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Communication Assignment 2012

Module Code: G10003 Date: 19/04/2013

Tutor: Gillian Gannon Student: Alexandru Grecu


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Table of Contents

Introduction Aim Objectives and Methodology History, Size, Type, and Ownership Internal Structures/Organisational Chart External Structures (PEST plus C Analysis) SWOT Analysis Impact of the Structures on the Performance of the Organisation Communication Process within an Organisation Types of communication used Sainsbury Recommended Changes Conclusion Bibliography

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In choosing the company for my Communication assignment I wanted to perform the analysis on an organisation that was involved in a highly competitive environment. This would also help make the report more interesting for readers. Then while reading an article in the Independent with the heading Sainsbury's outpacing Tesco with s a l e s g r o w t h i t occurred to me that Sainsburys is an ideal organization to analyze that operates in a highly competitive industry-Food Retail.

Aim Objectives and Methodology

My first aim is to explore and analyse the internal factors of the supermarket and to have a look into external factors positive and/or negative that can affect the company. Also I want to make reader to understand Sainsburys Business Strategy and the methods for communication within company; and how it has facilitated Sainsburys to achieve success.


In gathering the information I mainly relied on the Internet to formulate this report. The various search engines to collect the information I needed for the report were: Sainsburys website was the most important source of

i n f o r m a t i o n . The website also had an archive o f c o m p a n y n e w s w h i c h g a v e m e a h i n d s i g h t o f t h e m o r e i m m e d i a t e matters faced by the company.


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Competitors websites. Internet search engines (Google, and MSN) to gather information related to Sainsburys and the UK retail industry.

History, Size, Type, and Ownership

J Sainsbury plc is a public limited company listed on the London stock exchange. Sainsbury's was founded in 1869 by John James and Mary Ann Sainsbury. They o p e n e d t h e i r f i r s t s m a l l d a i r y s h o p a t o n e o f L o n d o n ' s p o o r e s t a r e a s a n d t h e Sainsburys shop quickly became popular for offering high-quality products at low prices. It was so successful that further branches were opened in other market streets. (J Sainsburys Plc, Our History [online]) J Sainsbury plc is a leading UK food retailer with interests in financial services. It serves 16 million customers each week in over 780 stores across the country. The supermarket chain operates three main store formats; regular Sainsbury's stores, Sainsbury's Local (convenience stores) and Sainsbury's Central (smaller supermarkets in urban locations) stores. Sainsbury's also operates an internet shopping service branded as "Sainsbury's Online". This service is available to over75% of the UK population. T h e g r o u p a l s o has interests in property and banking. It provides financial services through the Sainsbury's Bank. This is joint venture between J Sainsbury plc and Halifax Bank of Scotland (HBOS). The current product range includes savings and loan products, credit cards and a number of insurance products p r o v i d e f i n a n c i a l services through the Sainsbury's Bank. This is joint venture between J Sainsbury plc and Halifax Bank of Scotland (HBOS). The current product range

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includes savings and loan products, credit cards and a number of insurance products.

Internal Structures/Organisational Chart

The internal structure of Sainsbury consists mainly in: Board of directors Operating board Committees

Board of Directors

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Operating Board

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External Structures (PEST plus C Analysis)

There are various forces in macro-environment that can affect the decisions of the personal and the management of an organization. Trade conflicts, new rules and regulations, Tax movements, changes of demographic view and policy changing of government are all instance of macro change. To modify and analyse these forces can be categorise using the PEST method. This method differentiates by some forces to the organizations. Sainsbury`s is a very large company and the PEST analysis is shown below. PEST forces of Sainsbury`s Political forces: European Union extension, Euro Zone, Globalize business, taxation rules and policies. Economic forces: Changing rates of interest, exchange rates, national GDP and Income, inflation, Job market and unemployment, Share Market. Social forces: Population based on age, different view to work, income classification and distributions Community works. Technological forces: Invention, modern and new product innovation and improvements, class of technological obsolescence. Legal forces: Law for Competitors, monitoring health and safety, employment based law. Environmental forces: Global warming, environmental issues, green house effect, animal welfare.

