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Tesco - Glocalisation

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Nathan Barr

on 14 October 2013

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Transcript of Tesco - Glocalisation

Local flavour built around universal human values. Eastern Europe
Treat people how we like to be treated glocalisation one set of values to drive global success Tesco had lost its way by the early 90's
Terry Leahy was appointed to the board as Marketing Director in 1992
Then CEO in 1997
Aimed to take over as the UK's number one retailer
Then take on the world giants of retail home market - UK Started by Jack Cohen as a small chain of market stalls in 1919
Grown to over 500 supermarkets by the mid 1990's
Expanded into general merchandise
Diversified into other industries including mobile telecoms, insurance, banking and internet services
Similar to Walmart their strengths were in leveraging their supply chain and IT http://www.thisismoney.co.uk/money/markets/article-1723933/Analysis-Tesco-conquers-eastern-Europe.html Samsung Corporation 1 May 1999 formed joint venture
Tesco invested significant funds into the JV
1137 staff re-hired from Samsung's prior layoff
South Korea today represents Tesco’s largest market outside of the UK, with 305 hypermarkets and convenience stores gathering annual sales of 4.1dn Pounds Samsung +Tesco = Homeplus Putting the communities we serve at the heart of what we do.
In Korea people are viewed as both customers and citizens
Respect for the local culture by taking full account of the Korean way of life
No one tries harder for customers
-South Korea Samsung-Tesco integrated Tesco operations systems, combined with Samsung's HR system
Growing local suppliers to take advantage of Tesco's global network South Korea
Treat people as you want to be treated Opens first three retail stores 1997
Financial Crisis of 1997 – 200mil loss (1998)
down size organization
restructure business
In the hunt for “break through strategy”
Retail business too attractive to disregard
Looking for financial backing from foreign investment UK
No one tries harder for customers Promoted loyalty by offering a 1% discount
Gathers customers data
Tailored product ranges by city or even suburb in the UK
Caters to sub-cultures rather than traditional market segments Background Global Ambitions UK
Treat others as we like to be treated Ethical use of the clubcard data
No data privacy laws existed in the UK in 1995
Tesco made a call based on its values to remove the names from the data to ensure privacy Eastern Europe Conclusions One simple set of values can allow a business to "Think global, Act Local"
Learn and adapt to local situations
Find what it is about your business that has meaning and apply that to international expansion.
Look for the differences and not the similarities and apply the values to them Currently has turnover of £72 billion from its operations in 13 countries based in Europe, Asia and the United States.
We will focus on the Eastern Europen and South Korean markets Global Success Integration Responsive Framework Simple,
Universal Values These values can be as unique as the country needs them to be as they mean different things to different people
"How we like to be treated" does not mean treat everyone like they are British.
Doesn't everyone think this way? Isn't it obvious? Peng 2014 References (2012) Management in Ten Words: Practical Advice from the Man Who Created One of the World's Largest Retailers, Terry Leahy
(2005),"The secrets of Tesco's expansion success: How the UK's largest supermarket is creeping up on Carrefour and Wal-Mart", Strategic Direction, Vol. 21 Iss: 11 pp. 5 - 7
(2002) McKinsey Quarterly Interveiw with David Reid "Taking Tesco Global"
(2005) Mark Palmer "Retail multinational learning: a case study of Tesco" www.emeraldinsight.com/0959-0552.htm
(2013) ‘We’ve learnt how to be local’: the deepening territorial embeddedness of Samsung–Tesco in South Korea Neil M. Coe*,y and Yong-Sook Lee**
http://www.tescoplc.com/files/pdf/results/2012/prelim/prelims_2011-12_analystpack.pdf

" Tesco's Sir Terry Leahy Talks Retail Strategy"
"Sir Terry Leahy, Every Little Bit Helps: Tesco's CEO talks business Entry into Eastern Europe Aldi – Limited range, quality at low prices, no frills
Aldi was ignored in German market and dismissed as a niche retailer.
Lessons learned in the UK from Aldi.
Aldi gained market share by appealing to a price conscious consumer during the 1990 UK recession
1995/96 entry into Eastern European market via Hungary, Slovakia and Poland Evidence of success Hypermarket failure – need to be closer to the city centres
Club card – listening to customer needs Eastern Europe
No one tries harder for customers Local flavour build around universal human values. Eastern Europe
Treat people how we like to be treated Global Standisation Home Replication IT systems
Tesco has well defined processes and scorecards, but tailored to the country Localisation How Tesco applies
"The Tesco way"
in all of global markets Trans-national Each subsidery is encouraged to be independent of the home office
They work together to source products from local suppliers for thier global network
Full transcript