The sphere of marketing is unique because it is always possible to implement some changes within a short period and achieve great success. However, a certain attention has to be paid to every detail of a process and the analysis of the steps should be done on a good level. The entry process is not an easy task even if it does not take much time. The point is that a team of professional managers and analytics have to investigate the chosen sphere, compare the possible participants with their opportunities and challenges, and offer the best recommendations regarding the situation under which the case is developed. As soon as the market for entering is identified, it is necessary to conduct a market analysis and understand the peculiarities of market growth, customers’ needs, forecasted demand, possible barriers, and even the role of the competitors that predetermine the quality of a process. The current paper introduces a management consulting report about the intentions of one of the largest UK supermarkets, Sainsbury’s, to enter the Chinese market and offer its groceries to the Chinese people.
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Sainsbury’s has to be ready to do much work within a short period to achieve the desirable results and make use of the information gathered. The necessity to meet short deadlines can be easily explained: as soon as the company investigates the market, it is necessary to make some solutions based on the data found. With time, some economic, technological or informative issues can be changed dramatically, and the worth of the data found can be minimal or even equal to zero (Wang, Chen, & Huang, 2011). There is a huge amount of work that has to be done by Sainsbury’s to understand the differences between the UK and Chinese markets and countries, in general (Goetz, 2015). There are the chances to achieve great results and opportunities; still, it is necessary to consider the threats and their impacts on Sainsbury’s in China and even in the United Kingdom.
As one of the largest supermarkets in the United Kingdom, Sainsbury is facing a unique position of expanding into new markets. The market will be different in scope and the geographic location. The company will be looking at the Chinese market, which is significantly different from that of the United Kingdom. An expansion overseas means that many of the current core business activities of the supermarket might change to embrace a new culture and a novel company structure should the company make the move through a joint venture initiative. Unlike many of its current market conditions, China presents new conditions of a growing economy, as well as a large population. Besides, it opens up the possibilities for retailers to save on costs of operations by being near the manufacturing centres for the majority of goods sold in the stores. This project aims to explore the ability of Sainsbury to move into e-commerce targeting the Chinese market, specifically with the Tmall online network of Alibaba Company (Tepper, 2015).
The evaluation of the work that has to be done helps to create a powerful plan according to which it is possible to understand both, Sainsbury’s intentions and Chinese opportunities. The current paper is divided into several logical parts which each of them responds to several functions and has to be certain expectations. The first section introduces the details about the company that has to be mentioned to present a clear picture of the case study and the current Chinese market situation (Sebora, Rubach, & Cantril, 2014). In addition to the background information about Sainsbury’s, its values that have been developed more than a century, the products that have amazed and attracted the British people, and the business strategy that is supported by the Sainsbury’s managers and executives for a long period, this section touches upon the analysis of the whole industry and proves that the sphere of marketing in China and the UK, and the grocery’s market, in particular, may be implemented regarding several social, economic, and even environmental factors.
As soon as the basics are given, the identification of the research methods takes place. There are four main approaches used to organise the management consulting report within the frames of which the expansion of Sainsbury’s business to China and the creation and promotion of an online store on the Tmall web site are possible. Tmall is one of the brightest organisations that develop online shopping from the best perspectives. It has already created a successful payment system that works worldwide. Several companies from China, as well as from other parts of the world, have already got a chance to try the opportunities offered by Tmall. Though some misunderstandings can take place, the current management consulting report about Sainsbury’s and its desire to enter the Chinese market should help to identify and prevent potential problems. The methods are a literature review, the analysis of case studies and a questionnaire survey, and a meta-analysis that helps to combine practical achievements with a theoretical basis. The chosen research programme is a unique chance to clear up what has been already known and implemented and define the perspectives of the activities planned by Sainsbury’s in regards to the Chinese market. The next section is based on the SWOT analysis that helps to introduce successful opportunity quantification. The report introduces the list of threats, opportunities, strengths, and weakness of the company in its intentions to enter a new market. It is necessary to admit that any new market is a scope of new traditions, expectations, demands, rules, and factors that have to be taken into consideration during the implementation process.
As soon as a good plan to enter a new market is created, the evaluation of the experience should be offered to clear up the challenges and mistakes other companies like Costco suffered from. It sounds interesting and effective to open a new store online without spending much time on building “brick and block” constructions (Dangana, Pan, & Goodhew, 2012). However, there may be some invisible obstacles that can frustrate the plans of the company and create some challenges. The section with opportunity resolution and the chapter about feasibility of the study provide an overview of the attempts that can be made to support the idea of expanding Sainsbury’s business to China on a properly explained and supported theoretical basis. The final section of the report contains some points for discussion, as well as the conclusions and recommendations made based on the work offered.
The success of this report is not only the fact that it introduces the analysis of the company in regards to the current Chinese market and the Sainsbury’s chances to succeed in entering. This report contains several ideas or recommendations about what Sainsbury’s can do to prove that the UK grocery is worth the Chinese attention. The cooperation between the UK and China has begun a long time ago. Sainsbury’s is not the first organisation that is going to offer its products and services to the people of China with their traditions and cultural preferences. Therefore, there is a great chance to consider the experience of other companies, take the best explanations and evaluations, and implement the best ideas making use of the values and strategies perfectly introduced by Sainsbury’s in the United Kingdom.
Background of the Company
Sainsbury’s is one of the most popular and successful supermarket chains in the United Kingdom during the last century. The story of the company is the story of the century that demonstrates how people can and have to work appreciating personal values, as well as the values of other companies. Sainsbury’s was firstly opened by John James Sainsbury and his amazing wife, Mary Ann Sainsbury, at Drury Lane in London in 1869 (J Sainsbury Plc, 2015a). The family wanted to create a store within the frames of which it was possible to sell good products of high quality. It was not enough for them to promote a selling process. It was necessary to introduce their values and prove that their ideas and intentions were worth attention. The first steps made by the partners were the retailing of fresh food produced at the British farms. What they wanted was the promotion of quality at low prices. The peculiar feature of the company was that its owners were not afraid to reject the labels and did not cooperate with the well-known brands. They introduced their lines and proved that their name, the Sainsbury’s, could be competitive enough within a short period.
Almost every decade of the 20th century was characterised by some new achievements of the store. For example, during the war period, in 1914, several women were hired because of the existing shortage of colleagues (J Sainsbury Plc, 2015b). In two years, the founders of the story decided to promote a special training school to help to learn more about the quality of a selling process and the ways of how to attract more customers offering them the products and goods of their brand. Each decade was a symbolic evaluation of the achievements made and the several short-term goals set. Many organisations and their leaders could not even guess what made Sainsbury’s so popular, and the answer was simple enough: Sainsbury’s put its customers at the heart of everything done in the store and made colleagues deliver only the best shopping experience to every person (J Sainsbury Plc, 2015c). In the 2010s, Sainsbury’s became one of the companies that used special geo-exchange technologies with the help of which efficient heating and water supply were possible. Food waste rates have been almost equal to zero since 2012. About 1,200 supermarkets have been opened in the United Kingdom, and more than 161,000 people could find a good job that corresponded to their values.
