(SOE09702) International business assignment analyzing the condition of Singapore for market expansion
Question
Task: Sainsbury’s have been looking closely for some time at a number of diverse markets including Singapore and Spain. In order to help with their decision marking, Sainsbury’s Board of Management has requested you to compile aninternational business assignment regarding the attractiveness of ONE of these locations based on potential return of investment. Evaluate the opportunities and risks presented by the given location of your choice. Based on your analysis, what would you recommend i.e. to invest or look for other options? Please ensure that you give reasons for your recommendation.
Answer
1. Introduction
Singapore has a population of 5.704 million, and the maximum population lives in this country with their family. Thus, the retail business will be the most profitable one in this country, like any other country. Sainsbury's is a retailing sector operating all over the world, and it has also created a large customer base. Singapore is a country where the company operates through a local online supermarket Redmart. 320 exclusive products are also getting proper attention. Thus, this international business assignmentis going to evaluate the condition of Singapore so that Sainsbury’s can start a business in that location through a direct operation. It will shed light on different zones of risk. Thus, the international business assignment will understand business opportunities in the host country.
2. Analysis of the Host Country for the international business assignment
2.1 Political Risk
Singapore is a country with a political approach that can support stable business operations within the nation. Singapore is a parliamentary democratic country and it enjoys the lowest political risk in the continent. The head of the state is the president and the head of the government is the Prime Minister. It is found from theinternational business assignmentthat its relationship with the neighboring countries such as Indonesia and Malaysiaare affected due to dispute over border issues. Moreover, the people of the country face basic rights to freedom of association, expression as well as peaceful assembly which can affect the purchasing power of the buyers. The country is highly developed free-market economy that owes success to its remarkably corruption-free and open business environment. The social system of the country is controlled by the government.According to current records analyzed for the international business assignment, it is found that Singapore is attempting to capitalize the business trends for 2022. The country considers it important to support a multi-faceted approach without thinking about any short-term benefits. Singapore ranks 4th in the anti-corruption list among 180 countries. Cavusgil et al. (2020) have said that the county is free from corruption from the past, as the records have shown that the county has the highest corruption when it has the rank of 9 on the same list. As per the current goal of the country, Cavusgil et al. (2021) have stated that it is offering globalization and special support to those companies with a credible business valuation. Apart from that, Hult, Gonzalez-Perez andLagerström (2020) have opined that according to the Roots Model, this problem can also cause a risk for this company to start a business. As per the international business assignment, it is a good point that Sainsbury is already operating in this country through a partnership with a local organization. Thus, there is the support of customers, and the company knows the demand of people in Singapore, so the marketing will be easy. However, it will become a benefit for this company though political support is the most crucial aspect of business operations. However, Kahiya (2020) has opined that Singapore has stringent intellectual property right protection to complete the business.
2.2 Cultural Risk analyzed in the international business assignment
Sainsbury offers great food at a competitive price across the world. The mission of this company is to serve great value and experience of convenient shopping. As per the international business assignmentfindings, it is also operating through the online and offline business of the brands like Tu, Habitat, Nectar and Sainsbury’s Bank. Thus, Nambisan, Zahra and Luo (2019) have commented that it can help in creating the most suitable option for developing a history of becoming the most valuable and the best employer to work with. The Singaporeans is currently losing the sense of identity and belonging which could create the risk of cross-culture issues. They are eager to know how to reduce the material (Kiasu) culture in order to make their society politer. Apart from this education and human capital issues are also faced by the people. In order to produce a better skilled workforce, the education syllabus is required to be reformed.A company needs to have knowledge related to cross-cultural literacy. Cultural risk is not a huge factor as business operations deal with internal and external stakeholders. Sainsbury's has its home country in the UK, and its culture does not match the culture of Singapore. In that case, it is the most important factor that can help in completing the operation to complete and implement a business successfully in the international market. Nielsen andRaswant (2018) have commented in the international business assignmentthat if a company treats its employees well, then it will treat customers with utmost preference. Thus, it can help in managing the best culture within the company, and this culture will be beneficial for the company to create a great customer base in the international market as well. However, Ratten et al. (2020) have commented that the main problem will take place when the international market will only support people, and it can also create differences of opinion through proper marketing aspects, and it may also create problems if local customers fail to accept the decision.
