Global Business Report: Sainsbury's Expansion and MNC Analysis

This report delves into the realm of global business, focusing on multinational corporations (MNCs) and their strategies for international expansion. It begins with an introduction to key concepts like the European Economic Community (EEC) and the rationale behind MNCs entering new markets, emphasizing the pursuit of profitability, diversification, and market growth. The report explores the challenges faced by MNCs, including foreign policies, product adaptation, changes in production functions, and economic conditions. A significant portion of the report is dedicated to a case study of Sainsbury's expansion into Estonia, analyzing market strategies, PESTAL analysis, and the determination of the most suitable mode of entry. Furthermore, the report addresses the challenges of Whole Owned Subsidiaries (WOS) and highlights the leadership traits necessary for successful market entry, concluding with a summary of key findings and recommendations. The report also includes individual reflective notes and a conclusion, providing a comprehensive overview of global business strategies and challenges.

Global Business

Table of Contents
INTRODUCTION..............................................................................................................................3
INDIVIDUAL NOTES 1....................................................................................................................3
European Economic Community(EEC).........................................................................................3
INDIVUAL NOTES 2........................................................................................................................4
Multinational Company's ..............................................................................................................4
Reason behind Multinational Corporation entering in new market -.............................................4
Challenges that are faced by MNCs at the time of entering into new market- .............................6
INDIVIDUAL REPORT....................................................................................................................8
1. Introduction-...............................................................................................................................8
2. Analysing domestic market-......................................................................................................8
3. Strategies for Sainbury for expansion in Estonia-......................................................................9
4. PESTAL analysis of Estonia in references to Sainbury policy formation for entry-...............10
5. Determining mode of entry will be preferable for Sainbury to become successful in their
vision and mission........................................................................................................................10
Solution for challenges that will accrue in WOS.........................................................................11
6. Leadership traits that are needed for successful entry-............................................................11
7. Conclusion- .............................................................................................................................11
INDIVIDUAL REFLECTIVE-........................................................................................................12
CONCLUSION.................................................................................................................................13
REFERENCES.................................................................................................................................15

INTRODUCTION
In this project report is based on global business means a company that is having its
presence in many countries and also known as multinational company. The whole report is on
globalization of domestic company its importance for company to capture mew market and
customer base for succession planning. It also en-light factors that have direct and indirect impact
on decision-making for internalization. Further it will highlight what will be the challenges that
MNC need to face for these process and how to tackle them without affecting vision and mission.
INDIVIDUAL NOTES 1
European Economic Community(EEC)
EEC is an Economic association that is came in forced in 1957 by 6 European member
country, this community is made to deal with policies of trade to be followed by member countries
(Adityo, Harapan and Marihandono, 2019). Main aims of community is to create a fair, common
trade facilities to associated countries and eliminated trade huddles. In 1993 EEC were sub-named
as European Union (EU), Founding members are France, Italy, Belgium, Luxembourg,
Netherlands and Germany.
Some benefits of European Economic Community-
It provides help to faced aggression from outside countries- In period of 1950,
condition of European countries were are not in condition to faced higher degree of competition
from MNCs. So EEC decided to provide some benefits to their countries and reduce tax for them,
avail finance at lower cost to increase their operation of domestic countries.
Higher job facilities and Standard wages- At the time of “Brexit circumstance” were on
peek, people were not losing their job infect that more employment opportunities been created it
just because of EEC. Wages are also increased due to rules and regulation are imposed on all
companies to provide standard wages and employment to local peoples.
Evaluation of Industrialization- In stage after World War II countries were struggling
with lower economic growth and 6 European countries decided to make EEC to provide better
rules for fair trade and good international economic environment (Komornicka, 2020). It boosts to
industrialization and higher standard product quality and make a health work environment for
domestic countries to become successful.

Provides high standard food and customer satisfaction- EEC regulated all the policies
about food standard and other products quality to maintain higher satisfaction to consumer and
better food product in countries.
Cons of EEC-
Lack of transparency some-times- many a times members countries make some own
benefited rules that delivered inverse impact on others countries and companies that lead to loop
fall in EEC. Just because of these some-time lace of transparency is shown in the policies.
European countries need to pay to became part of EEC- EEC provides many advantages to
members countries for funding community only 2% of its funding comes from other countries rest
is being charged from European countries.
Taxation policies does not support new business ideas- the community had very high tax
policy that discourage some small business to be more developed due to tax part is had same taxes
for all companies. There need to be some relief for new star-up and small business.
INDIVUAL NOTES 2
Multinational Company's
Company's that have its business operation across country border but headquarter in the
origin country, In other words company that have business activities in more than one country
(Ronit, 2020). It enables companies to expand their business activities and profitability by entering
into new market and country.
Reason behind Multinational Corporation entering in new market -
To increase Profitability and Diversification- Some company have make expatiation up
to the level it can make in respective country and reach maximum revenue potential. So it is an
indication that company need to start thinking about more profitability through entering into nee
market in other country. In will serve new customer base, new market places to sales that lead to
increase sales and turnover, provide new and fresh talent for employment etc are some benefits of
going international. Internationalization allows companies to be diversified not only to cross
boundaries but some-time it came diversification in product quality and nature. This just to adopt
demand and reference of new consumer. It leads for products differentiation according to change
in test and references.