As it has been stated above, one of the strongest aspects of the company is its ability to define the values clearly and follow them precisely. Sainsbury’s offers its customers the possibility to “Live Well for Less”, and this slogan is not only about price. It is about the way of how Sainsbury’s develops the relations with the suppliers, chooses colleagues (not ordinary workers), involves stakeholders, and demonstrates a real commercial advantage of everything done (J Sainsbury Plc, 2015f). The company proves that its intentions to be environmentally friendly, promote positive changes in the community, support sourcing with integrity, and consider the best for food and human health can be justified and supported by millions of people. Its progress is evident so far: Sainsbury’s develops its services not only in fresh food and drinks but also in electronics, apparels, pharmacy, etc.
The success of the company may be also explained by the fact that Sainsbury’s values turn out to be a solid basis for the chosen business strategy and a good opportunity to become competitive on the global level. As the majority of business organisations, Sainsbury’s creates two types of strategies for growth: one of them is a long-term that is to offer its services and products to more countries worldwide introduce its properly defined values to everyone around, and another type is short-term that consists of several ideas that are approved and considered by the leaders and require immediate steps to be taken. Sainsbury’s is the chain of supermarkets that has already gained the fame of high quality of products at low price in the UK; now, it wants to be declared as the best line in the whole world and offers more countries a chance to benefit the British quality.
Among a variety of products offered by Sainsbury’s, it is hard to define the one that is the best. Each section is a unique combination of taste, beauty, and quality at reasonable price. Meat and fish are always fresh and look amazing. Frozen products correspond to the quality set by the company. Food cupboard is always properly organised and introduced. The section of bakery turns out to be a real masterpiece created for the customers with loyalty and love. Fruits and vegetables are from the farms treated by the professionals. Sainsbury’s is one of the companies that put the idea of healthy life in the first place; therefore, it is expected to find more products like nuts that are packed in the store, vitamins (some of them are the products of famous pharmaceutical organisations, and some vitamins are manufactured in the store). Sainsbury’s makes a good attempt to combine the products of the same category, introduce several well-known brands, and then offer the products of its brand. People should know that they are free to choose from a variety of products anytime but always can try a new offer of the store. Even the drinks have that crucial aspect that make the customer fall in love with the traditions supported by Sainsbury’s. In addition to the drinks known worldwide, Sainsbury’s promotes its brand, and the reviews left by people prove that all the products are of high quality, fresh always, and tasty that does matter for customers in all countries.
It is hard to resist the beauty of the grocery offered by Sainsbury’s. However, the company does not want to stop on selling food and beverages only. One of the frequently offered services by Sainsbury’s is the possibility to study and choose the work in the organisation. It seems to be reasonable for the company to provide students with the required portion of knowledge, explain the expectations of the company, and be sure the potential colleagues know what they go into. It is not only effective but also cheaper to create the experts on its basis and does not share the developed talent with the other but address it to the development of the company’s values.
The best proof of the product quality is the number of customer transactions – 24 million per week (“Best for food and health”, 2015). Sainsbury’s understands that such numbers require the constant presence of improvements and innovations. It is obligatory to promote healthy eating and even to support an active style of life to explain why Sainsbury’s products are worth recognition.
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Industry Analysis in China and UK
Sainsbury’s is a leading company in the grocery’s industry, and it is necessary to analyse the latest achievements in this sphere and compare the conditions under which the company has to work in the UK and may work in China. UK grocery is the richest and most successful example in the world, still, the worth, that is about £177.5 billion per year, impresses a lot (“UK grocery retailing”, 2015). UK grocery is characterised by a variety of channels that make the chosen market possible. The majority of channels are the hypermarkets and superstores like Sainsbury’s, still, they demonstrate the ability to cooperate with other sources like small supermarkets, convenience stores, online purchases, and discounters. The reports offered by Sainsbury’s show that the dynamics of the industry the company is involved in undergo dramatic and rapid changes that cannot be explained sometimes. The company must take several steps to meet the demands and satisfy customers’ needs regarding the conditions available.
In comparison to the situation in the UK grocery industry, China becomes an evident leader and the biggest market for grocery shopping on a global level (Allen, 2012). Chinese grocery has been developing fast during the last five years. Even though prices are usually higher in China, people continue shopping and choosing the best, even the most expensive, products. Another important factor of economic growth is a constantly growing population. The investigations show that the grocery industry in China and UK has different positions, and the Chinese situation is more preferable: in 2011, the Chinese sector was about £607 billion, the US sector was about £572 billion, and the UK sector was nine-steps lower (Allen, 2012). Even the existing bureaucratic challenges inherent to the Chinese society and economy, this country continues developing successful business relations with several countries around the whole globe. The country uses the services of many foreign retailers, as well as it performs the role of a crucial food and service retailer. China creates a powerful competition to the world leader, the United States, and it is hard to predict what country can take the leading positions in the next five years.
At the same time, the Chinese grocery may be easily put under threat because of the efforts, energy, and financial costs spent on its development. The Chinese market must offer appropriate commodities. The evaluation of the current situation of the Chinese grocery sector and the conditions under which Sainsbury’s is developing nowadays proves that the cooperation between the chosen supermarket retailer and the chosen developing country may be characterised by several positive outcomes and benefits for the both.
Business Strategy of the Company
The representatives of Sainsbury’s admit that the current constantly changing grocery industry and the ways of how people shop require the development of new strategies and ideas on how to meet the needs of all customers, not to lose the leading positions, and consider the quality of goods as the main goal to be achieved. All aspects of the Sainsbury’s business strategy is to use all available sources to learn and know better the customers. Considering the importance of the values, the company differs from other representatives of the same industry with its ability to promote best healthy food, underline the worth of its brand, and support the idea of environmentally friendly relations.
The current business strategy of the company is not complicated indeed. First, Sainsbury’s introduce “great products and services at fair prices” (J Sainsbury Plc, 2015e, p.7). This approach means the presence of a powerful value proposition and growth opportunities in a variety of possible non-food products and services. The store has to use its full potential to stay a quality leader in the market and demonstrate that it possesses the best knowledge about its customers. The strategy focuses on the customers and the comfort required. A convenience store network is changed and improved, as well as the groceries online channel undergoes the necessary changes. The customers have to know that the company does everything possible to satisfy them and make their shopping more convenient. They are eager to buy the best quality products at really good prices, and the company uses this factor to succeed. Sainsbury’s differentiates from its competitors by the ability to understand what the customers may want and how they can get it (J Sainsbury Plc, 2015e). Sainsbury’s aims at helping the customers get access to the services and product they may want.
To meet the goals set, the company introduces several institutions to train the colleagues on the necessary level and make them mature enough to cooperate with the customers with different tastes and demands (J Sainsbury Plc, 2015e). It is not an easy task to prove that the offered product or service is better than the others, and every colleague of the store has to know the most appropriate methods of convincing people and introducing food. Therefore, it is a justified step to invest in the right tools to help colleagues to work more effectively.
The choice of research methods is a crucial step that has to be taken while developing an independent management consulting project as it helps to create a working guide and follow it in the process (Gill & Johnson, 2010). Sainsbury’s is the company with the world name, and China is one of the perfectly developing countries in the world. The Sainsbury’s attempts to enter the Chinese grocery market have enough grounds and can be easily understood. The heads of the retail line realise the benefits they can get from the cooperation with China. Still, it is necessary to analyse the opportunities, threats, perspectives, and other issues properly to comprehend the essence of Sainsbury’s development. This study uses a secondary research approach by relying on publication data, official annual report of the company, and sampled opinion from independent publications found online. It embraces a quantitative approach that focuses on the reasoning behind the financial strategy Sainsbury’s takes to prepare it for overseas expansion. The method is ideal for bringing out the online shopping opportunity in the Chinese market and ways of achieving it.
