Faced with increased competition at home, Sainsbury's decided to expand its international operations by entering Egypt.But in Egypt, there is an odd victim on the boycott list, Supermarket group Sainsbury's pulls out of Egypt after just two years - at a cost of more than £100m. I and my team have studied on it. Hope you like it and suggestions are most welcome.
2. Introduction
• UK head quartered multinational corporation (MNC)
• Leading UK and US food Retailer
• Operated in financial services and real estate
• Comprised of:
Sainsbury supermarkets
Sainsbury bank in the UK
Shaw’s Supermarket and Star markets in the USA
3. Objectives
• Mission “First For Food”
• Objectives meet customer needs effectively
• Provide shareholders with good sustainable returns
• Offered 23000 products with 40% inhouse brand
• Second largest market share in the UK retail super market(11.9%)
4. International Expansion
• Wal-Mart capturing UK market
• 3 main opportunities:
• Short term return on investments
• Medium term return on investments
• Long term return on investments
5. Why Egypt?
• Egyptian market offered considerable potential
• Concentrated population
• Largely unexploited domestic food market
• Higher expenditure on food
• Banking business opportunities
• Stepping stone to other middle east counties
6. Human Resource
Management
• A Major Challenge
• Transference of 64 expatriates from its headquarters
• Family relocation allowances
• High labor and management cost
• Poor extensive training due to lack of time
• Outsourcing issues
7. Marketing
• Stores tailored to match target customers
• Concentration on simplicity, moderate illumination and basics
graphics configurations
• Continuous modification in response to sales report and sales figure
• Utilization of brand name
• Focus highly populated areas
• Potential customers with medium purchasing power
• Introduced 130 Key value Items (KIV)
• Introduced bar-coding in products
9. Political
• Favorable Investment Condition
• Good relation of British Government and Egypt Government
• Later Degraded Relation
• Seen as Jews supporter
• Fatwas Issuing
10. Economical
• Success in US and UK markets.
• 11.9% Market Share in UK.
• Market Challenger in US market
• Ranked 14th among top global grocery retailer with 29,743
Million Euro Sales.
• Joint venture with Edge Group
11. Social
• One-stop shopping – Non Food Product – Benefitted
• Cheap and Large Variety Product
• Increase Women Work Force – Decline Domestic Meal Making
• Social Discrimination – Show off
• No culture blending of Egypt employee with Sainsbury
12. Technological
• Barcode System
• Automated Sales System – Marketing Analysis System – Pricing decide-
Bundle etc.
• Online Business ( UK) – Wanted for Egypt
16. Strengths
• Market Image and Experience
• Good relation with government
• Deep Pockets
• Cheap & Variety.
Weakness
• Focused only on pricing and
variety
• Excess Standardization – process
n procedure
• Training
• Very fast
17. Opportunity
• Large Potential Market
• High Consumption pattern of
consumer
• Favorable investment condition
• Stepping stone for further
expansion – Middle East
Threats
• Highly Religious environment –
Unstable
• Lack of government support
• Currency fluctuation
• Lots of labor regulation
• Custom and licensing
• Lack of Bureaucratic support
18. Sainsbury’s Future in
Egypt
1. Scale down it’s operation ? or
2. Find new local partners ? or
3. Sell the business entirely ?
Lost 55.5% of profit for from 1999 to 2001.
Earning per share decreased from 31.4 to 13.8.
Moreover if people don’t have trust what can be expected from
government.
Religious + Volatile nation. Easily impacted by external environment.
Democracy was not yet mature.
