Table of Contents

TASK 1: Addressing and exhibiting an understanding to the Organizational purposes of the business ..... 2
1.1 Explain briefly the following types of organisaitons and their purposes: ............................................. 2
a) Virgin Group LTD ......................................................................................................................... 2
b) Sainsbury PLC ............................................................................................................................... 2
c) MC Donalds .................................................................................................................................. 3
d) National Health services (NHS) England ..................................................................................... 3
e) A corner shop near were I live ....................................................................................................... 3
1.2 Considering Sainsbury PLC, describe the extent to which it meets the objectives of its different
stakeholders .............................................................................................................................................. 4
1.3 Considering Sainsbury PLC, explain its various responsibilites as an organisaiton and the strategies it
employs to meet them .............................................................................................................................. 5
TASK 2: Understanding the nature of the national environment in which businesses operate .................. 6
2.1 Giving relevant examples, briefly explain how different economic systems attempt to allocate
resources effectively.................................................................................................................................. 6
2.2 Considering Sainsbury PLC UK, assess the impact of fiscal and monetary policy on their activities ..... 7
2.3 Explain the impact of competititon policy and other regulatory mechansism on the activities of
Sainsbury PLC UK ....................................................................................................................................... 8
TASK 3: Understanding the behaviour of organizations in their marketing environment ........................... 9
3.1 Explain how market structures determine the pricing and output deicisons of Sainsbury PLC UK. ..... 9
3.2 Illustrate how market forces shape Sainsbury PLC UK responses using a range of examples. ........... 10
3.3 Explain how the business and cultural envoronments shape the behaviour of Sainsbury PLC UK. ... 10
Task 4: understanding the global factors and assess the significance of the global factors that shape
national business activities .......................................................................................................................... 12
4.1 Discuss the significance of international trade to Sainsbury PLC UK .................................................. 12
4.2 Analyse the impact of global factors on Sainsbury PLC UK................................................................. 12
4.3 Evaluate the impact of polciies of the European Union on Sainsbury PLC UK .................................... 14
Bibliography ............................................................................................................................................... 15

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TASK 1: Addressing and exhibiting an understanding to the
Organizational purposes of the business

1.1 Explain briefly the following types of organisaitons and their purposes:

a) Virgin Group LTD

Respected brand world-wide, Virgin is business that has successfully ventured in many businesses
suchas investment and financial services, travel, holidays, health and well being, Mobile services
etc to nasme a few.Richard Branson is the founder of the group.

This company has work force of over more than 50,000 and is a business globaly functioning in
more than 50 countries of the world. (Virgin, 2014)

Purpose:

Richard Branson adsvocates against restricting your business by having a defined and bounded
purpose. Branson says that the common purpose of all Virgins business is to enhance life of the
people by offering economical prices, products that are improved, services of great quality.
(Branson, 2014)

However, being a publice limited company the purpose would be growth of the company
by issuing shares.
Restricting takeovers of the business and maintaining profitability at all times.

b) Sainsbury PLC

Founded in the year 1869 Sainsbury operated by a chaion of supermarkets and convienence stores.
It has a workforce of over 160,000 employees.

Purpose:

To establish itself as a market leader in providing best food at best prices.

To source the raw materials helping and benefiting the environment
Affecting the environment positively and be a great working place for all its employees (J
Sainsbury plc, 2014)
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 c) MC Donalds

It is the world leader in the fast food hamburger chain of restaurents. It serves more than over 70
million customers on daily basis. It is a global company operating in about 190 countries. It has its
headquaters in the United States. The company was founded by Richard and Maurice McDonald in
the year 1940.(Burger Business, 2014)

Purpose:

Being a public limited company apart from the purpose of serving the community and adding value
McDonalds has the purpose to provide constant profitable growths to all its
shareholders.McDonalds funda of growth is by providing franchise of the company and letting
people open McDonalds outlet.This has led to the expansion of company at such a high level
globaly. (McDonalds, 2014)

d) National Health services (NHS) England

Launched in 1948, NHS is the worlds largest health service provider which is funded publicaly.

Right from the time of its inception NHS had the principle of ;

Meeting the need of all, provide free healthcare services based on the needs of the patient
medicaly.

