Business AdministrationAG 1

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Communication Assignment

2012

Module Code: G10003

Date: 19/04/2013

Tutor: Gillian Gannon

Student: Alexandru Grecu

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Table of Contents

Introduction

Aim Objectives and Methodology

History, Size, Type, and Ownership

Internal Structures/Organisational Chart

External Structures (PEST plus C Analysis)

SWOT Analysis

Impact of the Structures on the Performance of the

Organisation

Communication Process within an Organisation

Types of communication used Sainsbury

Recommended Changes

ConclusionBibliography

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Introduction

In choosing the company for my Communication assignment I wanted to

perform the analysis on an organisation that was involved in a highly

competitive environment. This would also help make the report more

interesting for readers. Then while reading an article in the Independent

with the heading Sainsbury's outpacing Tesco with sales growth i t

occurred to me that Sa insbury s is an idea l organ izat ion to

analyze that operates in a highly competitive industry-Food Retail.

Aim Objectives and Methodology

My first aim is to explore and analyse the internal factors of the

supermarket and to have a look into external factors positive and/or

negative that can affect the company. Also I want to make reader to

understand Sainsburys Business Strategy and the methods for

communication within company; and how it has facil itated

Sainsburys to achieve success.

Methodology

In gathering the information I mainly relied on the Internet to

formulate this report. The various search engines to collect the

information I needed for the report were:

S ai ns bu ry s w eb si te w as t he m os t i mp or ta nt s ou rc e o f

in fo rmat ion. The website also had an archive of compa ny news

which gave me a h inds ight o f the more immediate matters

faced by the company.

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Competitors websites.

Internet search engines (Google, and MSN) to gather information

related to Sainsburys and the UK retail industry.

History, Size, Type, and Ownership

J Sainsbury plc is a public limited company listed on the London stock

exchange. Sainsbury's was founded in 1869 by John James and

Mary Ann Sainsbury. They opened their f irst small dairy shopat one of London's poorest areas and the Sainsburys shop

quickly became popular for offering high-quality products at low pr ices. It

was so successful that further branches were opened in other

market streets.

(J Sainsburys Plc, Our History [online])

J Sainsbury plc is a leading UK food retailer with interests in financialservices. It serves 16 million customers each week in over 780 stores

across the country. The supermarket chain operates three main store

formats; regular Sainsbury's stores, Sa i ns b u r y ' s Loc a l

( c o n v e n i e n c e s t o r e s ) a n d S a i n s b u r y ' s C e n t r a l ( s m a l l e r

supermarkets in urban locations) stores. Sainsbury's also operates

an internet shopping service branded as "Sainsbury's Online". This

service is available to over75% of the UK population. The group a lso

has in terests in property and bank ing. I t prov ides f inanc ia l

services through the Sainsbury's Bank. This is joint venture between J

Sainsbury plc and Halifax Bank of Scotland (HBOS). The current

product range includes savings and loan products, credit cards and a

number of insurance products provide f inancia l services through the

Sainsbury's Bank. This is joint venture between J Sainsbury plc and

Halifax Bank of Scotland (HBOS). The current product range

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includes savings and loan products, credit cards and a number of

insurance products.

Internal Structures/Organisational Chart

The internal structure of Sainsbury consists mainly in:

Board of directors

Operating board

Committees

Board of Directors

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Operating Board

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External Structures (PEST plus C Analysis)

There are various forces in macro-environment that can affect the

decisions of the personal and the management of an organization. Trade

conflicts, new rules and regulations, Tax movements, changes of

demographic view and policy changing of government are all instance ofmacro change. To modify and analyse these forces can be categorise

using the PEST method. This method differentiates by some forces to the

organizations.

Sainsbury`s is a very large company and the PEST analysis is shown

below.

PEST forces of Sainsbury`s

Political forces: European Union extension, Euro Zone, Globalize business,

taxation rules and policies.

Economic forces: Changing rates of interest, exchange rates, national GDP

and Income, inflation, Job market and unemployment, Share Market.

Social forces: Population based on age, different view to work, income

classification and distributions Community works.

Technological forces: Invention, modern and new product innovation and

improvements, class of technological obsolescence.

Legal forces: Law for Competitors, monitoring health and safety,

employment based law.

Environmental forces: Global warming, environmental issues, green house

effect, animal welfare.

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Political forces

These forces refer to government policies such as the degree

of intervention in the economic scale. What product and services does the

mentioning country want to provide? What extent does it depend in

subsidising organizations? Sainsbury`s is forced by this factors.