2.3 Economic Risks
An efficient open economy is the main point that can help in creating proper rights to conduct a business. It is found from the international business assignmentthat Singapore has a corporate tax of 17%, and it can also create a difference of opinion to understand the most suitable ambience in creating proper competition in the market. Singapore has also implemented a 0% tax on people with lower income rates. It has a 15% tax on residents and a 22% tax rate for non-residents (Gov.sg, 2022). Thus, the Government of the country is making it flexible for the residents while making it a bit tough for the non-residents. 1% growth has been seen in the last year's GDP, and it can also support the economic development within the country. As per the international business assignmentthe economy of Singapore faces risks related to inequalities and competitiveness which can affect the operation of the business. It can lead to shrinking of the availability of the consumer base and decreasing the market share for the company. In that case, it can offer proper benefits to the people out there, and it can also help in making better performance for business practices all over the world. The inflation rate in Singapore although has been slowing down but it remains high over the course of time. However, it is still a question if Sainsbury will be able to manage the increasing level of inflation rate in Singapore. In that case, Srivastava, Singh and Dhir (2020) have opined that it can be an issue to create differences of opinion in different countries. As per the international business assignmentanalysis, Singapore is prone to inflation, which means Sainsbury will make remarkable profit in this location.
2.4 Legal Risks
Singapore has inherited its legal aspects from the English Common law system. Thus, it is needless to mention that it is too strong to break. In that case, it may create an opportunity for any business to flourish. Verbeke andCiravegna (2018) have said in the international business assignmentthat strong rites over individual property are also a strong point that may create different opinions, and people from different places may come to have business functions in the country. Thus, legal risk is hardly there in the country. Contract law is also much stronger than supporting a business to have a proper contract. On the other hand, it may also create a risk if the company fails to meet any contract made within the legal system of different countries. Thus, Srivastava, Singh and Dhir (2020) have said that all these areas may create differences in opinion along with the creation of proper support systems in different countries. Thus as per the international business assignment findings, legal risk will not make any change, and it may create an opportunity for those businesses operating in different countries. Singapore inherited a territorial tax system and certain forms are administered by the “Inland Revenue Authority of Singapore (IRAS)”. Therefore, the companies operating here is required to register for “SingPass or CorpPass for getting accessed to IRAS for paying taxes for running business or it may lead to the creation of legal risks. The legal system of Singapore is associated with the ASEAN law family. As per the records, these countries in the ASEAN list have the highest impact, and it may not leave chances to prevent any operations that are against the legal system.
2.5 Ethical Risk
As per the international business assignmentcorporate governance is the most important framework, including ethics, sustainability and corporate social responsibility. Nambisan, Zahra and Luo (2019) have said that it is also important for the company. On the other hand, it is also important to check different situations, and it is the mission of Sainsbury to create a strong business operation along with the most specific way of handling things. According to the reports of SSTA 2022, the terrorism threat to Singapore is relatively high and is the biggest threat that could affect the business operations in the country. The Country also faces problem associated with environment and sustainability issues. Actions is to be taken for reducing carbon emission and increase clean energy as well as building more green spaces for reducing heat. It is found from the international business assignmentthat Sainsbury has targeted to create zero carbon footprints by 2035, and all these areas need popper management to get the basic operational management into a different unit (About.sainsburys.co.uk, 2022). Moreover, it is also necessary to maintain different aspects that can operate within the climatic system in different areas of operation. Hult, Gonzalez-Perez andLagerström (2020) have opined that it is also important to meet the obligations of multinational companies to meet with the ethical solution. As per the international business assignmentSainsbury does not support any unethical behaviour, and it is not accepted in this country as well. Thus, Singapore can be a suitable destination for operation for Sainsbury (About.sainsburys.co.uk, 2022). No unethical activities are practised in this company.
3. Business Opportunities in the Host Countryanalyzed in the international business assignment
Internalization is the decision-making procedure of entering into a foreign market that involves upstream, downstream or any cross-border activities. As per the international business assignmentresearch and development, production along with sales and marketing are the most important activities that may take place within a business environment. A country needs to have an abundance of resources so that a company can make a positive effort to complete the business. Singapore has an overall country attractiveness in case of cost, corruption, and proper infrastructure with legal costs. Singapore has a proper size of an economy with likely economic growth (Gov.sg, 2022). There is a political risk that can cause problems as this country is only supporting domestic business operations (Gov.sg, 2022). It is found from the international business assignmentthat Sainsbury's is operating in this county by coming in partnership with a domestic company. It can help in creating an opportunity for this company to stay within the business environment. Thus, each company needs to set certain ethical principles that may support in maintaining proper strategies to operate within a business. Sainsbury has an exceptionally good employment practice by maintaining human rights. Singapore is a source of skilled labourers, and it has market-seeking goals with innovation-seeking goals. Christofi et al. (2021) have said that efficiency is the most important aspect in completing the business, and it will also create different roles in managing business potentials with chances of an increase in the profit rate.