General Evaluation of the Methods
In the report, several research methods will be used. First, a questionnaire survey is made to consider the public opinion about the preferable ways of shopping and products for selling. The attention to the public opinion is a powerful idea to realise whether the Chinese people are ready and eager to use the services and products that are not from China. Another important research method is the analysis of case studies introduced by the company. The analysis of the corporate responsibility activities helps to understand how the organisation chooses the activities and what it expects to get from them. A literature review is one more method that can be used to analyse the company and find out interesting material to rely on. There are many facts about Sainsbury’s offered online and found in different journals and books. The Chinese grocery market can be also investigated using literature analysis and the statistics offered online. Finally, it is possible to use meta-analysis in the report to combine the results of different investigations and studies and find out how certain interventions can influence the work of a company and its further development and promotion in different countries.
Every method mentioned is a good opportunity to focus on several variables of the report: Sainsbury’s as the primary issue for the analysis, the Chinese grocery market as the place where the intervention takes place, the Chinese as the audience involved in research, and Tmall as the method of the process implementation.
A questionnaire survey is the research method used by many students and business people to find out the further impacts of an offered implementation or change. This method has several advantages and disadvantages that have to be taken into consideration in the process of the company’s analysis. For example, 100 Chinese, who are of different gender, age, status, and occupation, are chosen for the questionnaire survey. They are asked to clear up what kinds of shopping methods they prefer and whether they are ready for online supermarkets lines being improved and enlarged in their country. The results show that more than 80% of the Chinese like to make purchases online and are ready to spend their money on grocery online. It is possible that some of them would like try the UK quality using Sainsbury’s entrance into the Chinese market. The attention to the public opinion is a powerful aspect of the chosen research method. Sainsbury’s is the company that appreciates the interests and needs of the customers, and the chosen method seems to be a good way to gather as many public opinions as possible to come to one particular conclusion. Finally, this type of survey helps to gather much information from different people in a short period. Though it may vary considerably, it turns out to be a good opportunity to find out several perspectives to analyse Sainsbury’s and the methods of shopping preferable by a particular population.
A case study is a method that aims at investigating specific situations and trends used by the company in different periods. The case studies are introduced on the official site of Sainsbury’s and prove that the company has achieved a lot and participated in a variety of activities during the last century. The case study about the partnership with Carers UK demonstrates how important the idea of family support is. This event helps to realise that Sainsbury’s values can be shared by a variety of organisations, and Sainsbury’s has enough powers to cooperate with some of them and promote the required portion of care and understanding for their customers. Among the existing case studies, the idea to use renewable energy and reduce the level of CO2 emissions by 40% seems to be one of the most successful and noticeable (J Sainsbury Plc, 2015g). In 2008, Sainsbury’s demonstrated a good ability to decrease the production of harmful wastes by using lower lighting levels and relying on the power of daylight. A certain attention has been paid to the store’s constructions that turned out to be environmentally responsible and make it possible to recycle the materials under the most appropriate conditions.
The situations help to explain how Sainsbury’s can combine the theoretical knowledge gathered during the decades with the current possibilities and intentions of the colleagues and the leaders. Case studies alone cannot give a general explanation and evaluation of the company, but its particularity may be easily combined with some other methods.
Review of Literature
The evaluation of the material about the company that has been already created and published is a good way to learn the Sainsbury’s activities. It is not enough to find several interesting articles and analyse the information given. This research method aims at focusing on the details that the company’s activities consist of. A literature review is a synthesis of the information that helps to get a clear picture of why and how different steps are taken. For example, research of Karim, Huda, and Khan (2012) explain the worth of such issues like knowledge, skills, and attitudes that have to be considered as the most important ingredients to create a successful business, and Sainsbury’s is chosen as the example to rely on. The authors consider the outcomes of employee training and the importance of special training programmes using which Sainsbury’s can control the present changing business climate (Karim, 2012).
The article by Akter (2012) is one more credible source of information with the help of which Sainsbury’s and its business strategy can be evaluated. This work focuses on the level of employee satisfaction and its direct impact on the Sainsbury’s work. From this article, it becomes clear that the company tries to unite the values about caring the customers with the necessity to consider the role of the colleagues, who decide to work in the company. The idea to support reward systems seems to be powerful indeed as it promotes the drive for organisational performance and encourages people to do everything possible to achieve the goals set by the company (Akter, 2012).
Meta-analysis is one of the most complicated still effective research methods that can be used to evaluate the company, its place on the market, and its abilities in regards to those, available to other companies. During the meta-analysis, it is necessary to integrate different approaches and combine the results from different studies offered on a particular topic. For example, to clear up whether Sainsbury’s is ready to enter the Chinese market, it is possible to rely on the example of the company that has already attempted to attract the attention of the Chinese customers: the case when Costco decided to go to China without even opening a store (Stock, 2014) and rely on its reputation in the USA and the ability to create and support the chosen mission (Anitsal, Anitsal, Girard, 2013). To succeed in the chosen research method, it is also possible to add some theoretical background like the evaluation of the book material about business strategies and the grocery industry in different countries. According to Aaker and McLoughlin (2010), strategic market management is an important part of the system that cannot be neglected by the companies that are going to change the marketplace. Therefore, the examples of Sainsbury’s or any other powerful supermarket retailer prove that China is one of the best options for the stores from different parts of the world to address to (Pennemann, 2013).
In general, the discussed methods introduce a solid basis for research. Sainsbury’s is the company that is going to make a serious step – to enter the Chinese market. To be sure about the effectiveness of the choice, it is necessary to touch upon such aspects like opportunities, challenges, feasibility, etc. The report is created based on a review of the past academic studies, personal experience and evaluation, and the results of the questionnaires. At the end of the project, if all the sources and methods are used properly, it can be possible to identify the potential solutions for the company, consider its real feasibility, and learn something from the past experiences of the companies that have already entered or failed to enter the Chinese grocery industry.
SWOT Analysis/Opportunity Quantification
The SWOT analysis is one of the frequently used tools to identify, understand, and evaluate the situations taking place in an organisation that focus on the company’s strengths, weaknesses, opportunities, and threats (Ferrell & Hartline, 2012). Each aspect of the analysis has to be properly identified and analysed from different perspectives to be sure about the worth of each step taken. The modern cities of China has a huge number of population, therefore, the power of purchasing among the Chinese online is huge indeed and has to be considered in the SWOT analysis as both, a threat and an opportunity for the company.
Sainsbury’s is identified as the company that chooses people, who buy grocery online/offline, as the main segment of their strategy. What the company offers is a possibility of selling goods at low prices with a considerable variety to offer. The population of the UK, where Sainsbury’s was founded and developed for a long period differs considerably from the population of China with the traditions, cultural preferences, styles of life, manners, and even tastes. The urban population of China does not have much time to go shopping anytime they want as they need to work long hours (Wu & Gaunatz, 2013). Several Chinese modern cities support the idea of grocery markets online; still, the constant changes and the necessity to improve the already formulated system due to the current information and technological progress make different markets compete on a global level to offer the best ideas to the customers. Therefore, the possibility of entrance of the UK Sainsbury’s to the Chinese market is high, and it is necessary to clear up the company strengths and weakness in regards to the Chinese population’s demands and expectations and quantify its opportunities and threats (problems).
