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Global Strategic Management 1 Global Strategic Management Student’s Name Institution Affiliation Instructor’s Name Course Date Table of Contents

Global Strategic Management 2 Part 2: ............................................................................................................................................... 4 Introduction and Analysis of Business Environment ...................................................................... 4 Analysis of microenvironment (Porters Five Forces) ............................................................. 5 1) Competition ................................................................................................................... 5 2) New Entrants Potential ................................................................................................ 6 3) Suppliers power ............................................................................................................ 6 4) Customers power .......................................................................................................... 7 5) Substitute threats ......................................................................................................... 7 Analysis of Macro Environment (PESTLE) ............................................................................ 8 1) Political ......................................................................................................................... 8 2) Economic ...................................................................................................................... 8 3) Social ............................................................................................................................. 9 4) Technological factors ................................................................................................... 9 5) Legal factors ............................................................................................................... 10 6) Environmental factors ................................................................................................ 10 Part 3: ............................................................................................................................................. 11 Designing an appropriate business strategy for the Penny Markets .............................................. 11 ANSOFF Model ............................................................................................................................. 11 Introduction to the ANSOFF model ...................................................................................... 11 Market penetration. .............................................................................................................. 12 Market development .............................................................................................................. 13 Product development ............................................................................................................. 13 Application of the ANSOFF matrix to the Penny market growth strategy ....................... 13 1) Market Penetration ..................................................................................................... 13 2) Market development ................................................................................................... 14 3) Product development .................................................................................................. 15 4) Diversification ............................................................................................................. 15 Part 4: ............................................................................................................................................. 16 Force Field Analysis ...................................................................................................................... 16 Introduction to the Force Field Analysis tool ................................................................................ 17 Application of the Force Field analysis in the Penny Market case. .................................... 17 Step 1: Describing the organizational plan and the proposed change ............................... 17

Global Strategic Management 4 Penny market is a chain of supermarkets which is located in German. The retail stores operate in six European countries. These countries include; Germany, Italy, Hungary, Austria, Romania, and the Czech Republic (Jantyik and Török, 2020). The retail stores offer a variety of high-quality and fresh products, which focuses on the customers' ranges, and their prices are at all-time favorable. Penny has established itself in various countries and ensured that its competitive priority is setting itself as a national discounter based on the various countries' specific range. The Penny Market supermarket plans to operate and enter the United Kingdom market. Thus, the purpose of this paper is to analyze the United Kingdom business environment to develop a viable solution and a strategy that would help the business successfully enter the United Kingdom market. Therefore, the paper will analyze the micro and macro environment and use an appropriate model to design the best entry strategy into the market. Part 2: Introduction and Analysis of Business Environment According to Putri et al. (2019), business environment describes all the components or factors that may have a direct effect/ impact on the business. These factors/ components contribute to the functioning of the business. The business environment can be categorized into two that is internal environment and the external environment (Alam, 2021). This part critically examines the micro and macro environments that may affect the Penny Markets in the United Kingdom.

Global Strategic Management 5 Analysis of microenvironment (Porters Five Forces) According to Repnikova et al. (2020), the organization's microenvironment describes its immediate environment that affects its decision-making and performance. The organization's internal environment may include suppliers, competitors, customers, the public, and marketing intermediaries (Leiber et al., 2019). Porter's Five Forces is a model which is used in the analysis of the organization's microenvironment. Porter's Five Forces is an essential framework in the analysis of the micro business environment since it helps explain why an organization can sustain a particular level of sustainability and profitability (Abinsay, 2020). This model was developed by Michael E. Porter and was published in 1979 (Isabelle et al., 2020). These forces are essential in analyzing the organization/ industrial structure and its corporate structure. Thus, these forces are critical in shaping all industries and markets globally (Shi, Agbaku, and Zhang, 2021). The main role of these forces is to measure the intensity, competition, profitability, and attractiveness of the market or industry. 1) Competition This forces analysis of the number of competitors in the market and how they can affect a new entrant (Jaya and Yuliarmi, 2019). The competition in the UK market is very stiff. This is because, there exist some company or already established supermarket which are considered as the big four. These supermarkets include the ASDA, Morrison’s and Sainsbury’s. These supermarkets can best be referred to as contestable oligopoly. However, challenging this ‘big four’ supermarket requires a market entry strategy that attracts customers. The strategy adopted by Penny Markets is more likely to become successful in the UK market due to its discounts