Purpose:

Providing good health services to all

Being free service at the point of delivery
Providing services considering medical needs irrespective of the paying capacity of
individuals

e) A corner shop near were I live

Flower Shower is a corner shop near the place I live.Entrepreneurial venture of two friends this
floral boutique has an element of innovation in them. They sell fresh flowers and dried flowers
arranged in unique fashion.They also sell fruit bouquet.

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Purpose:

Profit making
Acquiring customers
Having the first movers advantage as they are the only business in the locality offering the
service

1.2 Considering Sainsbury PLC, describe the extent to which it meets the
objectives of its different stakeholders

Objectives of the shareholders Extent of Sainsbury meeting the objectives

To get return on their investments in a short Annul report of Sainsbury shows improving
span of time these shareholders seek short term profits every year. For shareholders investing
profits. less than a year it is a return on investment.

It can also be growths that is long termed and It has a long term strategy to deliver its
not quick. These shareholders aim for the value shareholders having the highest market share for
increasement of the firm. a year,meeting the long term objectives.

To get dividends at regular intervals. Financial stabliliy enables them to meet this
objective too.
Shareholders also aim to influence the
management of the organisation in favour of the Sainsbuy indulges in regular board meetings
achievement of their personal goals and targets. and information exchange with its shareholders
to understand their requirements and act in the
benefit of the firm

They have the objective to minimise the risks on It is trusted brand one of the Big Four grocery
their investnments by investing on a trusted chain of UK.

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brand that has low possibilities of losses (J Sainsbury Plc, 2014)

(Kessler, 2014)

Siansbury keeps its shareholders informed its website has a share holder center oriented to deliver
the shareholders all the necessary information. It gives information about the companys ordinary
share and answers to all doubts of the shareholders by directing them to relevant links. Ordinary
shares of the company are listed on the LSE in the form this web page enables the shareholders to
check the number of shares they posses, the value of the shares etc. It also informs the share
holders abou the financial performances of the firm and informs them about the constitution of the
board members at Siansburys and the management. (J Sainsbury plc, 2014)

Conclusion: Sainsbury is very efficient in meeting the objectives of the shareholders.

1.3 Considering Sainsbury PLC, explain its various responsibilites as an

organisaiton and the strategies it employs to meet them

Sainsbury as an organisation has responsibilites to the elements of its internal as well as external
environment.

They keep consulting with NGOs and their stakeholders and have set various
responsibiltiesit has as an organisation.
They have the responsibility dealing in the food business to deliver their customers
healthier and ethical products.
They provide their customers with a wide rang eof food at economical pricing. The
suppliers are also paid adequate prices in Sainsburys.
It is a huge employment provider and enriches the community byh creating and providing
many jobs.
It makes decent and controlled usage of the non- renewable resources suchas electricity ,
water etc.
It follows proper methods and treatments of discarding waste in a manner that does not
harm the society and the environment.

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 Sainsbury takes the responsibility of being an ethical business.
It is honest in providing information and meeting its responsibilities towards its
shareholders and customers. (J Sainsbury plc, 2014)

TASK 2: Understanding the nature of the national environment in which

businesses operate

2.1 Giving relevant examples, briefly explain how different economic systems
attempt to allocate resources effectively

Evey nation requires to deal with the proble of allocation of resources.This allocation is about;

What goods and services needs to be produced?

How willthe process of production carried out
And at whom will the production targeted to?

To answer these questions the Free and the Command System exists.

Free Market Model

There is limimted involvement of the governemet in this system.

The means of production show private ownership
There is no or little constraints imposed by the governemet in the operation of the
businesses
Individuals in a free market economy work for attaining their personal goals and motives.
This is a decentralised system.
Free enterprise exists in the free market system.This means there is no control of the
governemt for the allocation of resources to the businesses, individual businesses and
suppliers can obtain resources and sell them as a araw material of the product of the choice
of the businesses.
There is no external hinderance in obtaining and selling products.
All there is no barrier of choosing up services by the people in the free market economy.

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 Workers are free in the choice of their profession and the consumers can choose the
product and the services they buy At their will.

