unit 1 assigment 2 btec business level 3 unit 1 assignment 2 exploring business business studies
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Assignment 1 - Exploring Business
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Unit 1 assigment 2 - BTEC business level 3.
unit 1 assignment 2. exploring business
Business studies (Harrow College & Uxbridge College)
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Unit: 1 assignment 2
Unit title: exploring business
Learning aim: examine the environment in which businesses operate
Sainsbury’s is a supermarket chain that has been active since 1869. For a lengthy period, it
was the largest supermarket chain in the country and currently it is one of the largest with
over 1500 stores across the UK. Over the years, the brand has survived in the face of stiff
competition through various market techniques.
In this report I will review the political, economic, socio-cultural, technological, legal, and
environmental factors that affect Sainsbury’s in the current market.
C1: External environment
Political:
By introducing new laws, the government will act on the activities of Sainsburys, and this
will have a huge effect on it. The government, for example, issued a new law in 2016 that
medium (50-249 employees) and large (250+ employees) companies would have to sell
plastic bags.
Government support.
The Uk Government offers numerous funding to help companies start up successfully.
Grants, finance and loans, mentoring, consulting, and start-up financing are some of the
supports. Grants are sums of funding for a particular business project offered to a company
and can be obtained by applying for it online. Government loans are the funds that a
government gives to a company to support the economy. As this is a loan, as soon as they
start making money, the company will have to pay it back. The government should send
fresh entrepreneurs who are starting up a business some mentoring and consulting to set
them up for success.
Support might be offered to Sainsburys when they are opening a new store in a specific
area. The government might offer help because Sainsburys will then be providing jobs for
people which would help the government.
Furthermore, Brexit is the main political element impacting Sainsbury's at present. It would
mean that England will no longer be part of the European Union, which would lead to
higher import prices. This will eventually boost the brand's product pricing and thereby
could lose a considerable number of consumers to rivals that provide cheaper wholesale
alternatives.
The exact consequences of Brexit may not be calculated as of now; however, it is
anticipated to lead to unfavourable conditions for the brand.
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In addition, the partnership between Qatar and England soon is another variable. Qatar's
Sovereign Wealth Fund is one of the company's biggest shareholders, and any political feud
between the two nations could lead to a drop in Sainsbury's market shares. This is also a
circumstance that can be impacted by Brexit and its political implications.
In the United Kingdom, political influences have a major impact on Sainsbury's results. In
the United Kingdom, government debt and consumer debt are currently extremely high.
This impacts the attitudes of the consumer and therefore intense pressure is faced by
market conditions. Not only does Sainsbury have to work in these market conditions, but it
also must continually grow its business. Although the political variables are not favourable,
due to its long history of delivering excellent product quality at affordable prices, Sainsbury
has been able to maintain steady growth.
Finally, the current world pandemic can make it hard to communicate with stakeholders
that are from different countries. This is because numerous flights have been cancelled
daily which means that important business meetings cannot take place this has a massive
impact on Sainsburys as they have shareholders that are from all over the world. This
shows that the communication between their shareholders is especially important as they
need to ensure that the people who are helping them financially are happy with the
business. This will ensure that there are not any disagreements later. Of course, there is an
option of online resources, however, that would not be the same and may have different
impacts on these stakeholders. Also, each country has their own rules that they have set
out to be able to control this pandemic. In some countries the number of cases might not
be as high meaning that the rules will not be as strict. This will mean that things such as
profit and trends are going to be different in each shop. This can mean that certain areas
will require help from the government such as issuing financial help.
Overall, the current worldwide pandemic has had a negative impact on not only Sainsburys
but other similar supermarkets such as Tesco. This is because the pandemic has caused
some Sainsburys stores to close because of the amount of profit they are making. This is
usually smaller Sainsburys stores that really depend on their customers.
Economic:
Exchange rates.
An exchange rate is a currency's value expressed in terms of another currency (for example
from pounds to euros). If the value of the pound rises and a company imports goods to
England, then the goods are cheaper for the company in England. On the other hand, if a
company sells overseas, the goods would be more costly, leading to a decrease in demand
abroad. Depending on the exchange rate going up or down, and whether it imports goods
from abroad or exports its own products, Sainsbury's may be affected by the exchange
rates for good or bad. If they were to purchase olives from Italy, for example, and the UK
exchange rate had risen, then they would buy the olives at a far cheaper price than
expected, but the value of the pound has reached its worst since the Brexit vote and has
gone down. This implies that for Sainsburys to buy supplies from abroad it would be more
difficult. For example, Unilever (the world's largest food supplier) "increased the price of its
products by
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10 percent in an offer, it said, to set the higher cost of imports caused by the weak
pound after the Brexit vote and this has a massive effect on a business such as
Sainsburys as this means that their costs will increase.
Fiscal policy.
To manage the economy in the correct direction by increasing or decreasing the demand
and accessibility of goods and services, the government uses things like tax and
government expenditure. Fiscal policies will improve investment, generate jobs and lead to
economic growth. There are policy buyer criteria, investment options and competitiveness
for retail organizations, including Sainsburys. This is because tax-related policies adjust the
amount that customers must spend on disposable income. The consumers will decide to
start saving and spending less on the goods ordered by Sainsburys if the government
chooses to raise the taxes. For example, as VAT increased in 2010, Sainsburys chief
executive warned that it would impact consumer spending by raising VAT from 17.5pc to
20pc. This was proven to be true as a survey of 2000 individuals suggested that the rise in
VAT will cost almost £ 500 a year for each household in the UK, with decreased
expenditure, especially on computer and electronic devices, holidays and eating out. To
manage the economy in the right direction by increasing or decreasing the demand and
accessibility of goods and services, the government uses things such as tax. Fiscal policies
will boost investment, create jobs, and contribute to economic development. For
supermarket organisations, like Sainsburys, there are policy buyer requirements,
investment options and competitiveness. This is because the amount clients must spend on
disposable income is changed by tax-related policies. If the government decides to increase
taxes, customers will decide to start saving and spending less on the products ordered by
Sainsburys.
Supply side policy.
These are measures aimed at improving the productivity factor and helping the economy to
expand. This can be achieved by reducing tax rates, such as income and corporate taxes,
for example. As a main factor for unemployed people to enter the workforce, or for current
workers to work harder, the lowering of income tax would take effect. The reduction of
corporate tax gives businesspeople an opportunity to start a business that can increase
national output.
Cost of fuel.
Sainsbury's is heavily dependent on road-based means of transport to ship its goods in the
UK and the EU. This implies that it is bound to raise its prices with the increasing cost of
both petrol and diesel. This not only means the loss of consumers with lower wages, but
the disappearance of fossil fuels soon will lead to the brand needing to search for
alternative means of transport. The two key economic variables that influence Sainsbury's
are combined with the higher wage demands of employees. Throughout the UK, the higher
pay campaign is gaining traction and Sainsbury's is forced to meet its employees' demands
to keep its shareholders.
Growing of Sainsburys
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