Slow growth in domestic market- in some cases' internationalization is not opportunity it
became necessity for organization to get a required growth that can't be achieved in domestic
market due to slow growth. So for that time company need to became MNC to maintain level of
growth rate and profitability.
To gain new customer and Market- benefit of going to new country make opportunities
to gain new customer base to increase level of productivity by adding new customer for
organization. This can only happen if company is entered in new market because in same country
market customer are well set on their product preference, to shift their mind will be difficult task
rather than attracting new one. So it is easy to attract new customer new fresh market by some
extra effort and promotion activities, moreover customer will want to explore new product.
Better Human Resources- another benefit of going cross border is to acquire new and
fresh talent, in some country many talented persons are not able to get better job opportunities
(Hosain, and et.al., 2020.). Due to lack of MNCs in particular country, so it will enhance
opportunities for both company will get better employees and employees will benefited with good
job. In many cases just for acquiring efficient employees and labor MNCs went for
internationalization because they can't have better employees in their country.
To get competitive advantage and Cost Saving- some-time it happens that company and
its competitor both are planing for internalized, for that time is important to take initiative to get
competitive advantage and become more successful. It helps to find and create more number of
consumer before competitor. In setting up production activities and business in new country make
coat saving benefits in many countries. As discussion above labor and wages are less in new
country, production function and better acquisition of places for plant can be set-up with in cost
effective manner. These all will put organization in a position to save some extra cost that has to
paid in their domestic country.
Increase Brand value of company- company is going for internalized some-time lead to
make increment in customer in existing county. This can be due change is precipitation about
company's image and brand value that is increases by internationalization. Company can benefit
these in new market as well, due to more popularity they may reduce some part of cost to avoid
wastage.

Challenges that are faced by MNCs at the time of entering into new market-
Not an easy process for any organization to enter into new country and market. Some big
challenges are like timing, economical condition, segmentation of new market . There are many
challenges and aspect that need to address-
Foreign Polices-Biggest challenge that is faced by MNCs understanding and adopting
policy that are imposed on them in country where they want to set up business. It is important to
understand these policies, however some-time policy are to complex that need some extra effort to
handle. With some companies it makes inverse impact and their objective can't fulfill by these
policies (Epstein, 2019). It is not always policies of country ware company is planing to go, in
many cases policies of domestic country is not allowing them to enter into particular country. In
many cases company has make full planing and ready to go for internalization than some
restriction from government are imposed on them, and need to drop the idea for that particular
country.
Strategies for Product- Every organization have their own product images and test or
fashion in a particular country. But when entering into new country and market it is a big challenge
to address need and want of customer to attract more satisfaction from customer side to established
in new market. It is a part of research team to get knowledge about customers preference and make
necessary change's product according to their need but in is not an easy process to be followed.
Making change in product with same level of cost is a big challenge, moreover company have to
believe on local employees but in some cases' information received from that side is not true.
Company need to adopt a good research to avoid failure due to product and make proper strategy
of eliminate that kind of situation because it can be harmful of organization in long term period.
Change in Production function- To make change in product it becomes necessity to make
change in production function like change in machinery, test, fashion, packaging, promotion
activities etc. These need change in production and selling process to become successful in that
country (Stendahl, Schriber and Tippmann, 2020). Many changes made by company lead to
inefficient production and loss making situation for company, so it is a challenge to decided to
make modification are to be made or not. In country ware purchasing-power of people are
increasing their chance can be taken but in country which are not economical stable chance taken
can be lead to reduce profitability of company.

