Introduction - Expanding operations in Belgium
Business is an activity that fulfils the demand of people by providing products and services against money, this is an activity running by an individual, firms, corporate, or any corporate. Sainsbury's is one of that kind of business organization, which is expanding its legacy continuously across the world(Allenand and Kraakman, 2016). In this assignment, Sainsbury Supermarket Ltd, is a focused objective, will be covered in entire report. It is about to establish its business in Belgium which is supported by foreign direct investment that aid to establish a firm in foreign country with policies, and it will analyse the situations of the current market through some models like Porter's five force and PESTEL and so on, this will be preceded by the embracing its marketing strategies, business analysis, etc. Further it flows with all the study points.
It is not a simple thing to invest abroad, first thing to think about is why a business should invest in abroad, a business firm is came in inception to only earn profit, there is only a one motive is that gain maximum benefit, by its resources. But when a business is getting spending its money in abroad, the first idea should be, does it really a need to expand in foreign market, is there any area which can hold up a place,, and secondly should be get a profit margin against the money speculation, and thirdly how long this investment can be sustain in market. Sainsbury's supermarket Ltd needs to embrace about all these questions, to proceed further.
1.2-Expanding the brand in Belgium
Sainsbury's Supermarket Ltd is a Company which deals in retail business, the expansion its brand in Belgium requires a high amount for funding, that comes through its stakeholders, shareholders, a geographical area where it is going to be developed and human resources such as management, staff, sales personnel, etc. marketing team which can promotes its new plans to get quick popularity among population(Follett, 2013). These all are the key factors which are required while expanding this venture in Belgium. For this it needs to enhance its approaches, in such a way:
1.2.1-Expanding current operation – While extending a company in new location, the basic operations are also needed to increase, every firm requisites some basic operations that are needed to run it, Sainsbury's is a supermarket for this it is necessary to raise its quality of operations in terms of research and development that can analyse the primary demands of citizens,suppliers so that there is sufficient stuff will be available, technology and workforce to offer a great service to the visitors.
1.2.2.Joint-venture opportunity – It can be commit a joint venture with purpose of sharing liabilities and profits too(Fossand and Knudsen, 2013). Because joint venture will provide a benefit to handle its expenditure and incomes, and can innovate new ideas that give a new scope. Sainsbury has advantage of its retail network of financial services through Sainsbury's Bank, which is a joint venture of itself and Bank of Scotland, and this the first bank that has abount 2.5 million customers. That offers a cross selling possibilities such as car finance, health insurance, visa/ credit card, and so on.
2. About the Company
Sainsbury's founded by John James Sainsbury in 1869, with a shop in Drury Lane. And now it is second largest chain of supermarkets in the United Kingdom with around 16.9 percent shares in the country, and became a biggest grocery retailer in 1922, with existing headquarter in Holborn, London, and the UK . It has around 1,415 shops across serving locations, with ideal number of employees 181,900, there worked to generate revenue nearly £26.224 billion, with operating income approximately £642 million.
2.1 Sainsbury PLC – Company Presentation
The retail shop reached on its peak during 1980, in 1995 Tesco overtook it, that time Asda became the second leader in 2003, after 2014 Sainsbury again regain its second place. It is also trading as LSE, OTCQX, OTCQX, FTSE in share market.
It's parent company is J Sainsbury PLC split into three divisions one of that is Sainsbury's Supermarkets Ltd, Sainsbury's Bank, Sainsbury's Argos. Group of industry is also interested in property(Bae, Rowley and Sohn, 2012).
2.2 Sainsbury's LTD Company history and information
In 2010, Sainsbury's opened its one of the largest shop in the UK which is now has over 1000,000 sq ft of retail space, the shops has similar layout but may vary according to customer demand, most of them having convenient kiosks including meat, fish, grocery items, bakery, etc. Besides this it has several operating departments suppliers, delivers, sales force, finance and other operating staff. Presently they give a new message of 'Try something new today' that exactly flow well with media and customers which launched by famous personality chef Jamie Oliver to encourage purchases to intimate kitchens and nutrients.
2.3 Companies existing operations in Belgium
Sainsbury is offering a huge range of products and services like bakeries, delicatessens, wine and spirits stores, banks, florists, clothing, pharmacies, books, CDs, DVDs, flowers, wine, gifts and electrical goods. It has good strength of customer that can also raise through price strategy to win against rivals. It is designing new marketing strategies that is friendly to know modern needs and demands.
