BMG872 Global Strategy Development and Implementation
I. Reasons for parent company’s international expansion
Sainsbury is the UK based biggest supermarket chain which originally sold food, but it now sells other things like groceries, mobile phones, clothing and books etc. It has largest supermarket in UK and its sister store is called Argos. It also has its store Sainsbury café and mobile store, Sainsbury fuels etc. Sainsbury is helping the customers to live well. Till now. it has been expanded its business to more than 605 supermarkets, 807 conveniences store to more than 15,000 own brand products and 250,000 online orders per week (Guo and Wang, 2019). It has strong historical sales figures and it operates with around 21 million customer transactions every week (Davey, 2021). It consists of 2,000 suppliers with having store location in major cities in UK and global market. Some of them are Belfast, Livingston, Salford etc.
In respect to Sainsbury product or services range, it has majorly categorised into three sections such as supermarket stores, extensions and convenience stores etc. It also consists of private labels such as Sainsbury stock cubes, Sainsbury property, Sainsbury’s finance and its café ranges in UK are the ones that create recognition in UK market (Adewuyi, 2016).
Sainsbury market share in 2019 to 2020 would be 14.9% which is second largest in UK after Tesco which is leader of UK market. However, Sainsbury has faced lot of downs in last one year due to pandemic and its lost market share to discount retailers. This has resulted into stock fell by around 10% in 2020 and reached its lowest level in 30 years. Still, Sainsbury maintained to hold the people interest with the online selling or deliveries system in both in its supermarket and cafes ranges (Sainsbury et al., 2018). Eventually, it is learnt that Sainsbury consist of second largest store in UK which clearly indicated that it has strong competitive advantage against its competitors.
When it comes to select for international market expansion then Australia region would be considered as feasible for it. The reason behind this Sainsbury has tried to enter into Australia by merging with Australia supermarket leader i.e., Coles. But it does not bring its private labels in Australia market. It is true that Australia people can access Sainsbury bakery or sauces in supermarket but when it comes to café label then its coverage is left till now. It would be more feasible for Sainsbury to enter with café labels in Australia as it is known that Sainsbury initially or exclusively started dealing in food business only and then after its product portfolio expansion takes place. In that case, it would be better to enter with its strong portfolio as clothing line or supermarkets are already have strong competition in Australia market so chances of grab position tend to be difficult (Sainsbury et al., 2019). Besides that, the survey findings revealed that Australia Cafes and Coffee Shops industry has grown strongly over the past five years, owing much of its success to Australia’s love for quality coffee and vibrant coffee culture. This love for coffee supported industry demand in the years following the global economic downturn and has fuelled revenue growth over the past five years. In respect to Sainsbury café in UK already proved that majority of people visit to place for its coffee or amazing frozen yogurt etc. Thus, these specifications clearly justified the decision to move towards the Australia with its private label (Davey, 2021). The Sainsbury will also get benefit in Australia population as due to its merger with Coles already create recognition which assist the brand to even get larger audiences in its private label i.e., café. These reasons valid the decision to expand in Australia market with café private labels.
ii. Possible strategic choices available to the parent company
Sainsbury is majorly focused on market or product development strategies as its already known that Sainsbury is dealing in multiple product line with owning private labels. Apart from this, it also has operated in around 80 markets. These areas proved that company is extensively engaged with these strategies. In that case for international expansion, there are different strategic choices are available for parent company i.e., Sainsbury (Lee and Olson, 2016). It includes concentration, market development, product development and innovation etc.
In respect to expansion of Sainsbury café, innovation strategic choice will consider as feasible to get the acceptance in Australia market. The reason behind to select innovation strategic choice as changes in product presentation or food cuisines changes as per the local people would help the café to get more acceptances from local people. It is because every country has different culture or set of people whose have diverse taste or preferences (Dogan, 2017). That’s why, it is important to bring changes or improvement in product or services as per the country demands.