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Political forces These forces refer to government policies such as the degree

of intervention in the economic scale. What product and services does the mentioning country want to provide? What extent does it depend in subsidising organizations? Sainsbury`s is forced by this factors.

Economic forces These include the Changing rates of interest, exchange rates, national GDP and Income, inflation, Job market and unemployment, Share Market. Economic change can have a major impact on a firm's behaviour. Sainsbury`s is automatically gripped by that forces. Social forces Sainsbury`s totally follows the responsibility for the society and its surroundings. It is operating effective charities, sponsoring games, arranging social activities, raising fund for Animal welfare, and many more. For example, in the United Kingdom the population has been ageing. Environmental forces Environmental forces include the changing of weather and climate. Changes in temperature can impact on many industries including farming, leisure and tourism and insurance as well. With major climate changes occurring due to global warming and with better environmental awareness this external forces is becoming an important issue for Sainsbury`s to consider.

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Legal forces: Sainsbury`s is in the boundaries of legal forces locally, nationally, globally. These are very close to the legal enforcements in which firms operate.

SWOT Analysis

STRENGHTS STRONG BRAND EQUITY Sainsburys has enormous brand equity and has built customer loyalty by providing them with Great quality f o o d a t f a i r p r i c e s . T h e c o r e U . K b u s i n e s s covers the grocery market and this means everything that is food related. It has over the years successfully delivered to its customers according to their needs regarding the quality, style, c o n v e n i e n c e , a n d p r i c e o f d i f f e r e n t p r o d u c t s a n d continues to provide them with the best offers. WIDE RANGE OF FOOD PRODUCTS Sainsburys has aimed to provide its It customers has with a range of products to c h o o s e from. accordingly

s u b - b r a n d e d o w n l a b e l p r o d u c t s t o f i t t h e requirements of different customers segments. It is continuously working t o introduce new ranges and improve existing ones in order to meet the demands of its customers. WEAKNESSES SMALL STORE SIZES Although Sainsburys have a large number of stores spread all over U.K, most of the current stores have relatively smaller sizes as compared to its competitors. D u e t o t h i s t h e r e i s l e s s r o o m f o r

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g o o d s o t h e r t h a n g r o c e r i e s a n d c u s t o m e r s cannot be provided with a complete shopping experience Sainsbury's property portfolio was built up during the 1980s, when supermarkets averaged 20-30,000 square feet, compared with 4050,000 square feet during the 1990s. HIGH ADMINISTRATION COSTS Sainsburys administration costs in recent years have been very high due to its supply-chain and IT costs. Although its previous supply-chain reduced in problems 2007, were they solved are and IT costs than have its still higher

competitors. Due to this it has lower operating and net profit margins although gross profit margin is much higher. OPPORTUNITIES EXPAND INTO NON-FOOD RETAIL Non Food products are very appealing to grocery

s u p e r m a r k e t s a s t h e y o f f e r higher profit margins. The growth potential for non-food products is also much more as compared to the food-items. According to Verdict consulting (2006) the Sales of electricals will grow by 71.1% from 2006 to 2011, whereas Food and grocery will only grow by 16% in this period. Non-food accounts for less than 10% of Sainsbury's total sales turnover whereas T e s c o s n o n food contributes to 25% of the total turnover. Sainsburys h a s therefore planned to increase its store sizes, where possible, and to open new larger stores in the near future to have more space available for non-food items and increase their market share in the non-food retail. However, it should also carryout additional market research to ensure the success of the Non-food items. HEATHY FOODS - MARKETING OPPORTUNITY


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A major advantage that Sainsburys has over the market c o s t - l e a d e r s i s t h e superior product quality. This can be made use of and exploited by Sainsburys in its advertisements to increase consumer awareness and their focus on Fresh and Healthy foods. This may help stealing customers from the market cost-leaders and increase Sainsburys market share. THREATS COMPETITOR PRICE WAR The retail industry is a highly competitive industry. Sainsburys has over the past few years invested heavily on price-cuts and promotions. However if cost-leaders r e t a l i a t e this may have serious c o n s e q u e n c e s a s t h e b u s i n e s s s t r a t e g y o f Sainsburys is different to the cost-leaders, and it may not be able to compete with them in this area. Also indulging in a price war would mean that the quality of its products may have to be compromised, which is a one of its key success factors.