A joint partnership is one of the market entry strategies that can work for Sainsbury’s expansion overseas (Nielsen, 2005). However, it requires sufficient capital for the investment. Sainsbury is making the right move in its financial management strategy. In the 2014/15 financial year, the firm has managed to have profit before tax levels that are higher than its performance in the 2010/11 fiscal year, yet there have been considerable investment activities in the business. Besides, the increase in cost savings in the company for the latest fiscal year has been larger than the previous increases over the last five years. The company saved 140 million pounds against 120 million pounds in the last year, despite a decrease in profits before tax from 780 million pounds in 2013/14 to 681 million pounds in 2014/15.
The company’s strategy is to diversify funding sources as a way of reducing its risk against changes in its financing environment, such as interest rates and currency exchange rates. The move aims to maintain an appropriate standby liquidity that should allow the firm to maintain a steady borrowing discipline and give assurance to its stockholders that are attainable. It places the company in a good position for taking up an opportunity to advance its online retail presence in China and boost its revenues to prevent a further slide in its profitability.
China’s online shopping market has been growing steadily in the past years. The volume of online retail trade was US$190 billion in 2012 and is expected to rise to US$650 billion by 2020 (Australia Unlimited, 2013). Consumption continues to become a major contributor to China’s GDP, which is shifting the government’s policy to support the sector. The penetration of high-speed internet is also a factor supporting the growth of the sector. China’s demographic characteristics are also changing. A rise in the affluent middle class that is also aspirational can explain partly the rise in online retailing in the country (Australia Unlimited, 2013). China’s online retail market relies on delivery services, which are also payment collection services whose personnel can acts as sales representatives and brand ambassadors for a given product to allow companies to cultivate brand growth at the local level (Australia Unlimited, 2013).
The identification of strong aspects of the company is one of the first steps that should be taken in the analysis. The presence of the strengths informs whether the company is ready enough for some organisational changes and the changes that can be made on a global level. Sainsbury’s is the company that possesses several strengths known locally and globally. The list of the following factors serves as the best evidence and a powerful ground for Sainsbury’s to enter the Chinese grocery market online.
- Sainsbury’s has been already gained the fame of one of the biggest and the most successful supermarket chains in the United Kingdom (J Sainsbury Plc, 2015c). A century and a half is the approximate age of the company, and that period was enough to introduce itself as a powerful and capable organisation that is eager to take care of its customers and put their interests and demands in the first place.
- Sainsbury’s has a strong basis of employees, usually called colleagues. More than 160,000 people work at Sainsbury’s today (J Sainsbury Plc, 2015d). The majority of them got a chance to study at the special institutions created by the company and develop the skills crucial for the work at this particular company. Sainsbury’s cannot offer their customers poor-skilled people, who promote services and help to sell and take care of the products. Therefore, one of the Sainsbury’s primary goals is to choose the best people to work with and train them on the necessary level regarding the values of the company.
- Sainsbury’s is good at introducing its brand and advertising. It creates a captivating story within the frames of which the main values and interests of the company are presented. It is not enough to say that the products and food are of high quality and worth the customers’ attention. The company wants every customer try and enjoy the quality of food and the attitude of the team. A customer’s satisfaction is the core of advertising that differentiates the company and makes it a strong competitor in the grocery supermarket line.
- Sainsbury’s has already opened more than 580 supermarkets and 520 convenience stores across the United Kingdom (J Sainsbury Plc, 2015d) and gained the reputation of a qualified and attentive leader in the chosen industry. Many people get to know about the supermarket, and more people want to make purchases with Sainsbury’s from any part of the United Kingdom.
- Sainsbury’s is very attentive with the choice of its leaders and managers. Its current chairman, David Tyler, chief executive, Mike Coupe, and chief financial officer, John Rogers (J Sainsbury Plc, 2015d), introduce a good team that does care for the company and make sure that every employer has enough appropriate working conditions to provide the customers with fresh products and high-level services. The reputation of management is a crucial factor for the company, and Sainsbury’s has already proved how careful it can be.
- The final and the most important strength of the company is the presence of loyal customers, who are using the services and goods of the company regularly. People, who have already tried the products offered by Sainsbury’s, do not want to change the supplier because they have finally found high-quality products at affordable prices.
However, in addition to the strong aspects of the company’s work, Sainsbury’s still has several weak points that make the company think about the required changes and improvements. However, it has been proved by the company that the identified weaknesses are the necessity that has to be done to meet the current marketing requirements.
- Sainsbury’s has to raise food prices because of the global changes that take place in the market. Though the company tries to make use of different coupons and sales for its regular customers, many people cannot agree with the idea of the rising prices. People admit that the whole essence of the company and its work (good products at affordable prices) is lost. People, who do not find high quality as the only reason to address the supermarket, need to be more inspired. Therefore, Sainsbury’s weakness based on the necessity to change prices and disappoint the customers in some way leads to the development of another weakness.
- Inability to introduce an appropriate competition to such brands like Tesco or Asda regarding the prices takes place. Sainsbury’s is the line of supermarkets that has already established itself as the company of low prices and high-quality products. As soon as one of the aspects changes, people may expect the change of another aspect. Still, the expected change does not happen, and people cannot understand why the rising of prices is supported by the quality improvement. Though it is a slow process, still, it is happening – people cannot accept the changes in prices and start looking at the services and products offered by other supermarkets.
It is necessary to admit that these weaknesses do not worsen the company. They only symbolise the necessity to make some changes and improve the current state of affairs returning to the established values and proving the fact that the company has something interesting to offer to the customers.
Opportunities (Opportunity Quantification)
Taking into consideration the strengths and weaknesses of the company, it is possible to formulate the list of the opportunities it may face entering the Chinese market and offering online shopping and services to the people with preferences and culture different from those of the UK people.
- Sainsbury’s can enter the grocery market of Chine through the cooperation with such organisation like Tmall, one of the Chinese websites that supports business-to-customer relations online and is used by the population regularly (Stock, 2014). Tmall has been already used by Costco, the American food retailer. Though the organisation does not open any physical stores in China, its brand is known to many Chinese and used by them. Costco’s experience turns out to be a good opportunity for Sainsbury’s to try entering the Chinese market and developing trustful relations with Tmall and the potential customers, who are going to learn better the UK quality.
- Sainsbury’s get a chance to expand into the developing economies of Asia or any other countries. Still, the purpose of this particular report is to investigate the possibility and the conditions under which Sainsbury’s can join the Chinese market industry and prove that the quality of the food offered is high and even better.
- Online shopping is a good opportunity for Sainsbury to introduce its products to a variety of the Chinese and not to spend much money on developing physical buildings, making the necessary agreements, and choosing the most appropriate locations analysis the social and economic aspects of different regions. Also, the population of China is huge indeed, and it is beneficial for the company to spread its services among the millions of people with the same cultural preferences and interests. The difference in gender, age, and incomes may cause various attitudes to online shopping (as it is seen from the questionnaire survey conducted), still, it is proved that people do want to buy food online to save their time and get access to a variety of products at different prices and quality.
