Business report on J Sainsbury's.

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CONTENTS

Introduction ....................................................Pg 2

Business Objectives ...........................................Pg 3

Types of business ..............................................Pg 14

Organisational Functions .....................................Pg 20

Organisational Structures .....................................Pg 31

Communication ................................................Pg 37

Product and Quality ...........................................Pg 41

Bibliography ....................................................Pg 46

Introduction

The business that I have decided to report on is J Sainsbury's.

As we all know this is a very well known and well-established organisation and this is why I decided to make a report on it and also because the branch I am going to focus on is about ten minutes away from where I live.

J Sainsbury's is a grocery store that has over 1 million branches across UK.

The registered address of the business is:

J Sainsbury's Supermarket

33 Holborn

London

EC1N 2HT

I am going to identify the different objectives of my chosen business and I am going to write this by focusing on the following points and explaining it thoroughly:

* Making a profit

* Surviving

* Increasing sales or market share

* Producing or offering high quality products or services

* Developing a skilled workforce

* Fulfilling charitable or non-profitable objectives such as caring for environment

I will also answer the following questions thoroughly:

. What are the principle objectives of the business?

2. What charitable and non-profit objectives does the business have?

Why they have those objectives?

3. How does the business maximise its profits?

4. Is "growth" one of the main objectives? Why growth is often risky for businesses organisations?

5. What sort of culture does the business have? How does the culture of the business affect its objectives?

At the end I am going to round up my report with whether or not I think the business is successful. Whatever my answer will be I will produce evidence to support my answer.

Business Objectives

First I would like to talk a bit about business objective in general and then I will move on to explaining about J Sainsbury's business objectives.

Businesses exist to provide goods and services. All businesses whatever their objectives have to make products and/or provide services that satisfy customers' wants or needs. Business sets themselves objectives that affect the way they operate. These objectives flow from its mission and are the criteria against which its performance needs to be judged.

J Sainsbury's objectives are:

* To provide shareholders with good financial returns by focusing on customers' needs, adding value through their expertise and innovation, and vesting for future growth.

* To provide unrivalled value to their customer in the quality of the goods they sell, in the competitiveness of their prices and in the range of choice they offer.

* To achieve efficiency of operation, convenience and customer service in their stores, thereby creating as attractive and friendly shopping environment as possible.

* To provide a working environment where there is a concern for the welfare of each member of staff, where all have opportunities to develop their abilities and where each is well rewarded for their contribution to the success of the business.

* To fulfil their responsibilities by acting with integrity, maintaining high environmental standards, and contributing to the quality of the life of the community.

Mission

Every business will have a mission statement, whether in the private or public sector, large or small, commercial or non-commercial. In every business statement you will find the answer to questions such as what the business is about? What is it that they are trying to achieve?

A mission statement is a written document setting out the organisation's purpose.

A good mission statement should:

* Be well written, simple and direct

* Define its purpose

* Identify the value s and culture of the organisation

* Set out its standards and the qualities that distinguishes it from its competitors

* Identify its customers

J Sainsbury's mission statement:

J Sainsbury's mission is to be consumer's first choice for food, delivering products of outstanding quality and great service at a competitive cost through working 'faster, simpler and together'.

Increasing shareholder returns

Short-run and Long-run objectives

Long-run objectives cover a three to five years time period. They usually define the organisation's primary or main aims, e.g. to increase profits by 10 per cent.

Short-run objectives, usually set up for up to a year ahead, are used to support the long-run objectives, e.g. to increase profits in the northeast by 15 per cent.

Mind you objectives can change over time depending on conditions in the external environment and on internal policies.

SMART objectives

To be effective objectives should be SMART. It is an acronym for:

* Specific - e.g. for a particular product in a particular area

* Measurable - such as percentage sales or profits

* Achievable - with extra effort

* Realistic

* Time constrained - within a set time period or deadline

Business objectives is necessary because:

* They act as management targets

* They are a standard against which performance can be measured

* They help to bring staff together

* When linked to pay or rewards they can encourage staff

* Making a profit

In general:

Traditionally it has been assumed that all firms attempt to make the most profit they can i.e. to maximise their profits. They therefore adopt pricing and production strategies that specifically aim to achieve this goal. However recently, it has been suggested that instead of maximising profits, businesses try to achieve satisfactory profits. Though this is lower than the maximum but still generally accepted by shareholders.

In Sainsbury's:

Looking at the financial records of J Sainsbury's, I can say that Sainsbury's had a massive increase on their profit right from 1998 up to 2002. If you look at the record of five years of financial records of Sainsbury's you will see that the group turnover increased exactly by £2,710 million.

