Assignment Sample on BMG872 Global Strategy Development Implementation

Historical Performance

The Company Sansbury’s is registered as the JSansbury’s in the UK and termed as the second-largest supermarket chain of the country. After founded in the year 1869, the Company achieved a strong market presence and moved towards the development with a 16.0% market share in the UK retail industry. John James Sansbury’s first established a Shop in the  Drury Lane in London in the year 1869, and after that, this small shop[ turned into the largest groceries trailer in the year 1922. Several times, the competition with ASDA and TESCO Plc made the Company face uncertainties regarding their market position. After each of the unstable market positions, the Company bounced back to its stable position with its strong market presence and competitive market analysis policies.

Products and Service

The parent holding of the Sansbury’s is the J Sansbury’s plc, and the business of the Company is divided into three major sections as per the industrial need and business demography. One of the most profit-making firms of the Sainsbury’s is the Sansbury’s supermarket and retail chain. Along with the supermarket ventures, the Company also has general utility shops, and it is the most popular section of Sansbury’s (Sansbury’s. 2021). Sansbury’s bank and Sansbury’s Argo are also two different sectors that earn profit for the Company. The Global operation of Sansbury’s offered  Tu, a fashion and apparel brand that offers kidswear, menswear, and womenswear and products for people of all ages (Sansbury’s. 2021). Sansbury’s groceries is the largest food retailer in the UK, and the motto of this grocery retail brand is to make people live well with less.  Sansbury’s bank is the first supermarket bank in the UK that offers hassle-free banking services to customers of the UK. In the digital marketing and digital business field, the Company set their presence and Sansbury’s cargo misleading digital retailer of UK, which offers more than 60,000 products through their online service and delivery channels (About.sainsburys.co.uk. 2021). Homewares at an affordable price are offered by the Company, and Sansbury’s home is one of the most prominent homeware ventures from Sansbury, where Sansbury’s habitat has shaped the way of living since 1964 (Sansbury’s. 2021).

BMG872 Global Strategy Development Implementation

Share of the Market

The outstanding performance of the Company makes it to be listed in the London Stock Exchange, and it is also included in the FTSE 100 index of the London exchange for the outstanding market performance and financial return to the investors (About.sainsburys.co.uk. 2021). The share prices of the Company are 244.60 GBps, and the total market capital invested by the Company is 5441.13 Million USD. The symbol of the Company is the stock market listing is SBRY, and the ISIN Number of the Company’s stock exchange is GB00B019KW72 (About.sainsburys.co.uk. 2021).

Rationale for Expansion

 Starting from the retailing business, the Company has several other sectors of business, as mentioned above. Due to the industrial revolution and digital progression, the Company has an opportunity to enter the global market to expand its presence (Moore, 2020). Expanding to the new market, the companies can understand the global trends of the business and implement in the UK sector to make it more structured and organized to be the leading service provider of the UK. Moreover, the retailing chain business in India is not developed yet (Oxford Analytica). So the consideration of Sansbury’s retailing sector expansion in India can offer competitive advantages to the Company, and the largest market can be consumed by the Company as the retail chain business has a strong market presence in the UK and worldwide recognition (About.sainsburys.co.uk. 2021). So the expansion of this specific business will be more impactful for the Company in gaining competitive advantages in the home country as well as in the Host country.

Strategic options Available

Sansbury’s is famous for its retail industry sector, so the retail industry is selected for expansion to the new market. Based on the strategic positioning and strategic decision making, the Company also has other choices to expand in the expandable market.

Sainsbury’s Banking:  The baking industry has a strong market presence in the UK, and Sansbury’s banking sector can achieve potential growth in the proposed new international location. As in India, there is a very less presence of Supermarket banking services. If Sansbury’s introduce their banking sector in India, with improved IT infrastructure, it will be able to beat the market and can achieve the strategic position in the market (Moore, 2020). The expansion of the banking industry is an excellent option for the Company to expand to a new level.

Sansbury’s Fashion:  In Asia, India is emerging as the most promising market in terms of its consumer base. The fashion trends influence the country at an excellent level. So the selection of the banking sector as an option to expand in India can be another strategic choice for the Company. Instead of the retail stores, if the Company opens its fashion brands store (Grimmer, 2019). Then market attraction towards the brand will gain a higher engagement from the customers, and the improved market performance can be ensured with it.

Argos: In the UK, Sansbury’s offers digital product delivery services and an online shopping experience to the customers. In the proposed market, there are numerous opportunities to enter the online retailing business. Focussing on a specific city or metropolitan region, the Company can start its online shopping venture in the proposed market (Moore, 2020). Though the competition in the online product delivery and digital service sector in India very high, still the market exposure is very high. So this sector can be preferred for the expansion.

