clothings, food items, electronics and many more. At margin similar cost result in switching costs low, hence customers can easily switch to other lower price supermarkets (Baena, 2019). Such practices result in cut throat price wars as they have to conduct advertisement in effective manner and try to bring innovative product for gaining competitive advantages. This forced respective company to get merge with Asda for surviving in cut-throat competition within UK food industry. Thus, competitive rivalry for Sainsbury's and Asda merger is high.
  • Power of buyers – customers of Sainsbury's and Asda have high bargaining power due to other supermarkets availability like Tesco Aldi, WM Morrisons and many more who are offering same products at related costs. This result in switching cost of product low as well as give power to buyers for selecting best competitive offers in same price range (Adler and Florida, 2019). Moreover, there are several customers who tends to be loyal for price instead of brand, this is the major reason they are shifting towards Aldi and Lidl in last years.
  • Power of suppliers – For Sainsbury and Asda bargaining power of suppliers will be low because of numerous suppliers availability within market. Due to merger some suppliers will demand high as they have option to change it with other because several are available in market. They will purchase from suppliers who offer at low prices because it will result in enhancing their profit margins that result in losses on the side of suppliers (Sako and Zylberberg, 2019).
  • Threat of substitute – Sainsbury and Asda both are part of retail industry and getting merger apart from them there are several other business firm also who are selling same products. As they have high threat of substitute product but threat from each other will get reduce after their merger.
  • Threat of new entrants – Sainsbury's and Asda will have low threats of new entrants because within retail market 69.8% of grocery market share is controlled through big four. Although, retail sector have high competition but after getting merger they booth organisation will no more competitors of each other (Ioannou and Serafeim, 2019). Along with this, there is requirement of huge amount for entering in retail industry. Thus, threat of new entrants for Sainsbury's and Asda will be low. Need Assignment Samples.Talk to our Experts!

2. Resources and key competences of organisation and identify core competences

VRIO analysis of Sainsbury's and Asda Merger - This is an framework which look each and every internal resources as well as also assess one by one to find out that they are providing sustained competitive advantages or not (Nithisathian and et. al., 2018). In simple term it can be said that, resources analysis conduct to identify whether they are offering sustained competitive advantages competitive advantage, has an unused competitive advantage, temporary competitive advantage, competitive parity or competitive disadvantage.

Resources

Value

Rare

Imitable

Organised

Advantages

Financial Resources

Yes

Yes

No

Yes

Long term competitive advantages

Local food products

Yes

No

Yes

No

Temporary competitive advantage

Employees

Yes

Yes

Yes

No

Temporary competitive advantage

V- Valuable

  • VRIO analysis of Sainsbury and Asda merger reflect that for them financial resources are more valuable as after getting merger financial resources will also get increase which help them in investing with external available opportunities. In addition to this, through merger they will also get assist in combating with threats available in external environment.
  • Both Sainsbury and Asda sell local food products after getting merger their foods will also get more valuable because they will get highly different. Along with this, there merger will also assist in attracting customers and help in gaining competitive advantages.
  • Sainsbury and Asda for are well known organisation of retail sector and their customers are also satisfy which show that their employees are well trained. If these will work together then result in gaining productive outcomes.

R- Rare

  • Financial resources of Sainsbury and Asda merger are founded rare as in respective sector resources are possessed through some business firm.
  • Local food products are not rare of Sainsbury's and Asda because these are provided in market easily through several other competitiors (Brooks, Chen and Zeng, 2018). After getting merger level of competition for both organisation get reduce but other competitiors are also using these resources in same manner like Sainsbury and Asda for gaining competitive advantages. Thus, local food products are valuable and it still using these resources.
  • Employees of Sainsbury's and Asda are rare resources that have been determined by utilisation of VRIO model. Both of the organisation have well trained employees which after merger help in gaining more competitive advantages.

I-Imitable

  • By VRIO analysis it has been identified that financial resources are costly to imitate. Respective resources are acquired through Sainsbury's and Asda by prolonged profit over the years. Along with this, competitors and new entrants also need same profit for long term to gain this amount of fiscal resources.
  • Local food products are not expensive to imitate which has been identified through VRIO analysis.
  • Staff members of Sainsbury's and Asda are not costly to imitate because other companies of same sector can also provide training session to their employees for enhancing their skills. Along with this, competitors can also hire employees of Sainsbury's and Asda by offering them better package, growth, working environment and other benefits.