Impact of the Structures on the Performance of the Organisation

Five basic operations performance objectives are: quality, cost, speed, dependability and flexibility. These five characteristics are used to measure the production efficiency of the company. On many different levels Sainsbury maintain high quality of its services, for example by keeping up high quality of its products-including fair trade products, through well- kept rooms with an attractive appearance to a fast service and a friendly-oriented staff. Sainsbury ensure that all suppliers have been evaluated by the Quality Attribute System (QAS) in order to provide constant quality of the products throughout the store. Sainsbury has

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different prices, which are suited to different kinds of customers. Through the implementation of high quality products, Sainsbury have high prices, however to adapt to the needs of less wealthy clients also offers a wide selection of 'basic' products at low prices. Therefore I would describe Sainsburys prices, as fair prices. Another key performance objective is speed. I would describe the speed of Sainsbury's as a moderately-high. Still we can come across queues, especially in the evenings, during the peak time, but Sainsbury has undertaken major steps to solve this problem. Sainsbury's team is trying to reduce queues through the recent introduction of baskets tills, self checkouts as well as the introduction of the newest Scan and Pack system. In order to improve the speed, Sainsbury also offers home delivery which can be obtained for the very next day. Dependability is about keeping the word to customers. This is one of the main objectives of Sainsbury. They are providing customers with quality products at fair prices; they go out to meet the expectations of customers for a healthy, safe, fresh and tasty food. Sainsbury respects environment by using environmentally friendly packaging. Goods are kept in magazines in case of necessity of quick restocking. Queuing time is reasonable and deliveries are on time. Online Shopping at Sainsbury's is also a great advantage. All the above provide a high level of dependability and are the reason why the Sainsbury's brand remains on the market for 141 years, and this makes the Sainsbury differs from its competitors. Flexibility refers to the ability of a company to offer a wide variety of products to its customers and this is what Sainsbury's is doing, since 141 years! During this time, there was a huge technological revolutionSainsbury had to adapt. On the market have appeared newer and newer products-Sainsbury's had to adapt. Sainsbury also took into account the recent change the behaviour of customers, who eat less at restaurants and eat more at home. They launched a wide range of new products and new sections to its stores such as electronics and household goods. They also introduced many attractive promotions and also suggest to customers interesting ideas for tasty and healthy meals in their cookery


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book-all in order to reach greater number of customers and to meet needs of every one of them.

Communication Process within an Organisation

Communication is simply the act of transferring information from one place to another. Although this is a simple definition, when we think about how we may communicate the subject becomes a lot more complex. There are various categories of communication and more than one may occur at any time. The different categories of communication are: Spoken or Verbal Communication: face-to-face, telephone, radio or television or other media. Non-Verbal Communication: body language, gestures, how we dress or act - even our scent. Written Communication: letters, e-mails, books, magazines, the Internet or via other media. Visualizations: graphs, charts, maps, logos and other visualizations can communicate messages. Communication theory states that communication involves a sender and a receiver (or receivers) conveying information through a communication channel. The desired outcome or goal of any communication process is

understanding. The process of interpersonal communication cannot be regarded as a phenomena which simply 'happens', but should be seen as a process