Command Market Model

It is dominated by the government.

The central planning authority act as price mechanism and allocates different resources.
It focuses in equal allocation of resources.
The governemt decides what goods and services are required to be produced in this system.
Alllocation of resources is also at the discretion of the government
Factor rewards are also determined by the governemt.(Eckstein, 1970)

Example: At times of the Second World War US government was controlling the economy of
America when it concentrated in building arms and ammunition for the war. As supply was limited
people had to return empty tubes of toothpastes to get a new one.(Notes, (n.d))

Mixed Market Model

It is not possible for a country to posses pure form of resource allocation by either the command or
the free market systems. A mixture of the above two known as the mixed economic system exist in
real life scenario.The resources are allocatede effectively by both the private bodies as well as the
governemet. (ebooks)

2.2 Considering Sainsbury PLC UK, assess the impact of fiscal and monetary
policy on their activities

Fiscal and monetary policy of the UK aims to stimulate functyioning of the business.

Fiscal Policy: These constitue the programs devised for spending money and taxation policies
formulated by the President and the Congress. Sainsbury is qaffected by the legislations governing
and stimulating the econonmy and the specific legislation targetted at t he grocery business of UK.
If the governemet passes tax cutting legislations it results in Sainsburys increase in spending a it
has more money.The governemet tries to regulate the ecoinomic conditions by imposing
regulations in the fiscal policies.Governement tries to give the people in the economy more

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disposable income at times of slowdown so that they have the capacity to purchaseFMCG goods
leading to profitalbility in Sainsburys business.

All the stages of the business cycle of Sainsbury is affected by the policies of the government
including the prosperity, recession, depression stage and the stage of recovery.

Monetary Policy: The Fedral Reserve system is responsible to for the expansion of the suplly of
money by its moetary policies aiming to keep the inflation in control.An expansion monetary
policy leads to an increqased money suipplykeeping the rate of interest low. As a result of this
Sainsbury can also expand business operations as it will be easier for businesses to borry money at
low rates of interest. Federal reserves also controls and decreases the money supply at times
making interest rates go higher and making it difficult for businesses like Sainsbury to borrow
money from the bank for expansion and other purposes.Sainsbury has the options to take
advantages of the fiscal and the monetary policies of the government.(Metcalf, 2014)

2.3 Explain the impact of competititon policy and other regulatory mechansism
on the activities of Sainsbury PLC UK

The Competition Commission enforces many policies that are oriented to foster healthy and better
competition strategies amonst the various companies in the similar industry.

The 1999 Competition Commision investigated the supermarkets in UK. The competititon policy
prohibits below cost selling strategies of all the grocery chain of UK including Sainsbury, Asda
and Tesco. It prohibits these market players from practicing those strategies that can affect the
interst of suppliers and the interest of public.It recommends codes of practice that the Sainsbvury
has accepted and follows it.

Sainsburys has many competitors including Asda,, Tesco that are the local leading grocery
chain competing with each other and the global grocery chains entering the grocery market of
UK. The government formulates certain policies to ensure that completion is limited and
functioning product markets are well ensured. For this purpose the government monitors;

Competition restricting agreements between companies

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 Companies abusing their position of being a market leader by being the formulate and
regulator of prices
It controls mergers and acquisition processes and provides state aids to companies that
need help to expand its operations and grow. (Economics Network, (n.d))

Sainsbury along with two of its rivals Tesco and Asda offers their customers a guarentee of
prices.Sainsbury tries to match the prices offered by Tesco and Asda by adopting various
strategy inorder to thrive in the competitive market.

TASK 3: Understanding the behaviour of organizations in their marketing

environment

3.1 Explain how market structures determine the pricing and output deicisons
of Sainsbury PLC UK.

The srtucture of the market in which businesses operates influences the way they behave and how
efficient is the business in terms of matters of the economy and also how much is the business
concerned about the well being of the customers it has.

The market structure can be monopolistic, perfect competitve, oligopolistic and momopolictic
competition.

