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Tesco Case Study

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Lulu Alanis

on 22 February 2016

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Transcript of Tesco Case Study

Reasons behind Tesco's Internationalisation Strategy
To secure long term growth

Potential growth for "modern" retail in Asia

Potential for growth serving emerging markets in Central Europe and Asia

Expansion to North America: Know-how in prepared-meals development (in the UK) to explore the US market around "convenience".
Tesco's performance in Thailand and South Korea
Despite Tesco's large size and experience in grocery market, they still suffer massive losses in international markets. Facing these challenges Tesco needs to reevaluate their approach to international business
Tesco Case Study
Tesco's entry to US
Fresh & Easy
Neighborhood Markets offering fresh-ready-to-eat meals, chilled prepared food etc. "Designed to be as fresh as Whole Foods, with the value of Wal-Mart, the convenience of Walgreens, and a product range of Trader Joe’s"
- Presence of strong
competitor - Wal-mart
- Tesco's intention to use
small format

skills gained in UK
- US food retailers had traditionally offered few of these products to customers and the distribution/logistics system were underdeveloped.

Significant features
of Tesco’s US experience:
- Attempts to engage with an online consumer culture.
- Establishing brand visibility and maximising development opportunities via investment in underserved communities.
- Integrated food production/distribution supported by follower-suppliers.
- Tesco's lack of initial competitive response.

Globalisation of Tesco in the light of Porter's diamond
PESTEL Analysis of the Internationalisation Strategy
Strategy Type
CAGE Framework
Tesco uses transnational strategy due to
High pressure of lower costs
as they operate in cheap grocery market
High pressure of adaptation as consumer tastes and preference differ from home market
-Tesco had successfully turned foothold
into positions of market leadership (Thailand) or potential market leadership (South Korea), had developed extensive multi-format store networks (exceeding 800 stores), and had
outperformed its multinational rivals
to the extent that Wal-Mart and Carrefour.
- Determined efforts to build
market scale
, and its adaptive responses to growing pressures across East Asia for tighter regulation of the expansion of multinational retailers.
Majority-share partnerships
in the non-core retail businesses of the leading conglomerates: the CP Group in Thailand and Samsung in South Korea
- Tesco's could rapidly reduce CP Group’s
to zero, and Samsung’s share to 1 per
cent (from 11% within two years)
Capital investments
to build scale and
accrue market leadership advantages
Reasons for failure in Taiwan.
- Unlike in South Korea and Thailand, Tesco could not find a suitable
local partner
in Taiwan
Chinese land ownership system

Success in Thailand, Poland .....
Tesco’s Fresh & Easy Failure in US
Production and labour in Asia is cheap

Influenced by the political and legislative of these countries.

:In 1995, a law was passed in France which prohibited the opening of new large retail stores..

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