Economical condition- Most important factor that is faced by company that is economical
condition of country, with many companies their expatiation gone against due to choosing poor
time. some-time company's are more focused on rules and regulation part that they need to follow
and gave less consideration to economical factor. In many countries where situation become very
critical in downfall period and reduces purchasing-power of particular country, selection of period
will make adverse impact on company. Economical condition of domestic country is also
important factor to address, if purchasing-power of respective country is decline than company
need to focused to domestic market to be stable first and then look for new market.
Getting Certificate of Incorporation- Before starting its business company need get
certificate of incorporation that another aspect that need to be address by management before
entering into that country. Every country has its own rules for registration as company, so it need
to be understood this and fulfill all requirements to get registered. As knowing about timing is very
crucial in for MNCs, if certificate can't be received than it will make delay in time and get launch
in new market and in will allow domestic and existing company to prepare for competition in
advance. Getting timely certificate is important for company to get in better position to make entry
in market and to make impact on competitor.
Human Resources and Raw material- many times selecting country that have both better
human resource and material at law cost the good quality is a big task for MNCs. In is a part of
making selection about country where to make route to get more profitability and efficient market
(Cooke and et.al., 2019). MNCs have to make research country that will provide then efficient
labor with lower rate of material because it has a big impact on working and profitability.
Company need to look not only that has potential customer but also to cost factor or per unit cost,
however if production expenses are less in one country and demand is in other country than
company need to think and about both country. They can produce in one (country) than export in
second if it is beneficial to then, it is very big and challenging task to make decision about it.
Coordination- company having business across border will have to face challenge to make
coordination between all operation and production activities. It became more complex when
business is having reach in many countries a need coordination between operation, moreover in
has business in country, so they will have different financial structures, management styles,
regulation so need coordination to evaluate overall performance of MNC.

Political condition- for making presence in any country a MNC need to evaluate political
factors, these are some essential factor that can directly or indirectly impact organization
(Banerjee, Venaik and Brewer, 2019). MNC must give due consideration to political condition
because future of business is dependent on that. If there is a chance of change in political
environment that company need to wait and after stable environment they can go for entry.
Country with political disability are not to be ignored due to insatiability, if company not taken it
than change in political factor make company in position to wind up or accruing losses.
INDIVIDUAL REPORT
1. Introduction-
For the research Sainbury Plc it is a UK based multinational company that have plan for
expansion in Estonia to make its profitability and presence (Mannarelli Filho and et.al., 2020).
Select company is established is 1869 work in retail industry and having employees base more
than 111900 in 2020. before entering into new market and country it needs to evaluate many things
and decided for all requirements that are-
2. Analysing domestic market-
Selected country is Estonia that is the member of European Union it will allow country to
make presence in other and companies want to entry in their domestic can enter in it
(Hutzschenreuter and Harhoff, 2021). Both UK and Estonia are member of EU that will help
Sainbury to make expansion.
Impact of Economical Downturn- Estonia is experienced economic downfall in 2011 to
2016 that rebounding its GDP and increasing its consumer expenditure every year. It will good
opportunities for Sainbury to entry, moreover more they can attract more customer base due to
increase in purchase power.
Political Condition- It can be founded that country is making effort to gent political
stability with the data -2.5 weak to 2.5 strong form 1996 to 2019. This reflects that Estonia is
improved from years and having more stability political environment so it will not been an issue
for company to entering.
Economical Stability- country's economical condition are also favorable for new
companies. Moreover, GDP of country is increasing continuously in positive manner before

COVID and economic factors are less influence. Country is not fully developed yet rather it is
developing and have great opportunities for MNC.
Human Resource- For any company who are going for expansion in new country, main
problem faced for human resources. However, they can bring machinery from outside but human
cant be brought is bulk. Estonia is country in which skillful peoples who want to get opportunities
for carrier succession.
Legal- country has very less legal laws for new entrance Mnc that will help to get success
for companies perspective and also increase value of market cap of country. Estonia have fewer
rules and regulation for foreign countries.
3. Strategies for Sainbury for expansion in Estonia-
Multidomestic Strategy- In this strategy MNC use subsidiaries for getting in-
dependability in domestic market and authority for decision-making is provided to subsidiaries ti
make working flow easy. Company need to acquire a local company in respective country and
make change in system to get indirect entry in the market or country. Subsidiaries will followed all
rules and working style of parental company (Cuervo-Cazurra and Li, 2021). Company like
Sainbury that work in retail industry where customer preference and local environmental factors
are important for success that can be easily meet with Multidomestic strategy.
Global Strategy- this is just opposite of Multidomestic, in this control and decision-
making power are held with headquarter or home office. It is used to get uniformity in decision-
making. Company is more focused on standard quality of product and make same line for
production function and other activities (Brenkert, 2019). This assumes all country as
interdependent and head office want to get integration across all business function. Form the point
of view of Sainbury it is not useful for them, however they will not be able not capture more
market share as want. Company need to set-up research and development department, to create
want of product in the mind of customer moreover, they will not comprise with product change.
Transnational Strategy- It is the combination of both strategies that will allows firm to
get global efficiency and domestic responsiveness. This will provide way for operating business
without establishing any branches in countries. It benefited company with decentralized decision-
making system and allow subsidiaries to make functioning stronger and efficient. Mainfocus of
this strategy is on making sales growth, cost effective production to make company economical
and stable (Angulo-Ruiz, Pergelova and Dana, 2020). This strategy is most preferable for Sainbury

