Open Innovation and Internationalization in Sainsbury

This document discusses the concept of open innovation and internationalization in Sainsbury, a leading retail company. It explores the benefits of open innovation and the strategies for international expansion. The document also covers the organizational purpose, profitability, and social responsibility of Sainsbury.

Table of Contents
ABSTRACT.....................................................................................................................................2
INTRODUCTION...........................................................................................................................3
Q 1) Open innovation and Internationalization...........................................................................3
Q 2) Internationalization, localization and competitiveness........................................................6
Q 3) Organizational purpose, profitability and social responsibility...........................................8
Q4) Personal reflection on learning...........................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................12

ABSTRACT
Open innovation means combining the external and internal resources and grabbing the
opportunities that it creates. It has ability to provide long term advantage to MNC's like
Sainsbury. It has been found out that Sainsbury is using the innovation funnel that supports firm
to align the strategic aims and objectives. This model provides various benefits of external
innovation. Further, company should adopt demand for internationalization because it helps to
spread division of human resource at international level.

INTRODUCTION
The term global corporate strategy means the strategy that company adopts when it wants
to expand and compete in the global market. It also refers to the plans a company has developed
to target the growth beyond its borders (Amanchukwu, Stanley and Ololube, 2015). The Report
is based on J Sainsbury. It belongs to retail industry. It was founded in year 1869 by John James
Sainsbury. It offers a wide range of products through superstore, convenience shops,
supermarket, forecourt shop etc.
The Report will outline the difference between closed and open innovation,
Internationalization, localization and competitiveness, organizational purpose, profitability and
social responsibility and Personal reflection on learning with the help of Gibbs reflective cycle.
MAIN BODY
Q 1) Open innovation and Internationalization.
Basis Open innovation Closed innovation
Meaning It is described as the use of
purposive outflow and inflow
of knowledge to improve
internal innovation and also to
expand the markets for
external use of innovation
(Eckhardt, Ciuchta, and
Carpenter, 2018).
It refers to the process that
leads to the innovation which
is fully controlled and all the
intellectual property is
developed in the company.
Under this process, all
intellectual property is kept
within the boundary of firm
until new goods are released in
the market.
Role of customers In case of open innovation,
customers are active co-
innovators as they provide
information to company that
helps to innovate new products
or service.
Under closed innovation,
clients are passive recipients
because they do not provide
any input that may help firm to
innovate new products.
Venture capital
Under open innovation venture
capital plays an important role.
In case of closed innovation,
venture capital plays only a
minor role.
Mobility of employee's High Low
Qualified persons The firm works with bright
minds outside and inside the
organization.
Under this, high skilled
workers mainly developers and
researchers are major source of
innovative ideas.

Role of research and
development
Innovation may come from
inside and outside. External
research and development may
develop major value but
internal research and
development department is
also required to capture the
part of this value.
Development, design and
marketing of in-house
innovations : Own innovative
technologies, ideas, markets
and processes offers a long
term competitive advantage.
Competition To compete with other firms it
is not essential to deliver the
best ideas but it is important to
make the most of external and
internal ideas.
To lead the competition in the
industry it is important to offer
the best ideas (Eriksson and
et.al, 2015).
Intellectual property Under this, innovation doe not
require to be created in order
to make profit from it. A
competitive advantage may be
gained and profit may be
generated by other people with
the help of own intellectual
property. The firm acquires
intellectual property of third
party.
Firm treats own know-how
confidentially to safeguard it
and also to avoid free rides by
other companies. Copyrights,
patent etc. are intended to
safeguard the ideas and
research of the company from
theft.
The open innovation model- Sainsbury is using the following model to promote innovation in
the organization.
The Innovation funnel :
It refers to the mechanism that supports a constant flow of ideas that can be screened for
profitability and viability. It is also known as funnel management process that is used by firms to
develop a realistic and innovative action plan (Forsgren, 2015).
Sainsbury is using innovation funnel that helps to align the strategic aims and objectives.
The model provides various benefits of external innovation. It also promotes strategic thinking
that helps to improve product quality, productivity, usability, reduction in operational complexity
and cost etc. Moreover, the funnel helps to provide more predictability and legal protection. It
enables Sainsbury to allow innovators to participate in cross licensing, licensing, joint ventures
and other transactions.
Factor endowment-