3. PESTEL analysis for Belgium
Short history about company – Belgium is strongly globalized country in European countries, its main imports are raw material, machinery, equipments, foodstuffs, oil products, and so on. It supports an open economy which refers to financial activities between domestic and outside community. Business can be easily established at international level(O'shaughnessy, 2013).
When a an organization expands it's business to the other countries, it should be aware about some circumstances, that factors can affect a business externally, although these aspects have an exterior impact over firm but these cannot be neglected because it makes an impression on business, to avoid the negative outcome, one should considers, political, social, economic, technological, environment and legal elements, that can influence its goodwill or can make it better. Below are the external factors that can makes a footprint to expand a business:
Political analysis – Sainsbury's performance has a major influence by political factors in the country. Inclining globalization can impact as both opportunity and challenge, possibilities as in a way to explore its operations and finance in other country with the government rules and policies to get economical and quality values whereas a challenge is to compete against competitors like Asda and Tesco. Political aspects poses by government such as corporate tax, custom duties, etc.
Economical analysis – The increase fuel prices results in rising products cost that extends the selling price, that reduces buying power of customers. The economic aspect is that total cost of product should be covered while selling a product, that means a market must have potential customers that can bear the price(Schlenker, 2012). Because if there are less purchasing power then Sainsbury's might not be able to expand and refurbish its stores and that can be reason of loosing jobs. But there is a positive reports of Belgium can resolve these things there may be opportunities can be found.
Social analysis - In context of social analysis, there is a increasing trend of healthy foods is a great opportunity for Sainsbury's, that make it to look out to the customers to engage customers. It can take an advantage of competition may be they are weak at some point so that it can include in its quality products and make their patrons happy by assisting them friendly staff. It can also make some strategies that can get customers to its shops. It also involved in charity, sponsor games, arrange social activities, and many more(Galaskiewicz, 2016).
Technological analysis – Using technological system is become necessary for largest brand like Sainsbury's, because there are so many things which are not possible to do manually. The essential operations which actually need technology such as checkout system, inventory system, maintaining security system, finance, and much more than this. Sainsbury's is constantly upgrading their technological system like self checkouts, scanning checkouts, computerized stock control, etc. that reduces the chances of human errors and it will aid to improve productivity. Along with this online shopping website is also an efficient and prospective way to increase its business.
Environment Analysis – Environment analysis defines that there are less or no involvement of elements that can harm the environment. If there are some substances that can have a bad impact then it have to pay fine for that. Sainsbury's decreases use of carbon footprint, and it has proved that there are not going to harm on environment, and it is taking a step for green surroundings. This is providing a organic foods and treatment of animals, etc. with ethics that are acceptable on fair price(Argyris, 2017).
Legal analysis - Every country has some legal rules and regulations, that must be followed by the organizations, they are abide to obliged that if they would abandon that, then government can even ban that firm in the country. Sainsbury's is well bound for legal issues such as national minimum wage policy, alcohol selling, age legislation, discrimination and fair treatment, etc.
4.Business Environment Analysis – Porter's Five force model
Porter's five forces model are used recognize and examine five vying forces that form every industry, and aid to determine weaknesses and strength within fertility. It is used to applied any segment of the economy to seeking for benefit and attractiveness. Porter's five force model gives a description about the following points:
Competitive rivalry - Sainsbury's has major players in food namely, Tesco, Safeway and ASDA that are sharing almost 70% market share. That gives a strong competition that make it revised its price and quality measures. That is a big advantage of this because it can perform well with this atmosphere(Galbraith, 2017).
Barriers of entry – New entry is always planned for certain new things that can give them benefit. Food market is a vast field where every day new entrants occurs, but they need large scale investment, so that they can stand against competition, for new new arrivals this becomes a tough conflict to take over the business of Tesco, Sainsbury's, ASDA.
Threats of substitutes – Substitutes are easily available in the UK's food market, some stuff is comes under infrastructure need and food is one of that, this is ever growing no matter what are the economic issues. But if there are some other company is exist in same demographic region than Sainsbury's will may get affected by availability of competitors that may have innovative ideas for food.
Power of buyers – Power of buyers have important role in the country, buyers can regulate product price, market share allocation, customer loyalty, etc. For example, milk is high in Safeway, then a customer can switch to Sainsbury's which have less price as compare to that.
Power of sellers – Power of suppliers can be refer to pay the price according to suppliers demand, if retailers are reluctant to pay that cost, then goods will not be accessible to sell, and that will affect its customers. For example, if suppliers are not happy with Sainsbury's retailers, then this will reduce its service to consumers and business too. Suppliers has an advantage for this, they can manipulate the price as they want, and retailers are bound to pay that(Bisdikian, Branch and Pappas, 2013).
