Question

Select one of the following companies: Tesco, Sainsbury (J) or Morrison (Wm). Your Manager requires you to analyse the market position and the financial performance of this company.  

You should:

• briefly describe the company;

• summarise the market position of the company in relation its main competitors (use secondary data from MINTEL & other sources);

• summarise the financial performance of the company in relation to its main competitors in the sector (use graphs and tables and relevant financial ratios);

• use secondary data on market position & financial analysis to estimate your company’s percentage share of the total UK market in 2019/20;

• explain the external economic factors which may influence your forecasts and estimates.

Answer 1

Sainsbury's Profile:

Founded in 1869 as a fresh food retailer, Sainsbury's is today among the top supermarket chains in the UK. High Quality and Low Prices has been the main focus of Sainsbury's. It is a public limited company, headquartered in London with over 1428 shops worldwide.

Sainbury's Supermarket, Sainbury's Bank (in association with the Bank of Scotland) and Sainbury's Argos are its main divisions.

Key Competitors:

Tesco, Asda and Morrison's are Sainbury's main competitors in the grocery sector. As of May 2020, Sainbury's market share in the grocery sector was about 42%,when combined with that of Tesco.

Market share in May 2020:

Tesco -------- 27%

Sainbury's -------- 15%

Asda --------    14%

Morrison -------- 10%

Financial Performance:

Tesco and Morrison are Sainbury's main competitors in the grocery sector. The following information gives an idea about the current financial performance of Sainbury's and its key competitors:

Tesco in 2019:

Revenue: 63.9K (GBP)

Earnings Per Share: 13.370

Morrison in 2019:

Revenue: 29.8K (USD)

EPS: 5.190

Sainbury's in 2019:

Revenue: 29.0 K (GBP)

EPS: 20.300

As Earnings Per Share are an indicator of the profitability of a firm, it can be inferred from the data above that Sainbury's is the most profitable among its competitors. Sainbury's EPS was 20.300 in 2019, indicating it is more valuable than its competitors.

External Factors Influencing Business:

- The political environment in the UK isnt much favourable. Because of high debts, consumers might be reluctant to spend every now and then

- Recesssion slows down the economy which affects all businesses. Sainbury's must look to diversify further, particularly in foreign markets in order to combat the effects of recession. Catering to the local tastes and preferences of consumers in different countries might help Sainbury's fight inflationary tendencies that it faces at home.