Global Strategy Development and Implementation for Sainsbury: Environmental Analysis and Entry Modes for Expansion in India

This report discusses the global strategy development and implementation for Sainsbury, including an environmental analysis of India and entry modes for expansion. It also evaluates the performance of the firm to justify internationalization and explains different types of strategies for internationalization.

Global strategy
development and
implementation

Table of Contents
Contents
Contents
INTRODUCTION ..........................................................................................................................3
TASK .............................................................................................................................................3
Performance of the firm to justify the reason for internationalisation ........................................3
Explain the different types of strategies which help the company in internationalise-...............5
Evaluate the environmental analysis of the country in which the chosen company is going to
expand and determine why the country is attractive- .................................................................7
Modes of entry- ...........................................................................................................................9
The potential organisational and managerial problems for the subsidiary operating in the new
international environment............................................................................................................9
Strategic advice for the subsidiary to overcome the problems discussed above.......................10
Conclusion.....................................................................................................................................12
REFERENCES .............................................................................................................................13

INTRODUCTION
Global strategy is defined as the strategy which has been developed by a business
organization for the purpose of expanding its operation into the global market. Its major
objective is to improve the sales of organization across the world. The term global strategy
includes several strategies such as international, multinational and standardization strategies. It is
necessary for a business organization to develop effective global strategies while starting
business in international market or any other country (Kretinin, Anokhin and Wincent 2020).
The chosen organization for this report is Sainsbury which is a largest chain of supermarkets in
United Kingdom having headquarter in London, England, UK. This report includes the reasons
of expansion of Sainsbury Company, available choices of strategy to the parent company along
with the reasons of selecting the particular location for expansion. In addition to this, it also deals
with the managerial problems faced by the organization during expansion along with its
strategies to overcome from these problems.
TASK
Performance of the firm to justify the reason for internationalisation
Sainsbury’s is being considered as third largest or biggest supermarket retailer in United
Kingdom. In all across the UK the respective company have more than 290 convenience stores
and 502 supermarkets. According to the data and statistic which is provided by Data moniton
(2010), it has been analyse that around 18 million peoples visit the stores of Sainsbury’s every
week. The financial performance of the respective company is very good for the past few years,
as reported the profit of the organisation has been increased by 57.3 % from £466 million in the
year 2009 to 733 million in year 2010. Food and grocery is being considered as the main
product of the company, despite of showcasing high quality products of their suppliers in their
stores, the own brands of the company showed a promising growth as 40 % of the sales are of
their own made products. The success of the respective company is driven by its ability to offer
the good quality of products to their customers and at a reasonable price. That is the reason that
company can achieve a successful position in the international market. The competitor analysis
of the Sainsbury’s with the help of Porters Diamond model has been discussed below: -

Definition of Porters Diamon Model- porters diamond model is also known as porter diamond
theory of national advantage (Wonglimpiyarat, 2018). This is a framework which is designed to
understand the amount of competitive advantage enjoy or possess by the nation or groups due to
certain available factor available to them. In context to the Sainsbury’s this model has been
discussed below-
 Factor conditions-these are basically those elements and aspects which offer a
competitive advantage to the organisation. Factors conditions are usually developed by
country at a very large level instead of natural resources. In context to the Sainsbury’s j
plc factor conditions comprises of natural resources, capital resources, human resources,
scientific knowledge, technological innovation and infrastructure. All these factors
condition assist the company to grow and expand its business not only locally but also
internationally.
 Related and supporting industries- the presence of supporting and related organisation
within the industry provides an assistance to the players towards the excelling and
expanding the business with the help of innovation and internationalization. In context to
the Sainsbury’s, the presence of related industries with in the nation assist them by
providing support material when needed in order to successfully operate the functions.
The presence of supporting industry is act as a facilitator for the respective company in
order to grow and expand their business by attracting customers and creating awareness.
 Strategy, Infrastructure and Rivalry- this element is related to the strategy of the
company, its organisational structure and competition available in the market. In relation
to the Sainsbury’s, the strategy of the company is to always focus on their customers by
offering them high quality of product them on continuous basis (Sukardi, Rusdiawan and
Wardana, 2019). Flatter organisational structure has been followed by the company

which support open and free communication within the organisation. Due to the presence
of immense competition in the local and global market, this allows the respective
company to introduce the novice processes and technologies in order to enjoy
competitive and cost advantage over their rivals.
 Demand conditions-these are basically those conditions which assist the organisation to
achieve a successful position in the any given market. The demand within the home
nation not only help in facing the challenges in the bigger market but also help in
expanding the business in in the international market. In relation to the Sainsbury’s, the
size of the domestic market helps them in understanding the dynamic of large market.
The sophisticated and demanding customers of the UK push the company to utilize all its
resources towards innovation.
Explain the different types of strategies which help the company in internationalise-
Internationalization strategy may be defined as a strategy which is developed by an
organisation when they seek to expand their business in the international market. These strategies
allow them to sell their goods and services outside the local market. There are different types of
strategies which help the organisation to expand globally some of them discussed below-
 International strategy- this is being considered as the most common strategy which are
adopt by the organisation to go globally. This is also called exporting strategy, in which
focus has been paid by the company on exporting the goods and services to the
international market by maintaining the production headquarters at home (Adel, Zeinhom

