Sample Essay
At this present phenomenon the nature of the retail industry is changing its image dramatically and the importance to survive with the competitors and remain as а leading company in the market has reached its highest peak. However, there are some issues which may have some impacts on the business.
Political factors
At present the changing trend of globalised business could be а challenge as well as an opportunity for the Sainsbury’s because they would have to compete against new forces from all over the world to maintain best quality of the products and services they offer.
Customer may get а negative impression because of the investigation going on price fixing as Sainsbury’s is listed in the top four retailers inUK(Rigby 2008).
The UK Government is to reduce corporation tax rates from 30% to 28%, which will help Sainsbury, to save large amount of money (HM Treasury 2008).
Economical factors
The rising food prices because of global food crisis may have impacts on the business of Sainsbury’s as it will definitely increase their purchasing and production cost (economist.com 2008). And eventually it will increase the overall price of the products in the super market
Supply chain of Sainsbury’s may get affected with the rising cost of fuel which may lead to an overall increase in prices.
The credit crunch will cut the purchasing power of the consumers as they would have less money to spend on luxury products. Therefore, automatically it is going to decrease profit margins for Sainsbury’s. On the other hand Sainsbury’s operates financial services company with HBOS (Annual Report 2007) and also а bank. However, both of are directed affected due to recession.
As the competition in the market is really high other big competitors like ASDA, MORRISON, LIDL, and ALDI are cutting down their product prices and giving lot of incentives to customer which may bind Sainsbury’s to drop their prices to survive in the market. (Annual Report 2008)
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