Heron Supermarket's Singapore Expansion

Introduction

Globalisation in business is important for allowing marketers to go beyond national boundary in terms of establishing their market footprint in international business platform. This report is going to highlight the international business operation of Heron Supermarket, the UK based supermarket chain, with discussing the opportunities and challenges that this supermarket will face while going to operate its business in Singapore. this report will allow discussing the market size, current financial condition and market growth of this supermarket in the UK market in terms of analysing that whether this supermarket will be able to operate successfully in Singapore. this report will do the external audit for this company in terms of analysing the overall external environment in Singapore market to find out the overall impact of this market condition on the operation, decision making and overall business of Heron supermarket. Finally, this report is going to make relevant recommendation that will assist Heron supermarket to operate its international business successfully in Singapore with overcoming the market risks.

Section 1:

Current situation:

Company background:

Heron Supermarket is a famous supermarket chain in the UK which is known for its high-quality products and comparatively ow price than the other supermarket chains in this market. on analysing the current financial situation of Heron supermarket, the financial report of this company is overhauled. Based on this report this company has gained sharp improve in its annual revenue in 2018/19 with £393 m, which is far better than the previous years with £274 m.

Market growth:

From the annual report Heron Supermarket, it is seen that the market growth for this company has gained by 43.5% in 2018. The annual report of 2018 also shows that Heron foods have gained a gross profit of 48.3 m and the gross profit margin is 12.3%, which represent the huge market growth of this supermarket china in its local market. Through analysing the annual report, it is also seen that the overall net income of this supermarket also increases due to the enhancing market size and customer based in the UK market. the overall cash flow for Heron Food Cash is 7.8 M and for Heron Foods EBITDA is 22.7 M during 2018.

Section 1.2:

External environmental analysis:

PESTEL of Heron Supermarket:

Porter’s Five forces for Heron supermarket:

Porter Diamond model Of Heron Supermarket:

Findings of the above-mentioned analysis:

Positive impacts:

The stable and supportive government in Singapore will assist Heron Supermarket to operate its business in this country peacefully without facing any political issues. As the Singapore government is highly supportive towards developing foreign entities in this country, it will assist Heron supermarket to get political, legal and social benefits in this country. High employment rate, strong economy and high per capita income will assist this supermarket to chose an economically stable target market which will bring high-value profit to this company

Negative impact

The Singapore government has posed strict legal obligation on the foreign business operating over here regarding maintaining the pollution free environment which can interfere with the overall manufacturing and selling process of Heron supermarket. In Singapore, customers have a strong educational background with a modern approach who have the ability to compare the price and quality of product before investing in any new company. This can pose pressure on the marketers of Heron supermarket to become best and unique in front of the customer's eye.

Implications of forthcoming changes in legislation:

From the overall analysis, it can be stated that any changes in the legislative framework of Singapore will pose a potential impact on the overall, decision making and operation of Heron supermarket. The Environmental and Anti-pollution Unit of Singapore has made changes in the environmental laws, in which it is said that the foreign, as well as local marketers in Singapore, have to maintain the pollution free environment during their operation. This regulation can make difficulties for Heron supermarket as there are chances of air pollution during the transportation of goods.

Impact of customer’s changing trend:

In Singapore, the customers have completely different buying behaviour and preference from that in the UK. This will pose both opportunities for Heron supermarket to deal with the new demand and market trend. As stated by Peng and Meyer (2016), if the firm needs to strengthen its international market footprint it needs to go beyond its known boundary.

Market size:

However, the developing local market in the Singapore market will increases rivalries to Heron supermarket. On the other hand, the consistent conforming growth in the Singapore supermarket chains represents the fact that heron supermarket can have high chances of grabbing high financial success in this country of operating its business in the right direction.

Market segment:

Based on the trend and customer buying behaviour in the Singapore market, heron supermarket needs to focus on the following market segment:

Gender: in order to grab the high-value competitive advantage, the marketers of Heron supermarket will prioritise on providing high-quality products and service its customer irrespective of their gender.

Age: Heron supermarket will sale grocery and food products that can be used by any age of people. in this aspect, heron supermarket will focus on the age group 12-45, for offering yummy food products, softies, cooldrinks and on the age group 45-65 to sale the health drinks, sugar-free and low-calorie products.

Income: Heron supermarket will set prices of each product in such a manner that can be afforded by any middle income to a rich person.

Trend identified:

Based on the above-mentioned analysis, it can be stated that Singapore has a highly modern supermarket trend, in which customers prefers faster delivery, convenient service and quality products.

Moreover, it is also identified that people in Singapore have shifted their preference towards eco-friendly and healthy products.