Global Strategic Management 7 Penny markets because, it will choose the supplier with minimum prices to increase on their profits. Thus, the entry of Penny Markets into the UK industry will be promoted by the increase supplier power in the industry. 4) Customers power Customers can drive for higher or lower prices (Itani, Kassar, and Loureiro, 2019). A sizeable proportion of the UK customer spends much on grocery purchase. Therefore, in the UK market, the grocery retailers takes a considerable proportion and are of importance to the UK customers. Since the Penny market focuses much on grocery retailing, it will benefit greatly from the sizeable grocery customers in the UK. In addition, it is essential to note that this sector is of great importance to the UK public market. This means that any development which might weaken the competition or affect the customer welfare is subjected to scrutiny. Thus, the entry of Penny Market to the UK market will be a great move since the supermarket will be guaranteed of protection from the government and also the company will enjoy the huge customer purchasing power. 5) Substitute threats Substitutes play a critical role in affecting the company's product. If a company can sell goods and products with no substitutes, then it will be able to increase the prices of its goods to favorable terms (Gupta, Ivanov, and Choi, 2021). Thus, the goods sold by Penny Markets have no proper substitutes. However, the substitutes that can be engaged in this case would involve direct contact to the farmers which would not be possible for every consumer. This means that Penny Market will remain in a favorable position for which they can control their prices and identify favorable terms to push for their profitability.

Global Strategic Management 8 Analysis of Macro Environment (PESTLE) The PESTLE analysis is a model used to analyze the external environment of a business which includes; Political, Economic, technological, legal, environmental, and sociological (Nandonde, 2019). These factors play a critical role in influencing the operations of the business. Analyzing these factors is critical and can prompt senior organizational managers to make better strategic decisions. 1) Political This describes how the government influences or controls the industry or the economy. These political factors include fiscal policies, taxation, conflicts, and trade tariffs (Abdoh et al., 2020). The UK political factors are favorable for the operations of a business. For instance, the country tariffs do not apply to countries with a trade agreement with the UK. This means that during its operation in the UK, when Penny Markets imports its products from countries with a trade agreement with the United Kingdom, the supermarket will enjoy the importation of duty-free commodities, promoting an increased profit margin. 2) Economic Economic factors significantly impact business operations, and they determine the organization’s long-term prospects in the industry or markets. Economic factors play a critical role in determining how the organization would price its goods and how its operations in the market would be influenced by the demand and supply models (Zetterholm et al., 2020). These factors include unemployment, interest, foreign exchange, and disposable income. The interest rates in the United Kingdom have increased to 4.25%; this means that if Penny Markets borrowed money from the UK banks, it would pay more. In addition, the inflation rate

Global Strategic Management 10 development and innovation would mean that its entry into the UK market would be eased due to its technological advancement. 5) Legal factors These factors affect the procedures and the policies of a market/ industry (Janssen et al., 2020). In addition, these factors play a critical role in the control of safety, employment, and regulations. These legal factors include; employment law, consumer protection, regulatory bodies, and environmental regulations. Some legal factors that the Penny Market would encounter in its entry into the UK market include minimum wages. In this case, Penny Markets will be required not to pay employee wages that are below a certain level. This means that Penny Market will be required to adjust its budget to accommodate the minimum wages prescribed by the UK government. 6) Environmental factors These factors mainly focus on the general and the physical environment. Environmental factors include climate, geographical local, weather, global climate, and consumer and stakeholders’ values (Nielsen‐Gammon et al., 2020). Some environmental factors may affect only some aspects of particular businesses while failing to influence others. Thus, the entry of Penny Markets in the UK means that the company would be subjected to the pressure initiated by the government for all the organizations in the UK to deal with environmental issues. Thus, the company will be required to take part in initiatives that would help address environmental issues.

