Enterprise Risk Management at Sainsbury’s

Introduction

Enterprise risk management is the practice of planning, organising, lading a controlling the activities of the multinational corporate firms in order to minimise the enterprise risks and maximise the organisational aims and objectives in near future (Reim, Parida and Sjödin, 2016). The organisations in the recent era of globalisation focuses on risk management practice in order to improve their operational efficiency and identify the risks or resolving the threats and grabbing the future market opportunities to secure future sustainable development of the organisations. the study aims at risk assessment planning through risk register on the particular company which would be effective to acknowledge the existing risks if the organisation and identify the market threats and opportunities so that it is possible for the organisation to develop effective strategic planning for managing the risk and grabbing the market opportunities. in this context, the risk assessment practice for the company Sainsbury’s will be conducted where the risks of the organisation can be identified and the study will provide a scope to develop effective strategic planning for managing the risk successfully, so that Sainsbury’s can fulfil the organisational aims ad objectives.

Organisational background

Sainsbury’s is the third largest retail chain in the UK with 15.3% share in the global retail market. The company is efficient to grab the market share and strengthen their customer’s base by delivering quality products and services where the products are hyper market and super market products. The company has more than 1500 shops to run their operations across the UK. The major focus of the company is on UK market where the company aims at grabbing the market opportunities to sustain in the retail industry and run their business operational activities strategically (Sainsbury’s, 2019a).

Total revenue of the firm in the last year was £28.456 billion and the net income was £309 million which further strengthen the financial base of the company. The company is also efficient to provide services such as Sainsbury’s bank and other financial services to the customers who are efficient and beneficial for the company to improve their presence in the market of the UK. Total number of employee in the last years was 186900, which represents strong employee base where the employees are efficient to contribute positively in the organisation to maximise the organisational vision and values (Sainsbury’s, 2019b).

Aims and strategy of the organisation

Vision statement of Sainsbury’s:

The vision of the company Sainsbury’s is to be the most trusted retailer, where the people love to work ad shop. The company is willing to put the customers at the heart of everything that the organisation does and invests in their store so that it can develop efficient colleagues and strengthen their channels to offer the best possible shopping experience.

Values of Sainsbury’s:

The values of the organisation are such as,

Managing health and safety of the colleagues

Sourcing proper resources and investment for further research and development

Creating sustainable environment

Enhancing the values for the social communities as a whole

Managing all the stakeholders by providing high return on investment

Strategies of Sainsbury’s:

The strategic planning of the firm is to maximise the shopping experience of the customers where the company focuses on creating values for all the consumers in the UK retail market s that the organisation Sainsbury’s and manage the customer’s base and strengthen their customers in long run. The company aims at delivering quality product safely to create vales for the customers where they can satisfy the people by delivering the right product according to the personal needs and preferences. The strategic model of the company is effective where the company focuses on managing the colleagues, great values for their products and services at fair price and customer’s relationship management. These are the major strategic planning of Sainsbury’s to create values for all the social communities as a whole (Sainsbury’s, 2019c).

Through providing high return on investment, the company is able to create values for all the stakeholders including the employees, mangers, supplier and distributors as well as, government, customers and social communities as a whole, so that it can satisfy all the stakeholders, engaged with the business. Apart from that, customer’s relationship management is necessary, where the company focuses on managing the customers by providing them continuous support and delivering quality products at fair price. Additionally, the product quality is maintained by the organisation to manage the customers and strengthen their customer’s base in near future. These are the major strategic planning of Sainsbury’s to run their operational activities strategically and secure their market position and competitive advantage in the UK retail industry (Sainsbury’s, 2019d).

Risk management practice at Sainsbury’s

There are several risks of the business in operating the activities in the market and it is necessary for all the multinational corporate firms to manage the risk efficiently in order to secure future sustainable development. Risk management is the process of identifying, defining and assessing the risk for better management of the risks and developing strategic practice to resolve the risks successfully. the retail industry face several risks of intense high competition, threats of substitute products and financial risk as well as sustainability risk, for which the companies in retail industry face difficulties in managing their operational efficiency successful (Olson and Wu, 2015). Hereby, for Sainsbury’s there are several risks such s intense competition and financial stability as well as poor management of the employees for which the company may face difficulties in running their business sustainably. In this regard, the company focuses on risk management activities through developing the principles such as senior management commitment, sourcing, supply chain visibility and transparency, performance measurement and continuous improvement which are effective of risk management planning. The leader of the company Sainsbury’s s efficient to identify the major risks of the business and develop proper planning for managing the risk and utilising the market opportunities of high demand for retail products, digitalisation of the company and strong customer base in the UK retail industry (Sainsbury’s, 2019c).