- The reputation of the company under analysis is successful indeed. If it is properly introduced in the Chinese market through the cooperation with Tmall, it will get a chance to develop more business relations with the organisations in different regions of China. Reputation and high-quality brand are the two factors that usually attract the attention of the customers and potential partners, and Sainsbury’s is the company that has these two issues being properly developed.
Threats (Problem Quantification)
To be successful at implementing the changes within the company and joining a new country’s market industry, Sainsbury’s has to consider the possibility of threats that can influence the development of the relations and services the company addresses to China. The identification of the threats, the potential problems for the company, should help to create a good plan and overcome the challenges that can worsen the results of the work.
- The existing level of competition is one of the most terrible threats for the company. China has already allowed Costco to its market. Sainsbury’s has to be ready to provide good explanations and promises to prove its worthiness.
- The current economic slowdown on a global level may influence the speed of Sainsbury’s entrance to the markets of China. It is not the company that can influence the general economic picture of the country. Still, the company has all chances to use the most appropriate ideas, introduce its values, and prove the high levels of the products’ quality.
- There is a necessity to follow the changes that take place in the country, where the market is introduced and make the improvements accordingly. There is a threat that a competitor may identify the necessity of change earlier and take the steps. The company may analyse the situation poorly and take a wrong step. Therefore, Sainsbury’s need to be ready to analyse the current changes in the Chinese market and even the economic situation to offer the appropriate products at affordable prices and take the leading positions in the competitions in the chosen sphere. Tesco, Morrison’s, and Asda are considered to be the main competitors for Sainsbury in the United Kingdom, and all of these organisations may decide to enter the Chinese market using the example of Sainsbury’s.
In general, the quantification of the problems and opportunities of Sainsbury’s demonstrate the readiness of the company to enter the Chinese market. The current economic situation in the UK and China is not stable; still, it is successful enough to provide Sainsbury’s with an opportunity to introduce its products and values to the people of a new culture. China is the country with a unique combination of interests, history, and personal preferences. The population of this country puts the technological progress in the first place. The British quality of food is a good chance for the Chinese to enjoy the freshness and naturalness; and Tmall can be used as a possible online shopping source for Sainsbury’s to spread its products due to Tmall’s popularity and reputation gained among the Chinese people.
Importance of Past and Future Experiences
The analysis of the opportunities for the UK grocery company, Sainsbury’s, to enter the Chinese market and expand its business through the services of an online store, Tmall, owned by Alibaba, may be based on the examples of the experience demonstrated by such companies like Costco or Tesco (Tesco plc, 2014) and the possible experience of the UK competitor, Asda.
Opportunity One. Costco is the US warehouse retailer that makes numerous attempts to enter the Chinese market and take the leading positions by a variety of means. First, it succeeded in cooperating with Alibaba ‘s Tmall (Yingying, 2015) and promoting its products to the Chinese population. One of the explanations Costco gave about its intentions to enter the market of this particular country is the presence of really fast-growing shoppers that are eager to buy foreign goods and promote it to the Chinese people. The stats shows that more than 20 million foreign companies have been already counted in China in 2014 (Yingying, 2015), but these numbers change considerably within a short period. The Costco’s experience proves that China is the country with good intentions to establish as many cross-border commerce frameworks as possible (Yingying, 2015) because online retail development cannot be stopped, and many companies from different parts of the world can win a lot in China.
Threat One. However, at the same time, Costco’s practice introduces several peculiarities of the Chinese people. First, it is stated that Chinese customers are rather cautious, and it is wrong to believe that their buying decisions are all based on price. What they are interested in is “tailor-made products and a shopping environment that reflects local touch” (Trefis Team, 2015, para. 4).
The Chinese is the nation that is extremely concerned about the quality of the products offered; therefore, Costco had to spend much time checking the quality and appropriateness of the goods delivered. On the one hand, Sainsbury’s should not worry about the quality of the products it offers as it is one of the company’s best strengths. On the other hand, before Sainsbury’s enters the market, it has to investigate the Chinese population again, clear up what people of the country expect to get with the UK grocery shop, and analyse whether Sainsbury’s can meet all expectations.
The example of Wal-Mart, another world retail giant, demonstrates that it is not enough to offer low prices. The Chinese customers are not attracted by the idea of cheapness at the expense of quality. This is why in China, people do not choose Wal-Mart but continue buying groceries at their local markets (Trefis Team, 2015). In its turn, Sainsbury’s should think about the successful methods of advertising that helps to underline the importance of British culture and uniqueness and prove that the offered products differ from the rest due to the company’s attention to the customers and the ability to follow the traditions of the UK.
Opportunity Two. The role of online shopping in the everyday life is crucial indeed. People want to save their time and money and make use of the services offered online. Still, even such burning desire to get access to a variety of products with spending fewer efforts is characterised by several unpredicted challenges. On the one hand, Sainsbury’s get an amazing opportunity to offer its groceries to the Chinese people and prove the high-level quality within a short period. On the other hand, the Chinese are rather conserved, and they need more time to be confident in the correctness of their choices, and Sainsbury’s decides to send several managers to check the regions for implementation and to provide the Chinese with the first glance at the products offered by the company (Wachman, 2010).
Threat Two. Sainsbury’s decides to cooperate with Tmall as the leading online platform for many stores in China. However, the company has to understand the threats that may come along with the Tmall’s cooperation. Several small vendors have already suffered from the strict rules introduced by the company “to charge significantly higher annual technical support fee and security deposit to vendors on Tmall” (Guo & Hu, 2014, p.44). This case should not frighten Sainsbury’s but inform about possible challenges and the necessity to be careful making agreements with the chosen organisation. The reputation of Tmall and the abilities opened are great indeed. Many companies want to work with Tmall to be in demand among the people of China.
In general, Sainsbury’s is the company with several potential benefits. It has a solid basis to start work at the Chinese market. The groceries offered by Sainsbury’s introduce the uniqueness of the British taste. The history of the company and the demonstration of its values help to prove Chinese customers their chances to enjoy individuality and taste the UK quality.
Analysis of a New Market Opportunity: Boston Matrix
To take up the opportunity, Sainsbury must get affordable capital for its investment activities. It must get a partner to support its entry into the new market. It also needs sufficient capital to honour its commitment to the new market opportunity. A Boston Matrix business analysis tool will help to analyse the opportunity.
The in-store sales for the group will continue to remain stable in the medium-term because of increased costs of operations and cost of goods and services. Meanwhile, the expansion and refurbishment of stores will continue to give Sainsbury the ability to offset the increases in prices with better economies of scale. However, the business has to consider overseas investments for stable and predictable growth. In particular, the entry into online shopping market in China will allow it to develop another cash cow, based on Boston matrix analysis. The business moved to banking in the past, which did not pay in favourable returns on investment. However, as the unit remains a question mark in the company’s outlook, it might change into a big source of capital financing. It will allow the company to reduce its external debt obligation and decrease its cost of capital. This will eventually invest a cash cow that contributes significantly to the overall operating cash flow for the group. Presently, there is no part of the company with a negative outlook for the future.