Economic forces

These include the Changing rates of interest, exchange rates, national

GDP and Income, inflation, Job market and unemployment, Share Market.

Economic change can have a major impact on a firm's behaviour.

Sainsbury`s is automatically gripped by that forces.

Social forces

Sainsbury`s totally follows the responsibility for the society and its

surroundings. It is operating effective charities, sponsoring games,

arranging social activities, raising fund for Animal welfare, and many

more. For example, in the United Kingdom the population has been

ageing.

Environmental forces

Environmental forces include the changing of weather and climate.

Changes in temperature can impact on many industries including farming,

leisure and tourism and insurance as well. With major climate changes

occurring due to global warming and with better environmental awareness

this external forces is becoming an important issue for Sainsbury`s toconsider.

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Legal forces:

Sainsbury`s is in the boundaries of legal forces locally, nationally, globally.These are very close to the legal enforcements in which firms operate.

SWOT Analysis

STRENGHTS

STRONG BRAND EQUITY

S a i n sb u r y s h a s e n o rm o u s b r a n d e q u i ty a n d h a s b u i l tc u s t o m e r l o y a l t y b y p ro vi di ng t he m w it h Gr ea t qu al it y

food at fai r pri ces . The cor e U.K busi nes s covers the grocery

market and this means everything that is food related.

It has over the years successfully delivered to its customers

according to their needs r eg ar di ng t he q ua li ty , s ty le ,

conven ience , and price of dif fe rent product s and continues toprovide them with the best offers.

WIDE RANGE OF FOOD PRODUCTS

S ai ns bu ry s h as a im ed t o p ro vi de i ts c us to me rs w it h a

range of products to c h o os e f r o m. I t h a s a c c o rd i n g ly

s u b - b r a n d e d o w n l a b e l p r o d u c t s t o f i t t h e r eq ui re me nt s

of d i f ferent customers segments . I t i s cont inuous ly work ing

to introduce new ranges and improve existing ones in order to meet the

demands of its customers.

WEAKNESSES

SMALL STORE SIZES

Although Sainsburys have a large number of stores spread all over U.K,

most of the current stores have relat ively smaller s izes as

compared to its competitors. Due to thi s the re is les s roo m for

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good s othe r tha n groc eri es and cus tome rs cannot be provided

with a complete shopping experience

Sainsbury's property portfolio was built up during the 1980s, when

supermarkets averaged 20-30,000 square feet, compared with 40-50,000 square feet during the 1990s.

HIGH ADMINISTRATION COSTS

Sainsburys administration costs in recent years have been very

high due to its supply-chain and IT costs. Although its previous

supply-chain problems were s o l v e d a n d I T c o s t s h a v e

r e d u c e d i n 2 0 0 7 , t h e y a r e s t i l l h i g h e r t h a n i t s

competitors. Due to this it has lower operating and net profit

margins although gross profit margin is much higher.

OPPORTUNITIES

EXPAND INTO NON-FOOD RETAIL

Non Food products are very appeal ing to grocerysup erm ark ets as the y off er higher profit margins. The growth

potential for non-food products is also much more as compared to

the food-items. According to Verdict consulting (2006) the Sales of

electricals will grow by 71.1% from 2006 to 2011, whereas Food

and grocery will only grow by 16% in this period. Non-food accounts for

less than 10% of Sainsbury's total sales turnover whereas Tescos non-

food cont r ibu tes to 25% o f the to ta l tu rnover . Sa insbury sha s therefore planned to increase its store sizes, where possible,

and to open new larger stores in the near future to have more

space available for non-food items and increase their market

share in the non-food retail. However, it should also carryout

additional market research to ensure the success of the Non-food items.

HEATHY FOODS - MARKETING OPPORTUNITY

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A major advan tage tha t Sains bu ry s has ove r t he market

cost- leaders is the superior product quality. This can be made use of

and exploited by Sainsburys in its advertisements to increase consumer

awareness and their focus on Fresh and Healthy foods. This may helpstealing customers from the market cost-leaders and increase

Sainsburys market share.

THREATS

COMPETITOR PRICE WAR

The retail industry is a highly competitive industry. Sainsburys has over

the past few years invested heavily on price-cuts and promotions.

However if cost-leaders re ta l i a te t h i s ma y hav e s e r i ou s

c o n s e q u e n c e s a s t h e b u s i n e s s s t r a t e g y o f Sainsburys is

different to the cost-leaders, and it may not be able to compete

with them in this area. Also indulging in a price war would mean that the

quality of its products may have to be compromised, which is a one

of its key success factors.

