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In February 2006 Tesco planned to enter the US retail grocery market.

Planned to invest around £220m per annum over 5 years period, in its US venture.

The proposed market entry caused a great deal of interest in the USA.

INTRODUCTION

Why do we think that Tesco decided to expand into the highly competitive US market?

Why do we think Tesco decided to use the brand name ‘Fresh & Easy’ for its US stores when the Tesco brand has been used for all its other international activities?

CASE STUDY EXPLAINATION

The wrong entry strategy

Market with fierce competitive

Misunderstanding of cultures

Lack of Customers knowledge

ENTRY STRATEGY USED BY TESCO WHAT IS GOOD OR BAD?

Tesco planned to introduce the British model.

Own brand products are unusual in America. In the US brands dominate.

US small retail outlets are relatively unknown.

Food in pre-packed as customers are required to scan the bar code on their purchases before paying.

The company’s environmental claims have come under scrutiny, along with its property strategy, its non-unionisation policy in a relatively strongly unionised sector of business and its refusal to sign a community benefits agreement.

Key difference between convenience stores in the USA and the UK.

Tesco is the UK based store.

The worlds fourth largest retailer.

UK market share in excess of 30% and annual profits of some £2bn.

Developed internationally over the past 10 years.

International expansion is a key element of Tesco's strategic development.

BACKGROUNDS

Environmental culture

LONDON

Tesco introduced a new brand name

“fresh & easy”

Market entry caused a great deal in USA.

Introduced chain of low cost similar to Tesco express

The aim was to provide a classless retailer

Fresh & easy was affected by the economic crisis

CASE STUDY

We conclude that Tesco has failed to establish a competitor retailer into a highly completive market due to poor preparation, failing to understand the surprising differences between US and British shoppers.

The financial crisis seriously affected the operation of the company for sales growth.

Tesco got some of its location wrong, by opening aspirational grocery stores in low-income areas.

Financial Performance over the last five years.

Why do we think that Tesco will not achieve its original target in the future?

What do we think about Tesco’s store location choice? What is right for Tesco to establish its stores in urban areas?

http://www.tescoplc.com/index.asp?pageid=30

CONCLUSION

CASE STUDY EXPLAINATION

Reduce the prices of the product.

Expend to different cities to target more customers.

Adapt their stores to the US culture and environment.

Resize the store to compete with their rivals e.g. Wal-Mart, marks and spencer's, safe way.

RECOMENDATION

http://www.mbaknol.com/management-case-studies/case-study-tescos-us-grocery-market-entry/

http://www.managing-innovation.com/case_studies/Tesco.pdf

Pervez, G., Philip, C. (2010) International Marketing, Third Edition., London: McGraw-Hill publisher p.57, 64,275.

Charles W.L.Hill (2012) competing in the Global Marketplace, 9th Edition., Washington: McGraw-Hill publisher p.416-528.

EXPANSION TO USA

REFERENCES

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