Therefore, Heron supermarket will focus on customer buying behaviour and preference to meet their demand.

1.2.1 Internal impact:

From the above-mentioned analytical tools following impacts are identified that the Singapore market will have on the internal environment on Heron supermarket:

From the PESTEL analysis, it is seen that Singapore is a multicultural country which will pose a potential impact on the skill and market adaptivity of Heron supermarket. According to Milani (2019), while operating international business, the firm needs to strengthen its staff skill and ability to deal with challenges in foreign country. in this context, The Heron supermarket will focus on conducting staff training and knowledge development programs in terms of adapting to the new culture and trend in Singapore market. Accruing to Peng and Meyer (2016), internationalisation of firms depends mainly on the legal framework on t foreign country as the legislation pose unwanted obligation on the diction process and operation of the business. The current social trend in Singapore is shift of customer's preference from luxury good to eco-friendly and recycling products, which can create economic and manufacturing issues for Heron supermarket. It is multicultural as well as the multiracial country which can create issues for staffs of Heron supermarket to adapt to this cultural aspect. As the majority of the people in Singapore are internet users this will assist the heron supermarket to operate an online business in this country without facing any customer issues. Singapore has potential local supermarket chains such as Sheng Siong and Big4 supermarket, heron supermarket needs to focus on improving its product quality and uniqueness to grab the high-level competitive advantage. As Singapore is politically and economically stable, there are many potential rivals in the UK market such as Tesco plc, Aldi and Morrisons who intend to enter into this market to grab the economic opportunities. In this context, Heron supermarket is going to improve its resources such as its staff, managers, management styles and selling process to grab the market in Singapore.

Sections 2:

Key Drivers:

From the internal and external analysis, the key drivers in the Singapore market for Heron supermarket can find out which are as follows:

Key opportunities:

From the analysis in Section 1, it can be stated that Heron supermarket has chances of getting the following opportunities:

The strong economic condition in Singapore will create opportunity for Heron supermarket to gain a huge return on investment in the international market. Increasing the supermarket trend in Singapore will be beneficial for Heron supermarket to operate its business in this country and gain a strong customer base. In Singapore, the shifting preference of customers towards one-stop shopping will create wide business opportunities for Heron supermarket

Key Threats:

Majority of the supermarket shares in the Singapore supermarket is grabbed by Sheng Siong supermarket, which can be potential berries to heron supermarket for entering into Singapore

Section 3:

Recommendation

Following recommendation can be done for Heron supermarket to assist this company to operate successfully in the international market.

Ansoff Matrix:

Market penetration:

Heron supermarket needs to develop existing product quality in terms of improving its brand image and reputation in the existing market by using the following process:

Improve existing product quality

Widened the existing product range

Conduct R&D (research and development) in making consistent improvement in the existing product for meeting customer demand in the existing market

Market development strategy:

Heron will focus on enhancing sales of existing products in the Singapore market by using highly modern promotional approaches such as online promotional programs and online ads

Heron supermarket intends to merge with famous food brand in Singapore, Meidi-Ya Food court to get opportunities in the local market

Product development:

Heron supermarket intends to sale new grocery and food products into new market (Singapore market) through using the following strategy:

Developing online market campaign

Arrange new stalls of grocery items and food products

Diversification strategy:

Heron supermarket will focus on different diversification strategy such as Horizontal, Concentric and Conglomerate strategy.

Recommended strategy from Ansoff matrix:

From the findings of Ansoff Matrix, it can be recommended that Heron supermarket will go for development of new market

Heron supermarket will promote both existing and new products in the Singapore market

Heron supermarket will conduct highly relevant and strong risk management system which will assist the company to deal with any challenges in the Singapore market

Heron Supermarket will have huge resources in entering and establishing in this market

customer in Singapore has different options in terms of choosing the best grocery stores.

Preference of fast-Moving customer Goods (FMCG) in the convenient stores are increased

Genuine and authorised suppliers in Singapore will help the Heron supermarket to get quality goods which can meet the demand of customers in this country

The stable and strong political structure will pose positive support to the Heron supermarket in terms of establishing its market footprint in this market

Before entering into this market Heron supermarket will conduct thorough research on the customer buying behaviour and supermarket trend in Singapore

The supermarket will focus on attracting FDI for maintaining a consistent flow of cash

From the above analysis, it can be stated that heron supermarket needs to analyse its product lifecycle in terms of evaluating the customer experience with this company. analysing product life cycle is important in international business (Hill and Hult, 2015).

Through analysing the product life cycle, Heron supermarket can understand where their products are able to meet customer demand in the Singapore market.

