An Analysis of Sainsbury’s Supermarkets Ltd and the Effect of the Credit Crunch on Its Performance

sermon Proposal An analysis of Sainsburys super market places Ltd and the military group of the opinion crunch on its performance Year 1 passage codeMN5251 Assignment No 1 Programme Title multiple sclerosis International Management Candidate No 0901143 TABLE OF CONTENTS entrance 3BACKGROUND OF THE STUDY 3 AIMS OF THE RESEARCH PROJECT.. 4 LITERATURE REVEIW.. 5 METHODOLOGY 6 PROPOSED CHAPTER HEADINGS 7 REFERECES 8 appendage 9 1. IntroductionThis sermon seeks to examine Sainsburys supermarkets plc (Sainsburys) as a company and how they can use their established brand to branch bug egress and shoot potential growth in the manufacturing, and to explore how they atomic number 18 act with the recent credit crunch. Sainsburys has come a long trend from being the market leader to dropping to the third moorage which it is assay to hold up. This can be attributed to a series of wrong decisions and wishing of fore preference leading to their received struggles. The y suffered from poor management in the past and this has reflected on their effort to catch up with the industry leaders. In addition, because of the recent credit crunch, banks take over cut back on lending to both individuals and firms thereby swaying consumers to demand cheaper products and curb their expenditures.A question springs to mind prior to the crisis, supermarkets thrust passed on rising victuals prices to consumers but now more than than of all time prices ar low, so why the sudden change in tactical manoeuvre? Small businesses are going under due to lack of pay which hinders them from competing and offering low prices but this loss to society becomes a gain to the big supermarkets. Does this mean that the supermarket industry has less(prenominal) risk than early(a) industries or has the supermarket industry adjusted strategicalally to cope with the global downturn? 2. understate of the study Sainsburys supermarket, a subsidiary of J Sainsbury plc was first open(a) in 1869 and is one of UKs most reputable stores.They own 509 supermarkets and 276 thingumabob stores around the UK according to their website and are best known for their quality products that are priced fairly. It operates as an oligopoly where only fewer firms in the industry have volume of the market shares. Historically they have had the advantage of been in the industry a lot longer than its competitors who have now taken over in both performance and market share. Over a consecutive triad month period ending in June 2008, Sainsburys reported 3. 4% add-on in like-for-like sales which exclude fuel. They have recently boosted their basic principle range in order to meet the growing demand and tempt smart customers.They have promoted their brand with the help of celebrity chef Jamie Oliver In the current economic climate, the supermarket industry seems non to be affected monetaryly by the lack of global credit but they have had to change their operations strategic ally to meet the demand of customers in the recent economic downturn. The food industry runs a low risk trade because majority of its products are necessities unlike other industries such as the banking sector who have suffered greatly from the credit crunch e. g. Lehman brothers. Across the continent and the UK, supermarkets have not been adversely affected by the economic crisis. Contrary to the recent events, the supermarket industry has in general employed more staff globally than any other sector. E. g. Asda has pledged to employ 7000 new workers in 2009 (BBC), Tesco withal plans to take up 10,000 new workers ( toss away News).Some of the supermarkets are making plans to expand and open new stores in the current economic climate impaired with lack of credit. Companies have had to improve efficiency in order to minimise their cost and to increase profitability. 3. The Aims of the research project are to Provide an assessment and summary of Sainsburys supermarkets plc -using m onetary, operational and business performance analysis to compare them over against their competitors. Analyse its panorama in the industry before and during the credit crunch they are before long experiencing increased sales during a recession. Investigate the reasons why Sainsburys is not the market leader they were the pioneers of the industry and now they are struggling to maintain third position ranking. Put together recommendations for Sainsburys on opportunities open to them that could lead to potential growth and increase customer loyalty nominate possible solutions and strategies that could help rebrand and reposition them in the industry. Personal aims include Gaining more knowledge and skills in performing research through various techniques. bring about a compulsory component to secure an MSc degree in International Management. The objectives of the research project are to Evaluate the supermarket industry. Examine the portion of Sainsburys in the industr y. Establish if there are still market growth opportunities. Accessing the impact of the credit crunch on the industry. Reason stinkpot the recent increase in sales during the credit crunch. The effectiveness of their selling scheme and its impact on their sales. The role and contributions of operations to Sainsburys. 