Unit 1 assigment 2 - BTEC business level 3. unit 1 assignment 2. exploring business PDF

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BTEC business level 3. unit 1 assignment 2. exploring business...

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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.

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

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

A strong economic element that Sainsbury's must contend with has always been the growth of new supermarket chains in the UK. Old rivals of the group have been brands such as Asda and Tesco, and newer ones such as Lidl and Aldi are proving to be a source of added competition in the current market. Covid-19 Moreover, as businesses and households are unable to generate and spend as they typically would because of COVID-19. There have been public health measures placed in place to contain its spread, such as social distancing, temporarily reducing economic activity. The weaker global economic activity, which decreases export demand and disrupts foreign supply chains, contributes to these impacts. As a result, business revenue and household incomes are dropping. This will also mean that people have less money to spend which will mean that places such as Sainsburys will not be making as much profit as before as people will not be spending as much money when they shop at supermarkets. unemployment

It is visible in the chart above that in the aftereffects of the Coronavirus pandemic and resultant lockdowns enforced by national governments, unemployment across the entire European Union is projected to increase to 8.6 percent in 2021. Spain is predicted to experience the worst unemployment rate among European countries at 17.9 percent, followed by Greece at 17.5 percent, while Czechia is forecast to have the lowest unemployment rate at 3.3 percent. It is also shown that in 2021 the unemployment rate in the UK is expected to reach 7.3% and is expected to decrease in 2022 to 6.2%. however, this is still a massive increase of unemployment rates as in 2019 the unemployment rate in the UK was only 3.8%. This has a negative impact on Sainsburys as this means the demand for Sainsbury’s products will decrease which in turn will decrease the production of food products. This will further increase the food prices and unemployment. Government debt

It is visible that an unexpected effect on borrowing has been because of the coronavirus (COVID-19) pandemic. Temporary figures suggest that in the first four months of the current financial year which was April to July 2020, the £150.5 billion borrowed was almost three times the £56.6 billion borrowed in the previous full financial year as a whole (April 2019 to March 2020). These borrowing figures on an accrued basis depend in part on future months' tax receipt forecasts and currently reflect the latest expectations reported by the Office for Budget Responsibility (OBR). Figures reported in the July 2020 OBR Fiscal Sustainability Study indicate that borrowing could exceed £322.0 billion in the current financial year (April 2020 to March 2021), about six times the amount borrowed in the March 2020 financial year ending. This will influence Sainsburys as because of the ongoing increase of debt this will eventually men that there will be a rise in taxes. This will lead to people's incomes to decrease which will mean that people will not be as willing to spend massive amounts of money in shops such as Sainsburys. Overall, compared to foreign Neighbors, the economic effect of the Covid-19 pandemic has hit the UK extremely hard. The UK economy is now 9.7 percent below its pre-pandemic rate, more than double the fall seen in the US and the EU, according to the latest estimates for 2019 (JulySeptember). The UK fall of 20.4 per cent was the highest of all comparable countries in quarter two (Apr-June) and double the European union average of 9.9 per cent. The United Kingdom was the second worst (against Spain) of all Eu countries in the first half of the year. This has massive impacts on things such as supermarkets, households, and the future.

Social: Attitudes to saving and spending Some people save to satisfy their needs and goals, and others save to cover potential or unexpected expenses. Throughout the years, the savings estimates of individuals have changed significantly. People are now more prepared to invest their money than to save it for later. Research has discovered that one of the UK's largest cities which is Shenfield, has 54 percent individuals who are now willing to spend their money. This is beneficial for Sainsburys because it means that more customers are likely to shop there as people's attitudes towards saving is low. However, this can be damaging to economic development. In fact, banks and the government rely on individuals to save money because it can boost

economic growth as companies can use that kind of money to spend more and it can also be used for household mortgages. The government has introduced cash ISAs (Individual Savings Accounts) and premium bonds, savings accounts that attract customers because of the possibility of winning a large cash reward to promote saving. Demographic trends In only 2 decades, demographic patterns shift over us, for instance, Great Britain has increased its population by more than 20 million. For different companies such as house builders, this creates huge opportunities since the government will have to build a lot of houses in the UK. But this will also influence Sainsburys, as population growth will lead to higher revenues.