for expansion in Estonia moreover it will allow authority to subsidiaries and control with parent
company and increase in level of productivity of overall organization. The Best advantage of this
strategy that company will be in position to implementing good business practices.
4. PESTAL analysis of Estonia in references to Sainbury policy formation for entry-
Political Environment- Estonia in improved is political condition previous decade. And
over the years political stability is being achieved, it creates opportunities for MNC (De Wit and
et.al., 2020). Country used a measurement to check stability which is minus in 1996 and improved
to more than 2 in positive in 2019.
Economical- Country is member of Economic Union that allow Mnc to for fair trade
policies and deal in rules for foreign counties working. This will create conman market condition
for all and provide same benefits to all. A part form that Estonia is working for improvement in
purchasing-power of local customers that will enhance opportunities for growth.
Social factors- For any country culture and social factor will make its own image in other
mind as Estonia is demographically small country but potential customers that want product which
are of their culture (Meouloud, Mudambi and Hill, 2019). Peoples are more focused on their
culturally value that have influence for social life also, so it will need more focus on social and
culturally factor.
Technological- The technological factors that Estonia have are sources of energy,
equipment for communication and transportation. These will lead to make production and
management activities stronger and effective.
Environment factors- Country is small so it has environment issues like air pollution,
shortage of water and natural resources etc. are the big issue that may affect new company to
established their self and survive for long term.
Legal factors- Main legal factor that will influence decision about entry in Estonia is
taxation policy of country. It has low level of taxation rate that will attract more Mnc's to be
participating in market to generate more profit and become successful.
5. Determining mode of entry will be preferable for Sainbury to become successful in their vision
and mission.
From understanding various strategics and market condition it can be defined that best
mode of entry for Sainbury will be “Wholly owned subsidiary”.

Wholly Owned Subsidiary(WOS)- It is like foreign direct investment in which company invest
or purchase domestic company that will allow them to understand country's culture and behavior
that help to make product according to need of customer. This type of entry only need some
changes in management and production unity moreover all think are already meeting the need of
customer.
Challenges that will be faced by Sainbury in WOS-
 Acquiring desired company this is very easy to say but difficult to perform moreover to
look company's potential for grow and willingness to become subsidiary.
 Another challenge is to manage the subsidiary in a manner that they will work in favor of
parental company.
 Assign leadership to deserving person that always find ways to motivate employees for
more productive working.
Solution for challenges that will accrue in WOS
 Make proper Research and development team to find which domestic company have more
potential for growth and what are most preferable ways to acquire it.
 Appoint a leader who are well-known face for that company and have leadership traits,
these will make a health environment for working and create unity in company.
 Some-time poor timing will lead to make reason for failure so selection of wound be
critically evaluate and make it successful.
6. Leadership traits that are needed for successful entry-
most common and universally accepted traits are important for leader are generally all
leader have (Howard-Grenville and et.al., 2019). Some essential points are-
 Leader should be able in managing all the rules and regulation that will have to meet at the
time of merger and acquisition.
 Good at managing dispute arises due to change management and policies and find unity in
work.
 Always guide team in favor to parent company and own company to make uniformity in
work.
7. Conclusion-
Sainbury which is very big its own country are going to star business in Estonia to become
more profitable. For that company has made a proper plan by using domestic analysis and

PESTLE to evaluated entry timing and production function. There is also a discussion about mode
of entry and leadership skills that required.
INDIVIDUAL REFLECTIVE-
From this project I have learned many things that has long termed impact of my academic
and professional life. To understand all the learning out comes firstly SWOT analysis own-
Strength Weakness
 Innovative thinking
 Focused on universal stated theories
 Target on gaining professional
knowledge
 good at understanding legal laws
 Focused on getting deeper understanding
 Try to develop own method for project
 Less understand of management skills
Opportunities Threats
 Gain knowledge about multinational
companies
 Deeper understand of Sainbury
company and its working and
operation
 Understand about strategics that need
to follow to for successful expansion
 Different working styles of Estonia and
Sainbury.
 More conservative financial success in
short period rather than long term
approach
The project is all about study on how multinational company need to consider making itself
marketable and growth-full in changing environment and achieve success in new country. Some of
the most important outcomes from these study for me are as follows-
Understanding about MNC- From this report my knowledge about MNC and their
working has increased. It also provides knowledge about what motivate them to go for expansion
across border.