Table 1: Boston Matrix for Sainsbury showing a positive outlook for the group (Source: Author)
Sainsbury’s online retail
|Question Mark |
|Cash Cow |
Sainsbury’s in-store retail
The online grocery division of the company delivered sales growth increase of seven percent, which is significant for the business and serves as proof of the potential existing in the online marketplace. With an aggressive approach at home and overseas, Sainsbury should be able to surpass the current increase of 13 percent in its average increase in orders per week. Besides, the online platform allows the company to know customers better and run targeting campaigns for boosting sales and increasing its market share. With its Click & Collect service, the company has allowed its clients to place general merchandise orders online and then be able to choose from products offered in more than 900 stores owned by Sainsbury (J Sainsbury Plc, 2015e). It will be part of the extension during expansion into the overseas market, especially China.
Sources of Finance for Expansion
The latest financing has been a long-term loan that is due in 2018 and amounts to 850 million pounds. Also, there is another long-term loan facility due in 2031 for 811 million pounds. These loans have a security of the company’s property assets, which make them relatively secure. Given that Sainsbury has been increasing its assets over the short-term with new developments, it will be able to sustain the security of the loans. It is unlike entering into a negative liquidity position because of servicing the loans. Meanwhile, unsecured loans are amounting to 339 million pounds. They range in maturity from 2015 to the year 2019. Therefore, they are paramount to the company’s profitability in the next few years as it enters the Chinese retail market. Besides, there is a 127 million pounds amount due because the company is relying on hire purchase facilities (J Sainsbury Plc, 2015e).
The company has also been relying on revolving credit facilities, with conditions for financing attached to its performance of core business. The business was able to surpass the conditions in its latest report of March 2015. The condition is to have the ratio of EBITDAR to consolidated net interest plus net rental expenditure lower than the returns on loans (J Sainsbury Plc, 2015e). After relying on an unsecured revolving credit facility, the group eventually moved to a secured resource of 1,150 million pounds. It has a final maturity of 2020, which gives the group sufficient time to conduct its business, meet other obligations, and still have sufficient funds for expansion in its traditional and new markets, such as China. The move to a secured financing facility, which is pegged against the security of 60 supermarket properties in this case, ensures that there are no financial covenants in place. Therefore, there are no restrictions on other uses of revenue by the group (Ruddick, 2015).
Long-Term versus Short-Term Debt
The evaluation of the past and current sources of finance, as well as the financial application of the company, is one of the ways to define and maximise the Sainsbury’s opportunities in regards to its attempts to expand the Chinese market. For a long period, the possibility of long-term debt was playing a crucial role in the company’s development, and its increase turned out to be a successful means of fund investments in various types of assets. The use of long-term debt makes a major component of Sainsbury’s financial strategy, with the present outlook being in the ratio of 3 to 1 for long-term debt and short-term debt. Overall, the group has been moving its unsecured loan to become secured loan facilities. It has also cleared many smaller unsecured financing facilities that were due in 2015. Notably, there has been no default.
Sainsbury’s cannot predict the results of its possible integration into the Chinese market, still, its long-term debt serves as a powerful facility in online sales using which it is possible to revenue streams, ensure long-term sustainability, reduce the risks, and get ready to invest in the Chinese market with several stable low interest rates. Also, working capital of the company has been changed from £300 million to 313 million that leads to several positive steps that can be taken to optimise and even maximise the funding position and promote the support of lending (J Sainsbury Plc, 2015e). First, it is possible to make use of the flexibility of the company’s assets and choose and even change the directions during the process of integration. The increased trade payables and their proportional dependence on revenues is a powerful evidence for flexible financial sources and coordination according to the demands identified within a short period. These opportunities will promote long-term flexibility and sustainable growth considerably; still, Sainsbury’s has to be ready to convince the potential partners and other members of the Chinese market in its stable situation and the possibility to overcome the risks (if any) with a minimum of costs.
Debt vs. Equity
The business financed its investment activities with 900 million pounds from cash flows, which were high by 310 million pounds in comparison to the previous year due to reduced property transactions that the group had. The business has also relied on new debt received of 674 million pounds that helped it offset another 659 million pounds in borrowings that it had repaid during the year, which leaves it with sufficient funds to move on with its investment activities, including expansion. The group is expecting a reduction in its year-end net debt for 2015/16 to be significantly lower than the current one, and it should also be an improvement in the group’s current retail working capital (J Sainsbury Plc, 2015e).
Debt overall remained stable from 2012 to 2015 below 3 billion pounds, while assets remained stable after a significant rise in 2014. This leaves the debt to total capital ratio to 0.638. On the other hand, the debt to equity ratio for the group is 0.499, with the total debt/total capital being just 0.333 (J Sainsbury Plc, 2015e). Such ratio values are a positive indication of the company’s ability to incur more debt without injuring its positive financial position. Present investments are also likely to bump its total asset valuation in the coming year, which will improve its debt to equity ratio in the medium term.
Sainsbury’s experience and the results achieved during the last decades show that the use of debt is faster than the use of its equity (J Sainsbury Plc., 2015e). Still, during the last five years, the debt of the company is stable and changes proportionally with equity. These activities increase investments and offer a stable basis for changes and improvements that are obvious as soon as the company wants to join the Chinese market and starts offering its groceries using Tmall as one of the leading online shops. The payment system of Tmall is stable and clear to every Chinese customer; this is why the potential customers of Sainsbury’s will hardly influence the challenges buying the products of Sainsbury’s from Tmall. However, Sainsbury’s itself has to be ready to investigate the conditions under which Tmall offers the products and explain their importance to the customers.
To maximise the opportunities Sainsbury’s may have in the Chinese market, it is crucially important to take the following steps:
- Investigate what the Chinese customers may want in and expect from the sphere of grocery;
- Compare the expectations with the conditions under which Tmall introduces Sainsbury’s products;
- Define the challenges possible with the implementation of a new payment system (Tmall and Sainsbury’s have different payment methods, and the company under analysis should realise its necessity to meet the requirements of the chosen Chinese online store);
- Consider the already approved theories and apply some of them to the situation of Sainsbury’s to clear up and get ready for the challenges and overcome them within a short period.
This part of the paper concentrates on the financial strategy and current financial situation of the company to highlight its ability to take advantage of the available expansion opportunity. This section looks at the implications that the company’s financial strategy has on its performance and uses the results to determine its ability to take on the investment opportunity of entering the Chinese market by setting up its online store through Tmall. It follows the institutional theory as it applies to organisational change and adaptation. The paper shows that low levels of financial constraints in operations and investment activities of the company aid in the initiation and adoption of expansionary changes into new markets, which move away the company from its current operational position (Alhorr, Singh, & Kim, 2010). Another crucial part of the report is the explanation of why each step has its ground and can be easily explained. Sainsbury’s readiness to enter the Chinese market is not only about the financial aspects of the project. Sainsbury’s has to be ready to compete with several foreign retail companies that want to succeed in entering China and use its best issues to convince the customers.
Implications of Sainsbury’s Financial Strategy
Gearing. In the last five years, gearing has gradually increased from 33.4% to 42.3%. The change is within the 10% percent; therefore, there is no reason for alarm. However, a proposed corrective action would be to lower the gearing to below 40% in the coming year (Sainsbury (J) PLC SBRY, 2015). The gearing explains that the business has been financing its new ventures, especially stores to generate more revenue in the future. Therefore, the expectation is that with the full operation and profitability of the new investments, the net debt vs. net assets percentage will naturally go back to a lower value that is sustainable for Sainsbury.
