International Business: Sainsbury's Entry into the Chinese Market

INTERNATIONAL
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Overview of the company and rationale for internationalization............................................3
2. Critically discussing which country they should enter and the rationale behind the decision.
Analysing the recommended country to support the rationale....................................................4
3. Critically evaluating a relevant strategy for the internationalization process for the specified
target market. ..............................................................................................................................7
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
International business is defined as the trading of goods, technology, services and have
the knowledge that helps to trade with the national borders. This cross borders transactions helps
the business to grow more in the different markets. The current assignment is based on the
Sainsbury, it is one of the second largest Supermarket in UK. This report will outline the
overview of the organization and importance in order to do international trading. Further this
report will indicate on the recommended country and the country analysis in order to support the
rationale. Moreover, this report will also put focus on the strategy that is relevant for the
internationalization process in the chosen market.
MAIN BODY
1. Overview of the company and rationale for internationalization
Sainsbury’s is the second largest supermarket chain in the markets of United Kingdom. It
has 16.0% share in the supermarket industry. The company was founded in 1869 by John James
Sainsbury by opening the shop in Drury Lane, London. The cited organization was the one of the
largest supermarket in the retail supermarket of the United Kingdom. This is the holding
company divided into the three segments that is supermarkets, banks and Agros. The company
was established as the partnership firm in year 1869. They have started the retail fresh food shop
and later expanded into the big grocery store in the market of United kingdom. Sainsbury used to
focus on the quality and sustainability which makes them differ from the other supermarket in
the UK. The company has cope up with these competitors and this helps the company to grow in
the UK markets. Sainsbury used to provide the best facilities to the customers that helps them to
have increase in the target customers.
The company was to expand its business in the different more markets that helps them to
have the good profit in the market. Expanding the company makes the company to have the
more saturated market. This helps the company to have the access of the new customers and
have new competitors in the new markets (Fischer and Green, 2018). The main reason behind
going to international is to provide the goods and services to every customer in the market. By
going outside the market of EU it helps Sainsbury’s to generate more revenue. This helps them
to have more competing sales, opportunities of investments, diversifying the market and have the
new talent in the company. By going international is the best strategy that is influenced by the
different factors and the company must adopt that factors in order to succeed in the new market.

This will helps the company to have the long term success and have helps them to gain good
profits in the market. By doing the internationalization it helps the cited organization will have
the recruitment of the new people that helps the company to get succeed in the new market. By
this the company will able to learn the culture of the new market and have more foreign
investment opportunities (Ergin, de Wit and Leask, 2019). This also helps the company to have
increase in the goodwill by having the internationalization of the products and services.
2. Critically discussing which country they should enter and the rationale behind the decision.
Analysing the recommended country to support the rationale
Chinese market is now booming and has been seeing a tremendous growth since a long time as it
has a large number of wealthy class of consumers and companies who want to expand their
business in international markets and get into a highly lucrative segment can enter China. As
China has one of the largest economies and its transition from an investment-oriented market to a
consumer-dominated one can help the companies to grow. Sainsbury’s should start their grocery
line in the Chinese market looking at the potentially growing market and the prospects of growth
in such a market(Paul and Sánchez‐Morcilio, 2019). Though, the hypermarket and supermarket
industry in china have facing fierce competition over the past few years and even the sales
growth were stagnated. But, with the resuming of the sales recovery in the market, the companies
have been doing well and are gradually growing which shows a bright future for the
supermarkets in China. As consumers are now more interested in western products, Sainsbury
can attract them and grow potentially in the market and can also effectively face competition by
doing so.
Analysis for the country can be done using PESTLE analysis that will give an idea about the
Political, Economical, Social or Socio-cultural, Technological, Legal and Environmental factors
that might impact the growth of the company in the Chinese market. The analysis of these
external factors will help the company to strategize their development.
Political Factors
The businesses located in a country’s periphery are affected by its political conditions. Some of
the political factors that can affect China’s market and the businesses are-
The trade relations that the country share with other powerful nations , but it has some disputes
with US and some countries from South China, which may become a barrier in the country’s
political stability(Pestle analysis of China, 2022). But being such a powerful country, it can deal