Sainsbury's Stakeholders and their Job Roles

Sainsbury’s Stakeholders and their Job Roles

The purpose of this task is to outline certain departments within the supermarket, such as stakeholders, job roles etc. To find relevant information needed I will be using resources such as information from class notes/worksheets, textbooks and the Internet.

Stakeholder is anyone who shows an interest in the business.

Shareholders/Owners

Sainsbury is a Plc, which means that ownership of the company is divided up between all the shareholders and the decisions are made by the board of directors with the shareholders best interests in mind. This is usually profit maximization, since each shareholder gets a proportion of the profits, relative to their share size, called dividends, at the end of each year.

The company, which generates its shareholders the most dividends, is likely to attract the most potential shareholders and keep most of its shareholders, which will generate capital for the company. Therefore, it is important to keep the shareholders satisfied since they generate capital for the company, this has to be done with regard for other stakeholders, for example if Sainsbury reduced prices shareholders would be displeased since, less profit would be made leading to lower dividend payment at the end of the year. But lowering prices improves the relationship with customers, which will lead to more customers, thus the spending on reducing costs would be recover and the company’s market share would be increased. This would lead to share prices raising therefore, the link between customers and shareholders, in that good relations with one, leads to good relations with the other.

There is evidence of this link on the Sainsbury website, which shows that when money was spend reducing prices, share prices fell, but as more customers were attracted, due to the lower prices, the share price increased due to a larger market share, which lead to increased profits. This is where Sainsbury have to decide, which stakeholder to satisfy or try to satisfy both, since they can retain profit for development or pay it out as dividends. The problem with retaining profit for development is that a lesser amount is paid to shareholders as dividends thus attracting less potential shareholders in the short term, but in the long term it will attract more shareholders, since the company will be better developed, though this will only happen if the company retains less profit for development and pays more as dividends. Sainsbury will analyse the market to attempt to choose the best time to make these changes.

Employees

This is a preview of the whole essay

Employees

Employees are important stakeholders within a company, since the company cannot operate without them, thus companies will strive to keep their employees satisfied. This will be done by motivating the staff. Sainsbury will offer staff the lowest wages possible, since wages are a context factor, so as long as there is a competitive wage there will be no dissatisfaction and Sainsbury will be able to motivate their staff though other means, such as a prosperous career ladder, thus allowing staff to reach self actualisation, which will benefit Sainsbury since, motivated staff perform better, which will satisfy their other stakeholders such as the customers, since they will offer them a better service, and with there being very little between each supermarket, the best customer service will prevail, this will attract more customers, thus increasing profit, which will satisfy the shareholders. Sainsbury also, rather than paying higher wages, which would displease the other stakeholders, offer pension schemes, which cost Sainsbury relatively little, but provide motivational factors, such as job security. They also have award schemes to recognise and motive staff who are performing well, this also if relatively cost free, and catch free, since it does not affect any other stakeholders negatively.

Customers

Customers are vital to the survival of any business, since they purchase the goods and services which provide the business with the majority of its revenue. It is therefore vital for a business to find out exactly what the needs of the consumers are and to produce their output to directly satisfy these needs - this is done through market research. The goods and services must then be promoted in such a way as to appeal to the target market and to inform them of the availability, price, etc. Once the goods and services have been purchased by the customer, it is essential that after-sales service is offered and that the customer is happy with his/her purchase. The business must try to keep the customer loyal so that they return in the future and become a repeat

purchaser.

Customers are very important stakeholders to Sainsbury and are vital. Without their interest in Sainsbury products and services, Sainsbury would not now be one of the Britain’s largest supermarket retailers. So Sainsbury must make sure that they give there customers what they want, ensuring them constantly into trusting the company to purchase and use Sainsbury products and services. Customers influence Sainsbury by purchasing and using the products Sainsbury sell. If the customer finds that they are not happy with the products and services they can decide to stop using or discontinue using Sainsbury products and services, which will have an huge impact on the company as profits will fall.