Analysis of the grocery market of the United Kingdom shows that this market has more than
93,000 grocery stores. They are operating in the forms of traditional retail stores, hypermarkets,
convenience stores etc. The grocery market in UK has four, market leaders Asda, Morrison,
Sainsbury and Tesco. These four firms share the larger portion of the grocery industry in UK.
They compete with each other on several factors such as decisions related to pricing and
promotion etc. These grocery giants of the UK create entry barriers to small firms like traditional
grocery stores. So we can say that Sainsbury operates in the oligopolistic marketing structure.

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3.2 Illustrate how market forces shape Sainsbury PLC UK responses using a
range of examples.

Market forces can be defined as the sum total of the demand ans supply in the marketing
environmemntaffecting the prices of the goods and the services. Market ofrces regulate the price
mechanisms leading to an increase in the price at the time of a decrease in the supply of goods or
an increase in the demand of goods and the services at the time of decrease in the prices.

Market forces affect the way a business functions. Any fluctuations in the demand and the supply
affects the pricing systems and the availibility of the products in the market and also its
quality.Forces in the market determine which goods and services needs to be produced at a
particular time.

However the food retailing business of UK being oligopolistic in nature is accused of controlling
the market forces rather being controlled by it. The market leaders in the industry THE Big Four
Asda, Morrison, Tesco and Sainsbury dictated the supply and demand leading small companies to
file complaint against this to the Office of Faire Trade in the year 2000. A voluntary practice code
established as a result of this control the market forces now.The suppliers can sell their products to
only few organisations in the food retailing business.

Sainsburys products were once premium priced as all the other market leaders sell their products
at cheaper rates the premium pricing technique of products such as extra virgin oil and pasta sauce
worked against Sainsbury and has become the reason of working against Sainsbury as it is stuck in
between trying to work against the threat of rivals. (Cencage Publishing, (n.d))

3.3 Explain how the business and cultural envoronments shape the behaviour of
Sainsbury PLC UK.

The behaviour of organizations depends on the shape of the business and cultural environment
they function. Sainsbury is also influenced by them.

The business environment and culture gives the organization the rules and shape the strategies
according to which organizations behave. The aim, mission and objective of Sainsbury are

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framed keeping in mind the business and cultural environment. Sainsbury operates in a business
environment where there are few players that are the market leaders of the grocery business of
UK Sainsbury being one of them takes major decisions and influence the entire business
environment. The external environment of Sainsburys is shaped by the political, economic,
social and technological factors.

The UK government encourages trade and globalization favouring Sainsburys growth as well.
BBC, 2014 says The UK economy will grow faster in 2014 than any other G7 state, while low
wage rises will keep interest rates at 0.5% until next year. This means the economic conditions
are growing further stronger leading to the increase in trade relations and growth of Sainsburys.

With new technological advancements in the global economy, Sainsbury is adopting

technological revolution to influence its environment furthermore.

Business and organizations culture has an important role to play.

Sainsburys aspect of culture that are visible are the dress code followed in the organization, the
way shelves were displayed, the ambience, colour themes they use, the store layout etc. The
cultural aspects hidden to the eyes are the values, beliefs, vision and the passion and ethics
making the organization.

Sainsbury stresses having employees that understand the role of positive attitude and have
passionate behaviour, which is a must being a part of a customer facing organization. They
recruit employees having the attitude for customer service. Sainsbury right from the point of its
inception has proved to be a responsible business being considerate and ethical about the way
they do things. (Sunny, 2010)

Sainsbury operates with a strong cultural environment that pledgers to source with integrity and
respects the environment. Sainsbury also takes part in various initiatives to help the environment.

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Task 4: understanding the global factors and assess the significance of the
global factors that shape national business activities

4.1 Discuss the significance of international trade to Sainsbury PLC UK

International trade includes trading for products , services and currency amongst different
countries. Advantage of international trade for Sainsbury will be it can utlilize resources to a
greater limit. Many food products that are notr localy produced in the United Kingdom can be
imported by the help of international trade. Increase in customer acquisition of the Sainsbury as
international trade will enable Sainsbury to offer more choices to the customers attracting them.

Sainsbury can develop international trades with the countries tha tcan offer them comparitive
advantages benefiting both the countries.

