Applied Business Unit 1, Sainsburys

Topics: Revenue, Profit maximization, Economics terminology Pages: 6 (1765 words) Published: March 4, 2014
Section A (i) Investigating the factors that have contributed to the success of Sainsbury’s Introduction
Aims are the goals that the company want to achieve. Objectives are detailed steps the company create in order to achieve their goals. The company will also have targets they will want to meet in the future, to improve their customers’ overall experience with themselves. They aim to increase profit by following the objective steps carefully, building the company up step by step. Sainsbury’s 5 values

Best for food and health
Sourcing with integrity
Respect for the environment
Making a positive difference to the local community
A great place to work
Sainsbury’s mission statement
"Our mission is to be the consumer's first choice for food, delivering products of outstanding quality and great service at a competitive cost through working 'faster, simpler and together." (http://uk.answers.yahoo.com/question/index?qid=20091121051929AAcbFT5) Sales Revenue Maximisation

Sales could consist of what they sell in food, clothes, electrical goods, toys, DVD’s, games, home-wear and many more. Sales could be defined as the exchange of goods or services for an amount of money or its equivalent; the act of selling.

Below we can see the trend of sales for Sainsbury’s over a five year period.

Year
£mSales
2007
18,518
2008
19,287
2009
20,383
2010
21,421
2011
22,943

Over the five year period, we can see that Sainsbury’s sales are on the rise. It has increased by 23.90%. Sainsbury’s have released new schemes to increase sales in the past five years; undoubtedly this will be the main reason for the increase of sales. To maintain their growing sales, Sainsbury’s should keep their prices competitive to other supermarkets. Also they should continue to release new ideas to maximise sales and profit. Sainsbury’s could open new stores – this would help them hugely. They can also; Release fresh advertising campaigns.

Have a wider range of non-food items.
Possibly have more obscure food from around the world, to attract customers from different nationalities. Sainsbury’s will now have increased profit margins as a result of their success in maximising sales. They will now also have an increased market share. Profit Maximisation

Profit is the return received on a business undertaking after all their charges/expenses have been paid

Below we can see Sainsbury’s profit data over a 5 year period.

Over 5 years, Sainsbury’s profit has increased by 23.9%
For Sainsbury’s’ profit to increase, they have clearly worked hard to increase their market share and additionally to increase their sales. This has resulted in their profits to increase. They may have also cut certain costs when it comes to packaging, logistics, supplier’s costs etc. For Sainsbury’s, increasing their profits is absolutely paramount for them – and probably their biggest goal/objective. It means they can then go on to make more profit through different ways, such as opening new stores, investing money into current stores for refurbishments which would make the shop a more attractive prospect for customers. They could drive more money into their website, to make it even more accessible for customers. As far as a company like Sainsbury’s is concerned – there is always room for improvement.

Market Share

Definition of market share is the share of total sales secured by one particular shop or company The formula to calculate market share is to;
1. Calculate your company's total revenue (also called total sales). 2. Calculate the total market sales.
3. Divide your company's total revenue by your entire industry's total market sales.

Below we can see a pie chart to show Sainsbury’s market share in 2009 (inc. Competitors).

Market leader - Brand, product, or firm that has the largest percentage of total sales revenue (the market share) of a market. A market leader often dominates its competitors in customer loyalty,...
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