Strategic Management And Economic Geography -Myassignmenthelp.Com

Question: Discuss About The Strategic Management And Economic Geography? Answer: Introduction There exist extremely high barriers to entry in the food retail market because of various factors. At first, organized retail is regarded as the most sophisticated sector in the Czech Republic and is having the requirement for a lot of investment, in addition to major brand development that will be taking years of establishment. Moreover, retail is considered to be at an advanced stage within Czech Republic stating that there is very limited opportunity in respect of new entrants for establishing themselves. There is an extreme importance of local information within the food retail sector, something that is considered challenging in respect of the foreign organizations to imitate. The corroboration of this is done through the existence of few international supermarkets within Czech Republic. The retail market is highly competitive having a very crowded market. In the current scenario, increasing number of organizations are trying to make an entry into the non-food sectors, which is d oing the intensification of the competition further. In the chosen market of Czech Republic, Sainsbury might be having a steady increase due to its programme related to the aspect of restructuring Rationale for selecting the Czech Republic market This country is regarded to be highly democratic as well as liberal but there is also the existence of a little bit of old conservatism. Moreover, there is the existence of a high corruption level, particularly within the political parties. This might be resulting in giving rise to unfair advantages as well as practices that are uncompetitive within the environment of the business. It is also necessary to do the mentioning that the country is part of the EU but isnt the part of the monetary union, meaning that the acceptance of the euro currency have yet not been done by the country (Foss 2013). Due to this aspect, at the time of economic crisis in 2008, people did not receive that much impact in comparison to the other EU countries. Economical As per the statistical reports, the average salary of the Czech Republic is considered to be 750/month. The minimum wage is considered to be 8,500 Czech koruna per month, amounting to 293. The population is spending 15% of the yearly income on food and the major percentages of individuals are having price-oriented. They try to seek an optimum value in a regular manner with the help of advertised discounts as well as special offers. In the current scenario, the countrys rate of unemployment is standing at 7.8%, and Czech Republic is having low labour costs when compared with the Western European countries that are considered good in respect of the foreign investors (Collings 2014). Socio-cultural Czech Republic is considered being a highly educated country that is among the top of OECD countries. There is growing interest towards the supermarket culture. Majority of the consumers are still very much sensitive towards the price of the products. The shopping in retail chains however is steadfastly developing. There has also been a significant growth in the popularity of breakfast cereals by the children, which increased the percentage of purchase in a significant manner. However, there isnt a wider range of morning cereals in the Czech market as the supermarkets are mostly offering sweet cereals in respect of the children (Brannen 2014). Technological The infrastructure of Czech Republic is having the 19th rank in respect of quality within the EU. This ranking is because of the low standard secondary roads all over the country, but developments are taking place. For instance, a motorway was made in the country in 2014, having a distance of 283 km. This helped to make more areas in the country increasingly accessible. This has given rise to significant developments in the transportation of goods throughout the country. There is the rich heritage of techniques as well as low entry barriers in the retail business that is intensifying the competition. Being an EU member, the Czech Republic is having specific advantages concerning trade. For instance, there isnt the existence of any regulations or restrictions to import or export foods inside and outside the country from the other EU countries due to the free goods movement. There is the application of particular rules in respect of trading, like the aspect of making sure the safety related with the food products as well as appropriately cataloguing every items that has been traded. These are associated with the aspect of ensuring smooth product transferring (Wheelen 2017). Environmental The countrys government is taking the accountability to do the improvement of environmental sustainability. The Czech population were not considered to be friendly with the environment but in the current years, there is occurring the changes in the attitudes of the various individuals. Individuals have commenced the work of separating the waste in respect of recycling, as well as various campaigns in respect of environmentally friendly behavioural aspect were running within the country (Daspit 2017). Due to this, there has occurred the increase in recycling process within the Czech Republic from 1% to 16% within the span of ten years and is still having a steadfast growth as well as there has been the implementation