Unit 7 9 Marker

Question 1

Sainsbury’s recently expanded into China, offering a selection of its products online through Chinese e-commerce giant Alibaba. Due to the success of the expansion, Sainsbury’s is considering further online expansion into emerging economies such as India.
Analyse how Sainsbury’s might increase its profits by expanding into emerging economies

Answer 1

Sainsbury’s may be able to take advantage of the high levels of economic growth associated with emerging economies which in turn, can lead to rising disposable incomes. Rising disposable incomes can lead to an increase in demand for products and services, resulting in increased revenue and subsequently profit, especially as some of Sainsbury’s products could be deemed to have an income elasticity of >+1

Question 2

Para 2

Answer 2

Sainsbury’s will be able to benefit from purchasing economies of scale. Expanding into emerging economies will require them to buy more food and other products, therefore it may be able to negotiate a discount, reducing unit costs leading to an increase in profits