International trade and commerce mean globalization and paves way for possibility of expansion.
The advancement in technological advancements has made international trade feasible and
knitted the world in a small web. International trade leads to achieve more number of suppliers
and possibility of finding better suppliers at economical prices which would mean Sainsburys
can target on increase its profit margin without a sufficient price hike in its product this would
help Sainsbury to gain competitive advantage over the other supermarkets in the UK and
establishing itself better in the competitive grocery industry. (Dudovskiy, 2013)

Sainsbury is a part of the fair trade that helps Sainsbury to indulge in ethical business and effect
the environmemnt in a positive way.

4.2 Analyse the impact of global factors on Sainsbury PLC UK

Businesses deal in the global environment having international trade relationships and suppliers
so; global factors regulate the business operations. Global factors relate to the businesss access
to global markets, spotting opportunist market and building trade and commerce.

Sainsburys requires to increase the extent to which it will be competitive in the global markets.
Sainsbury takes decisions considering the global market. Sainsbury can be determined by not
only the size of the firm in terms of its own expansion but also through mergers, acquisition and

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take overs it does in the global markets is an essential factor talking about the global success of
the firm.

The global environment consist the political, environmental, social and technological factors and
a PEST analysis will help us to understand the impact of the global factors better.

Political factors

The political factors in the UK have great impact on the performance of Sainsbury. Currently in
UK, the government debts and the consumer debts are very high. This impacts the customer
attitudes and therefore business conditions experience great pressure. Sainsbury has to not only
operate in these market conditions but also has to develop their business continually.

Economic factors

These factors affect demand, costs, prices and profitability. In the light of the economic
slowdown, growing unemployment and inflation in food prices are important elements of
economic factor that affects Sainsbury greatly. As a result of growth unemployment and high
prices of food products, the demand for Sainsbury's products will decrease which in turn will
decrease the production of food products. This will further lead to increase the food prices and
unemployment just like a viscous circle effect.

Sainsbury should decide on expanding into new markets and therefore globalization of
Sainsbury's store will enable it to well-manage the risks associated with the economic slowdown.

Social factors

Customers prefer to have all the products available under one roof. Sainsbury by introducing
non-food products have largely benefited from this strategy.

With reduction in the people cooking meals at home and the onset of easy to prepare and less
time taking options of eating, there is a growing demand pattern of a certain types of products.
The marketing themes of Sainsbury being Cook and Save' promotes easy to cook products
thereby allowing the customers to have more options that they look for from the Sainsbury and
increase in item sales.

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Technological factors

The technological advancements have a positive impact on the business operations. There is a
significant growth potential in the online or web based operations of the business. Online
operations enable the organization to expand their operations in areas of growing demands.

Environmental factors

Sainsbury operates considering the environmental obligation as there is a huge global pressure to
do so. (Alexander & Hansen, (n.d))

4.3 Evaluate the impact of polciies of the European Union on Sainsbury PLC
UK

Sainsbury supports the extent the EWuropean Union is in support of being commited to human
health and protection of the customers.

It sees food safety and sourcing with integrity as a part of its values. EUs proposal on food safety
is taken as Sainsbury as a tool to restore the confidence of its customers in it. Sainsbury being a
trusted brand name in the grocery market of the United Kingdom is vigilant on the quality of food
it sells adhering to the guidelines proposed by the European Union. Sainsbury is in favour of
tracebility of product guideline that the European Union proposed and follows it. All brands and
products of Sainsbury follows tracebility guidelines.

Sainsbury believes that the European Unions idea to establish a European Food Authority is a
measure to ensure that consumer safety and health is protected.

Sainsbury employs scientist who perform risdk analysis of different products sold by the brand
accepting the EU proposal.Sainsbury however is skeptical about making the EFA vbody the first
contact point on all issues relating to scientific food information as from its inception the first point
of customer interface about their queeries has been done by Sainsbury so it might result in lost of
customer confidence. (European Commision, (n.d))

European commision gives various guidelines and set of standards for the grocery business of the
member countries. Sainsbury being a responsible company adheres to these guidelines that it finds

14
reasonably correct. However, it has doubts and uncertainity regarding certain proposals of the
Union suchas being the prime point of contact with the customers.

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