Sainsbury Case Study

1322 Words 6 Pages
1.0 Introduction
Cultural differences influence an organisation’s ability to penetrate a foreign market. As Ahistrom and Bruton (2009) note comprehending culture is vital to understanding the differences in business globally (p. 36). Various cultures have different management, communication, and negotiation styles that are influenced by societal values and norms. Therefore, companies that penetrate a new market have culture to contemplate besides a country’s legal structure, economic position, and competitors. Consequently, some multinational companies will employ different strategies such as diversification, product development, franchise, or mergers in order to penetrate foreign markets with distinct cultures. This paper examines the cultural
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This influences the strategic decisions made by Sainsbury’s while operating in Egypt. Power distance affects how Sainsbury’s differentiates or diversifies its merchandise to suit the market. This is because societies that accept power distance have social stratification that rank people according to status and wealth and is not considered a good or bad thing (Freitag & Stokes 2009, p. 61). The supermarket will have to segment the market and have a niche, for instance, targe high-end customers or indigent customers. Therefore, the company will have employ focus strategy, which entails targeting a narrower segment or even differentiating its products or services to meet the supply of the target market (Griffin 2007, p. 69). Although the power distance level in Egypt is high compared to the UK making it harder for Sainsbury’s to penetrate the market, the fact that more individuals in Egypt are becoming increasingly familiar with quality and the market for grocery is larger than countries such as Netherlands and Belgium is creates possibilities (Sebora et al. 2014, p. …show more content…
This can be explained using the PESTEL analysis economic aspects that touch on the rate of inflation, unemployment levels, economic growth and social aspects that touch on attitude towards work and leisure (Bowhill 2008, p. 332). In 1999, Egypt’s economy was growing at a higher rate than most countries in Europe with a GDP of $90.5 billion (Sebora et al. 2014, p. 3). This would be beneficial to Sainsbury’s it means that inflation rates will be contained. However, the willingness to spend is dependent on people’s attitude towards spending and leisure. Most Egyptians are non-spenders and it may difficult or and take a while to change that perception. Therefore, the supermarket will have to diversify its products to be acceptable to the taste of the majority. Furthermore, Sainsbury’s will have to engage in cost-focus strategy in order to make their products available to a population that is non

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