Global Strategic Management: A Case Study of Sainsbury's Expansion

This report examines Sainsbury's global strategic management, detailing its existing strategies, and analyzing the internal and external factors that influence its business using PESTLE and SWOT analyses. It applies the Ansoff Matrix to highlight potential strategic changes, focusing on market penetration strategies such as price reductions, increased marketing, and loyalty programs. The report discusses the importance of adapting to health consciousness among UK consumers, technological advancements in retail, and environmental concerns like carbon footprint and plastic waste. It also addresses the impact of political factors like Brexit and legal factors like sugar tax on Sainsbury's operations, providing a comprehensive overview of the challenges and opportunities facing the company in the global market. Desklib is a platform where students can find similar solved assignments and study resources.

Global
Strategic
Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
Existing strategy of the company.................................................................................................1
Explain the effects of the current internal and external factors have on it existing business......2
Apply either the VRIO or the ANSOFF Matrix to highlight some changes the company can
apply to its existing strategy........................................................................................................5
Provide justifications to the changes you have made and explain if there are any pitfalls in the
new strategic changes you have recommended...........................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Global strategy is a strategy made by the company for the expansion in the global
marketplace. The main aim of developing global strategy is to increase the sales around the
globe. Creating global strategy involves many factors for instance the products are according to
global market place, analysing the competitors, production and other external and internal
factors. Analysing these factors before expansion helps the companies to succeed in the global
marketplace. Developing the global strategy is very important for the companies to ensure the
business is succeeding in the global locations (Coccia, 2020). The companies want to expand
into global market with time and experience to increase the market share and customer base. This
strategy also helps in increasing brand awareness, generates new sales, helps to diversify the
risks, lowers the labour cost, provides access to the new and it increases operational flexibility.
Sainsbury Plc is a UK based supermarket chain based company. It was founded in 1869 by John
James Sainsbury in London. The company is headquartered in London, England, United
kingdom. The company is operating in UK and Ireland. The Sainsbury is dealing in retail
segment that includes food, clothing, general merchandise, and financial services. it has around
23000 product offering and more than 1400 suppliers internationally and has over 1500 stores
across UK. Sainsbury has its own brands such as Argos, Habitat, Tu, Nectar and Sainsbury's
bank. This report aims to examine the Sainsbury's existing strategy in the global market, and the
current internal and external factors affecting the Sainsbury's existing business with help of
different analysis, it also examines the companies opportunities to grow revenue through new
products and the companies competitive advantage of its resources. This report also includes the
suggestions and recommendations that company can use for the strategic changes.
MAIN BODY
Existing strategy of the company
The business strategy refers to the set of actions, goals and plans about how business will
compete in the market with the products. This helps company to achieve its objectives. The
global strategy refers to the set of actions or plans that company develops to expand into the
global market. The global strategy helps companies to enter in the new markets and expand the
sales. The global expansion of the companies is beneficial for consumer as well as the company
(Antokhov, and et. al., 2019). The global strategy helps companies to attract new customers, Sell
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more products and increasing market share in various countries. Thus the brand image and
awareness increases and it provides a competitive edge against the competitors in the
marketplace. The Sainsbury company is one of the leading retail company in the UK from more
than 150 years of experience.
 Vision of Sainsbury: The vision of Sainsbury is to become the most trusted retailer
where people love to work and shop.
 Mission of Sainsbury: The main goal of Sainsbury is to provide best food at best price.
 Values: Sainsbury is focusing on main 5 values those are; living healthier life, Making a
positive difference in the society, sourcing with integrity, respect for environment and a
great place to work (Crossan, Vera, and Pathak, 2021).
Mainly the global strategies are divided into three types those are; Standardisation, International
and Multinational. The Sainsbury's global strategy is as follows;
 The Sainsbury company is following multinational global business strategy. In this
strategy the company caters products to different market. The company is manly
providing its services and products in England, Scotland, Northern Ireland and Ireland.
But the company is importing the products from over 70 plus countries around the globe.
And exporting in UK and Ireland.
 The Sainsbury is focusing on smooth operations and reducing the cost, also the company
is focusing to improve the food quality and providing different choices to the customer.
The company is also focused to do innovations and provide values to the consumers
consistently.
Explain the effects of the current internal and external factors have on it existing business
PESTLE Analysis
PESTLE analysis is a tool to examine the different external factors effect on the business
of a company, such as political, economical, social, technological, environmental and legal
factors. This analysis helps companies to understand the dynamics of the market and growing the
companies business continuously (Dzwigol, Dzwigol-Barosz and Kwilinski, 2020). These
external factors are not controllable by the company. The external factors affecting the
Sainsbury's existing business are as below:
 Political Factors: It includes those factors which are influenced by the government of
the country's. These includes tax rates, fiscal policies, trade tariffs, trade barriers, etc. the
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most affecting political factor to the Sainsbury is the Brexit uncertainties. The Sainsbury
is operating in the UK and the UK's exit from the European union can affect the business
of the company. This is making difficulties for the company to import from the European
countries. This could result in the price hike of the products. The another political factor
affecting the company is the England's relation with Qatar. Any argue between the
countries can lead to loss of the market share as the Sovereign wealth fund of Qatar is
among largest shareholder.
