Situational Analysis SWOT
In this part of my report, I am going to evaluate my business by doing a SWOT analysis on their business
environment such as their competition. This would enable my business to look at their financial future for
the business and inform their decision making. This evaluation will often inform the business’ marketing
plan which they will use to review their business aims and objectives.
SWOT is used to assess the market for the internal factors of a business environments. SWOT is an
acronym that stands for: Strengths, Weaknesses, Opportunities and Threats. It is a useful tool which
helps to analyse what a business does well and wrong
Strengths
The first strength that can give Sainsbury a competitive advantage is them having the Second Highest
Position in the UK with a recorded market share of 15.7% in December 2020. An advantage of this for
Sainsbury is that they will have a greater influence over customers purchasing ideas, and can receive
better quality goods from suppliers due to their reputation of being the second-best supermarket in the UK.
Because of this, they can increase profit and market share as their goods and services from top suppliers
are at best quality to satisfy customers wants and needs. However, due to them only being second in the
UK, not first, their main competitor Tesco with a recorded market share of 27% in December 2020, will
procure better and more satisfying goods and services and will have a greater influence over customers
that can persuade Sainsburys, and other supermarket customers that shopping at Tesco is in their best
interest. As a result, increasing Tesco revenue and market share whilst decreasing Sainsburys and other
supermarkets. By Sainsbury having the second highest position in the UK, they can persuade other
supermarkets customers like Lidl and Aldi that they provide a better shopping experience compared to
them which can increase their market share and revenue. Due to this they can obtain better suppliers and
more power over customer purchasing ideas than what they had originally so they may overtake Tesco as
the leading UK supermarket. Once achieved, they can maintain their number one ranking by expanding on
the business from the capital they gained from being the second-best supermarket.
The graph below shows the UK supermarkets market share from January 2017 to December 2020:
, https://www.statista.com/statistics/280208/grocery-market-share-in-the-united-kingdom-uk/
The second strength that can give Sainsbury a competitive advantage is them having Online Presence,
this refers to all activity and content that is conducted through the internet. Due to COVID-19 regulations
limiting interactions in stores, Sainsbury must make their website easy to navigate by consumers so they
can purchase online. An advantage of online presence for Sainsbury is that it can provide a stable
communication chain between the business and customers as a way of promoting and advertising
upcoming deals and offers that they might have a liking for, which can build up brand awareness. As a
result, Sainsbury can cut cost on advertising and operating branches by using the internet and social media
as it is more effective to generate profit with lower cost to maintain. Whereas, a disadvantage of online
presence is the fallibility to cyber-attack as it can steal, alter, destroy or disclose valuable information for
both the business and customers, which can jeopardise Sainsbury reputation as their security is vulnerable.
This can stun the development of profit as customers will be hesitant to purchase from Sainsburys website,
and look for other competitors like Tesco or Asda who may have better security than them, due to the fear
of their personal details being leaked. Sainsbury has more online presence than most of supermarkets in
the UK which would give them a competitive advantage when generating money.
The final strength that can give Sainsbury a competitive advantage is them having a Nectar Card, which is
a Sainsbury loyalty card scheme. An advantage of Nectar card for Sainsbury is that it can provide
information on customer profile (like what the consumer purchase and when they purchased it), so the
business may send customers deals and offers based on the information gathered to keep them interested,
this can increase customer retention as the customers’ needs and wants are being pleased by the business
offering deals based on the information gathered on them. However, due to Sainsbury competitive nature to
make the most profit possible, their customers won’t be able to benefit the most from the nectar card as it
has low limits to keep it balance for the business to make profit without making a major lost, which can
decrease customer retention as consumers would place their sights on other competitor retailers who store
card can offer more for them like Tesco. Overall, this is a strength for Sainsbury as other businesses like
Asda and Lidl might not make customer profile their main priority, but Sainsbury do. They do this by using
the nectar card to help them monitor their customer activity to ensure that they getting the best shopping
experience. Due to this, Sainsbury can increase customer retention by pleasing, and even exceeding the
wants, needs and expectations of their consumers by offering them products and services that are suited to
them.
Weakness
The first weakness that Sainsbury have when competing in the market against competitors is
diversification, which refers to a business entering a new market by creating a new product for that new
market. An advantage of this for Sainsbury is that they can increase their sales and revenue as they are
expanding their product range to target more customers to grow their market share and increase their
profit. An example of Sainsbury diversifying will be them taken over Argos with a £1.4 billion deal, and
launching their first Sainsbury's sushi gourmet all in 2016 to help boost sales growth. However, a
disadvantage of this is that it requires a large amount of capital and time to fund the production of a new