The term factor endowment is defined as the amount of capital, land, labour and
entrepreneurship that is possessed by the firm that it exploits for the purpose of manufacturing
goods and services. Currently, Sainsbury has nearly 2200 convenience stores, supermarkets and ,
established online capability and Agro stores across Ireland and UK (Annual Report of J.
Sainsbury Plc, 2018). Further, it has employed approximately 185000 employees that helps firm
to serve the needs of customers and community.
Related and supporting industries-
It is defined as the downstream and upstream industries that supports innovation with the
help of exchanging ideas. These can encourage innovation on the basis of degree of knowledge
transfer and transparency. According to the Diamond model, customers and suppliers can
represent either opportunities or threats for the organization (Grayson and Hodges, 2017).
Sainsbury sources raw material over 70 countries on the basis of ability of suppliers to meet out
ethical standards, safety and quality etc. These suppliers represent an opportunity for Sainsbury
to gain competitive advantage over competitors.
Demand conditions-
It refers to the size and nature of the domestic demand for the goods and services of the
industry. Therefore, demand of home market is of major importance in shaping the attributes of
the products offered by the firm. The demand of products offered by Sainsbury is very high in
UK. In year 2018-19, the annual sales of the company in UK is nearly 28 billion pounds.
Strategy, structure and rivalry-
Strategy is defined as the general direction that is developed for the firm and its various
parts to attain a desired state in the future. The current strategy of Sainsbury is to change the way
in which company is operating its stores and online channels.
The structure of the organization defines how various activities are directed for achieving
the aim and objectives of firm. At present, Sainsbury has adopted hierarchical organization
structure because there is large number of people working in the firm and the level above
controls each level (Johnson, 2016).
Rivalry means the condition of two individual or groups that are involved in a lasting
competitive relationship. Sainsbury is facing intense competition from other firms like Tesco,
Waitrose, Morrisons etc.
Government-

Sainsbury is also focussing on reducing deforestation. It has been working with
Woodland Trust from year 2004 and it also contributes to Clean Growth Strategy of the
Government.
Q 2) Internationalization, localization and competitiveness.
Internationalization-
The internationalization strategy is described as the strategy through which the company
sell products or services outside the domestic market. But the focus of the firm is on the market
of home country. Internationalization is one of the strategies that is used by firms to reduce the
cost of operations related with developing goods and services. It is also defined as the expansion
of the business from domestic market into foreign market. The decision of multinational
companies is one of the strategic decision that may have impact on all the internal as well as
external operations (Mathuva, 2015).
One of the important theory of internationalization that can be used by Sainsbury is the
theory of Liberalism. The theory sees the process of internationalization as market led extension
of modernization. It is the result of human desire for political liberty and economic welfare.
There are various forces that interlink humanity across the planet. Such as technological
advances in the area of information processing, legal arrangement to support markets to spread
on a trans world scale etc.
Advantages -
New Revenue Potential -
One of the major advantage for Sainsbury to meet out the need and demand of customers
at international level is that it will help to increase the revenue of the firm. By moving at
international level firm will be able to increase the existing base of clients. If the product or
service gain success at international level then it will help Sainsbury to increase the revenue from
new customers.
Foreign investment opportunities -
Foreign investment is very valuable for a company. By moving at international level
Sainsbury will gain the opportunity for investing funds in different areas. This will provide
various opportunities of growth for the firm.
Disadvantages -
Ethical business practices :

One of the major challenge that firm may faced while meeting the demands of
internationalization is that it has to follow various practices in different areas such as product
safety, regulatory compliance etc. that plays an important role in success or failure of global
company.
Public relations :
Another challenge that Sainsbury may have to face is regarding building public relations
in new geographic area both for localizing the message and investing funds to create the
momentum (Mikucki-Enyart and Caughlin, 2018).
Localization-
It is defined as the procedure for adapting the goods or service to a particular market or
locale. The process of localization involves addressing the rules, regulations and requirements of
the domestic country. The objective of localization is to provide a product the feel and look that
has been created mainly for a specific target market.
Advantages -
Reputation - The place where the business is localized will gain reputation.
Skilled labour – Localization protects the specialization in particular trades. As a result
employee's skilled in the business are fascinated to that place.
Increase market share – By making available the product or service to local customers in
domestic market, firm get better solution that fits the market and needs of customers. By
localizing the business into just particular language helps to open the product to potentially
bigger market.
Disadvantages -
Marketing dilemma :
The non localized offering may result into consumers not being attracted towards retail
brand like Sainsbury etc. Company generally spend 80% of the marketing budget to increase the
market share and lost clients due to change in brand image. Therefore, it is possible that fund
spent to attract customers but those clients spend less due to which profitability may be affected.
Pricing dilemma :
The international companies price their goods higher as compared with local companies
mainly retailers. However, if the price is too it will impact the profitability and often high price
reinforces the premium positioning of global company (Morden, 2016).

