Business report on J Sainsbury’s
Traditionally it has been assumed that all firms attempt to make the most profit they can i. e. to maximise their profits. They therefore adopt pricing and production strategies that specifically aim to achieve this goal. However recently, it has been suggested that instead of maximising profits, businesses try to achieve satisfactory profits. Though this is lower than the maximum but still generally accepted by shareholders. In Sainsbury’s: Looking at the financial records of J Sainsbury’s, I can say that Sainsbury’s had a massive increase on their profit right from 1998 up to 2002.
If you look at the record of five years of financial records of Sainsbury’s you will see that the group turnover increased exactly by i?? 2,710 million. In terms of making profit J Sainsbury’s doesn’t only operate as food retailers but as a property development that is called J Sainsbury’s Developments Ltd. They are in logistical services, which are called J Sainsbury’s Distribution Ltd. Finally J Sainsbury’s Bank plc, which is a financial service. The total turnover for J Sainsbury’s in 2001 in the food retailers, financial services area and property development was i?? 17,244 million and in 2002 it is i??
17,162 but the total gross profit was i?? 1,162 million in 2001 and rose up to i?? 1,257 by 2002 March. J Sainsbury’s also in 2001 made profit on ordinary activities before interest of i?? 513 million and again by 2002 it had risen up to i?? 620 million. Looking at this I can say Sainsbury’s’ one of the objectives has been met. They wanted to provide their shareholders with good financial returns by focusing on their customers’ needs. If you look at the figures above, I would say that they have accomplished that and the shareholders will get good financial returns. While businesses such as BT and BP think in i??
billions, at the other extreme some businesses think of surviving. Survival is the main objective of every business. This is particularly relevant during a recession. Most new businesses have survival as the main aim of the first years of operating. When managers are concerned with survival they tend to be very cautious and reluctant to take any risks, this can mean that profits stay very low and the policy is self-defeating. The financial highlights shows that between 2001 and 2002 the sales in the retailing sector changed by 7. 4%. Underlying profit before tax changed by 14. 2% and the profit before tax changed by 30.
7%. On February 2001 Sainsbury’s supermarkets Ltd became the first major food retailer to achieve the corporate accreditation Investors in People. The Investors in People Standard is tried and tested flexible framework that helps UK companies succeed and compete through improved people performance. Sainsbury’s also increased their sales by launching Sainsbury’s own-label organic fruits and vegetables. Also the mobile phone service called Sainsbury’s one. With the figures from the ten-year financial record I can say that Sainsbury’s have a big share in the market and each year it keeps on increasing by couple of percents.
In 1990 the share was 409% and gradually, year-by-year it increased to 714% in 1999. J Sainsbury’s’ is in the retail groceries business. They are a public limited company (PLC). Before looking at J Sainsbury’s as a PLC, it is worth considering the benefits and constraints of other types of ownerships. Sole traders- these types of businesses are relatively small businesses. A sole trader is a person who owns the business all on his own. He has no one to answer to and has total authority. These sorts of businesses are usually corner shops. Usually one person owns the business and employees only one or two employees to help.
There are some advantages of being a sole trader; the main advantage is that all the profit, which is made, goes straight into the owner’s pocket. It is very easy to set up a business as a sole trader. The owner would be able to respond to market change quickly. All of its financial details can be kept secret; the financial details do not have to be published. This is good, as the owner’s competitors would not know how much profit he/she is making. On the other hand, there are some disadvantages of being a sole trader. As there is only one person, who owns the business it would be hard for him/her to raise capital.
Even the banks would think twice as it is a risky investment. There are few assets to support the application of a bank loan. Sole trader is an unlimited liability that means if the business goes bust then personal belongings can be taken to accumulate to the amount owed. The major disadvantage is that there will be no one to share your ideas with or to share the workload. Partnership – in a partnership two or more people can be trading together. A maximum of 20 partners is allowed, except for partnerships in the professions such as law and accountancy.