O- organisation

  • Sainsbury's and asda financial resources are organised for capturing value which has been identified by using VRIO analysis.
  • Patents of respective organisation are not organised in proper manner which simply means that sainsbury's and Asda is not using their patents at full potential.

TOWS Matrix

Strength – It involve positive aspects of an business firm, that reinforced position of Tesla in becoming most dominant organisation at global level. Strength involves factors that are believed as stronger point of Sainsbury's and Asda Maerger as it make sure profitability of company, popularity, expansion with long term. Below mention are strength

  • Right expansion moves – It is one of the biggest strength of Sainsbury's and Asda merger as from small grocery store brand expanded to convenience store which later on become supermarket. That deals with numerous merchandise category which help in fulfilling daily basis needs of customers. Sainsbury's and Asda are top supermarket brand within United Kingdom.
  • Opportunity to cater all type of customers – Sainsbury's and Asda is offering their products for every type of customers while their value products are for economic segment (Keyes, 2016). There are several branded as well as expensive products which higher segment customers are looking for.
  • Innovative promotion strategies – There are several promotion strategies which merger of both company is adopting and they are highly innovative as well as they pitch brand direct against their competitors. For instance, brand match promotion within this each and every product sold by Sainsbury's will compared with other competitive company like Tesco and Aldi this type of practices indicates that they are cheapest.

Weakness – along with strength every organisation have some weakness also same as merger of Sainsbury and Asda also have. Thus, there are some shortcoming of respective company's organisational structure that result in reducing its growth and competitiveness. Explanation of these are as follows :-

  • Brand Switching – Same as other retail brand Sainsbury's and Asda merger will also facing lot of risk from brand switching. After conducting promotional activities as well as loyalty programs (Puranam and Vanneste, 2016). Respective merger is still finding difficulty in retaining their customers for long duration.
  • Low Margin – With increasing level of competition in retail sector and risk of online retailers there are several retailers who lost their sales volume. For attracting more and more customers Sainsbury's and Asda cut down their cost and keep price of products lower in comparison of competitors which will sustain no longer.

Opportunities – It is exploitable set of circumstances with several unsure results, explore to risk and necessitate commitment of resources. Opportunity is external factor for Sainsbury's and Asda which assist in improving its performance, strategic growth, management structure and many other aspects. Opportunities of both merger company are as follows :-

  • Business expansion – Sainsbury's and Asda merger have several opportunities in relation of expanding their presence at global level mainly in emerging economies such as India, China, Brazil and many more. Because these nation have large working population and they provide wide market to companies (Dahl and Fløttum, 2019). In addition to this, countries which have fast growing economy will provide plenty labour to company who are setting their business at low cost. This will result in reducing production cost of company which result in selling their finished products at low price and able to attract more and more customers. As they will be able to minimise several expenditure which help them in investing more in opening outlets. This would assist them in grabbing more and more customers on global level as well as it also enable Sainsbury's and Asda in gaining competitive advantages in term of high market share.
  • Emerging market – It also work as opportunity for Sainsbury's and Asda Merger because emerging market have potential customers who has rising disposable income which will boost their affordability. Thus, establishing stores in emerging market result in increasing demand of such products within population and result in adding profitability of business.
  • Digital marketing – It is also an opportunity for Sainsbury's and Asda merger as they can also facilitates customers through online shopping (Oppenheimer, 2019). As it will help customer who have mobility issue by providing flexibility to them as they can purchase daily needed products by sitting at home. Want to get Assignment help? Talk Our Expert Now!