of landfill taxes within the country. Because of this, there has been an increase in the popularity of products that are considered being environmentally friendly. Eco-friendly consumerism is on rising slowly but surely (Peppard 2014). There is still additional requiremen t towards the measure for preserving the resources as well as environmental conditions. Analysis of the opportunities and threats in Sainsburys industrial environment To analyse the opportunities and threats relating to the industrial environment of Sainsbury in the Czech Republic market, a relevant model or framework like the 5-forces analysis is taken into consideration. Porters Five Forces Analysis for Sainsbury Competitive Rivalry The retail market is highly competitive having a very crowded market. In the current scenario, increasing number of organizations are trying to make an entry into the non-food sectors, which is doing the intensification of the competition further. In the chosen market of Czech Republic, Sainsbury might be having a steady increase due to its programme related to the aspect of restructuring. This is considered being a positive trend although it is lagging behind Tesco, another supermarket chain that is considered being a market leader. The other supermarket chains such as Tesco, Morrison as well as ASDA are having their presence in the retail sector of Czech Republic. Each of these supermarket chains are having varied competitive advantages over the other competitive brands (Johns 2015). However, the reach in the convenience stores of Sainsbury will be assisting it in having a larger reach of customers in the Czech Republic. Barriers for entry There exist extremely high barriers to entry in the food retail market because of various factors. At first, organized retail is regarded as the most sophisticated sector in the Czech Republic and is having the requirement for a lot of investment, in addition to major brand development that will be taking years of establishment (McFarlin 2016). Moreover, retail is considered to be at an advanced stage within Czech Republic stating that there is very limited opportunity in respect of new entrants for establishing themselves. There is an extreme importance of local information within the food retail sector, something that is considered challenging in respect of the foreign organizations to imitate. The corroboration of this is done through the existence of few international supermarkets within Czech Republic (Deresky 2017). There occurs moderate threat from the potential entrants. This threat is considered being limited since the established organizations are having cost advantages that are not available in respect of the new entrants. Moreover, the rise of online brands in respect of grocery retail might also be regarded as a potential market entrant (Armstrong 2015). Threat of Substitutes The risk of substitutes within the retail industry for food is considered being low, due to the fact that customers are viewing it to be a necessary requirement, particularly in the developed countries such as Czech Republic. The retail market always try converging as well as assimilating innovations that are considered being new in regard to the food products or alternative businesses, for making the experience of shopping to be a highly pleasurable experience. This will be making them highly challenging for substituting. The only significant threat of substitutes is considered to be an internal industry threat in which one supermarket will be lapping up the business of the other supermarkets (Bettis 2016). Within the retail market, the risk of substitution is extremely less regarding food products and medium for non-food items. The ultimate substitutes are considered to be the convenience stores that Sainsbury is aiming towards annihilating through the opening of 50-100 convenience shops every year. There is also the rise in standards of competition due to the option of online marketing (Najaf 2017). Buyer Power There is the existence of a high buyer power within the retail industry simply because of the existence of so many competitive brands doing the sale of similar products. The only differentiation occurs regarding the aspect of price as well as the loyalty of the customers. In addition, there is the existence of a low switching cost in respect of the customers. When the economy will be going more and more towards recession, the requirements of the customers will be given more emphasis, which will be resulting in the increase of their power in a considerable manner (Cavusgil 2014). The buyers are having the option of selecting from a number of varied products when there is the requirement for buying the products. The campaigns relating to the comparison of prices are having an impact on the extent of the bargaining power regarding the buyers. In respect of the buyers, it can be stated that the advancement of technology will always be facilitating the customers switching from one brand to another, since one of the key aspects is that the buyers are always focusing on the low price of the products. Supplier Power Supplier power is generally having more complications since it is considered having the difficulty for getting categorised. There is a mutually dependent association as the suppliers are themselves regarded as huge organizations such as PG, Unilever, Cadbury and so on, having a considerable appeal regarding their brands (Carraher 