Impact of the Structures on the Performance of the

Organisation

Five basic operations performance objectives are: quality, cost, speed,dependability and flexibility. These five characteristics are used to

measure the production efficiency of the company. On many different

levels Sainsbury maintain high quality of its services, for example by

keeping up high quality of its products-including fair trade products,

through well- kept rooms with an attractive appearance to a fast service

and a friendly-oriented staff. Sainsbury ensure that all suppliers have

been evaluated by the Quality Attribute System (QAS) in order to provide

constant quality of the products throughout the store. Sainsbury has

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different prices, which are suited to different kinds of customers. Through

the implementation of high quality products, Sainsbury have high prices,

however to adapt to the needs of less wealthy clients also offers a wide

selection of 'basic' products at low prices. Therefore I would describeSainsburys prices, as fair prices. Another key performance objective is

speed. I would describe the speed of Sainsbury's as a moderately-high.

Still we can come across queues, especially in the evenings, during the

peak time, but Sainsbury has undertaken major steps to solve this

problem. Sainsbury's team is trying to reduce queues through the recent

introduction of baskets tills, self checkouts as well as the introduction of

the newest Scan and Pack system. In order to improve the speed,

Sainsbury also offers home delivery which can be obtained for the very

next day. Dependability is about keeping the word to customers. This is

one of the main objectives of Sainsbury. They are providing customers

with quality products at fair prices; they go out to meet the expectations

of customers for a healthy, safe, fresh and tasty food. Sainsbury respects

environment by using environmentally friendly packaging. Goods are kept

in magazines in case of necessity of quick restocking. Queuing time is

reasonable and deliveries are on time. Online Shopping at Sainsbury's is

also a great advantage. All the above provide a high level of dependability

and are the reason why the Sainsbury's brand remains on the market for

141 years, and this makes the Sainsbury differs from its competitors.

Flexibility refers to the ability of a company to offer a wide variety of

products to its customers and this is what Sainsbury's is doing, since 141

years! During this time, there was a huge technological revolution-

Sainsbury had to adapt. On the market have appeared newer and newer

products-Sainsbury's had to adapt. Sainsbury also took into account the

recent change the behaviour of customers, who eat less at restaurants

and eat more at home. They launched a wide range of new products and

new sections to its stores such as electronics and household goods. They

also introduced many attractive promotions and also suggest to

customers interesting ideas for tasty and healthy meals in their cookery

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book-all in order to reach greater number of customers and to meet needs

of every one of them.

Communication Process within an Organisation

Communication is simply the act of transferring information from one

place to another.

Although this is a simple definition, when we think about how we may

communicate the subject becomes a lot more complex. There are various

categories of communication and more than one may occur at any time.

The different categories of communication are:

Spoken or Verbal Communication: face-to-face, telephone, radio or

television or other media.

Non-Verbal Communication: body language, gestures, how we dress or act

- even our scent.

Written Communication: letters, e-mails, books, magazines, the Internet

or via other media.

Visualizations: graphs, charts, maps, logos and other visualizations can

communicate messages.

Communication theory states that communication involves a sender and a

receiver (or receivers) conveying information through a communicationchannel.

The desired outcome or goal of any communication process is

understanding.

The process of interpersonal communication cannot be regarded as a

phenomena which simply 'happens', but should be seen as a process

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which involves participants negotiating their role in this process, whether

consciously or unconsciously.

Senders and receivers are of course vital in communication. In face-to-

face communication the roles of the sender and receiver are not distinct

as both parties communicate with each other, even if in very subtle ways

such as through eye-contact (or lack of) and general body language.

There are many other subtle ways that we communicate (perhaps even

unintentionally) with others, for example the tone of our voice can give

clues to our mood or emotional state, whilst hand signals or gestures can

add to a spoken message.

In written communication the sender and receiver are more distinct. Until

recent times, relatively few writers and publishers were very powerful

when it came to communicating the written word. Today we can all write

and publish our ideas on the Internet, which has led to an explosion of

information and communication possibilities.

A message or communication is sent by the sender through a

communication channel to a receiver, or to multiple receivers. The sender

must encode the message (the information being conveyed) into a form

that is appropriate to the communication channel, and the receiver(s)

then decodes the message to understand its meaning and significance.

Misunderstanding can occur at any stage of the communication process.

Effective communication involves minimising potential misunderstanding

and overcoming any barriers to communication at each stage in the

communication process.