and Mahrous, 2018). If this strategy is adopted by the Sainsbury’s, then they don’t have
to invest in their staff members and facilities overseas. Along with this they have to face
some challenges like initiating the sales offices abroad, managing the global logistics,
follow the foreign trade regulations and many more.
 Multi-domestic strategy - the multi domestic business strategy may be defined as a
strategy in which focus has been paid on establishing a presence in the global market and
done modification in its product according to the need and demand of the local market.
In relation to the Sainsbury’s, if this strategy is adopted by the management of the
company, then they have to repositioning their marketing strategies in order to engage
with the customers of foreign market along with these foreign customs, cultural traits and
traditions have to be taken into consideration by them. The headquarters of the company
are maintained within the country of origin but they may establish localized headquarter
in India which assist them in making and managing relation with the foreign customers.
 Global strategy- if global business strategy has adopted by the company, then they
treated the whole world as a one market and in order to boost the revenue and presence of
the company they leverage the economies of scale. In relation to the Sainsbury’s, if they
adopt this strategy then they have to make small changes in their products according to
the need and demand of customers, although most of the aspects are homogenized. Along
with this they have to established operations in the Indian market.
 Transnational strategy- the transnational strategy is basically the combination of multi
domestic and global strategies. This means that, company operate their business function
from its country of origin and this also give permission to the company to operate their
function with full scale in the global market (Lahiri, Mukherjee and Peng, 2020). In
relation to the Sainsbury’s, if this strategy is being adopt by the management of the
company, then they don’t have to make changes in its product but they have to focus on
marketing the product in India. The challenges which have been comprises in this
strategy are effective management strategies and large management costs.
From the above discussion it has been identify that transnational strategy is very good for
the company. If this strategy has been adopted by the management of the Sainsbury’s, then they
can effectively expand their business operation in the India. This strategy allows them to operate
their business function in full flash manner and they found the labour and other resources in

India at a very cheap rate. As India is a developing country, so the government of nation also
support the company by giving them subsidy and benefits.
Evaluate the environmental analysis of the country in which the chosen company is going
to expand and determine why the country is attractive-
Meaning of PESTLE analysis: - pestle analysis is basically a strategic framework which are
used by the organisation in order to gain the macro picture of the country environment. In
relation to the Sainsbury’s company in order to expand their business in India, the PEST analysis
has been discussed below-
 Political- this factor is related to the rules and regulation which are made by the
government of the nation. In relation to the Sainsbury’s, governance of India is
considered as one of the largest democracies all across the globe. The taxation system of
India is well structured and along with this government of the nation provide different
types of benefits in order to encourage the business within the nation and also developed
different types of programmes.
 Social- after the introduction of industrial reform policies in 1991 in India, the economy
of the country become stable (Achinas and et. al., 2019). In 2013 the country registers a
GDP of $5.07 trillion. A further growth in the GDP rate of 5 % in 2014 as compared to
4.35 % in 2013. Good infrastructure has provided by the government which help the
Sainsbury in operating their business smoothly.
 Economical- India has a population of more then 1.25 billion people in which 70 % of
the individual are in between the age group of 15 to 65. This factor act as an advantage
for the Sainsbury’s, as management of the company are able to sell, there in a very
effective manner and earn lots of profit.

 Legal- in the recent past, different types of laws like equality law, minimum wage act
law many more are implemented by the council of the nation. In order do their business
in a very effective manner the management of the Sainsbury’s company have to follow
all these laws (Zahari and Romli, 2019).
Porters Five forces model- this framework is used by the organisation in order to analyse the
competition within the nation. In relation to the Sainsbury’s firm in order to expand their
business in India this framework has been discussed below: -
 Threat of New Entrant- Low amount of threat has face by the company from new
entrant if they expand their business in India because company has a well-known image
all across the globe and along with this retail sector require continuous innovation and
huge investment(Bruijl, 2018).
 Bargaining Power of Supplier- transnational strategy has followed by the company in
which they produce their goods in India. Number of suppliers are available in India
which provide the raw material to the Sainsbury’s at any time and in large quantity. So,
low amount of threat has been faced by the company from this factor.
 Power of Buyer- high amount of threat has faced by the company form this force
because the buyers of India are more demanding in nature. 70% population of India is
young generation and they easily switch to the other supplier if company offer low
quality or high prices product to them.
 Substitute product- respective company deals in those products whose substitute are not
available in the market so due to this low amount of threat has been faced by the firm. To