Threats – These are the phenomenon that stop organisation in taking advantages of benefits which derived from availability of strength. There are few threats which Sainsbury's and Asda merger will face for maintaining business from unpredictable market condition. Explanation of threats in relation of both organisation merger are as follows :-

  • Competition – It is major threat for Sainsbury's and Asda as they are facing high competition like all other organisations. Mainly with the companies like Aldi and Lidl who are offering competitive quality product with discount rate (Cappa, Cetrini and Oriani, 2019). Along with this, in United Kingdom cost of living is high which force people to reduce their spending. It is one of the rising threats in an organisation which can create a deadly impact over the survival of an organisation in a bigger market and also over its emergence in it. This impacts over various other aspects and growth of an organisation. Sainsbury and Asda is an biggest chain of supermarket. It is going to be impacted because of this as increase in competition leads to increase in substitute availability which creates various preferences for an customers that automatically shifts the customers. The company is going to be effected negatively as it has to face loss of money and brand value loss as the substitute company like RESCO, ALDI and LIDL is going to capturing its market.
  • Shortage of skilled workers: Work Force is an important factor in any company as it provides services to the customers and performs task given by the mangers (Espahbodi and et. al., 2019). Sainsbury and Asda merger is a developed and large entity who gives quality to the customers. If the workers reduces then it results in reductions of quality services leads to decrease in quality of customers and ultimately growth of profit reduces.
  • Changing of environmental laws; AS the change in these law result in reduction of usage of raw materials that effects the selling of various products. Sainsbury and Asda is going to be effected because of this as availability of certain product may fall in shortage which results in los in selling of these products.
  • Liability laws: These laws differ from country to country and this may lead to various kind of changes regarding claiming of liabilities (Ntene, Azasu and Owusu-Ansah, 2020). Sainsbury and Asda merger may have face lot of claims regarding products sold by it which may happen because of the changes in policies of caliming compensation.

 

Strengths

  • Right expansion moves
  • Opportunity to cater all type of customers
  • Innovative promotion strategies

Weakness

  • Brand Switching
  • Low Margin

Opportunity

  • Business expansion
  • Emerging market
  • Digital marketing 

SO Strategies

  • Increase market for attracting customers to spent.
  • Using digital marketing and attract customers towards merger.

WO Strategies

  • Digital marketing provide better services to customer’s which result in low brand switching.
  • Emerging market and business expansion strategy of merger result in increasing margin of company. 

Threats

  • Competition
  • Shortage of skilled workers
  • Changing of environmental laws
  • Liability laws

ST Strategies

  • Innovative production help merger in sustaining within competition.
  • Training and development session provided to employees make them skilled.

WT strategies

  • Bring innovative products.
  • Provide training and development session to employees for becoming more skilled.

3. Strategy Evaluation

Strategy evaluations will going to discuss merger of Sainsbury's and Asda for gaining competitive advantages within retail industry (Sainsbury’s and Asda to operate ‘dual-brand strategy’ in merger that creates new supermarket leader, 2020). SAF Model will utilise for strategy evaluation, here it stands for suitability, feasibility and acceptability. Explanation of these are as follows :-

  • Suitability – Merger of Sainsbury and Asda is suitable as it help in gaining more competitive advantages because these both organisations are of same sector as well as comes under top companies of retail sector. Thus, merger of both organisation will be suitable for retail sector in their point of view.
  • Acceptability – Merger of Sainsbury's and Asda is acceptable because they will create new supermarket leader of retail sector. Along with this, respective merger is acceptable by customers also because company will come with huge products as well as offers in market area for serving existing and potential customer's. In simple term it can be said that, if merger will be acceptable by company then they will enhance customer base which result in generating high revenue. But in relation of government bodies merger of Sainsbury and asda is not acceptable as they are leading companies of retail sector if both will get merger then result in wide impact on sales of other companies available in market.
  • Feasibility – This merger deal is within 2nd and 3rd biggest supermarket which will create combined network for approx. 2800 Sainsbury's, Asda and Argos stores. It will equate to approx. 31 percent share of supermarket sector, ahead of current market leader Tesco on 28%. Thus, for both the organisation merger will be beneficial as it will provide them assistance in serving their customer will more innovative product at good prices by working together. Get Best Coursework Help from our experts!

CONCLUSION

From above discussion it has been summarised that, corporate strategy influence how an organisation create values which simply means that it cover both product portfolio and assumptions i.e., resources as well as organisational aspects. In addition to this, it is essential for company to analyse both internal and external factors because it will provide assistance to them in identifying strength, weakness, opportunity and threats. Along with this, industry analysis is essential for company which will conduct by using porter's five force model. All these are necessary because business environment is dynamic in nature and need to be evaluate in effective manner.

Read Also :- Hospitality in Digital Marketing

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