ROCE. The return on capital employed (ROCE) before taxes had been stable in the last five years, except in 2014/15 when it dipped to 9.7% from 11.3% (J Sainsbury Plc, 2015e). A steady ROCE is a good sign of a company that has a potential to support its growth prospect, maintain healthy profit margins and reward investors. Stability indicates that a company like Sainsbury can take on new business ventures quickly and turn them into profit centres. It would be the case with online shopping ventures that the company gets into with partners in the Chinese market to deliver its unique product and service portfolio to an already established retail distribution network.
The reason for ROCE reduction reduced sales. Also, the business suffered non-cash impairment and an onerous contract charge that partly affected the ROCE (J Sainsbury Plc, 2015e). The business ended up paying 628 million pounds for the cost, which attributed the reduced ROCE on a reduction in the closing capital employed.
Cost of Capital. The overall cost of capital over the last five years remained unchanged for the company. There are no changes in debt versus equity financing structures. The company has made changes to have most of its unsecured loans move to become secure ones, thereby leaving it in a better position to get new capital when need arises (J Sainsbury Plc, 2015e). Besides, Sainsbury has also been relying on direct financing from financial institutions. It also relies on a revolving fund, which allows it to support short-term capital needs without having to enter into other additional contractual agreements with other firms. In this regard, the cost of capital for the group remains stable and predictable in the medium term. The predictability allows Sainsbury to offer better partnership deals with its potential joint partners for new ventures. It also leaves Sainsbury with the ability to honour its capital commitments for any investment activities that the company continues to embark on throughout the world (J Sainsbury Plc, 2015e).
In addition to the given financial evaluation of the company and the overall Sainsbury’s readiness to enter the Chinese market with the help of the Tmall payment services and its reputation, the evaluation of the company’s activities and its reactions to the conditions offered by the Chinese market and Tmall and the identification of the challenges and real steps have to be given to complete the report. The following points will provide the necessary explanation of how Sainsbury’s should enter the Chinese market and use the services offered by Tmall.
From the questionnaire survey, where 100 Chinese from 20 to 50 are questioned, it is clear the marital status and the level of incomes do not influence the decision whether to buy or not to buy products online. It is the question of taste and preferences. Both, a single 45year-old man and a married 28-year-old woman, can buy some groceries online or, vice versa, go to a real shop neglecting the opportunities opened with online shopping. The way of how the company offers its products and benefits for the customers influences the further usage of the services and the reputation of the company as a good grocery retailer in the country. The ads have to be focused on the issues that differentiate the products of Sainsbury’s from the other stores’ products: the company’s values, the attention to every customer, and a powerful presentation of each product with its history and production details.
To prove the feasibility of the ideas offered, the following evaluation of a product can be used. Still, it is just a general idea of how to develop an ad.
The official site of the company introduces some details about the components of the juice to rationalise the choice of a customer. Still, it is not enough for the Chinese customer to learn some nutritional information about the product. It is more interesting and effective to learn why the juice is appropriate for a Chinese person. What makes this product special? Is it possible for an ordinary Chinese man, for example, to benefit from the purchase of this juice? Why should the Chinese pay attention to the product? Sainsbury’s should underline a true UK taste and the Chinese customers’ chance to enjoy the quality that has not been introduced before. The price should not matter when a chance to touch a new country’s essence comes. It is interesting to involve the customer in the purchasing process. It is necessary to prove the correctness of the choice.
Another feasible opportunity for Sainsbury’s to enter the market in China is to study the peculiarities of Tmall and clear up how to benefit from the cooperation with the store. Tmall turns out to be a powerful platform for Sainsbury’s to offer goods to consumers. The representatives of such famous brands like Adidas or Samsung have already defined Tmall as one of the exclusive channels that make online purchases successful and credible in China (“The world’s greatest bazaar”, 2013). Even though Tmall has one definite and serious competitor, Taobao, the reputation of the former is better and more convincing. People want to use Tmall. They trust the company and the payment system created. There is no need to think about the most appropriate ways to get connected with the customers. Sainsbury’s has to discuss the conditions of work with Tmall and set the payments that suit the both parties.
As soon as the conclusions are made, the work can begin. During the last several years, Sainsbury’s has proven that the product line “Taste the Difference” is a successful solution for the company to introduce their quality. Tmall may choose this line due to the results shown: about £1 billion of annual sales and a huge amount of products that are usually in demand. Sainsbury’s should also keep in mind that Tmall is open for every company around the whole world that can pay certain entry taxes and become interesting to the customers. This is why the company may win with Tmall because of the possibility to open real physical stores, take care of the location, and spend huge money on the equipment. It seems to be enough to be attractive online and offer attractive financial ideas to make Tmall’s users pay attention to the grocery of Sainsbury’s.
Regarding the conditions under which Sainsbury’s has to work and offer its groceries to the Chinese people, it is possible to underline two crucial factors that the company has to pay attention to. On the one hand, it is the Chinese people with their demands and expectations. On the other hand, it is Tmall with its opportunities and requirements that have to be met. Both aspects introduce several benefits for Sainsbury’s, as well as create certain threats that have to be overcome. Sainsbury’s is ready to conquer a new market, and the Chinese need some new fresh and unique ideas. The financial platform of the company and the technical platform built by Tmall are perfectly combined and can be implemented accordingly.
Sainsbury Expansion into China: Financial Outlook
With the present positive outlook for financial performance in its coming financial year, Sainsbury has a green light to expand into online shopping in China. The company has proof of the lucrativeness of online shopping, which allows it to increase sales without accompanying a change in its investment activities. This allows it reduce its debt appetite and have more cash flow for serving its operations. As a retail company, a low liquidity ratio is understandable due to the obligations that the business has with its in-store retail business. It has to react to changes in short-term pricing and upgrade its stores to meet customer expectations and changes in their preferences. These are cost factors that will continue to impact the liquidity position of the company. However, the move to invest in a bank is the right one for a long-term perspective of accessing affordable capital.
The financial situation for Sainsbury group is positive and allows the company to move overseas to tap avenues for growth in its online retail business. An entry through Tmall would curtail Sainsbury brand visibility, but it would have a positive impact on its finances. There would be limited licensing obligations for the company to start serving the retail market in China. It would rely on an already established delivery channel and enjoy the gains made by the parent company of Tmall to raise awareness for online shopping and overall Tmall brand awareness (Tepper, 2015). With a positive outlook for its finances, Sainsbury should be able to cope with any changes in the fees levied by Tmall in the short-term, especially the compulsory fixed sum deposit.
Sainsbury’s in China: Culture and Traditions
In addition to the already identified positive financial situation of the company, it is necessary to say a few words about the ethical aspects that are also crucial for the integration of Sainsbury’s into the Chinese market and the grocery’s industry in particular because China is the country, where the order and respect to the traditions do matter. During the whole writing process and the reasons given in the report, it is clear that Sainsbury’s has enough powerful grounds to enter the grocery market of China. Still, the company has to comprehend that it should not impose its values and traditions on the Chinese people. It should be a gentle still confident introduction of the services and products that are so popular in the United Kingdom.