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which involves participants negotiating their role in this process, whether consciously or unconsciously. Senders and receivers are of course vital in communication. In face-toface communication the roles of the sender and receiver are not distinct as both parties communicate with each other, even if in very subtle ways such as through eye-contact (or lack of) and general body language. There are many other subtle ways that we communicate (perhaps even unintentionally) with others, for example the tone of our voice can give clues to our mood or emotional state, whilst hand signals or gestures can add to a spoken message. In written communication the sender and receiver are more distinct. Until recent times, relatively few writers and publishers were very powerful when it came to communicating the written word. Today we can all write and publish our ideas on the Internet, which has led to an explosion of information and communication possibilities. A message or communication is sent by the sender through a communication channel to a receiver, or to multiple receivers. The sender must encode the message (the information being conveyed) into a form that is appropriate to the communication channel, and the receiver(s) then decodes the message to understand its meaning and significance. Misunderstanding can occur at any stage of the communication process. Effective communication involves minimising potential misunderstanding and overcoming any barriers to communication at each stage in the communication process. An effective communicator understands their audience, chooses an appropriate communication channel, hones their message to this channel and encodes the message to reduce misunderstanding by the receiver(s). They will also seek out feedback from the receiver(s) as to how the message is understood and attempt to correct any misunderstanding or confusion as soon as possible. Receivers can use Clarification and

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Reflection as effective ways to ensure that the message sent has been understood correctly.

Types of communication used by Sainsbury

Communication methods used by Sainsbury can be categorized into different types depending upon the level at which it takes place, the direction it takes or by its very nature. Some of the commonly communication methods which Sainsbury use are: 1. Personal Communication 2. Business Communication 3. Internal Communication 4. External Communication 5. Upward Communication 6. Downward Communication 7. Lateral Communication 8. Diagonal Communication 9. Formal Communication 10. Informal Personal Communication Between two individuals, be it a family, or group or community or even an organization. Takes place in the individual capacity. There is an element of privacy in all such communications.[e.g.] Personal Letters, Personal Telephone Calls, Conversations, One-to-one Meetings/Talk or e-mail messages etc. It is private in nature and no official about it. Business Communication Takes place between/among goal of a business. Takes place between/among markets, market places, within the organizations and between/among

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groups of employees, owners, and employees, buyers and sellers, service providers and customers, sales persons and prospective buyers and also between/among people within the organisation. All the above communications indeed impact the whole business activities. Communication is the vehicle on the business moves. The ability of the communicator to communicate effectively verbally, non-verbally and in writing is a pre-requisite for organizational and business related success. Internal Communication Internal Communication takes place within the organization or group among t h e people within, among different groups of e m p l o y e e s a n d b e t w e e n employers and employees. I t c o u l d b e oral, or written, visual or audio-visual, formal or informal a n d upward and downward. Internal Communication serves to inform, instruct, educate, develop, motivate, persuade, entertain, direct, control and caution people in the organization. When a personal letter is written at an official address besides writing the n a m e o f t h e a d d r e s s e e , t h e envelope is superscribed as PRIVATE convey the nature of Communication. Knowledge, Skills, Goal Orientations, Sharing of Corporation C o n c e r n s , Review and Monitoring, Performance Appraisal, Counselling and Training are some of the issues concerning Internal Communication. External Communication: External Communication flows outward, unlike Internal Communication. I t addresses the people outside the organization e s p e c i a l l y t h e prospective customers, competitors, public, p r e s s , m e d i a a n d t h e Government. Takes place in various ways through different channels. They are :



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Notices Brochures Demonstrations Telephonic Calls, Business Meetings Press Releases Press Conferences Audio-Visual Presentation Publicity Films Advertisements Product Launch Events etc.

Upward Communication Large organizations such Sainsbury have different hierarchical level or tiers. The process of communication to be effective and complete should encompass all levels and tiers. Upward Communication moves upward i.e. from Bottom to Top levels in the hierarchy. Any communication that moves from employees to s u p e r v i s o r s , supervisors to managers, managers to top level executives, Regional Managers to General Managers and so on may be called as Upward Communication. Similarly, communication from Branches to Regional Offices, Regional Offices to Zonal Offices and Zonal Offices o Head Quarters [HQ] etc. are upward communication. Employees Suggestions, Market Reports, Performance R e p o r t s , Feedback on new Products, Requests for facilities etc. are all Upward Communications in the organizational context. Downward Communication


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This flows from Top to Downward, i.e. from CEO to Downwards. This communication travels through-Senior Executives to Junior Level functionaries, from Controlling Office to the Branch, from the Head of the Division to the Head of Unit, Corporate Goals, Business Priorities, Motivational Letters, Work-related instructions, Newsletters, Letters from the CEO/General Managers Desk etc. are all typical example of Downward Communication. This type of communication is increasingly important, as business becomes larger, complex and specialized. Even in small companies, Lateral Communication is very much essential in order to co-ordinate various functions by encouraging Team of Work among peers. Major setback to Lateral Communication includes Departmental isolation, lack of time and communication opportunities.