Habitat: being an international brand with such a strong market presence and glorious market prestige, penetration into the home decor and home designing sector is another choi8ce for the Company to utilize in the expansion in this new region (Aluko and Knight, 2017). Based on this, the Company can achieve a strong market share, as the competition in this industry is very less. It will be a better opportunity for the Company. As the country is proceeding towards the urban development and urbanization process, the need for home decor services is increasing (Grimmer, 2019). Tracing the flow of this market and the market trends,m the Company can ensure its smooth business operation.

Groceries Delivery:  Along with online grocery delivery, the fresh food items delivery services are not popular yet in the proposed country. Few of the existing online retailing sectors are trying to get into this sector, but the success in this industry is not ensured yet, due to lack of market understanding and inefficient supply champion (Aluko and Knight, 2017). Amazon pantry and Flipkart groceries are trying to get into this market, but the strategic decision-making and identification of the market opportunity make them struggle in getting a potential customer base for the business.

Rationale For Location

AT Kearney mentioned India as the most promising and most attractive market option for online retailers to expand their businesses.  Based on the market volume and the availability of the favorable elements for business expansion, the consulting firm of AT Kearney mentioned India as the most attractive market in the world, three times in a row (Watson IV et al., 2018). The convergence of the several economic and socio-political factors makes the country an ideal location to promote the retail industry.  The favorable factors that make India an ideal location for market expansion are economic growth, favorable market demography, and strong supply chain options (Watson IV et al., 2018). The infrastructure of the country and the initiative of the government snake the country as one of the most attractive destinations for companies to invest in the retail sector. The Macro environment of the country and the external influences of those external macro factors influences the growth of the retailing industry of the country (Grosso et al., 2018). PESTEL analysis of the country makes options more transparent to consider the rationale for the election of the country as the most promising location for the retailing industry.

External Environment Analysis

PESTLE Factors

PESTEL Elements Influencing factors
Political factors ●      Parliamentary democratic country with freedom of speech and freedom of living in an independent way (Beteille,  2020).

●      The current ruling right-wing political party is favorable for Foreign investment firms to expand their business in the country (Beteille,  2020).

●      Stable political state and minimum political unrest prevailing in the country.

●      The intervention of the political power in the foreign business firms is very less.

Economic factors ●      Sixth Largest economy of the world in terms of the nominal GDP

●      The third-largest economy in terms of Purchasing power parity (Garg and Panchal, 2017)

●      THE nominal GDP of the country reached $739.3 Billion makes it a strong country in terms of purchasing power.

Social Factors ●      Hierarchical social structure is observed in the country

●      Religious tolerance and no restriction on social behavior are imposed by the government and constitutional policies (Beteille,  2020).

●      Notions of complete equality are yet to achieve in the country.

●      Higher national unemployment rate near about  6.9% (Garg and Panchal, 2017).

●      8.4 million people live under the poverty line in this country.

Technological Factors ●      In the Global innovation index, the country is ranked 52 among the world.

●      India comes under the top 15 countries in the ranking list published by ICT (Tamzi and Parves, 2017).

●      Governmental influence on technology is observed with the Digital India initiative.

Environmental factors ●      Pollution, poor water management, and sanitation issues are major hardships observed by the Company.

●      Huge landfill and soil erosion impact the environmental stability of the country (Beteille,  2020).

●      Less economic disasters are observed in the mainland region of the country, but the Coastal areas are prone to natural disasters like tidal effects.

Legal factors ●      Labour law is the constitutional policy that needs to be followed in business operations (Tamzi and Parves, 2017).

●      E-retailing sectors are restricted to sell only 25% from specific vendors. More than 25% of sales are restricted in the country.

●      Corporate tax was reduced to 22% last year.

Analysis of Elements

Based on the macro environment of the country, it can be stated that the country has an excellent political stable situation in the world and the right-wing government is very much friendly for tech companies to expand in the country., Moreover the market volume of the retail industry is more than $600 billion, which promises opportunities for the Company to expand in the selected region (Holtbrügge and Berning, 2018). Moreover, the potential customer base of the country is very large as in terms of buying power it comes to the second position in the world. 22% corporate tax and innovative minds of the country will be helpful for the business expansion. The surging unemployment and the economic stability of the countrymen enable the Company to attain cheap labor. The international location is selected through the strategic choice to make a significant profit with minimum operating expenses.

Market Entry Process and Consequences

Market Entry Process

Performance of international market entry is done very cautiously to avoid the irrelevant hectic situations and issues related to the business operation. Analyzing the external environment and market opportunities, the market entry strategies are fixed as per the requirements (Holtbrügge and Berning, 2018). The options available for Sansbury’s to explore the Indian market through its Retailing subsidiary can be performed with different market entry strategies.

