Sainsbury is the oldest and one of the largest food retailers in the United Kingdom. The first store was open in 1869, and since then, it has strived to maintain its trusted heritage of quality which goes hand in hand with the provision of best services (J-sainsbury.co.uk, n.d.). In recent times, Sainsbury has faced many challenges in trying to remain the market leader in the industry. One of the recent events that can greatly affect Sainsbury operations is Britains exit from the European Union. Additionally, Brexit may affect the interest of various stakeholders of Sainsbury in one way or another. Therefore, it is important to carry out a SWOT analysis as well as determine how Brexit has affected the interest of Sainsburys stakeholders so as to know how the decision has affected major players in the food retail industries in the United Kingdom.
IT infrastructure. Sainsbury understands that it is important to reach a wider market through the internet thus allowing the retailer to overcome the losses that may come as a result of Brexit with increased online sales. Consumers in different regions may capitalize on the weakening British pound to secure bargains that only UK-based retailers will be able to match.
Diversified investments. Sainsbury has diversified investments in different businesses that are not related. Such diversification will allow the retail store to minimize risks that may be brought by Brexit. Sainsburys choice of quality investments which are guided by informed and insightful market analysis will ensure that the companys performance is not considerably threatened by any event that comes as a result of Brexit.
Reduction in the flexible movements in the European Union countries. Britains exit from the European Union can greatly affect the movement of people in the European Union countries. Under the EU umbrella, academic and industry talent moved freely between the EU countries hence allowing for efficient research and innovation in the United Kingdom (Moller and Oliver, 2014). One of the factors that resulted in Sainsbury to lose its position as the market leader to Tesco was the lack of innovative strategies by the food retailer. Therefore, reducing the flexible movement of talent between the UK and EU countries may impact Sainsbury negatively.
Loss of jobs. Another weakness of Britains exit from the European Union is that many people may lose their jobs (Moller and Oliver, 2014). Since Sainsbury employs people from different countries in the EU, it may be affected by Brexit and result in many people losing their jobs. The main reason for this is that the regulations related to immigration laws between the different countries may affect many people that are currently employed in Sainsbury.
Greater efficiency and productivity. The loss of value of the sterling pound implies that UK retailers who buy in dollars will have higher costs to bear (Irwin, 2015). To mitigate these costs, the retailers will have to improve efficiency and productivity in their various operations. Sainsbury and other retailers need to reap the benefits of comprehensive analyses of the business processes after subsiding of the headwinds of Brexit.
International customer base. The loss of value of the sterling pound has made the United Kingdom an attractive shopping destination for people all over the world. The attractiveness has given retailers an opportunity to build loyalty with overseas customers due to the low prices of the retailers (Moller and Oliver, 2014). Even if the sterling pound regains its value, the retailers should build excellent service, experience, and choice so as to retain the customers.
A weakened sterling pound. Once the referendum declared that Britain had decided to leave the European Union, the sterling pound sank very low against the US dollar. In fact, HSBC warned that the British exit could lower the value of the sterling pound by as much as 20 percent (Howes, 2016). This effect of Brexit on the sterling pound may affect Sainsbury due to the considerable implications of the exit on the import and consumer prices.
Legislation worries. Another worry of Brexit is about legislation. If the UK exits the EU, then it would have no influence on the regulation of products such as food and clothing hence potentially resulting in more problems for retailers, such as Sainsbury, that operate in Europe.
Interest of Stakeholders
Stakeholders are people who have an interest in a particular business. They may be both internal and external (Bbc.co.uk, n.d.). The internal stakeholders include employees customers, managers, directors, trade unions, and shareholders. On the other hand, the external stakeholders include suppliers, customers, competition, financiers, and the government. The stakeholders have diverse interests and powers hence the Brexit may affect them based on the interest and power that they have. Therefore, it is important for managers to come up with efficient ways to deal with these issues.
The main interests of employees, managers, and directors are in terms of the security of employment, wage levels, fringe benefits, promotion aspects, and working conditions (Bbc.co.uk, n.d.). Their power arises from the job title, position in the organizational hierarchy, and personal and departmental reputation. The interests of these stakeholders that are likely to be affected are the security of employment due to the regulations related to immigration laws and working conditions which will be improved to retain talent. The next group of internal stakeholders is trade unions whose main interest is the number of unions members as well as ensuring that the interests of their members are met (Bbc.co.uk, n.d.). Their powers arise from the number of union members and the nature of bargaining. Brexit will affect trade unions negatively since there will be different regulations between the UK and other EU countries hence making it difficult to protect their best interests. Finally, shareholders interests are profit levels, the size of dividends and growth in shares (Bbc.co.uk, n.d.). They derive their power from the number of shares they hold. They will be affected negatively since the value of shares will reduce due to the uncertainty brought up by Brexit.
Suppliers are one of the most important external stakeholders of a company. Their interests are the value of contracts and speed of invoice payment (Bbc.co.uk, n.d.). Their powers arise from the location and availability of other suppliers. Brexit will favor local suppliers as they will get high-value contracts easily from local retailers. Customers, on the other hand, are interested in the quality of goods and services, and prices and payment terms. They derive their powers from the location of other suppliers, quality of goods and services offered by other suppliers, and prices and payment terms of other suppliers (Bbc.co.uk, n.d.). International customers will benefit since the devalued sterling pound would result in comparatively lower prices with improved quality of goods and services. Competitors are also important external stakeholders of a company. Their interests are same as that of customers, and their power is derived from the behavior of other competitors (Bbc.co.uk, n.d.). Competitors will be negatively affected by Brexit since they will have to come up with efficient pricing options that are in line with the value of the sterling pound.
Financiers are interested in how promptly companies pay their loans and they derive their power from offering better deals or prices to companies (Bbc.co.uk, n.d.). Brexit will affect financiers negatively since they may be uncertain how customers will respond to Britishs exit hence making it unclear in the number of sales retailers will make. Finally, the governments interest are payment of corporate tax and implementation of legislation while deriving power from enforcing the legislations (Bbc.co.uk, n.d.). The government will benefit from Brexit since it will be easier to collect corporate tax and implement legislation for the retailers.
Bbc.co.uk. (n.d.). BBC - GCSE Bitesize: What are stakeholders?. [online] Available at: http://www.bbc.co.uk/schools/gcsebitesize/business/environment/stakeholders1.shtml [Accessed 4 Jan. 2017].
Howes, G. (2016). Pound to Suffer 15-20% Slump on Brexit, Surge to 1.60 if Brexit Avoided. [online] The Pound Sterling Live - Today's Rolling Coverage of the British Pound Sterling. Available at: https://www.poundsterlinglive.com/gbp-live-today/3686-hsbc-forecast-for-the-pound-on-brexit [Accessed 4 Jan. 2017].
Irwin, G., 2015. BREXIT: the Impact on the UK and the EU. Global Council, London. Available online at http://www. globalcounsel. co. UK/system/files/publications/Global_Counsel_Impact_of_Brexit_June_2015. pdf.
J-sainsbury.co.uk. (n.d.). J Sainsbury plc / 145 years of history. [online] Available at: http://www.j-sainsbury.co.uk/about-us/145-years-of-history/ [Accessed 4 Jan. 2017].
Moller, A. and Oliver, T., 2014. The United Kingdom and the European Union: what would a Brexit mean for the EU and other States around the World? European and global perspectives. DGAPanalyse.
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