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Global Policy

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Global Policy in MNC

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Introduction

Through increasing corporate strategies it has been evaluated that company operates in a global context. Here, Sainsbury has been undertaken which is a MNC operating in UK and therefore, firm possess effective competitive advantage through improving the brand image of firm among competitors (Brown, 2014). However, if any business does not focus upon importing or exporting directly, they need to focus upon international business environment which involves buyers, sellers and new entrants so that best results can be attained. Further, it is essential for company to identify its target investment location in relation to enhance its market and satisfy the needs of numerous customers. Through implementing the Michael Porter Diamond model it helps in analysing that why certain nations are more competitive than others as well as certain industries are more competitive than others (Kilian and Murphy, 2014). Management of Sainsbury aims to invest within India so that they can gain competitive advantage to overcome rivals. Selecting target investment location assists in proving useful for businesses so that they can attract wide range of customers and identify their needs in order to raise the performance of firm in market.

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Porter Diamond Structure

Here, the diamond structure affects the four different factors that lead to a national competitive advantage which are as follows-

Factor conditions

It can be assessed that each and every country creates its own important factors such as skilled workers, innovative technology that helps in enhancing the varied factors which helps in improving the country's image in market. It is essential for firm to identify the different factors of the location where they are planning to invest i.e. India so that national competitive advantage can be attained (Pindyck, 2013). However, company might face certain disadvantages within factors of production force innovation as in adverse conditions i.e. labor shortages or scarce raw materials, firms are being forced to innovate new methods and thus such innovative leads to national competitive advantage.

Demand conditions

It assesses that when the market for a specific product is larger locally than in foreign markets. However, the local companies pay more attention to that product as compared to the foreign companies. Hence, it provides competitive advantage for businesses in order to operate in Indian market and enhance brand image in market (Cukierman, 2013). Further, Sainsbury aims to demand local market that leads firm to gain national advantage. Therefore, it is essential for businesses to identify the trend setting local market which assists local market that helps firm to anticipate global trends and enhance the market share of firm.

Related and supporting industries

It assesses that Sainsbury faces competition from local supporting industries as they are very competitive in nature and thus businesses focuses upon being more cost effective and gain innovative inputs. Further, it also strengthens the firm's image when the suppliers themselves are strong global competitors and Sainsbury faces tough competition within market (Sellar and Lingard, 2013).

Firm strategy, structure and rivalry

Here, it identifies that local conditions affects the firm strategy therefore, it is essential for businesses to tend to be hierarchical. Sainsbury needs to carry out its operations on the basis of effective strategy and structure which aims them to determine in which type of industries, country will flourish (McCauley and et. al., 2015). Also, rivals needs to be identified so that industry could be made attracted. They also prefer to move forward the business and give tough competition to rivals. However, it also assesses that the local rival forces assists firm to move beyond and enhance the brand image of firm in market.

Porter Five Forces

Here, it helps in analysing the overall industry structure which is as crucial in regard to gain effective strategic decision making. It also assists in shaping industry competition which are as follows-

Competitive rivalry

It is high as competitive forces helps in examining how intense the competitive currently is in the marketplace which helps in evaluating the number of existing rivals and their capability of carrying out the task (Milanovic, 2013). Sainbury faces tough competition from rivals as there are various competitors such as Asda, Tesco are available and gives tough competition to each other in order to obtain high market share.

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Bargaining power of suppliers

It is low as there are several suppliers available therefore they need to have control over its prices otherwise it would lower the profitability of firm in market. It can be assessed that businesses are in better position when there are wide number of suppliers available (Hollifield and et. al., 2014). Therefore, it is essential for Sainsbury to identify several numbers of suppliers so that they can switch over to others in order to save cost.

Bargaining power of buyers

It is high as there are various firms available in market from which individual could purchase the product. Customers have the power to purchase the products when there are various competitors available in regard to sell the products to consumers. Hence, it is essential for Sainsbury to provide varied range of products or services that helps in satisfying the needs of consumers (Percival and et. al., 2013).

