International Business & Strategy

Topics: Tesco, Hypermarket, Wal-Mart Pages: 10 (1954 words) Published: August 8, 2014

International Business & Strategy


Nikolaos Athanasiou


Eileen Roddy: Strategic International Business
Management (CRN 33138)

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Challenging Tesco giant in the Kingdom of Saudi Arabia

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Born and grow in UK, Tesco PLC decided in 1995 to extent its leadership in mass grocery retail market to rest of the world. By doing this at that time, based on a strategic plan that is still more-less the same in principals, has achieved to hold the 4th place in the specific market segment. With main competitors such Carrefour, WalMart and Metro, Tesco had 50% of its revenue coming from grocery market. Nowadays and during last years, Tesco has presence in 13 countries, including cooperation with TATA in India, with more than 2000 stores in Europe, Asia and US. From the other hand, a Kingdom such is of Saudi Arabia, grows exponentially over last decades as one of the main sources of oil. Saudi Arabia is places 8th in the world most fasten growing economies according to IMF and 6th from macro-economic stability perspective. It is forecasted for the population to reach 30 million till 2016 and the average income per capita to be $33.5k till 2020. One more significant forecast is for mass grocery retails to have an increment of 66% by 2016. Tesco’s hypermarket stores in the Kingdom of Saudi Arabia would be promising but also challenging. Tamimi, Panda and Carrefour are the main competitors. Hypermarkets in KSA having 18% of the total food retail share, where supermarkets have 26%. The entry strategy into the Kingdom would be ideally an introduction of their own-brand product with a “Direct Investment” and full control of its operations. Although such a strategy has a lot of risk, in parallel provides the highest possible revenue, assuring also the brand and the business’ sustainability. Tesco giant, has the financial base and experience to do such a move and has proof that by entering in new and competitive high-risk markets successfully.

Tesco PLC, from 1919 when founded, continues to support a business model that provides clarity to its consumers and leverages their shopping experience. In the

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United Kingdom, Tesco has present many different approaches on how to have customer satisfied, according to the size and the needs of each populated area. The name have given to each different type of store, clearly provides the scope of: Tesco Express, Tesco Metro, Tesco Supermarket, Tesco Extra and to Tesco online. In addition, Tesco has been expanded to another perimeter of consumers satisfaction such is financial services and telecommunications and keep doing this inside and outside UK as well (“Long Term Strategy”, 2009).

Tesco, through all this years of experience and interference with consumers on a daily base, realizes the difference of mentality between countries. Realizes that someone leaving in India, has other needs and priorities than someone leaving in US. On that scope, Tesco builds each local management team having in mind the mentality of the country, providing in parallel the experience and knowledge needs by carefully sourcing. Even when things going not as well as supposed to be for the group, Tesco continues to invest in their people e,g, by providing training to them instead firing. To ensure its position and assets, Tesco keeps on always to invest in a collaboration and partnership in the whole supply chain, having high rate of customer’s satisfaction. This strategy will drive also the success of Tesco entrance to the isolated market of Saudi Arabia.

Country Specific Advantages
Kingdom of Saudi Arabia, with over of 29 million people which expected to be more than 30 million till next 10 years, is in Top 20 world’s largest GDP...
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