Global Strategic Management 11 Part 3: Designing an appropriate business strategy for the Penny Markets According to Morkunas et al. (2019), business strategy describes an organization/ company's master plan. This is an essential plan that the organization initiates and implements to help them achieve their strategic objectives and goals. Finance, operations, and marketing include some of the company's key strategies. Thus, a company having a business strategy aims to aid it in achieving a competitive advantage (Saeidi et al., 2019). Hence, some business strategies include focus, differentiation, and cost leadership. The use of each strategy largely depends on the company's goals. For instance, an organization that has a main of expanding may employ the growth strategy, while a company whose main focus is to increase its profitability may particularly use the cost-cutting strategy. In its quest to venture into the United Kingdom market, the Penny Market chain of supermarkets, in this case, aims at expanding its number of stores and establishing new ones in the UK market. Thus, in this case, the key strategy of the Penny Markets chain of supermarkets is the growth strategy. In this case, the ANSOFF model will be essential to analyze the appropriate strategic model for the Penny Markets. ANSOFF Model Introduction to the ANSOFF model The ANSOFF model, or the market/product expansion grid, describes a two-by-two model commonly used by analysts or management teams to evaluate an organization's growth initiatives (Rojek, 2019). This tool is essential to the stakeholders since it helps them conceptualize risk levels associated with particular growth strategies. This matrix was developed by H. Igor Ansoff

Global Strategic Management 13 Market development This concept focuses on selling products in a new market. In addition, an organization can use this concept to determine its entry into new markets. Product development This concept focuses mainly on introducing a new product to a new market. In other words, this concept describes how an organization can develop a product or a service within the market. Diversification This concept describes the entry of an organization into a new market with new products. Application of the ANSOFF matrix to the Penny market growth strategy 1) Market Penetration When employing this strategy, the organization's management aims to sell more of its products and what they are familiar with in the existing markets. In this case, the organization may use the following execution strategies. 1) Streamline distribution and increase market efforts. 2) Decrease the price of goods to attract new consumers/ customers. 3) Determining their competitor in the market. Thus, in this case, since the Penny Market intends to introduce its product into the UK market, it should employ the above execution strategies for better market penetration. For instance, one of the grocery stores in the UK which may pose great competition to the Penny Market product is Tesco. Identification of Tesco as its competitor would guide the organization into improving the quality and affordability of its goods to match those provided for by the Tesco retail store.

Global Strategic Management 14 In addition, the entry of Penny Market in the UK market means it will find a customer base that already shops in other supermarkets. Thus, one of the entry strategies of the Penny Market would be to lower the prices of its commodities to attract a new customer base which would later be its loyal customers. Finally, the Penny Market needs to streamline its distribution process in the United Kingdom. An organization's distribution process entails customer services, warehousing, shipping, packaging, and inventory control. Thus, to increase its market process, Penny Markets must ensure that it has streamlined all these distribution processes to increase its marketing efforts in the new market. 2) Market development This is another strategy that Penny Market needs to consider in its entry into the UK market. This strategy is not very risky since it does not involve huge investments in research and development (R & D). In this strategy, the organization management is guided on utilizing the existing product by entering new markets. Some of the approaches that Penny Markets will adopt in this strategy include the following. First, entering a new market, also referred to as regional expansion. Finally, in this approach, Penny Markets needs to understand how it shall cater to the different customers in the UK or the different UK target demographic. Thus, the products that Penny Market sells will find their way into the UK market, and this will require them to build an advertisement and a logistic infrastructure that would guide them to overcome the risks presented. Thus, this would be an essential approach for the Penny Markets since it would give them a proven roadmap to guide their market development.