 Economical Factor: This includes the performance determining factors of the economy
such as inflation, unemployment, interest rates, economic growth, foreign exchange rates,
etc. (Bahrami, and Khadivar, 2020) in case of Sainsbury the inflation is the most
effecting factor as the Sainsbury's depends on the transport for its retail stores, any hike
in the prices of fuel can lead to product price rising. Also the people working in UK have
higher salary expectation this could also affect the business of UK. The company is also
facing stiff competition from Tesco, Asda, and Morrisons.
 Social Factors: These factors includes the influence of the society on the business such
as demographics, cultural trends, population analytics etc. The health consciousness
among UK people is rising continuously the people are focusing on health diets this is
important for the company to make changes according to the social trends. Also the fair
trade movement is gaining popularity in the society the people are supporting farmer for
the fair prices.
 Technological factor: These factors include influence from the technology such as
research and development, innovation etc. the technological factors affecting Sainsbury's
business are the technological analytics and online shopping of people. The technological
advancement in the retail stores like self-checkout technology, use of artificial
intelligence and big data etc. and the online shopping habit of people in the UK is rising
the people want to order groceries from sitting their home.
 Environmental factor: This includes the influential factors from the surrounding
environment such as carbon footprint, pollution, waste, global warming, dealing with
hazardous substantial etc. (Berman, and Dalzell-Payne, 2018) in the case of Sainsbury
the effecting environmental factor is carbon footprint and plastic waste. The carbon
footprint of large supermarket chains are higher, weather it is transportation of goods or
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keeping the goods in the storage, or in store at a minimum temperature it causes emission
of carbon dioxide. The company is also facing issues with going green in the packaging
of the goods it is increasing the cost for the company.
 Legal factors: These are those factors which are implemented by the law and legislations
of the county. These can affect the operations of the business in the country. These
factors include business laws, health and safety laws, labour laws, environmental laws
etc. Sainsbury is affected by the recent rules of stop the promotion of high salt, sugar and
fat foods for the children below sixteen. the company now has to approve its promotions
from the regulatory authorities for launching in the market. Also the UK introduces the
sugar tax in United Kingdom it will cost the company to do modification in the products.
SWOT Analysis
Swot analysis is a tool to evaluate company's positioning and it helps to develop strategic
planning. Swot analysis evaluates both the internal and external factors, also it asses the current
and the future potentials for the company (Mazzarol and Reboud, 2020). The organizations use
this analysis to improve its market position. Sainsbury's swot analysis can help company to focus
on strengths and opportunities, it also can help to improve the weaknesses, and identify the
potential threats. Sainsbury's SWOT analysis is discussed below;
Strengths Opportunities
Strengths are the main aspect which gives
the competitive advantage to the company;
 The Sainsbury is in the business from
more than 150 years and it has extreme
experienced leadership.
 Thee company is utilizing branding and
advertising very effectively though
T.V. , online campaigns, print media
etc. and it is also using very innovative
promotion strategies.
 the company has over 1500 store across
UK and a employee base of more than
Opportunities refers to the area of
improvement for expanding the businesses.
 Sainsbury have the opportunities to
enter in different markets though
partnership and joint ventures.
 The use of new technology in the retail
stores can be implemented such as self
checkout mechanisms, this will help to
reduce lines and boost the sales.
 The Sainsbury's has the opportunity to
expand its market in other countries like
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1 lakh people. Africa, Asia.
 Sainsbury also has opportunities to
expand in the local or rural areas of
UK. As the demand of branded product
is rising in the rural areas
Weaknesses Threats
Weakness refers to the areas in which the
business is lacking and it needs the
improvement (Yoshikuni, and Dwivedi,
2022);
 The retail segment have low margins
on the products in order to attract the
consumers. This situation is not
sustainable for Sainsbury.
 The increasing cost of the items and
overall experience of the supermarket
adds the additional cost for the
company.
 It has been difficult for Sainsbury's to
retain its customers as the consumers
are switching brands frequently.
Threats are the factors which impacts the
business negatively;
 The rising competition in the retail
segment can affect the business of
Sainsbury, the main competition of
Sainsbury are ASDA, Tesco, Marks &
Spencer etc.
 Change in government policies can
affect the Sainsbury's functionality
negatively (Macher, and Veledar,
2021).
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Apply either the VRIO or the ANSOFF Matrix to highlight some changes the company can
apply to its existing strategy.
Ansoff matrix is a fundamental framework which helps marketers in identifying new
opportunities for growing revenues of a business though development of new products or
entering into new markets. It provides in identification of new combinations of markets and
products. The matrix is two by two framework used by analysts to analyse and plan the growth
strategy (Ameir, 2021). Different type of changes adopted by Sainsbury is as below;
 Market Penetration: This is the concept of increasing the sales volume in the existing
market through existing product. This is the least risky in the matrix. In this companies
try to sell more to its existing market through different strategies for instance increased
marketing for the product, price reductions, discounts, acquisition of competitors, and
smooth distribution process (Otenko and Parkhomenko, 2019). The company can use
price cutting strategy in order to attract new and existing customers. Sainsbury can
increase promotions and advertising frequency in order to increase the sales in UK. The
company also have to focus on loyal customers and offer them loyalty bonus to retain the
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Illustration 1 : Ansoff matrix Model

customers. The Sainsbury can managed to increase the profit margins through these
strategies. The Sainsbury can start using these strategy to reduce stiff competition from
ASDA and Tesco.