Exporting: As the Company has a strong presence in the UK market, so the production facilities are improved in that country. These production facilities can be implemented in business operations in India (Holtbrügge and Berning, 2018). The products of the retailing goods can be produced or gathered from the UK and then exported to India. But the import and export tax of the newly explored country imposed a boundary on this market entry process.

Franchising: Through this process, making an agreement with the existing companies of the new country, Sansbury’scan makes an agreement to offer product and service delivery to the customers. Through this effort, Sainsbury’s allows them to utilize their brand image to the Company; in return, Sainsbury’s can enjoy the prefixed market of that Company (Holtbrügge and Berning, 2018). It is a risk-sharing process of market entry, and the firms from the host country, with which the agreement for franchising is made, have a responsibility towards the partnered firm to deliver values and profits.

Direct Investment: By investing in wholly-owned subsidiaries, Multinational organizations can make a profit from their direct investment. Through this process, the Company can set up a new business environment for the proposed subsidiary in the newly selected market. Based on the performance and the operation of a business, the Company can explore the different opportunities there (Grosso et al., 2018). This needs a more aggressive approach to promote the business in the foreign environment.

Trade Intermediaries: If the Company does not have enough resources to utilize in the foreign market, then the consideration of the foreign intermediaries can offer opportunities to understand the foreign market and helps to promote the Company and its business. It is useful to gain competitive advantages within a very short time (Grosso et al., 2018).

Consequences

To analyze the consequences, a market forces analysis is required. Considering the available market forces, the analysis of the impact of those forces can define the consequences of the market entry of the Company.

Porter’s Five Forces analysis

Threats from New Entrants: If Sansbury’s puts their hands together with the existing firms from the new market segment, then the understanding about the new environment can be realized. It also mitigates the threat to the subsidiaries arising from the introduction of new entrants (Tamzi and Parves, 2017). Still, the retailing industry in the country is huge, and the risk from new entrants is very intense.

Threats from Supplier: If Sansbury’s considered the foreign production unit and operates the business through the import and export policies, then the threat from the supplier will be less. For the time market entry into the new market segment, it is important to consider the existing production unit and supply chain (Tamzi and Parves, 2017).

Bargaining Power of Customer: In the UK, the Company is famous for retailing at a reasonable cost, which offers competitive advantages to the Company. The section in which the Company is going to operate its business has higher competition (Masih et al., 2019). Still, the brand value of the Company enables it to faceless bargaining threats from customers.

The threat of Substitutes: As the industry is vast and different market giants are present in the market, so the risk of substitutes is prominent in the country. The worth of the retailing industry defines that the threat is very high in magnitude (al Habibi, 2019). But this threat can be mitigated through partnering with the possible rival firm from the projected region.

Competition with Rivals: The business rivals of the Company are e-retailing firms of the country. If the subsidiary opens its online retailing sector, the competition will be huge, and it can be mitigated by partnering with the rival firms and making a supply chain agreement with them.

Porter’s Five Forces and Impact, Mitigation

Five Forces Impact Mitigation
Threats from New entrants Medium Partnership and franchising
Threats from Supplier Low Export and Import policy
Bargaining power of customer Low Partnership and franchising
Threats of Substitute High Partnering with the competitor
Competition with Rivales High Partnership

Analyzing the above scenario and possible threat analysis to the subsidiary and the relevant consequences related to the market entry strategies, it can be stated that Sansbury’s can move in a partnership with an existing firm to promote their business in the newly explored country.

Organizational and Managerial issues

  1. Communication gap   As the Company is moving to a new region, to a different continent, the communication gap occurred due to the differences in the verbal and non-verbal communication approach (HR and Aithal,  2020). The verbal communication gap is created with the linguistic barrier where the non-verbal communication gap is caused by the cultural gap between the two countries.
  2. Leadership Issues: Hiring employees is a cup of tea, but the retention of the employee in the organization is related to effective leadership skills (Masih et al., 2019). The retailing industry operation is related to the autocratic leadership approach for organizational management that can impact the perception of the workforce.
  3. Management issues:  The governmental policies of the working environment and the business policies of the conjugated forms are different as their operation of the business is made in compliance with the governmental guidelines (HR and Aithal,  2020). Hence, management issues can occur in managing the stakeholders, conjugated firms, and employees of the organization.
  4. Accountability:  When the new subsidiary will be opened in a new environment, the responsibilities for the success of the business for that particular subsidiary are given to a market leader from that region (Masih et al., 2019). But the accountability of that market leader in managing the organization can be impacted by the communication gap between the firm and the management of the Company.
  5. Cultural Conflict: As per Hofstede’s cultural dimension model, the Cultural differences between these two countries are very prominent (al Habibi, 2019). So, the complex cross-cultural impacts the product designing and market operation, workplace management issues.