2015). It needs to be stated that if supermarkets are not able to do the selling of their products, then the customers will be shifting their loyalty towards other brands, which will give huge power on the hands of the suppliers. On the other hand, when the products from the big organizations will not be reaching the supermarkets, there will occur a huge negative impact on their sales volume. There might occur a change in the relationship based on the big branded suppliers situation. Also, the supplier power regarding the smaller suppliers will not be taken into consideration since their volume of sales in depending upon the supermarkets. The incurring of cost in respect of switching between the suppliers is considered being low. As a result, organizations like Sainsbury can easily do the switching. For reaching 75% of the grocery market in Czech Republic, suppliers are required working with one of Czech Republics four biggest supermarkets such as Morrisons, ASDA, Sainsbury or Tesco. The suppliers are having very less bargaining power, so that the supermarkets are efficiently dictating the business terms (Peteraf 2014). Analysis of the strengths and weaknesses in Sainsburys internal environment VRIO Based Competencies Analysis regarding Sainsbury The VRIO criteria is used for assessing the capabilities of the company that will be providing a sustainable competitive advantage. These are regarded as Value, Rarity, Inimitability and Organization. The primary question associated with the framework will be asking whether a resource will be adding value by enabling Sainsbury for exploiting opportunities or defending against threats. When the answer appears in affirmative, then a resource is regarded being valuable. Resources are also considered being valuable when they will assist Sainsbury for increasing the perceived value of the customers. This occurs through the increase in the aspect of differentiation or through the decrease in the product price. It is essential for undertaking continuous review relating to the resource value since continuous change relating to the internal or external situations will be making them less precious (Somsuk 2014). The quality, ethical aspect as well as hundred percent local meat as well as fresh food sourcing will be adding to the superior value towards the value proposition that Sainsbury is offering in respect of its customers. The electric vehicles that are being used in respect of home delivery as well as the utilization of solar power energy within its stores is considered being a major addition of value. Complete ownership of its bank for delivering the financial products in an effective in comparison to its competitors is adding values as well (Hill 2014). The private labels of Sainsbury such as TU regarding the clothing segment as well as Taste the Difference will be adding great value as well. Resources that can be achieved by a single or very few organizations are regarded as rare. Rare as well as valuable resources are granting competitive advantages on a temporary basis. The acquiring of resources that can only be done by an organization is regarded to be having rarity. Resources that are considered to be rare as well as valuable will be granting competitive advantage temporarily. However, the circumstance when more than few organizations are having similar resources or using the ability in a similar manner, will be leading towards the aspect of comparative parity (Gomes 2016). Student Loyalty Card / Sainsbury Meal Ticket Sainsbury did the introduction of Sainsbury Meal Ticket in respect of the students. It is coming in the form of two cards as well as the concept regarding this is parents will have one card as well as another card the children will be having. Parents will be having the option of loading money to the card, which is approx. 750, as well as the individual with another Child card will be having the scope of using them exclusively in the stores of Sainsbury (Galliers 2014). An effective and constructive customer loyalty with Sainsbury Brand The organization is considered being a 144 year old strong brand that is famous for its consistent supermarket selling quality, which is associated with the aspect of providing fresh as well as tasty food from a long time. The brand value of Sainsbury is built on the image of the brand. In addition, the senior management of the company is considered being inimitable in respect of Sainsbury. Organization The final aspect is associated with the questions as to whether the important resources, which are considered being rare or inimitable are having proper organization for the achievement of maximum contribution level from it towards the actualization of a higher growth level (Barney 2014). From the perspective of analyzing the performance regarding Sainsbury, it has been evaluated that the higher manager productivity has assisted in allowing the overall company to achieve the leading position in the entire world. Taking into consideration the major growth level as well as reputation in the global market in respect of Sainsbury provides the indication that the resource organization of the company has been made in an effective way (Rothaermel 2015). The organizational resources as well as core competencies are organized in an efficient manner at Sainsbury and are regarded as the major factor of contribution for the accomplishment of increased overall growth. Various modes of