Marketing strategies is a section of business plan, that used to outline the overall game plan, how the goods and services renders in market to allure customers. Marketing strategies consists of four P's that has a major significance in identifying business implementation. The four P's as follows:
Product – A product must be in demand of a geographic area, so that it can gain some profit, a product which is not relevant to the customer's needs does not have any importance to them and will be a reason for loss. Product should be qualitative as Sainsbury's is a food chain so it have to maintain a quality and taste of items.
Place – One should select a place where things can be easy to approach for people, so that they can purchase it. A demographic area has a location where users can get the stuff.
Price – Price of product must satisfy customer's and quality of product both. If product deserve price then customer can pay that but if goods are not at that level to pay higher cost then consumers can even forget the brand. So it is better to measure the price strategy according to the requirements(Korhonen,2014).
Promotion – Promotion can be said a most desirable feature of marketing because it helps to launch a product in market, people can know that what is available through advertisements, social media, magazines, newspaper, campaign, selling promotions, etc.
Marketing share information
The above image is for Sainsbury's retail market in the United Kingdom from July 2013 to March 2017(Weske, 2012).
Analysis summary – From the above graph of market share information, this can be stated that there are no major fluctuation from 2013 to 2017, in the initial 2013 it was 8.8% then it has ups and downs in the same year, and in 2014 it constant but suddenly it dropped to 6.9% in December 2014, after that it again came on peak at the rate of 9. 7 % in the month of July, 2016 and the last growth was observed in 2017 approximately 7.4%.
There are some particular purpose can be valued from the above discussions, and that conclusions are followed by these points:
5.1-Advantages of investing in Belgium
There are a few advantages in investing in Belgium, one of that it has a joint venture with bank of Scotland though both firms can expand its market value by providing better services to its customer. Another, thing is that it is European Union country which is already importing in so many business material and having open economy which makes opens the door for globalized market, any country can approach its business environment to expand its business. Being a European country it has less extrinsic affect of political, social, environment, technological and legal factors(Bubb, 2014).
This report is about to expand Sainsbury's Supermarket Ltd in Belgium, it includes history of company where it is situated, it size and scope for future, current operations, as it going to prosper in European countries, so there are new opportunities can be analyse with PESTEL analysis which examines about external factors and porter's five force model is give view of rivals, buyers, suppliers, substitutes, and new entry that are helping hand of business but can be a hurdle if they reflect in some way, which they can have an advantages(Baltzan, 2012).
- Allen, W.T. and Kraakman, R., 2016.Commentaries and cases on the law of business organization. Wolters Kluwer law & business.
- Follett, M.P. 2013. Freedom and co-ordination (RLE: Organizations): lectures in business organization(Vol. 15). Routledge.
- Foss, N.J. and Knudsen, C. eds., 2013.Towards a competence theory of the firm(Vol. 2). Routledge.
- Bae, J., Rowley, C. and Sohn, T.W. eds., 2012.Managing Korean business: Organization, culture, human resources and change. Routledge.
- O'shaughnessy, J., 2013.Patterns of Business Organization (RLE: Organizations). Routledge.
- Schlenker, B.R., 2012. Self-presentation.
- Galaskiewicz, J., 2016.Social organization of an urban grants economy: A study of business philanthropy and nonprofit organizations. Elsevier.
- Argyris, C., 2017.Integrating the Individual and the Organization. Routledge.
- Galbraith, J., 2017.American capitalism: The concept of countervailing power. Routledge.
- Bisdikian, C., Branch, J.W. and Pappas, V., International Business Machines Corp, 2013.Analysis of IT resource performance to business organization. U.S. Patent 8,539,018.
- Korhonen, J., 2014. BIg Data–BIg Deal fOr OrganIzatIOn DesIgn?.
- Weske, M., 2012. Business process management architectures. In Business Process Management(pp. 333-371). Springer, Berlin, Heidelberg.
- Bubb, R., 2014. Choosing the Partnership: English Business Organization Law During the Industrial Revolution.Seattle UL Rev., 38. p.337.
- Baltzan, P., 2012.Business driven technology. McGraw-Hill/Irwin.
- Grandori, A. ed., 2012.Interfirm networks: organization and industrial competitiveness. Routledge.
- Drucker, P.F. 2017.The Theory of the Business (Harvard Business Review Classics). Harvard Business Press.