Porter’s Generic strategy of Morrisons:

Recommended Porters Generic strategies:

Heron supermarket will go for diversification strategy in which it will focus on age group and financial condition of customers in Singapore

Age group of 12-45 are targeted for grocery and yummy food products and age group 45-65 is targeted for selling heathy products and medicines

Target customers for Heron supermarket will be middle class to higher class people who can easily afford its products

For maintaining strong customer-base in a foreign country it is important for a foreign company to understand the buying behaviour and demand trend of customers (Nasr, 2018). In Singapore, the shifting preference of customers towards one-stop shopping will create wide business opportunities for Heron supermarket. In this context, Heron supermarket will focus on providing high quality product to its customers in Singapore which will assist thic company to not only grab the strong customer bae bhut also improve its brand reputation in the market of Singapore.

Highly modern customer approach and their high standard of living enhance chances for heron supermarket for grabbing high economic growth

Genuine and authorised suppliers in Singapore will help the Heron supermarket to get quality goods which can meet the demand of customers in this country

The stable and strong political structure will pose positive support to the Heron supermarket in terms of establishing its market footprint in this market

Highly supportive government system will encourage Heron supermarket to operate business in Singapore without any political, economic and social harassment. Availability high skilled staffs and skilled labours in the Singapore market will assist Heron supermarket to make highly relevant workforce in terms of dealing with changing buying behaviour and market trending Singapore. Strong technical framework in Singapore will assist the marketers of Heron supermarket to install high-quality software, operating system and application program in terms of connecting to local marketers, sponsors, suppliers, labours and customers. Government support towards the development of foreign companies in Singapore will create opportunities for this supermarket to gain political and governmental support

High living standard and string education level in Singapore will assist this supermarket to grab potential customers who can understand the importance of the unique and quality products. Although Heron supermarket is a famous supermarket chain in the UK, its online sale system is poor as compared to the other potential rivals in the Singapore market. therefore, Heron supermarket can face difficulties in providing convenient online shopping facilities to the customers in Singapore.

Singapore government focuses on pollution-free business process in this country in which the foreign and local business operating here will have eco-friendly products and recycling packaging process. This can create threats to enhancing overall expending of the supermarket.

Growth strategies:

Heron supermarket will go for JV or Joint Venture Strategy, which will assist this company to merge with local companies in Singapore in n terms grabbing advantages in labour market and connecting easily with local suppliers, dealers and contractors. Although the market growth of Heron supermarket has reached its expectation level, the developing competition of potential rivals and market saturation are the causes which instigate thus company to go for internationalisation. It has chosen Singapore due to the fact that this country has strong economic condition and customer prefers the supermarket trend over the other retail shops. According to Daniels et al. (2014), analysing current financial situation is important for determining whether the selected firm is able to operate its business in the chosen foreign country. The annual report of 2018 also shows that profit of this company has growth by 2.18%, which makes it apparent that this company can have the financial ability to operate its business in Singapore market, in which there are many potential supermarket chains. Singapore government has a very supporting fiscal and monetary policy which are in the favour of entrepreneurial business and FDI. The heron supermarket needs to utilise this opportunities inn terms of getting proper economic advantage in this country regarding operating its hassle free trade.

Other risks strategies:

Heron supermarket will have strong management system to deal with changing market trend in Singapore market. This supermarket will have strong leadership and HR strategy to develop efficient risk management framework. Accruing to Peng and Meyer (2016), internationalisation of firms depends mainly on the legal framework on the foreign country as the legislation pose unwanted obligation on the diction process and operation of the business. Singapore government prioritised the recycling packaging and eco-friendly food manufacturing to make the environment pollution free. This can enhance the overall cost and expenditure of Heron supermarket. in this context, heron supermarket needs to set proper pricing strategy which will assist its marketers to set such price for each item which will, not only assist this company to rede it overall selling cost but also makes customers in Singapore to easily afford these items. Singapore government prioritised the recycling packaging and eco-friendly food manufacturing to make the environment pollution free. The Singapore government focuses on implementing strict law in this country to avoid the chances of any type of corruption. Singapore government has posed strict obligations on foreign as well as local companies to reduce pollution during the transportation. This can pose severe pressure on the marketers of heron supermarket to standardise their products and review the packaging process which can enhance the packaging cost and take huge time to reset the overall selling process. therefore, marketers of this supermarket should have high skilled and relevant management system which will focus on changing rend in legislative and social aspects in this country in terms of maintaining sustainability of this business in Singapore

Conclusion:

It can be concluded that Heron supermarket will have the following SMART objectives in operating its business successfully in Singapore

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