SWOT Analysis / TOWS Matrix for J Sainsbury (United Kingdom)
Based on various researches at Oak Spring University , J Sainsbury is operating in a macro-environment that has been destablized by – geopolitical disruptions, increasing government debt because of Covid-19 spendings, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, there is backlash against globalization, increasing commodity prices,
increasing energy prices, talent flight as more people leaving formal jobs, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that J Sainsbury can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the J Sainsbury, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which J Sainsbury operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of J Sainsbury can be done for the following purposes –
1. Strategic planning of J Sainsbury
2. Improving business portfolio management of J Sainsbury
3. Assessing feasibility of the new initiative in United Kingdom
4. Making a Retail (Grocery) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of J Sainsbury
Strengths of J Sainsbury | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of J Sainsbury are -
Low bargaining power of suppliers
– Suppliers of J Sainsbury in the Services sector have low bargaining power. J Sainsbury has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps J Sainsbury to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of J Sainsbury
– The covid-19 pandemic has put organizational resilience at the centre of everthing J Sainsbury does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– J Sainsbury is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the Retail (Grocery) industry. The technology infrastructure of United Kingdom is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Diverse revenue streams
– J Sainsbury is present in almost all the verticals within the Retail (Grocery) industry. This has provided J Sainsbury a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Successful track record of launching new products
– J Sainsbury has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. J Sainsbury has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Strong track record of project management in the Retail (Grocery) industry
– J Sainsbury is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy of J Sainsbury comprises – understanding the underlying the factors in the Retail (Grocery) industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Learning organization
- J Sainsbury is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at J Sainsbury is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at J Sainsbury emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the J Sainsbury are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Highly skilled collaborators
– J Sainsbury has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Retail (Grocery) industry. Secondly the value chain collaborators of J Sainsbury have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Retail (Grocery)
– J Sainsbury is one of the leading players in the Retail (Grocery) industry in United Kingdom. Over the years it has not only transformed the business landscape in the Retail (Grocery) industry in United Kingdom but also across the existing markets. The ability to lead change has enabled J Sainsbury in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– J Sainsbury has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – J Sainsbury staying ahead in the Retail (Grocery) industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses of J Sainsbury | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of J Sainsbury are -
Workers concerns about automation
– As automation is fast increasing in the Retail (Grocery) industry, J Sainsbury needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of J Sainsbury supply chain. Even after few cautionary changes, J Sainsbury is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left J Sainsbury vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of J Sainsbury is dominated by functional specialists. It is not different from other players in the Retail (Grocery) industry, but J Sainsbury needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help J Sainsbury to focus more on services in the Retail (Grocery) industry rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, J Sainsbury has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Retail (Grocery) industry over the last five years. J Sainsbury even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Slow to strategic competitive environment developments
– As J Sainsbury is one of the leading players in the Retail (Grocery) industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Retail (Grocery) industry in last five years.
High dependence on J Sainsbury ‘s star products
– The top 2 products and services of J Sainsbury still accounts for major business revenue. This dependence on star products in Retail (Grocery) industry has resulted into insufficient focus on developing new products, even though J Sainsbury has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, J Sainsbury has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Need for greater diversity
– J Sainsbury has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High operating costs
– Compare to the competitors, J Sainsbury has high operating costs in the Retail (Grocery) industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract J Sainsbury lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, J Sainsbury has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Retail (Grocery) industry using digital technology.
Ability to respond to the competition
– As the decision making is very deliberative at J Sainsbury, in the dynamic environment of Retail (Grocery) industry it has struggled to respond to the nimble upstart competition. J Sainsbury has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
J Sainsbury Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of J Sainsbury are -
Learning at scale
– Online learning technologies has now opened space for J Sainsbury to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, J Sainsbury can use these opportunities to build new business models that can help the communities that J Sainsbury operates in. Secondly it can use opportunities from government spending in Retail (Grocery) sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, J Sainsbury is facing challenges because of the dominance of functional experts in the organization. J Sainsbury can utilize new technology in the field of Retail (Grocery) industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, J Sainsbury can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Building a culture of innovation
– managers at J Sainsbury can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Retail (Grocery) industry.
Creating value in data economy
– The success of analytics program of J Sainsbury has opened avenues for new revenue streams for the organization in Retail (Grocery) industry. This can help J Sainsbury to build a more holistic ecosystem for J Sainsbury products in the Retail (Grocery) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– J Sainsbury has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Retail (Grocery) sector. This continuous investment in analytics has enabled J Sainsbury to build a competitive advantage using analytics. The analytics driven competitive advantage can help J Sainsbury to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help J Sainsbury to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for J Sainsbury to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for J Sainsbury to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for J Sainsbury in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Retail (Grocery) industry, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help J Sainsbury to increase its market reach. J Sainsbury will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Loyalty marketing
– J Sainsbury has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Leveraging digital technologies
– J Sainsbury can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Threats J Sainsbury External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of J Sainsbury are -
Shortening product life cycle
– it is one of the major threat that J Sainsbury is facing in Retail (Grocery) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing wage structure of J Sainsbury
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of J Sainsbury.
Consumer confidence and its impact on J Sainsbury demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in Retail (Grocery) industry and other sectors.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. J Sainsbury will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for J Sainsbury in the Retail (Grocery) sector and impact the bottomline of the organization.
High dependence on third party suppliers
– J Sainsbury high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Regulatory challenges
– J Sainsbury needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Retail (Grocery) industry regulations.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of J Sainsbury.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, J Sainsbury can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate J Sainsbury prominent markets.
Environmental challenges
– J Sainsbury needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. J Sainsbury can take advantage of this fund but it will also bring new competitors in the Retail (Grocery) industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for J Sainsbury in Retail (Grocery) industry. The Retail (Grocery) industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Weighted SWOT Analysis of J Sainsbury Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at J Sainsbury needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of J Sainsbury is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of J Sainsbury is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of J Sainsbury to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that J Sainsbury needs to make to build a sustainable competitive advantage.