Strategic Solution to the issues

  1. Focusing on the local workforce:  To avoid the communication gap within the organization. The recruitment of the local people is required. It also enables social engagement with the organization and develops a socially concerned brand image of the Company (al Habibi, 2019). Even the employment of the local management personnel as the leader of the organization can make the employees engaged in the activities within the organization. Hence, the leadership issues can also be minimized with it (HR and Aithal,  2020).
  2. Training on Cross-cultural practices: Tom operates the business in this region, it is necessary to work on the cross-cultural activities. Working on cultural learning about the selected region can improve the cultural conflict-related issues (al Habibi, 2019). The organizational reformation of the accountability issues and management issues can be resolved with it.
  3. Compliance with the Social norms: The organizational culture-related issues also impacted employee retention within the organization (Masih et al., 2019). Which can be improved with compliance to social norms. This compliance forms the workplace cultures, and the engagement of the employee to the organization can be improved.

Conclusion

When a business stains its stable position, the Subsidiaries are established to make the presence of the business in a more improved way. Sansbury’s is also a strong market platter of the UK in the retail industry along with the groceries and banking industry. This diversified location enables the Company to have a structured business operation in the UK. Being a strong market player in the UK, the Company has its operational unit in different regions of the world. Similarly, the Company is now looking to get competitive advantages in India to leverage its ROI in an improved way. The consideration of the expansion is dependent on the market analysis and creation of competitive opportunity through it. For this reason, in the succeeding section, the historical performance is analyzed to understand the strength of the Company. Then, the operational process and strategic advantages enjoyed by the Company is mentioned.

References

About.sainsburys.co.uk. 2021. Welcome to Sainsburys Home. [online] Available at: <https://www.about.sainsburys.co.uk/>   [Accessed 23 March 2021].

al Habibi, B., 2019. HR practices of Marks & Spencer, Selfridges, Primark, and Sainsbury’s (Doctoral dissertation, University of Science & Technology).

Also, O. and Knight, H., 2017. From corner store to superstore: a historical analysis of Sainsbury’s co-evolution. Journal of Management History.

Beteille, A., 2020. Society and politics in India: Essays in a comparative perspective. Routledge.

Garg, P. and Panchal, M., 2017. Study on Introduction of Cashless Economy in India 2016: Benefits & Challenges. IOSR Journal of Business and Management, 19(4), pp.116-120.

Grimmer, E.L., 2019. The power of private labels drives Coles’ deal with Sainsbury’s: Interview with Isabelle Lane.

Grosso, M., Castaldo, S. and Grewal, A., 2018. How store attributes impact shoppers’ loyalty in emerging countries: An investigation in the Indian retail sector. Journal of Retailing and Consumer Services,40, pp.117-124.

Holtbrügge, D. and Berning, S.C., 2018. Market entry strategies and performance of Chinese firms in Germany: The moderating effect of home government support. Management International Review, 58(1), pp.147-170.

HR, G. and Aithal, P.S., 2020. Experimental Investigation of Cannibalisation by Introducing a Global Brand Abreast Existing Indian Store Brand. International Journal of Applied Engineering and Management Letters (IJAEML), 4(1), pp.10-19.

Masih, J., Rajkumar, R., Matharu, P.S. and Sharma, A., 2019. Market Capturing and Business Expansion Strategy for Gluten-Free Foods in India and USA Using PESTEL Model. Agricultural Sciences, 10(02), p.202.

Moore, T., 2020. Henry Moore: Friendships and Legacies.

Oxford Analytica, Rules will rule out uncompetitive Sainsburys-Asda deal. Emerald Expert Briefings, (oxan-es). .

Sansbury’s. 2021. [online] Available at: <https://www.habitat.co.uk/?utm_source=Sainsburys&utm_medium=referral&utm_campaign=banner&utm_campaign=Globalnav&_%24ja=tsid:77091%7Ccgn:Globalnav>  [Accessed 23 March 2021].

Tamzid, M. and Parves, M.T., 2017. Human Resource Management Policies and Diversity Management (A Case Study on Sainsbury’s). Human Resource Management, 8(4).

Watson IV, G.F., Weaven, S., Perkins, H., Sardana, D. and Palmatier, R.W., 2018. International market entry strategies: Relational, digital, and hybrid approaches. Journal of International Marketing, 26(1), pp.30-60.

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