Diagonal Communication Diagonal communication in Sainsbury makes the

o r g a n i z a t i o n m o r e f l e x i b l e b y allowing faster communication of information in both directions, from the lower levels of the company to the top, and vice versa. It takes away the rigid command structure that can bog down companies in "red tape" (commonly known as procedures) and can aid in efficiency by employees getting quick answers to questions that might otherwise take a week or maybe even two. It allows cross communication between departments which in theory, helps disseminate information faster and helps people do their jobs quicker and more efficiently. The idea is that it empowers people more and allows them to have better c o n t r o l over their jobs and and breaks lower down echelons. barriers Generally, between diagonal u p p e r management


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communication is not liked higher level people, because, it works in theory only. Formal Communication Formal Communication generally follows a well-defined hierarchical pattern and periodicity. Memoranda, Circulars, Instructions, Guidelines, Clarifications, Agreements, and Reports are some of the Channels that facilitate the flow of Formal Communication in Sainsbury. The to main ensure aim that Branch of Formal Communication is


communication takes place on an on-going Meetings, Union-Management Conferences, Periodical

basis in an organization. S t a f f Meetings,


Sales Review Meetings and Customer Meets are some of the examples of Formal Communication. Informal Communication This type of communication takes place in an Unstructured

Manner and outside the Formal Pattern of Communication. There is an element of spontaneity in this communication. Informal Communication works well in smaller, loosely knitted organization. It is used more often in situations where there are no rigid hierarchical tiers. While Formal Communication is a must in large organizations, it is the Informal Communication that helps sustain goal orientation in small units. Informal Communication takes place through Chats,

C o n v e r s a t i o n s , and Grapevines etc.

Recommended Changes
As a significant change I would suggest to a Sainsbury's to introduce some products which will give to a company a comparative advantage over their

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competitors. My second recommendation to Sainsbury's would be an opening of local shops located in the city centre rather than on the outskirts of the city. Customers often if do not need to do large purchases are choosing local shops rather than supermarkets to save time and money, because undoubtedly in large stores often they acquire more than actually have planned. Good idea, which would attract additional customers to the Sainsbury's would be the introduction of pay point or post office to the store, where the customers immediately after purchase could pay their bills without spending extra time to reach these places elsewhere in the city. Conclusions Sainsburys financial performance in 2011 was exceptional. I m p r o v e m e n t i n sales, profit margins, dividends and a stable liquidity position should send positive messages to all stakeholders. The key corner stone of Sainsbury overall success is providing its customers with Great quality food at fair prices. It has stayed closely connected with the needs of the customers regarding the quality, style, convenience, and price of different products and have delivered accordingly by sub-branding own label products to fit t h e r e q u i r e m e n t s o f d i f f e r e n t c u s t o m e r segments. market. Since the launch of King's recovery programme, the t u r n a r o u n d h a s b e e n phenomenal and the company has reported twelve consecutive quarters of sales growth, most recently in January 08. Despite distractions from potential takeovers s p e c u l a t i o n i n t h e last quarter of the year 2011, strong performance was delivered. Overall Sainsburys growth will be affected by general market issues such as the impact of regulatory and planning regimes on store development and economic factors such as the level of household





d o w n - market, Be good to

yourself for the up-market, and Taste the difference for the mid-

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anticipate and meet the increasing consumer focus on fresh, healthy, quality foods and fair prices.

Sainsbury publications J Sainsbury`s Plc 2011 available at Online financial publications