Threat of new entrants

It is low as it requires huge investment to start the retail businesses. However, it is being easier for businesses to identify the competitors and then raise the performance of firm in market in order to improve the market share. Further, barriers to entry involve absolute cost advantages, input access and economies of scale etc. so that company could be recognized effectively and efficiently (Rosati and Scott, 2013).

Threat of substitute products or services

It is high as there are varied substitutes available with consumers that helps them to switch from firm's products or services to that of competitor. Sainsbury needs to identify how many competitors are present and examine the ability to lower the cost so that sales can be enhanced (Lingard, Martino and Rezai-Rashti, 2013).

Advantages

It can be evaluated that main advantage of implementing porter model assesses that Sainsbury enhances its market share and identify the target market where firm can invest. Through adopting market development strategy and identify the location i.e. India for investment helps in increasing the firm's profitability margin (Axelrod and Van Deveer, 2014). Following are the different advantages obtained by Sainsbury in terms of gaining competitive advantage so that firm can invest in new target location i.e. India.

Expand geographically

One of the main advantage of business is entering new market is that company aims to expand geographically and improves the business image in market. Further, it also benefits Sainsbury in terms of gaining advantage it could diversify product offering and thus provide appropriate quality products for consumers in Indian market. Thus, it would help firm to enhance its sales and profitability so that success can be attained (Gray, 2015).

Appeal to different customer segments

Further, it is one of the effective advantage that helps Sainsbury to identify the appeal to different customer segments and provide them the best quality goods in regard to raise the sales in market. For instance, when thinking of raising the investment in new market i.e. India (Pindyck, 2013). Marketers of firm need to identify the needs of customer segments and then provide them appropriate product quality so that desired quality goods could be sold to them.

Attaining long term vision

Company is required to develop long term vision and thus for that they need to invest in new target market so that desired goals could be attained. Sainbsury is required to develop its long term vision which is one of the main benefits in terms of identifying the target investment location and thus gain national competitive advantage (Gupta and et. al., 2013).

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Develop new skills and competencies

Another advantage is that Sainsbury is required to hire skilled professionals who are able to manage the firm's operations in market and thus make crucial decision so that new skills and competencies can be attained. However, in order to gain competitive advantage, firm is required to develop new skills and competencies they are required to fulfil the same and thus results into performing the desired actions in an effective manner (McCauley and et. al. 2015).

Demands

It can be assessed that firm needs to identify the demands of its target market and then provide the same products or services to them so that they can gain customer satisfaction. Hence, Sainsbury is required to undertake effective strategies in terms of carrying out market research so that they can evaluate the demand, needs and wants of target market so that they can influence buyers towards firm (Milanovic, 2013). However, through identifying the demands of customers from the new target location it would result firm in enhancing the market share and size. It is the best way through which firm could improve the performance and raise its productivity so that best results can be attained. There are different demands of consumers which needs to be identified and fulfilled so that best actions could be attained. However, fulfilling the demands of consumers within the new target market aims to enhance the customer base and size of firm.

Furthermore, identifying the demands of consumers it assists in fulfilling their needs and thus obtain satisfaction among them. Sainsbury management requires assessing the needs of target market where firm is planning to expand its operations and then implement the same so that goals could be fulfilled (Kilian and Murphy, 2014). Also, assessing the demand aims to fulfil the needs of consumers and then provide them appropriate products or services so that target audience could be satisfied. Thus, through identify the needs of target market it helps in improving the business performance and thus raise the market share so that best results can be attained, therefore, sales and profitability could be raised. Also, it is essential for firm to improve the national competitive advantage within target investment location and thus raise the profitability of business.

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Through carrying out effective research it would focus upon identifying the needs of target market and then evaluate the best results so that demands could be fulfilled effectively. Also, it is crucial for them to undertake effective strategy and thus results into carrying out the targets so that competition can be overcome (Brown, 2014). Thus, evaluating the demands by Sainsbury;s team it would focus upon raising the market share and profitability condition.