For example, the population growth of the borough of Greenwich is growing over the years, as we can see from the table. For Sainsburys, this is beneficial since there would be a better chance of getting new clients. In addition, having a long-term relationship with them is the secret to making profit over time as it will be easier to employ people because they will have a choice of individuals to recruit. For companies such as Sainsburys, having people of different nationalities come to the UK creates new opportunities. For instance, in their shop, the Sainsburys in Woolwich added a new world's food sections, e.g., Hallal meat, because they found that there are many Muslims in need of this kind of product in that area. To satisfy the need, Sainsburys noticed a gap in the market and acted accordingly. This has helped to increase their earnings. trends

The selling of fast-food goods in its stores accounted for a significant part of the brand's sales. Nevertheless, the UK population is turning gradually towards a health-conscious diet that does not include fast food products. The company would need to change its fast-food menu and include more nutritious choices such as salads and organic shakes to remain important in the current socio-cultural environment. This is a global trend that is strongly present within the UK and this shift in customer behaviour affects every big fast-food brand. Fair trade

The fair-trade movement is another emerging consumer activity that Sainsbury's can cater to. This includes an increase in the prices of wheat, vegetables, and other farm-related products, but instead of an increase in profit as a way of helping farmers. The fair-trade movement affects goods such as chocolate and coffee, and the brand should ensure that it meets the demands of its customer actions. Also, clients tend to enjoy one-stop shopping in today's industry. This implies that they want to have under one roof all the goods available. This policy has helped Sainsbury to a large degree by adding non-food goods. “cook and save” In addition, other social factors have resulted in a decrease in domestic food production, such as growing women's workforce, population growth, etc. Therefore, there is an increasing demand trend of a certain types of goods. One of Sainsbury's marketing themes is 'Cook and Save' which promotes easy-to-cook products enabling consumers to further stretch their household budgets. Covid-19 Furthermore, because of the ongoing pandemic it is visible that people are now using online resources more, an example of this would-be home deliveries. more people now are ordering products from Sainsburys to their homes and using the online home delivery websites. It is also visible that because of quarantine people are finding more hobbies and are buying more garden and game related items. In the summer there was a massive increase in garden related items being sold. Now it is shown that more games such as puzzles, and table games are being sold. It is also clear that UK citizens have changed the way they conduct their buying this is because some households are not receiving as much income as they used to before the pandemic. Also, people have changed what they buy due to low incomes. More people tend to buy things that they need rather than want such as electronics. This impacts supermarkets such as Sainsburys as less people are spending money overall. Technological: The recent launch of Sainsbury's eCommerce store is extremely helpful for the new generation of tech-friendly catering. Like most other UK supermarkets, Sainsbury’s offers online shopping options. More so than ever, customers want to order their groceries from the comfort of home. The advent of eCommerce and its usage in the food industry are still in early days. There are facets of this, however, that the brand should enhance to provide a better user experience for its customers. If the brand begins using modern analytical systems based on data, such as big data and AI (Artificial Intelligence) (Artificial Intelligence principles), then they could better understand and respond to their customers' statistical needs. Such analytical approaches also help raise revenue and run better marketing campaigns. Moreover, the pandemic has increased the use of technology and the use of Sainsburys ecommerce store. This will mean that a store such as Sainsburys will require more delivery

drivers and staff to operate in warehouses. However, this can be difficult as it is possible for employees to get sick and not be able to come to work which will mean they will need to be issues with sick pay for the 10 days of self-isolation. This can be difficult for businesses such as Sainsburys as customers are panic buying which has caused an increase of online orders. Due to the increase of online orders Sainsburys has updates their website so customers would not have problems with the website such as glitches. Sainsburys has an increase of online customers rather than customers who visit the actual store. Lastly, Sainsburys had to change their processes due to COVID-19 as it is a government requirement to ensure that customers shop safely. This includes keeping 2 meters apart and ensuring that surfaces are clean. Legal: While a brand as broad as Sainsbury's has various decision-making layers added to it, it must ensure that the structural changes it makes are not delayed by the nature of the market. With the customer base's constantly evolving demands, the business still needs to be on its toes to fulfil the unique requirements. Any delay in regulatory approval will contribute to the loss of market share and the opportunity of competitors to provide consumers with a better experience. And since the amount of competition faced by Sainsbury's is completely huge, there needs to be no allowance in this aspect. The legal implications of the post-Brexit economy are also a significant factor that the brand should be prepared to face. While operating its channels, which would now fall outside of Britain's economic and political sphere, it would be appropriate to change many of its policies. Moreover, there have been new laws being introduced because of the COVID-19 pandemic. This means stores such as Sainsburys must follow certain guidelines to ensure safe shopping for their customers. An exam...