Pest Analysis of Sainsburys in a 3rd World Country

Introduction of the Company Sainsburys is the third declamatoryst chain of super markets in the United estate. It was founded in 1869 and has been growing all over the United Kingdom ever since, and today operates over 1000 super markets and convenience stores and employees over 150,000 employees and captures more(prenominal) than 16% of the market sh be. It is equivalentwise listed on the London melodic line Exchange and is the constituent of the FTSE 100 index.Sainsburys non only provides products to its customers but in any case renovations to some extent. The products and services offered by Sainsburys start out a replete(p) range from food and drinks to energy providing, clothing to policy, appliances to banking facilities. Sainsburys has been a growing entity at a growing rate. Though TESCO has overtaken Sainsburys to become the market leader and has spread out not only in United Kingdom but in like manner outside the United Kingdom such as Europe, Asia and North America.Since TESCO has everlastingly been a strong competitor of Sainsburys so Sainsburys as well has this intention to scatter outside United Kingdom, too. It is necessary for a debauched or confederation to carry out a blighter analysis either as a new entrant or to exist and survive in the market to keep its self updated with the do work of the macro environmental factors. Introduction of PEST Analysis PEST analysis stands for administrational, economic, social and technical analysis. PEST Analysis focuses on analysing the macro-environment in which a teleph genius line or a firm operates.Each of these factors play a vital aim in the overall business environment and one should consider these factors and contribute vital knowledge of them as they can either make you a success story or may end up closedown down the business. Political factors refer to the economic policy adjudgen by the government and the government hindrance the parsimoniousness. This intromit s atomic number 18as such as tax policy, crusade, law, tarrif and disdain restrictions. Political stability is also preferably important for the economic growth. While, governments eat great influence on health, education and infrastructure of the nation.Interest rate, economic growth, monetary and fiscal policy, inflation and the exchange rates are the important economic factors. These factors play a vital role in a firms business strategy and decision making. Every country has its own culture and the nation has a strong impact on their living. The social and cultural influences on business vary from country to country. affectionatefactors include the cultural aspects and include health consciousness, langu mature, population growth rate, senesce distribution, career attitudes.Trends in social factors affect the pauperization for a smart sets products and how that company operates. For example, the roles of men and women in the society. Furthermore, companies may change v arious management strategies to suit to these social trends scientificfactors lose vital place in PEST analysis. Some markets are labour intensive and some are gravid intensive. Technological factors determinebarriers to entry, minimum efficient production level and influenceoutsourcingdecisions.It is one of the study drivers of globalization and is the base for competitive advantage. Innovation is offered to the customers or consumers through engine room for example internet banking, smart phones etc. It also enables the firm to produce a product cheaply and to a burst quality in standard. Pakistan is the sixth most populated country in the world with over 180 million people. It is estimated that the 25% of the population belongs to the bosom income class. It is also estimated that 55% of the Pakistani population is in the 10-40 years age bracket.The upper middle-income class is estimated at 17 million with relatively high per capita income which favours more consumer spe nding. The average Pakistani consumer spends 42% of his income on food cerebrate products. The upcoming changes in demographic exit create opportunities and challenges for businesses in Pakistan. Pakistans food retail sector is unorganised and highly dominated by independent small stores. Over the past few years, some large European food retailers have opened stores in all major Pakistani metropolitan cities like Makro, Metro and Carrefour (Hyper star).Pakistani families are attracted towarfareds these stores receivable to their strategic location, multiple product range and imported processed food. Studies also show that there has been a mansion houseificant shift to organized initialise of shopping from traditional format, in urban areas. This provides a challenging and advantageous opportunity to other food retailers to enter the market. Sainsburys provides convenient shopping at a lower place one roof, has wide range of products, consumer friendly environment, large stora ge and discounted prices.These factors give Sainsburys an advantage over other food retailers currently present in Pakistan. If Sainsburys decides to enter in food retail sector then it has to bring to pass a PEST analysis. PEST Analysis of Sainsburys in Pakistan Political Factors The political factors revolve around the current government in a country. Currently, in Pakistan, the ruling party is Pakistan Peoples