An effective communicator understands their audience, chooses an

appropriate communication channel, hones their message to this channel

and encodes the message to reduce misunderstanding by the receiver(s).

They will also seek out feedback from the receiver(s) as to how the

message is understood and attempt to correct any misunderstanding orconfusion as soon as possible. Receivers can use Clarification and

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Reflection as effective ways to ensure that the message sent has been

understood correctly.

Types of communication used by Sainsbury

Communication methods used by Sainsbury can be categorized into

different types depending upon the level at which it takes place, the direction it

takes or by its very nature. Some of the commonly communication methods which

Sainsbury use are:

1 . P e r s o n a l C o m m u n i c a t i o n

2 . B u s i n e s s C o m m u n i c a t i o n3 . I n t e r n a l C o m m u n i c a t i o n

4 . E x t e r n a l C o m m u n i c a t i o n

5 . U p w a r d C o m m u n i c a t i o n

6 . D o w n w a r d C o m m u n i c a t i o n

7 . L a t e r a l C o m m u n i c a t i o n

8 . D i a g o n a l C o m m u n i c a t i o n

9 . F o r m a l C o m m u n i c a t i o n

10. Informal

Personal Communicat ion

Between two individuals, be it a family, or group or community or even an

organization.

Takes place in the individual capacity. There is an element of privacy in all such

communications.[e.g.] Personal Letters, Personal Telephone Calls, Conversations,

One-to-one Meetings/Talk or e-mail messages etc. It is private in nature and no

official about it.

Bus iness Communicat ion

Takes place between/among goal of a business. Takes place between/among

markets, market places, within the organizations and between/among

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groups of employees, owners, and employees, buyers and sellers, service

providers and customers, sales persons and prospective buyers and also

between/among people within the organisation. All the above communications

indeed impact the whole business activities. Communication is the vehicle onthe business moves. The ability of the communicator to communicate

effect ively verbally, non-verbally and in writing is a pre-requisite for

organizational and business related success.

Internal Communicat ion

Internal Communication takes place within the organization or group

among t h e p e op l e w i th i n , a m on g d i f f e re n t g r ou p s o f

e m p l o y e e s a n d b e t w e e n employers and employees. It could be

ora l , o r wr i t ten , v i sua l o r aud io -v i sua l , fo rma l o r in fo rma l

and upward and downward. Internal Communication serves to inform,

instruct, educate, develop, motivate, persuade, entertain, direct, control and

caution people in the organization. When a personal letter is written at an

official address besides writing the name of the addressee, the

env elo pe is sup ers cri bed as PR IVA TE or CONFIDENTIAL to

convey the nature of Communication.

Knowledge, Ski l ls , Goal Orientat ions, Sharing of Corporat ion

Concerns, Review and Monitoring, Performance Appraisal, Counselling

and Training are some of the issues concerning Internal Communication.

External Communicat ion:

External Communication flows outward, unlike Internal Communication. I t

a d d r e s s e s t h e p e o p l e o u t s i d e t h e o r g a n i z a t i o n

es pe c i a l ly th e p rospect ive cus tomers , competi tors , pub l i c,

press, media and the Government. Takes place in various ways through

different channels. They are :

Letters

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Notices

Brochures

Demonstrations

Telephonic Calls,

Business Meetings

Press Releases

Press Conferences

Audio-Visual Presentation

Publicity Films

Advertisements

Product Launch Events etc.

Upward Communicat ion

Large organizations such Sainsbury have different hierarchical level or tiers.

The process of communication to be effective and complete

should encompass all levels and tiers. Upward Communication moves

upward i.e. from Bottom to Top levels in the hierarchy.

A ny c om mu ni ca t i on t ha t m ov es f ro m e mp lo ye es t o

s u p e r v i s o r s , supervisors to managers, managers to top level

executives, Regional Managers to General Managers and so on

may be called as Upward Communication. Similarly, communication

from Branches to Regional Offices, Regional Offices to Zonal Offices and

Zonal Offices o Head Quarters [HQ] etc. are upward communication.

E m p l o y e e s S u g g e s t i o n s , M a r k e t R e p o r t s , P e r f o r m a n c e

R e p o r t s , Feedback on new Products, Requests for facilities etc.

are all Upward Communications in the organizational context.

Downward Communication

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This flows from Top to Downward, i.e. from CEO to Downwards. This communication

travels through-Senior Executives to Junior Level functionaries, from Controlling

Office to the Branch, from the Head of the Division to the Head of Unit, Corporate

Goals, Business Priorities, Motivational Letters, Work-related instructions,Newsletters, Letters from the CEO/General Managers Desk etc. are all typical

example of Downward Communication.

