Tesco International Management

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INDEX:
Page:
Index1
Introduction2
Question 1: YIP’s drivers of globalisation framework3-9 • Market5
• Cost6-7
• Government8
• Competitive9
Question 2: Thailand / Korea / Japan10-16
• Entry Strategy11
• Brand Management12-14
• Politics/ Economy15-16
Question 3: Fresh & Easy Neighbourhood Markets17-23
• Macro Assessment18-20
o Risk in foreign markets18-19
o Economic Recession19
o Infrastructure19
o Socio-cultural20
• Micro Assessment21-23
Question 4: Tesco US – Porters Diamond24-27
• Factor Conditions24
• Home Demand Conditions25
• Related & Supporting Industries25
• Firm Strategy, Industry Structure & Rivalry26-27
Question 5: PESTEL analysis28-38
• Political29-31
• Economic32-33
• Socio-cultural34-35
• Technological36
• Environmental37
• Legal38
Conclusion:
Appendix (if applicable)
Bibliography:39

1. Identify the reasons behind Tesco’s internationalisation strategy and evaluate Tesco’s international expansion in the context of YIP’s “drivers of globalisation” framework Tesco’s internationalization strategy was both proactive and reactive. In 1997 Tesco was the third largest retailer in England but quickly surpassed its rivals Marks and Spencer’s and Sainsbury’s with a business 5-6 times their value by 2010. – Terry Leahy (1. The Art of management Tesco Economist Interview, 2012)

One of the key drivers of this success was the development of big data to drive big growth. Terry Leahy copied the idea from a co-op in Manchester who had developed a primitive membership scheme. By the time of implementation technology was sophisticated enough to handle and make sense of this big data. The development of the Tesco club card revealed not only what customers shopped for in Tesco, but also rich data on what other services they were spending their money on.

The use of this big data was often more telling than traditional market research as there was often great variance in terms of what people said in traditional market research vis a vis what they actually spent on as verified by their Tesco club cards.

This telling data was also to provide the blue print for growth into other non-food retailing such as banking, insurance and clothing.

By 1998 Walmart was on the offensive in the UK and while Tesco was gaining ground on domestic rivals, the threat of a U.S retailer gaining significant market share was real. The strategic imperative was to act both defensively and offensively to retain and gain market share both locally a globally. This big investment offensive move not only provided strategic framework for growth but maintained stakeholder morale in a company with very visible rivals both domestically and globally.

In real terms Tesco, although a leader in the UK with profits of 3 Billion, The UK accounted for only 2-3% of the world’s GDP. International expansion and access to world markets was essential to growth– Terry Leahy

In examining Tesco’s globalization strategy, Yip 1992 provides the most widely used framework for assessing the extent of and potential for industry and market globalization. Yips research suggests that there are four categories of drivers (market, cost, government and competitive), which must be analysed in order to determine the degree of globalisation within an industry. The strength of the drivers vary from industry to industry and from market to market.

We will look at these four categories of drivers across key market entries for Tesco and see where Tesco successfully evaluated these and acted with informed execution and the markets where it is floundering due to ill-informed...
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