maintain this, they have to adopt services-oriented approach and always focus on need of
consumer.
Competition-immense amount of competition are present in retail sector and this not only affect
the profitability but also the sustainability of the firm (Pezzutto and et. al., 2018). Some of the
rivals are Marks and Spencer, Tesco, Aldi UK, Morrisons and Associated British Foods.
Modes of entry-
This comprises of all those channels which assist the firm to entre into the new international
market. Some of them discussed below-
 Licensing- under the licensing one firm give permission to another firm to utilize its
intellectual property (Puthusserry, Khan and Rodgers, 2018). The property which are
allowed to use are intangible in nature like production techniques, trademarks and
patents. The licensee will pay an amount to the licensor to use the property.
 Franchising- this is similar to the licensing in which intellectual property rights are sold
to a franchisee. The rules which are comprises in this are usually very strict like processes
must have to be follow and specific component must be utilized in manufacturing
process.
 Joint venture- this comprises of two companies who established a joint business in
which one of the owners will be local. New management team as well as share control
would be provided in order to run the new business(Budhwar, Varma and Kumar, 2019).
From the above discussion it has been recommended to the Sainsbury’s that, company can adopt
franchising mode in order to expand its business in India. The need of capital in order to grow
the business can be eliminated by this. The fees which have received by the respective company
assist them in covering some fixed expenses like rents, salaries, fixtures and many more.
The potential organisational and managerial problems for the subsidiary operating in the
new international environment
Sainsbury is expanding their business in a new international environment. It is a not an
easy task to expand the business operations in a new country. During expansion of organization,
several of organizational and managerial problems have been raised. Below mentioned are some
important organizational and managerial problems for Sainsbury while entering in a new
international market:

 Language Barrier: In order to present the products in a particular country, the
organization is required to present the products and services with an influencing message
in the language spoken in the particular country. Sainsbury is also going to face this
problem while expanding their business operations in India. The people of United
Kingdom can understand the organizational message in English language but the people
of India are not so good in understanding the same language (Sundström, Hyder and
Chowdhury 2020). The organization will face the problem while sharing important
information with their customers in the new country. Due to this problem, Sainsbury face
problem in communicating with their customers. Cultural Differences: All the countries have their own language; in the same manner
they have their own specific culture as well. Arts, food, traditions and social norms are
the several factors which are included in culture. It is an essential for Sainsbury to learn
about the culture of India before expanding their operations. In order to performing
business operation successfully, bringing emotional intelligence in operations is found as
the essential factor. Nuances of foreign politics, policy and relations: A business organization is always
influenced by politics, laws, relationships among countries and policies. There are several
decisions which have been taken by the political leaders and affect several important
organizational factors such as labor laws, transportation infrastructure, raw material cost,
taxes, educational system and many more (Gupta and Khanna 2019). The operations of
Sainsbury are also going to affected through these decisions and it is the major problem
for the management to understand the political policies and laws and perform the
business operations by following all such policies.
 Managing Global Teams: Another major problem which Sainsbury is going to face
during expansion of business organization in India is to manage the employees and teams
working globally. It is a huge challenge in front of Sainsbury to monitor the performance
and practices of employees working in the different countries. It may cause different
losses to the organization.
Strategic advice for the subsidiary to overcome the problems discussed above
All the above mentioned are several problems which have been faced by the Sainsbury
while expanding their business operations in India. In order to successfully operating their

operations in the new international market, it is found as essential for management to develop
effective strategies to overcome from the problems. Overcoming from these problems may be
time and money consuming but it leads to the generation of revenue and success of organisation
in future. Below mentioned are the several strategies which are advised to Sainsbury for the
purpose of overcoming from the problems and issues which are discussed above: Recruiting Interpreter: It is recommended to Sainsbury to hire the interpreter to reach to
the customers as it help the business organisation in translating the information and
message of organisation in that language which is being preferred and understand by the
customers of India (Dang and et. al., 2018). In addition to this, the organisation can also
hire the employees from the expanding country as it helps them in knowing about the
preferences and demand of customers. Training and development: In order to overcome from the problem of difference in
cultures of different countries, the management have to schedule the training and
development sessions for their employees as it help them in understanding the culture of
India. Getting training help the employees of Sainsbury in knowing about the customers
preferences in a more effective manner. Along with this, it also help the employees in
introducing emotional intelligence in their operations which help the organisation in
successfully performing operations. Follow all political norms: The problem of different political policies and laws bring
changes in the tax rates, labour rate and many other important factors of business
organisation. It is recommended to the management of Sainsbury to always keep an eye
on the political news, so that they can bring the changes as per the political environment
in an effective and efficient manner.
 Monitoring practices: In order to overcoming from the problem of managing the
employees globally or global teams in Sainsbury, the organisation is requiring to use
different technology to monitor the performance and actions of employees in the
organisation. Organisation has to develop a strong relationship with global teams or
employees working globally (Chandra, Paul and Chavan 2020). Through the use of video
conferencing platform, the organisation can check and monitor their practices on time.

Conclusion
From the above report it has been concluded that the expansion of business result in the
higher growth and revenue generation of organisation. There are several approaches to expand
the business such as Licensing, franchising, joint venture and many more. All of these entry
mode of organisation have its own merits and demerits. A firm is required to analyse all the
factors which can affect the business operations in new country. In addition to this, it has been
also analysed that the expansion of business organisation in the new country also bring several
challenges and problems for the management because of difference in culture, language, political
factors of different countries. It is found as necessary for the management of business
organisation to develop the effective strategies in order to overcome from the challenges faced
by the organisation.

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