The comparison and evaluate of the past experiences demonstrated by Costco and similar companies show that China is a strict company. It may allow everyone to try themselves on its market, still, not many can stay for a long period. The demands of the Chinese are high indeed. The country can understand how rich and effective its population is. Therefore, it uses the benefits got and chooses only the best and the most appropriate options that come from different parts of the world. Many companies have already experienced the Chinese “Welcome”, but only a few of them are in demand among the Chinese customers now. Sainsbury’s has to be ready to address its values and history. Its leaders understand that online stores are easy to be created in China. However, with the promotion of online Sainsbury’s stores, the company loses its strength, the professionalism of the personnel to demonstrate its care for customers. The Chinese online shoppers can enjoy the quality of UK products, but they are not able to understand what it means to be cared by a professional UK vendor. The values of the company support the business strategy chosen: first, the company offers its customers the best possible for food and health (J Sainsbury Plc, 2015f); second, Sainsbury’s supports the idea of sourcing with integrity, in other words, the company chooses to work directly with the farmers and growers to be sure of the quality of all products sold; third, the idea of respect to environment has been already supported by several companies, and Sainsbury’s is on the list of the companies that become the greenest grocery store and involves many suppliers to follow its example; and, finally, the company strives to make a positive different to the chosen community and proves itself as a good neighbour with the best intentions.
Entering a New Country Market
Sainsbury’s is a powerful company with its definite basis in the United Kingdom. Still, in China, not many people know about this grocery’s retail chain. Therefore, Sainsbury’s has to understand that its integration into the Chinese market is a new situation with no definite infrastructure, no sales, and poor knowledge of the Chinese market. Though it is possible to learn a lot from the surveys, questionnaires, and other sources or rely on the experience of various companies, the experience of Sainsbury’s may differ, and differ a lot. It is wrong to believe that the company’s decision to expand its business to China using Tmall’s opportunities is just the expansion of the already developed business (Keillor, 2011). It is a new kind of work that has to be made on a high level. It is the consideration of such issues like politics, demography, economics, culture, traditions, etc. Sainsbury’s should not only to learn the peculiarities of the new market. The company has to be ready to introduce its ideas, share their cultural preferences, and prove the worth of their work to the Chinese people with their interests and demands. The maximisation of the opportunities means the evaluation and comparison of the Chinese features in regards to the UK principles.
The general comparison of the two countries shows that the styles of life, as well as the financial conditions under which the two types of the population live, differ considerably (“China vs. United Kingdom”, 2015). One of the most evident differences is the level of expenses in the countries: China sets prices on different products lower than those of the UK, the Chinese do not usually take care of the financial aspect of the product but pay more attention to the quality and the origins of the products. Research show that the Chinese people like to use unique products (Trefis Team, 2015), and Sainsbury’s has to use its best means to prove that the British quality and culture are worth of the Chinese attention even if the prices are higher.
Sainsbury’s is the company that has been proving its quality and reputation for a long period. Being founded in 1869 as a store with several high-quality products, nowadays, in 2015, it does not lose any of its values and improves its reputation. However, the level of quality is not the only according to which the company has to be evaluated. The achievements demonstrated by Sainsbury’s are amazing indeed and make many other UK companies follow its example and respect its history. There are many customers, who want to use the products offered by Sainsbury’s. This company cooperates directly with many UK farmers and gardeners, who are eager to share their production and provide ordinary people with quality products.
It is not an easy task to support this kind of cooperation. Not many farmers agree with the conditions offered by a company, and not many local companies prefer the services and products of local farmers neglecting a chance to use the products with a world brand. However, grocery should not the market sphere within the frames of which people strive to sell more products with a famous brand. Sellers have to focus on the quality of the products and think about the customers, who are going to use and eat the products. Sainsbury’s introduces itself as a powerful and effective competitor on the British grocery market, as well as any other markets Sainsbury’s is involved in. This organisation has proved that not only quality can matter. In addition to this important factor, Sainsbury’s pays much attention to the relations that develop between customers and sellers. This company sets several values with the help of which all managers, sellers, and other employees truly believe that they are a part of a huge team, the colleagues, who have to do their best to satisfy the customers and meet all their needs.
However, international business differs considerably from doing business at home. The company has to develop several new skills and improve its knowledge about the country to enter and the peculiarities of the market in the chosen country. There is a necessity to find a kind of guide, a helper that can show the right direction and the way of how to make a right choice. The report shows that Sainsbury’s has even found the answer to this question. It is going to use the services offered by one of the most popular and demanded by the customers’ web site, Tmall. Tmall is a chance for Sainsbury’s to enter a new country’s market and benefit from the already properly developed payment system and the already created regular group of customers. At the same time, the provided opportunities should not make the company think that there is nothing left to be done. There are much work and research that have to be made by Sainsbury’s.
In the paper, the intentions of Sainsbury’s to expand its business in China are introduced. The analysis of the past case studies and questionnaire surveys and some other methods are used to explain the steps Sainsbury’s takes. Still, even though a variety of sources is used, and several ideas are offered, certain limitations have to identified and elaborated in the following investigations that can be made as soon as Sainsbury’s starts taking the first steps and achieving the goals set. First of all, the current report is limited to the periods for entering a new country’s market. The conditions under which Sainsbury’s can enter the Chinese market can be easily changed within a short period. For example, some other companies from different countries get to know about the intentions of Sainsbury’s to enter the Chinese grocery business and make the same decisions creating challenges for the company. It may also happen that the economic situation of the chosen country can be changed because of the global changes that are happening nowadays.
Finally, though the Chinese people are fond of their traditions, culture, and history, they can be easily fascinated with the latest technological innovation that can substitute the idea of buying fresh food from a British store with the prices higher than the local ones. This is why as soon as the managers and analytics of Sainsbury’s define the scope of its possible entrance into the Chinese market and define the conditions as preferable, they have to move, implement changes, and never forget about its values and traditions that turn out to be a visit card for Sainsbury’s.
The following recommendations are created based on the report developed above. Sainsbury’s is defined as the company with good chances to enter the Chinese market, expand its business successfully, and operate a new online store in Tmall with several benefits. The list of the suggestions is as follows:
- Continue investigate the Chinese grocery market and IT sphere to understand the preferences of the Chinese in the crucial for Sainsbury’s spheres.
- Discuss the conditions under which Sainsbury’s can implement its services in Chine with Tmall as the main intermediary of the operation.
- Pay attention to the past experiences of other countries that have already tried to enter the Chinese market (both, successfully and unsuccessfully).
- Think about the advertisements that can be used to introduce Sainsbury’s products to the Chinese population and focus on such aspects as traditions, culture, uniqueness, and quality of services.
- Remind the difference that exists between international and local business and do not use the same techniques that have been always used in the United Kingdom.
- Do not set many goals at the same time but create one particular long-term goal (e.g. to become a leading international company in the sphere of grocery market with a brand name in China) and several short-term goals (e.g. establish good business relations with Tmall, introduce the products on a high level, prepare the Chinese to a possibility to buy not only groceries with Sainsbury’s, share the values developed with centuries with people, who appreciate the history and respect the traditions).
Sainsbury’s is more than ready to enter the Chinese market, and the population of China has to provide the company with a chance to share its own grocery culture with the world.
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