In terms of making profit J Sainsbury's doesn't only operate as food retailers but as a property development that is called J Sainsbury's Developments Ltd. They are in logistical services, which are called J Sainsbury's Distribution Ltd. Finally J Sainsbury's Bank plc, which is a financial service.

The total turnover for J Sainsbury's in 2001 in the food retailers, financial services area and property development was £17,244 million and in 2002 it is £17,162 but the total gross profit was £1,162 million in 2001 and rose up to £1,257 by 2002 March.

J Sainsbury's also in 2001 made profit on ordinary activities before interest of £513 million and again by 2002 it had risen up to £620 million.

Looking at this I can say Sainsbury's' one of the objectives has been met. They wanted to provide their shareholders with good financial returns by focusing on their customers' needs. If you look at the figures above, I would say that they have accomplished that and the shareholders will get good financial returns.

* Survival

In general:

While businesses such as BT and BP think in £ billions, at the other extreme some businesses think of surviving. Survival is the main objective of every business. This is particularly relevant during a recession. Most new businesses have survival as the main aim of the first years of operating.

When managers are concerned with survival they tend to be very cautious and reluctant to take any risks, this can mean that profits stay very low and the policy is self-defeating.

In Sainsbury's:

As part of surviving, Sainsbury's rigorously monitor 10,000 lines weekly to ensure that they remain competitive. They also reinvested some of their cost savings in price adjustments. Alongside this they are continuously running a highly attractive, sustainable promotional programme.

J Sainsbury's has been making great strides in retaining their colleagues to serve their customers better.

The business has replaced their legacy system with 'best in class' IT solutions to help them gain competitive advantages. Their replatforming project retains its scope and is on target.

* Increasing sales/Market share

In general:

This is closely linked to the business's desire to achieve sales revenue. The market share is the fraction of the market that a business controls. A bigger share of the market gives more power and influence to a business. If the business abuses this power by acting against the public interest e.g. by charging high prices, the Competition Commission could investigate on it.

In Sainsbury's:

The financial highlights shows that between 2001 and 2002 the sales in the retailing sector changed by 7.4%. Underlying profit before tax changed by 14.2% and the profit before tax changed by 30.7%.

On February 2001 Sainsbury's supermarkets Ltd became the first major food retailer to achieve the corporate accreditation Investors in People. The Investors in People Standard is tried and tested flexible framework that helps UK companies succeed and compete through improved people performance. Sainsbury's also increased their sales by launching Sainsbury's own-label organic fruits and vegetables. Also the mobile phone service called Sainsbury's one.

With the figures from the ten-year financial record I can say that Sainsbury's have a big share in the market and each year it keeps on increasing by couple of percents. In 1990 the share was 409% and gradually, year-by-year it increased to 714% in 1999.

* Providing service for the community

In general:

Many non-profit making organisations exist only to provide a public service and their sole purpose for raising money is to help them carry out their activities, they are not interested in profit making but in providing a service to the community.

In Sainsbury's:

During 2000/01, J Sainsbury's plc invested £14.2 million directly in support of UK communities.

J Sainsbury's plc strives to deliver an imaginative programme of community involvement that reflects their strengths as a business and meets their customers and colleagues' expectations. The projects listed below are examples of the innovative, people-oriented charities that J Sainsbury's plc support.

* Crisis FareShare - provides nutritious meals for homeless people and re-directs Sainsbury's supermarkets wasted food away from landfill sites.

* Salvation Army - donate food that would otherwise be thrown away because it cannot be sold thus strengthening Sainsbury's donation network in areas outside the reach of Crisis FareShare.

* Express Link Up - supplies equipment for use by sick children in hospitals across the UK.

* Producing high quality product and/or services

In general:

Being able to provide permanently high quality goods or services is now a significant aim for most businesses. This allows them to differentiate from their competitors and can give a permanently sustainable competitive advantage.

In Sainsbury's:

Quality food is a priority for Sainsbury's customers and a key component of the Sainsbury's brand. During the year, they have invested in their food ranges and have improved/developed over 3,200 products. Sainsbury's has a reputation for quality. In addition, their own-label subbrands are amongst the best in UK. Sainsbury's have constant supply of fresh fruits and vegetables on shelves 24 hours. They have certain staff employed just to make sure that every product on shelves is up to date and, the out of date products are taken off the shelves as soon as it is necessary. Customer complaints to do with the products are dealt promptly and they always make sure that the customers go away satisfied.

Sainsbury's home delivery service into stores has reduced new customer acquisition costs by 60 per cent and fulfilment costs by 30 per cent in the second half as compared to the first half of the year.

* Developing a skilled workforce

In general:

Most businesses would agree with the statement that 'our greatest asset is our people'. This means achieving its objectives through the motivation and development of its staff.

