Tesco in China

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TESCO AND THE SUPERMARKETIZATION OF CHINA

AN ANALYSIS OF THE CHINESE RETAIL INDUSTRY AND TESCO’S STRATEGIC POSITION WITHIN IT

Prepared by: Martin Witthoeft Module Title: Strategic Management Module Leader: Graham Webster Module Code: BC315017S Academic Year: 2008/9 Semester: One Level: 3 Submitted: 17 December 2008

Table of Contents

1.

The Supermarketization of China ..................................................................................... 1 1.1. 1.2. China - Land of Opportunity ....................................................................................... 1 Tesco on Course of Expansion ..................................................................................... 1

2.

Part 1: Analysis of the Chinese Retail Market .................................................................. 2 2.1. 2.2. 2.3. 2.4. PESTEL Analysis ............................................................................................................ 2 Porter’s Five Forces Analysis ....................................................................................... 5 Opportunities and Threats Analysis ............................................................................ 7 Critical Success Factors Analysis .................................................................................. 8

3.

Part 2: Analysis of Tesco in China...................................................................................... 9 3.1. 3.2. 3.3. 3.4. Porter’s Value Chain Analysis ...................................................................................... 9 Balanced Scorecard Analysis ..................................................................................... 10 Ansoff Matrix Analysis ............................................................................................... 13 Strengths and Weaknesses Analysis.......................................................................... 14

4.

Future Outlook on Tesco in China ................................................................................... 15 4.1. 4.2. 4.3. Learning Curve for Expansion .................................................................................... 15 Strategic Recommendations...................................................................................... 16 Is Tesco able to deliver its Strategy? ......................................................................... 17

5.

List of References............................................................................................................. 18

i

List of Tables

Table 1: Tesco’s International Strategy Table 2: Current Shopping Trends in China Table 3: Opportunities and Threats in the Chinese Retail Market Table 4: Critical Success Factors in the Chinese Retail Market Table 5: Financial Results for Tesco in Asia Table 6: Ansoff Matrix Analysis of Tesco in China Table 7: Strengths and Weaknesses of Tesco in China

1 4 7 8 11 13 14

List of Figures

Figure 1: Porter’s Value Chain for Tesco China .......................................................................... 9 Figure 2: Tesco’s “Steering wheel”........................................................................................... 10 Figure 3: Tesco’s “Steering wheel update” & “Shopping list” ................................................. 12

ii

1. The Supermarketization of China
China is the emerging force in today’s business world and its domestic market bears huge growth potential for multinational companies. This report focuses on China’s supermarket industry and shows how multinational Tesco is competing in what Gale and Reardon (2004) call the “supermarketization” of China.

1.1.

China - Land of Opportunity

China is the sixth largest economy in the world with a GDP of $ 3,241 billion in 2007 and an annual growth rate of 9.8 per cent in 2008. The growth of real disposable income at an annual rate of 11.5 per cent is...
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