BUSINESS STRATEGY

Business Strategy for Competitive Advantage: J Sainsbury Ltd

Business Strategy for Competitive Advantage: J Sainsbury Ltd

Introduction

J Sainsbury PLC was founded in 1869 and incorporated in 1922, London. For the past 140 years, the company grew rapidly; today it is one of the “big four” supermarket chain in UK. It currently sorely operates in UK and employs about 150,000 people. Its cooperation business is composed of four areas, which are supermarkets, online business, property market and banks. The Sainsbury supermarket operates a total of 890 stores comprising 547 supermarkets and 343 convenience stores around the UK (Company Profile for Sainsbury 2011). This paper provides the business strategy with which this company has achieved its competitive advantage.

Business Strategy

The stores are pride of providing health, safe, fresh and tasty food to its customers. It also jointly owns Sainsbury's bank with Lloyds Banking Group and has two property joint ventures with Land Securities Group PLC and the British Land Company PLC. Its total revenue (excluding the value added tax) in Fiscal Year (FY) #2010 was £19,964 million, which increased 5.6% from the last year. The underlying profits before tax grew to £610 from £519 million. The basic earnings per share increased 93.4% to 32.1 pence from 16.6 pence (Sainsbury Annual Report 2011).

The group business is consisted of retailing (supermarket and convenience), financial services (Sainsbury bank joint venture), and property investment (British Land joint venture and Land Securities joint venture). Thus all the revenue is generated by sales of goods and services from those three operating segments, which mean that interest revenue from bank and gain or loss from property investment, are all included in the income statement.

Porter's Generic strategies framework

To achieve their objectives, companies develop marketing strategies. There are four generic marketing strategies: market penetration, product development, market development, and diversification." (Gay, Charlesworth, Esen, 2007, p. 185).A company follows a strategy of market penetration by selling the same products in existing markets. Product development entails the company's selling the same products in different markets, while market development involves targeting different markets with the same products. Finally, a company can diversify by selling new products to new markets. One or more of the generic marketing strategies may be pursued at any given time (Kotler, Armstrong, 1998, p. 87)

This paper suggests that the Internet may be used as a means of undertaking generic marketing strategies. That is, that the traditional generic marketing strategies can be applied to companies that are pure retailers. This research proposes that when companies combine virtual and physical operations, they also employ market penetration, product development, market development, and diversification. Because these strategies are employed when retailers venture into the virtual marketplace and online retailers move into the physical marketplace, they are classified as strategic enhancement and strategic innovation.

Value Chain Analysis

Sainsbury implemented e-business strategies in different business units and company focused on convincing its employees to incorporate e-business. In the value chain, company accepted the Internet in all its business functions. In order to re-engineer its business processes Sainsbury ...