Suppliers

Suppliers are the companies who supply the products which businesses sell consequently they are important stakeholders. Companies often find it difficult to satisfy suppliers, especially large supermarket chains, since they want to pay the lowest possible price for the products, so suppliers end up making little profit from their products. Due to these problems with satisfying suppliers large companies will often expand vertically, thus purchasing the suppliers, thus lowering costs which will benefit the other stakeholders since it will mean lower costs, therefore increasing the profit margin on the products, whilst making it possible to lower the selling price of products. Sainsbury, attempt to satisfy their suppliers by buying them, thus removing any dissatisfaction they may have as stakeholders. The suppliers that Sainsbury does not own do not generally have their concerns taken into account since if they will not sell their products at the price Sainsbury wants them to, Sainsbury will simply purchase the product from a supplier who is willing to supply at that price. Sainsbury can do this because all the potential companies for which the suppliers can supply do the same; since the supermarket market is a highly competitive one and companies attempt to match the price of rivals. This causes the suppliers to suffer, but they cannot refuse to supply for a low price because if they did so, they would sell their product to very few companies.

Managers/Directors

Managers and directors run the company. They are stakeholders because they may have been awarded share options or may just own shares in the company they work for. The profit of the company mainly in terms of market share, profit and share prices will determine whether managerial staff will continue to have a job in the company, because if the company fails the person will be sacked.

Mangers is important to Sainsbury, this is because it’s with the mangers influence and commitment that the company’s activity can flow sufficiently and successfully. There effort on the company is to make the company and its various departments to work well together and pull in success for example within departments they make sure that there staff are performing well, they assign tasks and make decisions for there set employees organised so that it will boost business performance. The mangers interest in the business is very important because without it the business would be lacking as they would not have had the correct support to maintain a sufficient business.

Government

The government affects the workings of businesses in many ways:

1. Businesses have to pay a variety of taxes to central and local government, including Corporation tax on their profits, Value-Added Tax (V.A.T) on their sales, and Business Rates to the local council for the provision of local services.

2. Businesses also have to stick to a wide-ranging amount of legislation, which is aimed at protecting the consumers, the employees and the local environment from business activity.

3. Businesses will be affected by different economic policies, (for example, if interest rates are increased, then this will discourage businesses from borrowing money since the repayments will now be significantly higher). However, businesses can also benefit from government incentives and initiatives, such as new infrastructure, job creation schemes and business relocation packages, offering cheap rent, rates and low-interest loans.

The government as a stakeholder will take an interest in the company. The government is there to make sure that they are running everything correctly, in terms of employment, products, legislations and regulations. Taxes, profit made from the sales, health and safety is dealt with effectively and if Sainsbury are following the correct legislations, e.g. equal pay act, and other acts etc they are also vital factors the government take an interest in.

Competitors

Competition has a big influence on Sainsbury. Sainsbury always tries to stay one step ahead of its competitors through regular market research. If one of its competitors launches a successful product Sainsbury will either try and copy or design a better product. One of the responsibilities of a Sainsbury is to ensure that all their products are in a high quality. Sainsbury have a Market Research Department that keeps a close watch on competitors and it also gives an invaluable insight into customers purchasing habits and attitudes.

Local Community

The local community is a very important stakeholder for all businesses, since they are possibly the most influential stakeholders. This is because the local community is usually also the customers of a company, accordingly if they are unhappy with the company they will simply not purchase that companies product or products. Therefore, if the community is unhappy, as are other stakeholders, such as stakeholders, since less profit will be being made, so they will be receiving less in the form of dividends. Furthermore independent suppliers may be reluctant to supply the company, lest the company’s bad reputation be bestowed upon them. To combat the detrimental effects a business may have on a local community, such as increased traffic and pollution, companies often set up schemes to benefit the local community. Sainsbury scheme to combat unrest in the local communities is that they offer ‘free’ computers for school, if customers spend a certain amount. This not only benefits the local community, it gives Sainsbury additional publicity, relatively cost free, since customers will be more willing to spend a little extra because if they do they are contributing towards a good cause, this bolters the companies profits, thus recuperating the costs of the scheme. This also satisfies other stakeholders, the shareholders will possibly gain more in the form of dividends due to the increase profits from the greater publicity and customer spending. The employees will be better motivated because they will feel that working harder will benefit a good cause, since they will be encouraging customers to purchase greater quantities of products. This scheme will also encourage suppliers to supply Sainsbury ahead of other supermarkets, since being the supplier of a company which helps the community would add to their image.

Throughout this task I have discovered the delicate balance between all the stakeholders and how one dissatisfied stakeholder will cause the majority of the other stakeholders to become dissatisfied