Additionally, the financial approach of the company is also effective for the organisation to manage the risks and improve their operational efficiencies in long run. The company also focuses on managing sustainability of the business in order to secure future sustainable development and mitigate the risk of negative environmental footprint. Apart from that, people management, partnership business and profit management system of the company are also effective to manage the risks of the company and their operational activities efficiently. Through people management, it is possible for the firm to manage their colleagues and strengthen their employee base by retaining experience and skilled workforce. Managing the productivity through performance management is also another tactic of the firm Sainsbury’s to manage their risk and maximise the organisational performance in long run. Hereby, identification of the risks in the market and developing the strategic principles are effective for Sainsbury’s to manage the risks and run the organisational activities proficiently to secure sustainable development in near future (Sainsbury’s, 2019d).

Risk register

The risk register is effective to identify the risk and maintain priorities of the risks associated with the fir in order to develop the risk mitigation policies and practice in the organisational workplace. In this regard, the risk register table is beneficial to evaluate the current risks, identify the probability and impacts of the risk on the organisation, where all types of risks are registered for better risk management practice and development of the mitigation strategy Rezaei, Shokouhyar and Zandieh, 2019). As per the risk matrix, there are 1 to 5 scales for probability and magnitude of the risk and after identifying the probability and magnitude of each risk, the ratings will be calculated by multiplying the likelihood and magnitude of the risks which determines the score of the risk. the table below shows the risk assessment approach for likelihood and magnitude of the risk and the nest table shows the risk ratings with proper colour, where it is possible to prioritise the risk and develop proper strategic planning for successful mitigation of the risks (Leveson, 2015).

SWOT analysis in this context is necessary to identify the strengths and weaknesses of the firm as well as acknowledge the market opportunities and threats in near future. in this context, the SWOT analysis of Sainsbury’s will be beneficial to understand the potential of the company to develop risk mitigation planning so that the company can enhance their market opportunities and maximise the organisational aims and objectives.

As per the Swot analysis, the major strengths of the company Sainsbury’s are Strong financial base, availability of resources, employee capabilities, high brand equity and strong distribution network which are major contributing factors to run the company in the retail market of the UK. On the other hand, the major weakness of the company are lack of product diversity, poor management of brand image and lack of marketing tactics which need to be mitigated, so that the organisation can run their operational activities strategically. In this regard, due to the weakness of the company Sainsbury’s, the risks arise for the firm which are increasing concern of the environmental sustainability, changing needs of the customer’s needs and preferences, lack of digitalisation of the business and lack of market expansion (Bourne, 2016). In order to fulfil the company’s vision and create values for all the stakeholders of the firm, it is necessary to take immediate actions so that the associated risk cannot hamper the business operational activities. In this regard, the major market opportunities for the company are increasing customer concern for eco friendly product, digitalisation of the business, rising emphasis on e-commerce activities, retail sector growth, product diversification and green supply chain management (Hillson and Murray-Webster, 2017). These are the major market opportunities through which the company can enhance their performance and grab the scope to establish the brand and retain high competitive advantage. Product diversification and the digitalisation of the business are necessary through which the company Sainsbury’s can fulfil the vision and maximise the customers values in long run. On the other hand, there are some threats of the business which are increasing obesity and diabetes, water scarcity, scarcely of other natural resources, intense competition, changing needs and preferences of the customers and unfavourable business environment. Through proper risk management technique, it is necessary for Sainsbury’s to mitigate the risks and enhance their opportunities in running their operational activities in the UK retail market sustainably.

Conclusion

the enterprise risk management practice provide an opportunity to the company to identify the existing risks in the market as well as assessment the risk for developing effective mitigation strategic planning. Sainsbury’s in this context faces the risks such as lack of market expansion, lack of digitalisation of the business, increasing concern of the environmental sustainability and changing needs of the customer’s needs and preferences which may hamper the smooth business operational process and deteriorated the profitability and sales volume of the firms.

In this regard, the risk mitigation strategies for Sainsbury’s are such as,

Proper market expansion through offline and online business model

Internationalisation of the business

Improving focus on creating mobile application

Designing company website

Mitigating green house gas emission

Maximising social communities values

through the above mentioned risk mitigation strategic planning, the company Sainsbury’s can expand their business and fulfil the above mentioned vision strategy where it can also maximise the organisational values by managing the operational actives efficiently and creating values for all the stakeholders, engaged with the business.

Reference List

Bourne, L., 2016. Stakeholder relationship management: a maturity model for organisational implementation. London: Routledge.

Hillson, D. and Murray-Webster, R., 2017. Understanding and managing risk attitude. London: Routledge.

Leveson, N., 2015. A systems approach to risk management through leading safety indicators. Reliability Engineering & System Safety, 136, pp.17-34.

Reim, W., Parida, V. and Sjödin, D.R., 2016. Risk management for product-service system operation. International Journal of Operations & Production Management, 36(6), pp.665-686.

Rezaei, S., Shokouhyar, S. and Zandieh, M., 2019. A neural network approach for retailer risk assessment in the aftermarket industry. Benchmarking: An International Journal.

Teece, D., Peteraf, M. and Leih, S., 2016. Dynamic capabilities and organizational agility: Risk, uncertainty, and strategy in the innovation economy. California Management Review, 58(4), pp.13-35.