Tesco: from Domestic Operator to Multinational Giant (Case Study from Exploring Strategy 9/E)

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Case Study – Tesco: From Domestic Operator to Multinational Giant. 1.Identify the reasons behind Tesco’s Internationalization Strategy. Tesco sought to take advantage of undeserved and immature markets, particularly in Europe and followed by Asia. Central Europe in particular was the first phase of its expansion in the post-soviet era. Tesco had achieved measurable success in the UK market which was highly regulated and competitive. Due to regulatory pressures, Tesco focused on its operations and capital investment within UK, which also led to opportunities in the international markets as they were a profitable business. Tesco had extensively studied the Asian market in late 90s and due to the rapid liberalization of previous restrictions on retail FDI across East Asia; it gave Tesco the perfect opportunity to move into these new markets, particularly Asia and within Asia starting with Thailand and South Korea. During the Asian economic crisis domestic conglomerates required funding and as a result Tesco was able to enter both markets (Korea and Thailand) via majority-share partnership. In the USA, Tesco was able to establish a good business model that let them compete with Wal-Mart. The vision set by its CEO, Terry Leahy, to develop dense networks of new breed of convenience styled stores. Tesco’s ability to integrate with the local suppliers and bring major supplier to the new markets also helped in to developing “smaller-format stores served by a short lead time integrated food preparation/distribution system”.  

2.Evaluate Tesco’s International expansion in the context of Yip’s ‘drivers of globalisation’ framework.

Tesco was able to time its expansion at the right time, when the drivers of international strategies were in favor.

1.Market drivers – Before entering the market, Tesco was able to evaluate the needs of the local customers, even though customers had the same needs as its home market, there was an element of localization that Tesco...
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