The innovation strategic choices could also help the Sainsbury Cafe to adopt the new product additions as per the preferences of local population. It is known that Sainsbury café has been constant in its quality focused for the product or services delivery. It never compensates quality of product. That’s why, Sainsbury get second leading position in UK after Tesco and Tesco is always into discounted strategy adaptation by compensating quality (Dinesh, 2021). This factor made it leader but when it comes to Sainsbury it never compromises the quality or professionalism in its product or services quality. This made it second largest brand in UK market. In that case, it is also must for Sainsbury café to continue this tactic within bring innovation in its current product line. Likewise, the food survey trends indicated that Australian workers are developing special place for plant-based meat in order to protect the animals. The food frontier by leading market research agency Colmar Brunton stated that Australians is presently witnessing an explosion in the availability and variety of plant-based meat options in foodservices and retail outlets driven by increasing consumer consciousness about the impacts of their food choices on their health and the planets. It is found that Australia famous food organization i.e., Fenn Foods are launching the world’s first carbon-neutral plant-based meat. The studies revealed that it also helps the society to become aware about the animal’s welfare. The plant-based meat would be also considered as a best option to replace with animal meat as it gives same number of proteins or nutrients (AlQershi et al., 2019). It is known that Sainsbury café is focused towards more breakfast or some dinning cuisine. In that case, it could target same sense of audiences for taking morning breakfast by enjoying plant-based meat with a great presentation. This would give the people with memorable experiences. Therefore, the selection of this strategic choices would bring lot of opportunities for Sainsbury to explore the café industry in Australia by receiving higher acceptances.
iii. Reasons for choice of location for the subsidiary
There are multiple reasons exist within which Sainsbury is selected the Australia region for its private label i.e., café. The first cause is that food business is quite suitable in Australia region as there is high demand of innovative breakfast or food in Australia due to working people prefer to grab breakfast from café and avoid time wastage. Post-pandemic, Australia people also get aware about the healthy eating or lifestyle after that they prefer to intake proteins through different sources like eggs, meat or chicken etc. In that case, it would be better option for Sainsbury to enter in Australia café industry (Huang et al., 2017). Another reason to select this location for subsidiary firm is that as per Australian food and grocery councils 2019 revealed that food and beverage, grocery and fresh produce bakery products is gaining worth $122 billion earning. The industry is made up of 15,000 businesses of all sizes that employ over 273,000 people. It means that it also provides job employment opportunities to local people. Apart from this, it is also learnt that Sainsbury café knows that every supermarket is slowing moving into café business like Ikea is started with furniture design to different household necessary items but it also aware that visitors after being moving to big store feel to eat something. This has made them to open café inside their Ikea stores only. This concept has provided huge advantage to the business of Ikea (Yusuf et al., 2016). Similarly, Sainsbury previously came into partnership with Australia local grocery store i.e., Coles. In that case, it would be better if they come with their own private brand name in Australia market for providing them new services and support them to access the healthy breakfast or snacking at any time even in visiting of store.
In addition to this study, it is realised that Australia people has gained huge acceptances of fitness in their lives whether its living health lifestyle to eating healthy. In that case, Sainsbury café existing strategy to offer healthy breakfast strategy would definitely work in the Australian market. It is also found that Sainsbury has need less investment requirements as compare to enter other western or Asian countries (Cole et al., 2018). The Asian’s countries have high labour availability but facility related to technology or resources availability are insufficient. However, the other western developed countries consist of high-cost resources availability. These areas make the Australia country location has more feasibility to move in the country. This would help the parent company to enter into new location and this investment bring high return with the entering into Australia location.
iv. Strategic methods of entry and the possible consequences
The international market entry mode consists of various sources from exporting to partnership along with outsourcing is new mode to present in international market. In respect to Sainsbury parent company has already used the partnership strategy with Australia Coles. But, this time for café label, the franchising strategic method to enter into Australia market would be feasible. The reason behind this is that the franchising method is for rapid market expansion and famous process to explore new market and work really well in case business has already become a popular brand and want to make expansion. In that case, the expansion of franchise in another country would be suitable as audiences would easily recognise the brand or get associated easily (Galie et al., 2018). Thus, this is the simple’s way to enter into the foreign market through franchising. Moreover, In-spite of having numerous advantages of franchising for Sainsbury café to enter into Australian market, But, at the same time, it can’t be ignored that recognised brand always has feel pressure of bring best services in new country. This pressure sometime creates a sense of heavy burden on brand how to cope up with that and this pressure many of time become a reason of executing poor customer services.