 Market development: This strategy refers to focus on entering into new market with
existing products. This is also considered as less risky for the business (Helmold, Terry,
and Hummel, 2020). This does not involve research and development cost for new
products. It benefits the business with new target market, this could be regional or
international. Sainsbury can expand into new markets like its competitors using this
strategy. This will help the company to increase the sales and it will raise the brand
awareness among new customers. This strategy can help Sainsbury to expand into rural
market of UK as the demand is high the company can increase its profit margins.
 Product development: This strategy focuses on developing new products for the
existing market. When a business has its strong presence in the market and the target
audience it looks for expansion of its market share through new product launches. In this
the business have to invest in research and development process to develop new
products. The business can also opt for branding a product produced by someone else.
Also it can add new products into its product line by acquiring the rights of production
and sell them. Sainsbury can introduce new products into the existing market of UK.
 Diversification: This strategy refers to entering a new market with new or fresh products.
This growth strategy is most risky in terms of business risk. But in this both the strategy
are required; product development and market development. The high risk can lead to
high rewards for the business through new income opportunities or through opening new
ways for market and products. The diversification further can be divided into 2 more
different strategies; 1) Related diversification 2) Unrelated Diversification.
Related diversification is when business enters into the similar products of existing
business. It costs considerably less for the company to spend on R&D. Unrelated
diversification is when there are no synergies between the existing and new business product or
market (Petrauskas and et. al., 2018). In case of Sainsbury's the company already has the
diversified portfolio of more than the 23000 products. Also the company is operating in the new
business of financial service market. The company can opt for new marketplace outside of united
kingdom instead or new product development.
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From the above development strategies the Sainsbury company can opt for the the market
development strategy. It would be less risky for the company in this the company has more
chances of succeeding. The company can expand its market into Africa and Asia, as these
continents are highly populated and there is high demand of the products also the company will
get less labour cost.
Provide justifications to the changes you have made and explain if there are any pitfalls in the
new strategic changes you have recommended.
There are few changes and recommendations that Sainsbury can apply on the business
strategies. These changes will provide benefits and new opportunities of market and customer
base expansion. The management of the Sainsbury can consider these changes in the business
operations and strategies. Those are mentioned below;
 Expansion of business in new Markets : the company is operating in the UK only. The
company can expand their market into regional category or into international countries
like china, India where the population is high as well as the demand is also high
(Rezaeian and et. al., 2019). The company can use market development strategy. But in
this Sainsbury has to come up with different strategy as the consumers in the UK and
Asian countries are different in income, value etc. the company has to spend on research
and development for expansion.
 Developing innovative marketing campaigns: The company can develop new
innovative marketing campaigns for increasing the engagement or the consumers with the
company. It will also help the company to face the competition and increasing the
demands of the products. But this will increase the cost for the company.
 Opening stores in rural areas of UK: The company can open new stores in the rural
areas of the UK. As the demand of the brands is rising in the rural areas the company can
increase its revenue and profit margins. The company can also partner with local stores to
reduce the setup cost of the stores.
 Adopting Market trends and changes: The market is dynamic and the perception of
people changes with time also the need and wants. The market trends provides
opportunities to the companies the company can increase the demand of their products
and services by understanding the need of the consumer or market trend. In this the
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company has to invest on the research and analysts to get better knowledge of market
trends.
 New technologies in the stores: The company is operating in online and offline both the
ways. But the offline stores of Sainsbury feels outdated in comparison with competitors.
The competitors such as Tesco and Asda are using new technologies, the Sainsbury
should also implement new self checkout technology. This will reduce the time of the
consumer and the labour cost will also be reduced for the company.
These recommendation will help the company to fulfil the requirements of the consumer
and it will provide new opportunities to the Sainsbury in the market (Yorks, Abel, and Rotatori,
2022). Thus these recommendations can help Sainsbury to attain growth and expansion or
market and customer base. By adopting these the company can overcome the changes of the
dynamic market.
CONCLUSION
From the above report this can be concluded that the global strategies are developed with
the main aim of managing business at global level. global strategies helps companies by
providing more opportunities and growth. For creating a business strategy the company has to
analyse different factors of internal and external environment. It is important for the company to
evaluate these factors in order to smoothly function the business. This allows companies to
identify different challenges and difficulties in the existing environment. The company can not
control the external factors but it can reduce the affect by using the different strategies. Also this
can be concluded that company can use the market development strategy for the growth. This
will allow company to enter into the new market outside UK and increase its customer base and
sales volume. The company has the opportunity to expand into the international as well as the
local market, also the company has the opportunity to implement new technologies in the stores.
At last the company can adopt different changes such as developing innovating marketing
campaigns, tap into the rural areas of UK, and analysing the market trends it will help company
to make its positioning stronger in the market.
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