Sainsbury’s tries to create such an internal strength by seeking trained employees along with proper success factors so that they can get proper support to communicate within the different origins of the country.As per the international business assignmentit also creates an important perspective that can operate through the different solution in creating an option that may support in presenting the most important ways to manage proper communication through the different origin of countries. Thus, this company can also get proper support from the country, and it may also get proper benefits. It is also important for the company to operate into different operations through different targets, and it will create differences of opinion in different countries. Thus, it is most important to create a target market. Sainsbury’s supports the employees to create a workplace with a proper and single culture. As per the international business assignmentsince Singapore is one of the dynamic as well as business-oriented countries in the world, Sainsbury’s will witness high level competition. Singapore has also accomplished the top place in the IMD World Competitiveness Ranking in the year 2019. The pattern of buying habits that is followed in Singapore is mostly of high standard. The residents are mostly keen on purchasing foreign products. The individuals are brand conscious and prefer purchasing new products. In other words, the individuals residing in Singapore mostly prefer experimenting with new commodities. The GDP growth rate in Singapore has been expanding at a healthy pace and the GDP per capita USD in the year 2019 was 65,390 that is way above any other developed countries (Elistia&Syahzuni, 2018). It is found from the international business assignmentthat as far as foreign investors are concerned, Singapore is among the top located country in Asia that attract foreign investors. In terms of FDI performance Index, Singapore has already been ahead of many Asian countries such as India and China.
4. Examples of companies that succeeded or failed in the host country
The host country that has been mentioned is Singapore that has its own share of both successful as well as unsuccessful companies. It is found from the international business assignmentthat the companies that have succeeded in Singapore has mostly used the intonation stating high risk gives high reward. The first most successful company is Razer that has turned out to be popular among gamers globally (Kong & Woods,2018). The company started as a start-up that went on to become major gaming-focused ecosystem globally. The second most successful company is Secret labthat is also a gaming company and has managed to make North America as its largest market. The third largest company is Old Chang Kee that has successfully filling stomach of Singapore residents for more than 60 years with curry puffs. The company has also successfully expanded in Australia, Malaysia as well as India(Kong & Woods,2018). The fourth successful company is the Golden Duck that turned out successful with their salted egg yolk.
As per the international business assignmentanalysis besides the successful companies in the host country, there are several companies that failed in Singapore. The first major failure in Singapore is Carrefour that failed to enter the Singaporean market despite being a globally successful brand(Kong & Woods,2018). The second major failure has been Frolick that majorly failed due to high competition from other franchises of frozen yogurt. The third failure has been Kungfu Paradise that is a part ofthe Paradise Group. In spite of being a part of a successful group it failed to make a mark in Singapore(Kong & Woods,2018). The third is Lowrys farm that is a Japanese clothing brand that also miserably failed in Singapore.
5. Conclusion
It could be concluded from the international business assignmentthat Singapore supports globalization, and the country is working towards creating such an approach that can help domestic business organizations to get further benefits. Sainsbury is an international organization operating in many countries all over the world. In that case, it is unsure if Sainsbury is going to get proper support from the country. As per the international business assignmentit may operate within different scenarios, and it can take proper aspects to start problems, and it may create many differences, and it may also have the potential in changing the circumstances through different operations. On the other hand, business operations are the most important parts, and they can also create differences of opinion in the market environment. There is no political risk or lack of economic management that can also create proper economic management along with certain risks with different potentials in creating better economic relationships along with the most suitable business opportunities. It could be inferred from the international business assignmentthat Singapore is a source of skilled labors and it has market-seeking goals with innovation-seeking objectives.As per the international business assignmenta country requires to have plenty of resources so it can make a positive effort to complete the business.Sainsbury’s supports the employees to create a workplace with a proper and single culture.
6. Recommendations
In order to survive and expand in Singapore, the recommendations in the form of market entry strategy for Sainsbury’s are mentioned in the international business assignment:
• The best way to internationalize in Singapore will be through direct investment that will make it easier for Sainsbury’s to open its store directly in the country.
• Direct investment will also avoid incorporating taxes as well as duties on the goods that will be traded by the company.
• The company will be able to generate a production site in Singapore thus manufacturing their goods locally.
• The company will also be able to attract capable staff through direct investment.
• Singapore as a country on the other hand, levies no tax on dividends that are received on a business. As per the international business assignmentthis in turn makes the company attractive for several investors.
References
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