It is recommended that Sainsbury should adopt demand for internationalization strategy
because it will help to maximize the overall profitability of the company. Sainsbury has already
adopted the differentiation strategy through modernization, expansion and investigation. Further,
internationalization helps company to offer high quality goods and services at global level.
Further, the firm has differentiated its products like food items that helps to increase the
customer base. This has lead to cost saving by bringing total savings of £540 million. Further,
Sainsbury is offering differentiated products at international level in terms of quality and also
adapting the supermarkets to serve variety of shopping missions (Neal, 2018).
Firm should adopt demand for internationalization because it helps to spread division of
human resource at international level. It will also help Sainsbury to access more profitable
markets and resources that will bring the benefits of increase in specialization and it will also
result into improvement in efficiency of performing different types of functions.
Internationalization will help Sainsbury to attract large number of buyers from other countries
that will help to increase the sales and also helps to improve overall profitability of the firm.
Q 3) Organizational purpose, profitability and social responsibility.
Organization purpose :
The term organization purpose refers to the motivating force that guide, move and deliver
the company to a perceived objective. It is the driving force that fuel the company together to
achieve success.
The major purpose of Sainsbury is to offer food items at a fair price. Company believes
in being fair towards environment, suppliers and don't cut corners for short term gains.
Corporate profitability :
The term corporate profit is defined as the amount that is left over after the firm make
payment of the expenses. All the money that is collected by organization during the reporting
period because of the products or services offered to the customers is considered as the top line
revenue. In year 2018, the profit of Sainsbury was £309 million. Profit of the group in year 2017
was £377 million (Potter, 2015).
Corporate social responsibility :
The term corporate social responsibility is defined as the self-regulating model of the
business that assists the firm to remain accountable towards itself, public and stakeholders. By
practising corporate social responsibility, firms remain conscious of the type of impact the

activities of organization is having on all aspects of society including social, economic and
environmental.
Multiple Goals model -
The management of Sainsbury is using multiple goals model that helps business to
simultaneously attain the corporate social responsibility and corporate profit. As per this model,
company have objectives beyond the shareholders value. Sainsbury also makes efforts to bring
an enhancement in the community without more focussing on monetary gain. According to
various authors this model is relatively radical (Ragland, Widmier and Brouthers, 2015).
Senior management team and CEO of Sainsbury has developed various types of
strategies for achieving the objectives of corporate social responsibilities and corporate profit
simultaneously which is important for growth and survival of the firm.
Sainsbury has taken part in the research project called Protein for Life and it is also
working with industry partners and academics to develop various guidelines for high protein
snack food items mainly for older people. This strategy of the management helps to maintain
health and safety of clients.
Further, Sainsbury has entered into partnership for completing a research project with
The Welcome Trust and Oxford University to look at different aspects of health, diet and
environment. Senior management of Sainsbury has also started Sainsbury's Foundation
Programme with the help of investment designed to improve efficiency, sustainability,
competitiveness and resilience of producers and suppliers by focussing on economic, social,
environmental development. Further, the organization has also adopted the approach for
reducing the packaging used in products and also ensure to use recyclable packaging and make
efforts to increase the amount of recycled material in it.
Strategic management principles-
The principles of strategic management involves wide range of guidelines, policies and
best practices related with strategic management. Sainsbury has adopted the following principles
that helps to improve market position, fast growth and development of the business etc.
Principles related with strategic goals :
Principle of expediency- The goal should be developed according to the values that has been
approved by management and owner of the business.
Principle related with strategic creativity and thinking :

Principle of strategic thinking- Strategic thinking must involve strategic analysis, making
strategic choices in the context of international business etc.
Principles related with strategic change :
The principle of strategic change- Sainsbury should fight the resistance of employee's to
change, focus on improving organizational culture and using modern concepts and approaches of
research.
Leadership principles- The leader of Sainsbury follows the below leadership principles to guide
the employee's of the firm (Rugman and Verbeke, 2017).
Be technically proficient :
The leader should know all the details regarding job and have familiarity with the tasks of
workers.
Making timely decisions :
Leader of the firm should have good decision-making, problem solving skills that helps to take
decisions on time.
Keeping employee's informed :
Leader should have knowledge of how to communicate with key people, employee's and with
seniors as well.
Developing the sense of responsibility in workers :
Leader of Sainsbury plays an important role in developing character traits among employee's that
assist them to perform professional responsibilities.
Take responsibility for the actions -
Another major principle of leadership is that leader of company should search new methods to
guide the business to new heights. They must analyse the situation and then take necessary
actions and also move on next challenge.
Ensure that tasks should be supervised, understood and accomplished :
Leader of Sainsbury should have excellent skills for communicating information to the
employee's. They should have ability to guide workers that are working in the organization.
Know yourself and seek self-improvement :
In order to have knowledge regarding self, Leader of the firm should have complete
understanding of own skills and attributes.