Global Strategic Management 16 diversification the Penny Market should adopt is unrelated diversification (Salampasis and Mention, 2019). The company aims to reduce over-reliance on a single product in this approach. In this case, if Penny Markets intends to go by this approach, the company should store over- relying groceries and focus on other general commodities such as tools and machinery. This means that if the Penny Market intends to utilize this strategy in its entry into the UK market, then it means that the company should invest more of its funds in other commodities and consumer goods. On top of utilizing the ANSOFF framework, Penny's management should adopt other strategic steps to guide them in planning the new market structure. In this case, the company should utilize the following steps. First, the company should explore the new market structure. This is essential in entering a new market since it would enable Penny Markets to promote and publish their new business in the UK markets. The second step involves decision-making. This is an essential step for the company since it helps set a clear customer journey that would lead to a successful business establishment. The third step is that Penny Markets should capitalize on their efforts in markets. This is essential since it will guide Penny Markets toward pushing its products into the new market. The last step, in this case, is advocacy. Advocacy in a business is essential since it will help promote repeat customers and increase customer loyalty. Part 4: Force Field Analysis Sometimes it becomes very difficult to address tough decisions in life and especially in business. The pros and cons of a decision make it difficult to make the right decisions. Thus,

Global Strategic Management 17 when making a tough decision, it is always rewarding if the right strategy and technique are used, guaranteeing the organization's success. One strategy that can guarantee an organization success in its decision-making process is the Force Field Analysis. Introduction to the Force Field Analysis tool This tool was introduced in 1940 by Kurt Lewin. The tool has widely been used in modern business to make communication and decisions regarding business operations. The main idea for coming up with this tool was to ensure that equilibrium was maintained between the forces that resist changes and those forces that drive changes. This means that for the agreed change to happen, the resisting forces must be weakened while the strengthening forces are weakened. Thus, this tool is essential to any organization since it guides them in making decisions based on the analyzed decisions of the forces against and those that promote changes. Application of the Force Field analysis in the Penny Market case. Various steps are used in applying force field analysis tools to drive organizational changes. These steps include the following; Step 1: Describing the organizational plan and the proposed change In this case, Penny Markets intend to initiate the following changes for successful entry into the UK market. First, the Penny market will diversify its products to introduce new products. Second, Penny Markets intends to streamline its distribution process and develop a product suitable for the UK markets. These plans and strategies will be influenced by various factors, some for the change and others against the change.

Global Strategic Management 19 Step 4: Assigning the scores At this point, the force Penny's market management will assign a score on each force, that is, the force for change and those forces against change. In this case, the management can assign each force a score from, let's say, one to five. One, in this case, would represent the weak force, while five represent the strong force. Step 5: Analyzing and Applying The purpose of the force field analysis is to guide Penny's market management in deciding these two steps or actions. The first action was deciding whether the company should proceed with the proposed changes or decisions. The force field analysis was also essential to help think about what the management needs to do to strengthen the supportive forces. This will be important because it will guide the implementation of successful changes. Thus, in Penny's case, some of the forces that the company management needs to strengthen to enhance successful UK market entry include developing better strategies to diversify its products and following the government regulations and legislation in adopting and implementing change. Conclusion Several factors should guide the entry of the Penny Market into the UK market. The Penny Market management needs to examine the external and the internal environment the company will face in the UK. This paper shows that some of the external and internal markets that Penny would encounter include suppliers, customers, politics, and economic, technological, legal, and sociological factors. From these factors, it is evident that the Penny Market is likely to face some challenges in the political space and economic factors. For instance, the market will face increased interest rates and government regulations when entering the market. The paper

Global Strategic Management 20 also addresses some strategies the Penny Market needs to utilize for successful entry into the UK market. These strategies include product development, market penetration, diversification, and market development. These factors are essential since they guide the Penny Market on the best approaches for successful market entry. On top of that, these factors are essential since they play a critical role in influencing the organization's profitability and influence in the new market. Finally, the paper utilized the force field analysis to determine the challenges associated with the strategies initiated in the UK market entry. From this case, it was evident that the various factors which Penny intends to use to initiate change include diversification, the development of suitable products that favor the demography, and streamlining of the distribution process. Thus to ensure successful changes in this case, the Penny market needs to strengthen its forces to ensure the favor of the said changes.