It is committed to providing all staff with:

a) The information they need to perform more effectively - all staff would be told what the business objective and aim is so that they can help the firm achieve it.

b) A regular performance appraisal - appraisal would help the business because if the staff has chance of talking about their needs and problems, then the managers should be able to help them. Once the problem is solved workers will be more motivated towards their work because they will feel wanted, then this will lead to them producing better work and service.

c) A personal training and development plan - new skills used from workers will produce better work, which will lead o satisfied customer's.

A complete and total commitment to training is vital if a business hopes to produce quality goods and services

In Sainsbury's:

Sainsbury's want everyone that works for them has the opportunity to develop their careers. They have a company-wide development programme based on a personnel management agenda where each manager has an individual training and career development programme. Colleagues in store have a 'how well am I doing?' meeting with their manger to assess their progress and training needs.

J Sainsbury's have been recognised by Investors In People because they have been successfully adopting and maintaining its four fundamental principles:

. Commitment to develop all employees to achieve business goals and targets;

2. Regularly reviewing training and development needs in the context of the business;

3. Taking relevant action to meet training and development needs throughout people's employment;

4. Evaluating outcomes of training and development for individuals and the organisation as a basis for continues improvement.

Retail staff have access to Learning@Sainsbury's, via the Sainsbury's intranet, which is helping to grow talent within the business, providing help and training when needed. It covers four faculties:

. Management capabilities;

2. Customer service and selling skills;

3. Operating standards;

4. Finance and business planning.

* Fulfilling charitable and non-profit objectives

In general:

A charity is an organisation whose key objective is to help people in need or work for the common good. A charitable trust is an organisation registered with the charity commissioners. Providing it obeys their rules it does not have to pay tax.

In addition to the dedicated charities many companies now include non-profit-making charitable objectives and activities as part of their mission in an attempt to improve their image with their stakeholders.

In Sainsbury's:

In 1999 Sainsbury's donated £3.8 million to charitable organisations and local community projects which included contributions of money and time to enterprise agencies, job creation, educational schemes, town centre management initiatives, community projects and the arts.

J Sainsbury's always receive request from charities and groups seeking to hold fundraising activities. Often store managers are in control of that because they know their customers' interests. National fundraising partners are chosen using the charity guidelines for the whole community programme and include staff in the store making every effort to impress in their fundraising efforts. Past partners have included Children in Need, National Meningitis Trust and Help the Hospices.

During 2000/01 Sainsbury's colleagues and customer raised a staggering £9 million through fundraising activities, including a record-breaking £4.5 million for Comic Relief.

The principle objectives of the business

The principal objectives of my chosen business are to meet its customers' needs effectively and thereby provide shareholders with good, sustainable financial returns.

It aims to ensure all colleagues have opportunities to develop their abilities and are well rewarded for their contribution to the success of the business.

Its policy is to work with all of its suppliers fairly, recognising the mutual benefit of satisfying customers' needs.

It also aims o fulfil its responsibilities to he communities and environments in which it operates.

The charitable and non-profit objectives of the business

The charitable and non-profit objectives of the business are to raise money for the poor and helpless people, also for those with disability and serious illness. Sainsbury's sell product that promote the charity or non-profit campaign and include a donation in their price.

Sainsbury's have those objectives because they believe this is one of the main ways that they can maintain their customers. Customers get very happy when they find out that large organisation are supporting non-profit activities. Moreover, are sponsoring charities for disadvantage people across the world.

Sainsbury's attract more customers during certain events then they do on a normal day, such as the Rode Nose Day, they sold twice as much as before when customers found out that every pound they spend 10p is going towards the red nose day.

True partnerships offer benefits to both parties and they are confident that their sponsorships provide a blend of community and corporate values and branding opportunities.

Maximising its profit

The business tries to maximise its profit by improving on the products that the customers least like. They give out questionnaires to customers to fill in answering questions about the company. They also ask the customers on how they can improve the service so that the customers are satisfied. Sainsbury's monitor what products customers most buy and what brands are most popular.

They also give discounts on occasions like Christmas, so customers would buy more.

Another way Sainsbury's maximise their profit is by going into partnership with existing businesses. For example in October 2000 the first opening on Sainsbury's Local store at a petrol station in Roehampton, London. In partnership with shell, Sainsbury's is planning a six-year trial of this concept.
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Growth

Growth is one of the objectives for J Sainsbury's. Infact it is one of the main objectives because once the company takes over a competing company, it gains a greater share of the market and increases its overall strength and bargaining power.

Growth can often be risky for organisations because the business starts of as a flat structure, where it has a close connection to the customers. This might be one of the reasons why businesses attract more customers. However, once the business grows the structure has to change to hierarchal for which customers ...

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