Tools

Following is the PESTLE analysis-

  • Political- It can be assessed that government forms varied number of laws and regulations in regard to carry out business activities. Therefore, it is essential for them to ascertain the market trends and take initiatives so that government needs to control the actions and directly affects the business performance (Cukierman, 2013).
  • Economical- Further, if the economic situation within the country is strong then it would affect the firm and thus it is essential for retail industry to assess the market conditions and purchasing power of customers before making any crucial decisions. Through identifying such factors it would result into improving the performance of retail industry and thus sale and profit also decreases (McCauley and et. al. 2015).
  • Social factors- It assesses that the recent change in lifestyle and attitude of people affects the retail industry. However, change in buying behaviour of consumers affects the retail businesses and therefore, firm needs to undertake effective choices so that they can attract customers towards firm. However, there are different social norms such as income, distribution, demographics etc. affects the retail operations of firm in market (Gupta and et. al., 2013).
  • Technological factors- Further, it is also one of effective factor that requires updation from time to time. However, if it is not being updated then products would no longer satisfying the needs of customers. Therefore, retail industries are required to update its technology and bring innovation within firm so that they can bring new changes within retail products and enhance customer satisfaction. Adopting new technology helps firm to improve its retail products and thus attract target customers so that best results can be attained (Milanovic, 2013).
  • Environmental factors- It also affects the environment as it damages due to pollution such as plastic waste. Therefore, it is essential for retail firms to overcome such changes and safeguard the environment in order to protect it. Retail businesses are required to carry out the environmental laws and regulations in regard to protect the individuals and does not affect their health (Percival and et. al., 2013).
  • Legal factors- Further, there are different legal factors that needs to be followed by retail businesses so that it helps them to protect the environment. Also, it is essential for company to undertake effective strategies and actions so that best results can be attained. Therefore, it is essential for retail businesses that has affects the individuals and other businesses (Lingard, Martino and Rezai-Rashti, 2013).

Concerns

It can be evaluated that Sainsbury requires assessing the main concern in relation to identify the target market where the firm needs to make investment. Also, it is crucial for them to improve the firm's performance and thus raise the profitability margin through increasing market share. Further, it is essential for them to fulfil the demand of target customers and thus improve the performance so that significant concerns could be improved (Axelrod and Van Deveer, 2014). Moreover, appropriate outcomes needs to be focused in regard to identify the main concerns and then improve the business performance so that appropriate outcomes could be attained.

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Moreover, it is significant for Sainsbury to evaluate the major concerns in relation to overcome the issues and then improve the market share of firm in market. Company aims to improve the brand image of firm and then raise their profitability so that market share and revenue can be raised. It is also essential for Sainsbury to undertake effective concerns regarding the investment in target location i.e. India and then evaluate the performance of firm in market so that desired goals can be attained (Gray, 2015). Thus, all such concerns are required to be acknowledged by company in relation to that they can improve their target performance and attain desired targets. Main concern of firm is to identify the needs and wants of target market and then provide them appropriate products or services so that best results can be attained in the form of customer satisfaction.

Conclusion

It can be conclude from the study that Sainsbury aims to identify the new target market for investment and enhance the profitability ratio of firm. Thus, it is essential for them to improve the firm's performance and gain national competitive advantage. Through developing the brand image firm aims to improve the sales and market share. Therefore, it is crucial for them to overcome rivals and then enhance target investment location. Thus, gaining competitive advantage within target investment location aids in improving firm's market share so that success can be attained.

References

  • Axelrod, R.S. and Van Deveer, S.D. Eds., 2014. The global environment: institutions, law, and policy. CQ Press.
  • Brown, K. , 2014. Global environmental change I: A social turn for resilience?.Progress in Human Geography.38(1). pp.107-117.
  • Cukierman, A. , 2013. Monetary policy and institutions before, during, and after the global financial crisis.Journal of Financial Stability.9(3). pp.373-384.
  • Gray, J. , 2015. False dawn: The delusions of global capitalism. Granta Books.
  • Gupta, S.,and et. al., 2013. Global policy review of antiretroviral therapy eligibility criteria for treatment and prevention of HIV and tuberculosis in adults, pregnant women, and serodis cordant couples. JAIDS Journal of Acquired Immune Deficiency Syndromes.62(3). pp.e87-e97.
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