entry available to Sainsbury and the most suitable one for global expansion The various modes of entry in the foreign market for Sainsbury are mentioned as under, This is considered to be the method to sell products as well as services whose production is done in one country and sold in another country. Exporting might be occurring directly or indirectly. Under direct exporting, an organization capitalizes on economies of scale regarding production concentrated in the home country, establishing an appropriate process to do the organization of export functions as well as do the procurement of foreign sales. On the other hand, indirect export does the involvement of conducting the process of exporting via intermediaries that are domestically based (Goetsch 2014). The exporter is not having control over the product in the foreign market. The advantages of this mode of entry in the foreign market is that it assists in the process of surplus distribution, it is less expensive, is having less risk, and assists in accessing the market faster. The disadvantages are that there exists high cost for start-ups regarding direct exports, the exporter having less or no control regarding product distribution and conducting export via the intermediaries of export does the increasing of the product cost (Hood 2016). Joint Venture The organizations are using this strategic aspect for making an entry into a foreign market through the process of joining hands as well as sharing ownership as well as management with another organization. It is used when two or more organizations are interested in achieving certain common goals as well as doing the expansion of global operations (Jackson 2014). The common goals are foreign market entry, development of joint product, sharing of technologies as well as conforming to the regulations of the government. The advantages of this mode of entry are there is technological competence, optimum resource utilization as well as partners having the ability for learning from one another (Rocha 2016). The disadvantages of this mode of entry are that it might be costly, management conflicts might occur, as well as stability relating to cultural as well as political aspects might be posing a risk relating to the aspect of conducting successful operations. Outsourcing This is regarded as a cost effective strategic aspect that the organizations are using for reducing the costs through the transfer of certain portions of work to outside suppliers rather than doing an internal completion. It will be including the aspects of contracting that are domestic as well as foreign and off-shoring as well. The advantages of outsourcing as a entry mode strategy are associated with the aspect of reducing the costs, sharing of risks, and concentrating on key process rather than the supporting ones. The disadvantages of outsourcing are having the absence of customer focus, costs that are considered being hidden as well as the threat of exposing confidential data (Nahavandi 2016). Franchising This is the process where semi-independent owners of business are paying fees as well as royalty to a parent organization in return for the identification of the right by its trademark, for selling its products or services as well as using its format or method regarding business (Gomes 2016). The advantages regarding this mode of entry is that it is having less risks, have staffs that are highly motivated as well as having the advantage of proficiency regarding the franchisers. The disadvantages regarding this mode of entry is that it is difficult to maintain trade secrets, franchisees might turn out to be a competitor in the future and a wrong franchisee might be ruining an organizations name as well as reputation (Morschett 2015). Foreign Direct Investment This is a mode to have an entry in the foreign market via investment. Investment might be done directly or indirectly via the financial establishments. Foreign Direct Investment does the influencing of the patterns of investment regarding the economy as well as assisting in the increase of overall growth. The advantages associated with this mode of entry is that is considered being an easier entry mode as well as there can occur modifications anytime. The disadvantages of this mode of entry is that the policies of the government might not be supportive and there might occur a low return on investment (Somsuk 2014). Taking into consideration the above mentioned mode of entry strategies the most appropriate mode of entry, which will be enabling the strategic global expansion to be successful for Sainsbury is considered to be franchising. This is because this mode of entry will assist the firm in various ways such as having less risks, having staffs that are highly motivated as well as having the advantage of proficiency regarding the franchisers. Conclusion The retail market is very competitive having a very crowded market. In the current scenario, increasing number of organizations are trying to make an entry into the non-food sectors, which is doing the intensification of the competition further. In the chosen market of Czech Republic, Sainsbury might be having a steady increase due to its programme related to the aspect of restructuring. This is considered being a positive trend although it is lagging behind Tesco, another supermarket chain that is considered being a market leader. 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