Based on various researches at Oak Spring University , J Sainsbury PLC is operating in a macro-environment that has been destablized by – increasing commodity prices, geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, increasing transportation and logistics costs, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy,
central banks are concerned over increasing inflation, there is backlash against globalization, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that J Sainsbury PLC can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the J Sainsbury PLC, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which J Sainsbury PLC 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 PLC can be done for the following purposes –
1. Strategic planning of J Sainsbury PLC
2. Improving business portfolio management of J Sainsbury PLC
3. Assessing feasibility of the new initiative in United States
4. Making a Retail (Grocery) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of J Sainsbury PLC
Strengths of J Sainsbury PLC | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of J Sainsbury PLC are -
Strong track record of project management in the Retail (Grocery) industry
– J Sainsbury PLC is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Retail (Grocery) industry
– J Sainsbury PLC has clearly differentiated products in the market place. This has enabled J Sainsbury PLC to fetch slight price premium compare to the competitors in the Retail (Grocery) industry. The sustainable margins have also helped J Sainsbury PLC to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the J Sainsbury PLC 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.
Operational resilience
– The operational resilience strategy of J Sainsbury PLC 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.
Highly skilled collaborators
– J Sainsbury PLC 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 PLC have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Retail (Grocery) industry
- digital transformation varies from industry to industry. For J Sainsbury PLC digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. J Sainsbury PLC has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
High brand equity
– J Sainsbury PLC has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled J Sainsbury PLC to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– J Sainsbury PLC has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – J Sainsbury PLC 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.
High switching costs
– The high switching costs that J Sainsbury PLC has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Learning organization
- J Sainsbury PLC 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 PLC is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at J Sainsbury PLC emphasize – knowledge, initiative, and innovation.
Organizational Resilience of J Sainsbury PLC
– The covid-19 pandemic has put organizational resilience at the centre of everthing J Sainsbury PLC does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– J Sainsbury PLC is one of the most innovative firm in Retail (Grocery) sector.
Weaknesses of J Sainsbury PLC | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of J Sainsbury PLC are -
Increasing silos among functional specialists
– The organizational structure of J Sainsbury PLC is dominated by functional specialists. It is not different from other players in the Retail (Grocery) industry, but J Sainsbury PLC needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help J Sainsbury PLC to focus more on services in the Retail (Grocery) industry rather than just following the product oriented approach.
Skills based hiring in Retail (Grocery) industry
– The stress on hiring functional specialists at J Sainsbury PLC has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Capital Spending Reduction
– Even during the low interest decade, J Sainsbury PLC 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.
Slow to strategic competitive environment developments
– As J Sainsbury PLC 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.
Ability to respond to the competition
– As the decision making is very deliberative at J Sainsbury PLC, in the dynamic environment of Retail (Grocery) industry it has struggled to respond to the nimble upstart competition. J Sainsbury PLC has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 PLC supply chain. Even after few cautionary changes, J Sainsbury PLC is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left J Sainsbury PLC vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though J Sainsbury PLC has some of the most successful models in the Retail (Grocery) industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. J Sainsbury PLC should strive to include more intangible value offerings along with its core products and services.
Employees’ less understanding of J Sainsbury PLC strategy
– From the outside it seems that the employees of J Sainsbury PLC don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High dependence on J Sainsbury PLC ‘s star products
– The top 2 products and services of J Sainsbury PLC 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 PLC has relatively successful track record of launching new products.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, J Sainsbury PLC is slow explore the new channels of communication. These new channels of communication can help J Sainsbury PLC to provide better information regarding Retail (Grocery) products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– From the 10K / annual statement of J Sainsbury PLC, it seems that company is thinking out the frontier risks that can impact Retail (Grocery) industry. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
J Sainsbury PLC Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of J Sainsbury PLC are -
Use of Bitcoin and other crypto currencies for transactions in Retail (Grocery) industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for J Sainsbury PLC in the Retail (Grocery) industry. Now J Sainsbury PLC can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, J Sainsbury PLC 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.
Creating value in data economy
– The success of analytics program of J Sainsbury PLC has opened avenues for new revenue streams for the organization in Retail (Grocery) industry. This can help J Sainsbury PLC to build a more holistic ecosystem for J Sainsbury PLC products in the Retail (Grocery) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– J Sainsbury PLC can develop new processes and procedures in Retail (Grocery) industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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 PLC 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 PLC 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 PLC to hire the very best people irrespective of their geographical location.
Buying journey improvements
– J Sainsbury PLC can improve the customer journey of consumers in the Retail (Grocery) industry by using analytics and artificial intelligence. It can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Manufacturing automation
– J Sainsbury PLC can use the latest technology developments to improve its manufacturing and designing process in Retail (Grocery) sector. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Lowering marketing communication costs
– 5G expansion will open new opportunities for J Sainsbury PLC 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.
Learning at scale
– Online learning technologies has now opened space for J Sainsbury PLC 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.
Loyalty marketing
– J Sainsbury PLC 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects J Sainsbury PLC can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. J Sainsbury PLC can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats J Sainsbury PLC External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of J Sainsbury PLC are -
High dependence on third party suppliers
– J Sainsbury PLC 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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, J Sainsbury PLC may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Retail (Grocery) sector.
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 PLC.
Shortening product life cycle
– it is one of the major threat that J Sainsbury PLC is facing in Retail (Grocery) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, J Sainsbury PLC 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 PLC prominent markets.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Retail (Grocery) industry are lowering. It can presents J Sainsbury PLC with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Retail (Grocery) sector.
Technology acceleration in Forth Industrial Revolution
– J Sainsbury PLC has witnessed rapid integration of technology during Covid-19 in the Retail (Grocery) industry. As one of the leading players in the industry, J Sainsbury PLC needs to keep up with the evolution of technology in the Retail (Grocery) sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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 PLC 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for J Sainsbury PLC 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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. J Sainsbury PLC needs to understand the core reasons impacting the Retail (Grocery) industry. This will help it in building a better workplace.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of J Sainsbury PLC business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– J Sainsbury PLC 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 PLC can take advantage of this fund but it will also bring new competitors in the Retail (Grocery) industry.
Weighted SWOT Analysis of J Sainsbury PLC Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at J Sainsbury PLC 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 PLC 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 PLC 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 PLC 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 PLC needs to make to build a sustainable competitive advantage.