Q4) Personal reflection on learning.
Gibbs reflective cycle – The model was developed by Graham Gibbs in year 1988. It provides
the structure to write reflection regarding learning from an experience. It offers a framework for
evaluating the experience (Worsnop, Miraglia and Davies, 2016).
Description :
My tutor have assigned me an assignment on global corporate strategy. Firstly I have
decided to divide different tasks that I have to complete for completing the assignment. I have
been given timeline for completing the work. To complete the assignment I have made efforts to
search information from google, annual report of Sainsbury, from books and journals.
Feelings :
Figure 1 : Gibbs reflective learning cycle,
2017
Source : (Gibbs reflective learning cycle.
2017)

I have realized that I have to do various tasks for completing the assignment on time. I
was quite excited because the task has given me an opportunity to develop my understanding
regarding the difference between open and closed innovation. I am somewhat nervous because I
felt that I am lacking writing skills.
Evaluation :
While performing the task I have made efforts to complete the assignment on time.
Further, I have realized that research skills plays an important role in collecting information from
various sources.
Analysis :
From this assignment I have learned different things such as it helps me to develop an
understanding in respect of different terms like localization, internationalization etc. I analysed
that senior management of Sainsbury plays an important role in promoting growth of the firm.
Conclusion :
Positive experience I gain is that I have come to realize my skills and abilities like time
management skills, communication skills etc. The skills that requires improvement are research
skills.
Action plan :
In future if I will get an opportunity to do similar task I will make more efforts to
complete the work in effective and efficient way.
CONCLUSION
The above Report has outlined that open innovation is different from closed innovation
on the basis of benefits, role of clients, mobility of workers, qualified personnels etc. It has been
concluded that Sainsbury has been using the innovation funnel that assist firm to align the
strategic aims and objectives. The Report has also explained that company has adopted
hierarchical organization structure because there is large number of people working in the firm.
It has been concluded that firm should use demand for internationalization because it helps to
gain competitive advantage over other companies.
REFERENCES
Books and Journals -

Amanchukwu, R.N., Stanley, G.J. and Ololube, N.P., 2015. A review of leadership theories,
principles and styles and their relevance to educational management. Management, 5(1),
pp.6-14.
Eckhardt, J.T., Ciuchta, M.P. and Carpenter, M., 2018. Open innovation, information, and
entrepreneurship within platform ecosystems. Strategic entrepreneurship journal. 12(3).
pp.369-391.
Eriksson, K., and et.al, 2015. Experiential knowledge and cost in the internationalization process.
In Knowledge, Networks and Power (pp. 41-63). Palgrave Macmillan, London.
Forsgren, M., 2015. Managing the Internationalization Process (Routledge Revivals): The
Swedish Case. Routledge.
Grayson, D. and Hodges, A., 2017. Corporate social opportunity!: Seven steps to make
corporate social responsibility work for your business. Routledge.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Mathuva, D., 2015. The Influence of working capital management components on corporate
profitability.
Mikucki-Enyart, S.L. and Caughlin, J.P., 2018. Integrating the relational turbulence model and a
multiple goals approach to understand topic avoidance during the transition to extended
family. Communication Research. 45(3). pp.267-296.
Morden, T., 2016. Principles of strategic management. Routledge.
Neal, R., 2018. Funding Frugal Innovation in Global Health: Philanthropy, Aid, and Industry. In
Frugal Innovation in Bioengineering for the Detection of Infectious Diseases (pp. 99-
112). Springer, Cham.
Potter, C., 2015. Leadership development: an applied comparison of Gibbs’ Reflective Cycle and
Scharmer’s Theory U. Industrial and Commercial Training. 47(6). pp.336-342.
Ragland, C.B., Widmier, S.M. and Brouthers, L.E., 2015. A factor endowment approach to
international market selection. Journal of Strategic Marketing. 23(6). pp.497-511.
Rugman, A.M. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.
Worsnop, T., Miraglia, S. and Davies, A., 2016. Balancing open and closed innovation in
megaprojects: insights from crossrail. Project Management Journal. 47(4). pp.79-94.
Online -

Annual Report of J. Sainsbury Plc. 2018. Online Available Through :
<http://www.annualreports.com/HostedData/AnnualReportArchive/j/LSE_GB0767628_2018
.p df>
Gibbs reflective learning cycle. 2017. Online Available Through :
<https://www.sheffield.ac.uk/ssid/301/study-skills/university-study/reflective-practice>