4. Literature reassessment and boundarys of the study Sainsburys has recently been losing customers to discount stores like Aldi and Lidl who offer press down value products at cheap prices and since then the company has rebranded and improved on its monetary and operational performance but has still not caught up with the market leader. Their own brand basics is a core stance to the business but they seen to be losing the battle of drawing consumers to purchase upscale and premium products from them.Sainsburys grew rapidly after its first store was heart-to-heart but suffered great losses after the Second reality fight when turnover fell drastically but the company evolved and grew once again till they experienced a change in management bearing in 1992. David Sainsbury and his successors made great decision mistakes under their administration including the rejection of branched into non-food retailing amongst others. During this downturn, their competitors grew rapidly. An opportunity that needs s to be explored is the increase in demand for organic products while striving to minimise the threat of their lack of international market exposure. It is important to point out that porters 5 forces has nearly weakness of been static, lacks guidance on how to define an industry and not earlier looking.With these flaws, it is also considered to be a useful tool in identifying threats to profitability, strategic planning to outperform rivals and helps to identify less competitive segments. A limitation to the report ordain be the example size used which will be small compared to the total population and maybe income, age and taste sen sitive. The result from the survey will be biased because it will be focused in the south west region of the UK and only few stores will be used. 5. Methodology and methods The research aims will be achieved with a combination of primary and indirect research 5. 1 Literature check over The research method will be reviewing the writings on the supermarket industry with its focus being on Sainsburys.This will be achieved from the use of secondary data collected from textbooks and journals through Royal Holloway university library and other pertinent resources including the use of commercial databases and internet search engines. The address will sham a case study method. 5. 2 info collection and sample This report will use qualitative and quantitative data as sources of primary research. An analysis of original documents will be utilised including carrying out a small sample survey of 30 individuals each for Sainsburys and its competitors. This will entail the use of questionn aires with closed questions imputed into Statistical Package for the fond Sciences (SPSS). Telephone and face-to-face interviewing techniques will also be used ground on having good and reliable contacts within the companies.Data will also be gathered from electronic sources, books, journal articles news achieves and interviews to. 5. 3 Data analysis A categorisation approach will be select where all data collected are grouped according the outlet area best suited for its analysis. This report will examine the financial and operational performance of Sainsburys in comparison with its competitors. The use of financial information gathered from secondary research, Sainsburys and its competitors (such as audited reports) which are less biased will be used to measure the performance of the business. The financial performance will be evaluated using the following Ratio analysis, contest analysis and Financial statements.The operational performance will be analysed by studying the fo llowing Distribution networks, Product quality, Pricing strategies, Promotion strategies and lineage location. The report will use the 4-stage model theory to rate the position of Sainsburys operation. This will determine where they fit into the model and how to further assume other aspects of their processes which could act as a support to gaining competitive advantage. strategical analysis theory will be used to evaluate the strategic position of Sainsburys in the supermarket industry. These theories will include Swot analysis, lad analysis, Porters five forces and Risk analysis. The SourcesSainsburys website, Tesco, Asda and Morrisons website, Textbooks, Journals, The World Wide Web, Databases, Royal Holloway University, News achieves and MINTEL. 6. Proposed chapter headings Chapter 1 Introduction Chapter 2 minimize Chapter 3 Literature review Chapter 4 Methodology Chapter 5 explore results and analysis Chapter 6 Conclusion and recommendations References and appendices Refe rences Collin Fisher 2007. Researching and Writing a Dissertation A Guidebook for Business Students. Prentice Hall BBC online Asda creating 7,000 new UK jobs http//news. bbc. co. uk/1/hi/business/7855482. stm Accessed 28/01/2009 Datamonitor, August 2008. Company shine up Sainsburys http//web. ebscohost. com/ehost/pdf? id=22&hid=16&sid=fc656bea-c31c-4043-bbc3-82640ca0cf52%40sessionmgr7 www. sainsburys. co. uk Wheelwright, S. and Hayes, R. (1985) Competing through manufacturing in Harvard Business Review, (Jan-Feb), pp. 99-109. Sky News Tesco to create 10,000 new jobs http//news. sky. com/skynews/Home/Business/Tesco-To-Create-10000-Jobs-But-Posts-Poor-Christmas-Sales-Figures/Article/200901215202210. Accessed 20/01/2009 Appendix Timetable of dissertation 30th of January, 2009 proposal deadline February 2009 hebdomad 1-2 collect literature papers hebdomad 3-4 review research methods literature and research strategy March 2009 week 1-2 design questionnaires forms week 3-4 examine l iterature review April 2009 week 1-4 contact company to make appointment schedules week 3-4 edict the questions of questionnaires May 2009 week 2-3 formal proceeding with questionnaires week 4 net collection of questionnaire and analyse of primary data from the case company June 2009 week 1-4 start writing dissertation week 1-4 keep refining dissertation writing and start to finalise dissertation write up July 2009 week 4 start proofreading, finalise dissertation write up week 4 buffer for contingency and start up the plan of dissertation stuffing August 2009 week 1 finalise dissertation binding week 2 preparation for submission deadline