Party which was democratically elective in 2008. Though it is backed by western strengths but tacit is considered to be a weak government.The basic questions arise such as how stable is the political or is there any government intervention in the economic policy making or laws and legislation protect the businesses. Unfortunately, due to weak governments in the past, the security and corruption has been the key fruit issues Pakistan has been set about over the the last decade. Which certainly is not a good sign for any foreign beautifyors. However, giants in food-r etail sectors like Metro and Carrefour ( hyper star) have set an example with an change magnitude growth in profit and elaboration even in such circumstances.Sainsburys may enter in the Pakistani market with its variety of products which are available under one roof, as the increasing trend in urban areas shows, there will be high demand for it. Political factors may also include the goods and services which the governments want to provide or be provided. Sainsburys collects much of its revenue by selling its wide range of wines and liven up. Pakistani law prohibits the sale or consumption of any type of wines and spirits within its geographical boundaries, Sainsburys will not be allowed to sell it in their stores which may negatively affect their sales.Government of Pakistan ensures that there is foreign investment in Pakistan and it has signed a few trade agreements too. It also provides foreign investors the incentives to invest here. Partial ownership by the Pakistan governmen t usually serves as an insurance policy for the share holders and the investors. Economic Factors Extremely volatile oil prices are the root cause of global financial crisis in Pakistan which has also worsenedned the energy crisis. These two factors increase the comprise of production.High inflation is a key resultant of it As Sainsburys produce much of its products in stores so they may go beyond their feasible region in producing a product. Interest rates are at their peak, economic growth is quite slow and this is due to the low level of lending and purchasing power of the consumer is weak. Though it is a labour intensive country and labour tag on is quite high and also available at low cost than most other countries but unemployment is rising regardless of the above mentioned fact. The cattle ranch between rich and poor continues to expand and the percentage of poor is increasing everyday.However relatively quite cheaper labour may do a pregnant impact in Sainsburys producti on. It will also bring employment opportunities for spring chicken and skilled labour. Heavy loans from financial institutions like IMF and world bank has do the government in debt upto neck and there are no remarkable changes in sight. However financial aid packages in the name of war on terror and from the friends of Pakistan has kept the economy from collapsing. Pakistan has integrated with global economy and has brought positive impact on economy with increase in GDP.Despite of the worse conditions, Investing in such a country where cheap labour is available and more than half of the countrys population lies in the labour force, targeting middle-income class-keeping the fact in mind that government provides support to privy investors would not be a bad decision. Social Factors The culture and organized religion are very close to each other in Pakistan. As mentioned above this will affect the sales of wines and spirits of Sainsburys as it is not only prohibited by the domina nt religion and prohibited by law but the targeted class does not accept it too.Health and Education are the two important sectors for any developing nations and Pakistan lack both of them and government of Pakistan fails to allocate the required budget in both the sectors. However, people like to shop and come with families to the big retail stores. There has been a material shift from traditional to organized format. The studies show that 11% of the population dispose to buy long life food related products in improvement for a month. Sainsburys provides a healthy and safe environment to work with,which for a change would attract the people to work and shop here.In comparison to the past, women have also started to contribute in the labor force. Language will be a barrier for the citizens of Pakistan as english is not the first diction in Pakistan. Buying imported products is considered a status symbol in Pakistan so there is a high demand for foreign products in Pakistan and i s appreciated in the local market. According to studies people spend 42% of their income on food related products. So there will be high demand for a food related products provided by Sainsburys. Technological Factors Technological expertise is overflowed in Pakistan as the labour supply and demand for IT professionals is high. There has been an improvement in the industrial sector but quiet down the countrys imports are higher than exports. Since it is a labour intensive area and not capital intensive so use of technology higher the cost of production but shift to focus more on labour may help Sainsburys to produce its products relatively cheaper. There is also a trend of buying products online seen. Sainsburys already provides the service of buying its products online which saves much time so the typical 9-5 workforce can also be targeted.