In respect to deal with such possible consequences, Sainsbury café must conduct intense research about local people food taste and preferences or even can work with local food café for understanding the people needs. This would be the best way to compensate the risk or deal with the international expansion uncertainties. Other than that, post-pandemic, the government policies on people visiting to stores could also become a risk for café to get higher people acceptances. In that case, it would be suitable for the Sainsbury to also focus on the online deliveries through register themselves with food applications so that people can enjoy the food and support the brand to continue its existences in Australia market. This would be another strategy to reduce the risk of low customer visitors. In consideration of environmental norms, it could be stated that Sainsbury café must focus on the no-plastic use packaging for saving environment from global warming. It could be done with design recycled packets or mugs for the people to eat or dispose it after consumption (Pagotto and Halog, 2016). This process somewhere also assists to cut-down the packaging cost. Therefore, these uncertain consequences could be deal with reliable implementation of strategies at right time. This would support the brand to get acceptances in international region.
v. The potential organisational and managerial problems for the subsidiary operating in the new international environment
There are various potential managerial problems that Sainsbury café could face in operation in Australia market. This is because of present of external factors. It includes political instability, economic factor along with socio-economic ones and change in technology etc. These are the ones that become a reason behind the creation of challenges for café to execute properly in Australia market. It is known that Australia consists of different culture people in that case, Café could face challenge to fulfil the requirements of all customer segment. Apart from this, the technical resources in Australia are still not advanced as compare to UK. In that case, Sainsbury face lot of challenges to bring innovation in that location. Likewise, if café wants to start-up with click and collect method in Australia then it needs to bring technology in Australia first then able to hold the services in the Australia market (Huang et al., 2017). This kind of challenge would be occurred in new location.
Vi. You should provide strategic advice for the subsidiary to overcome the problems highlighted in v
As for individual and group conduct, it is recognized that culture, power and governmental issues are the main considerations that impacts human practices. This is on the grounds that association culture is the one that help individuals to trade normal convictions, qualities and encounters of association (Walsh, 2016). The association culture has a solid impact over the practices of individuals as culture directs individuals how to act or act in a working environment and it likewise supports to keep up with specific set of accepted rules inside which each individual is relied upon to act in specific manner. though, legislative issues and force of association additionally impacts the progression exhibitions as solid influential individuals have a brought together ability to direct the primary concern laborers however the achievement of association is generally relied on how they guide their subordinates. accordingly, the way of life, power has a significant impact to represent the deciding moment the association (Angouri, 2018).
The instance of Sainsbury which is an inside planning firm obviously confronted the issue of helpless group the executives because of present parcel of impediments like contentions, ill-advised correspondence which prompts muddled of jobs and obligations. aside from this, the distinctive work encounters are one more component that make issue for group pioneer to manage it. The present circumstance examination of Sainsbury obviously needs to an improvement in its labor forces culture with the goal that issue identified with helpless governmental issues or unified power can be figure out. It became significant that each various leveled part should have specific decentralized power so they might take pertinent choice for their specialization and arrange with each capacity on legitimate way (Steers and SnchezRunde, 2017). This review would examination of Sainsbury culture, legislative issues or power impacts so remedial moves can be made.
The ideas like association culture, governmental issues or power impact individual or group exhibitions. In setting to Sainsbury fashioners firm, it is noticed that since firm is managing little undertakings so number of staff or encounters of them are less. the way of life of association is additionally evolved in such a way that restricted spending plan accessible for project or less innovation has been utilized (Hutchison, 2018). This made individual conduct in that manner to play out the errand according to the expressed way. it can say that firm people individuals don’t get the opportunities to introduce their choices because of less openness. this additionally made the person to battle when it is approached to deal with enormous inside projects. in the event of group bunch, the practices are affected such that all individuals have distinctive working encounters so each other conclusions or perspectives are intruded on which establish a negative work space (Afsar et al., 2016). It is realized that high struggles never support the group to work with cheerful mood. The group building requests for the right correspondence organization. yet, on account of Sainsbury inside, it is understood that they have been dealing with issue of correspondence hole because of concentrated power or power. aside from this, immediate correspondence is likewise not held as expected. This carelessness become a purpose for the unclarity of the jobs and obligations. it prompts the helpless commitment of work exhibitions. It is additionally observed that since each person in group have assorted individual foundation so the distinctions in language, abilities happened (Rosen et al., 2017). This is likewise considered liable for the distinctions in assessment or happening of conflicts at working environment. These regions don’t have positive impacts over the individual or colleagues’ practices and it ends up being useless for the firm long-haul supportability.
References
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