This type of communication is increasingly important, as business becomes larger,

complex and specialized. Even in small companies, Lateral Communication is

very much essential in order to co-ordinate various functions by encouraging

Team of Work among peers. Major setback to Lateral Communication

includes Departmental isolation, lack of time and communication opportunities.

Diagonal Communicat ion

D ia go na l c om mu n ic a t i on i n S a in sb ur y m a k es t h e

o r g a n i z a t i o n m o r e f l e x i b l e b y allowing faster communication ofinformation in both directions, from the lower levels of the company to the top,

and vice versa.

It takes away the rigid command structure that can bog down companies in "red

tape" (commonly known as procedures) and can aid in efficiency by employees

getting quick answers to questions that might otherwise take a week or

maybe even two.

It allows cross communication between departments which in

theory, helps disseminate information faster and helps people do

their jobs quicker and more efficiently.

The idea is that it empowers people more and allows them to have better c o n t r o l

o ve r t he i r j ob s a nd b re ak s d ow n b ar r i e r s b et we enu p p e r management and the lower echelons. Generally, diagonal

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communication is not liked higher level people, because, it works in

theory only.

Formal Communication

Formal Communication generally follows a well-defined hierarchical pattern andperiodicity. Memoranda, Circulars, Instructions, Guidelines, Clarifications,Agreements, and Reports are some of the Channels that facilitate theflow of Formal Communication in Sainsbury.

T h e m a i n a i m o f F o r m a l C o m m u n i c a t i o n i s

t o e n s u r e t h a t t h e communication takes place on an on-going

basis in an organization. S t a f f M e e t i n g s , U n i o n - M a n a g e m e n t

M e e t i n g s , B r a n c h M a n a g e r s Conferences, PeriodicalSales Review Meetings and Customer Meets are some of the examples

of Formal Communication.

Informal Communication

This type of communication takes place in an Unstructured

Manner and outside the Formal Pattern of Communication. There is an elementof spontaneity in this communication. Informal Communication works well in

smaller, loosely knitted organization.

It is used more often in situations where there are no rigid hierarchical tiers.

While Formal Communication is a must in large organizations, it is

the Informal Communication that helps sustain goal orientation in small units.

Infor mal Communica tion tak es p lac e thr ough Chats ,

Conversat ions, and Grapevines etc.

Recommended Changes

As a significant change I would suggest to a Sainsbury's to introduce someproducts which will give to a company a comparative advantage over their

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competitors. My second recommendation to Sainsbury's would be an

opening of local shops located in the city centre rather than on the

outskirts of the city. Customers often if do not need to do large purchases

are choosing local shops rather than supermarkets to save time andmoney, because undoubtedly in large stores often they acquire more than

actually have planned.

Good idea, which would attract additional customers to the Sainsbury's

would be the introduction of pay point or post office to the store, where

the customers immediately after purchase could pay their bills without

spending extra time to reach these places elsewhere in the city.

Conclusions

Sainsbury s f inanc ia l per formance in 2011 was except iona l .

Improvement in sales, profit margins, dividends and a stable liquidity

position should send positive messages to all stakeholders. The key corner

stone of Sainsbury overall success is providing its customers with Great

quality food at fair prices. It has stayed closely connected with the needs

of the customers regarding the quality, style, convenience, and price of

different products and have delivered accordingly by sub-branding own

label products to fit the requi reme nts of dif feren t custome r

segments . E .g . Bas ics for the down-market, Be good to

yourself for the up-market, and Taste the difference for the mid-

market.

S i nc e t h e l a un c h o f K i n g ' s r e c ov e ry p r o gr a m me , t h e

t u r n a r o u n d h a s b e e n phenomenal and the company has reported

twelve consecutive quarters of sales growth, most recently in January 08.

Despite distractions from potential takeovers s p e c u l a t i o n i n t h e

l a s t q u a r t e r o f t h e y e a r 2 0 1 1 , s t r o n g p e r f o r m a n c e w a s

delivered.

Overall Sainsburys growth will be affected by general market issues such

as the impact of regulatory and planning regimes on store

development and economic factors such as the level of household

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disposable income. However, Sainsburys is well positioned to

anticipate and meet the increasing consumer focus on fresh,

healthy, quality foods and fair prices.

Bibliography

Sainsbury publications

J Sainsbury`s Plc 2011 available at www.j-sainsbury.co.uk

Online financial publications

www.businessweek.com

www.ft.com

www.wikipedia.com

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