The strategic response of Tesco in adapting to the challenges of the international markets
Course: 6-week Pre-sessional English
Student name: Jiayang Lin
Student ID: 1234091
Literature Review 4
Market Localization 6
Employee Localization 6
Brand Localization---Coorporating With Local Companies 7
Pricing Strategy-Big Price Drop 7
The UK-based company, Tesco, was founded in 1919 in the East end of London. In 1929, Tesco opened its first store in North London. In 1947, it floated on the ...view middle of the document...
Tesco has done lots of work exploring the overseas markets and examined the local competitors before making a decision. Over the decade, while considering about the market condition which was unable to offer them a high profittability and the threat made against them by the supercenter-driven transformation of Wal-Mart, Tesco continuously resisted great opportunities to enter the market through operating chains of convetional large-format supermarkets. Therefore, after researching the U.S. market for more than ten years, Tesco began to reassess its view of U.S. market entry(Michelle & Neil, 2010). Tesco's chief executive, Terry Leahy observed that there are no difficulties in entering the retailing markets, because of which, it wouldn’t bear long-time waiting and trials. You have to launch and go.
After Tesco successfully got into the US market, it aimed at attracting all the main social groups of shoppers. Tesco drew up a plan in how to better run the stores when comparing with the local ones and they came up with innovative improvements in two important ways: the size of their stores and the range of their goods. Tesco first started with opening small convenient stores distributed everywhere so that they would not be exposed to the direct competition with other big supermarkets such as Wal-Mart. And As for products, Tesco offered high-quality prepared foods ( Jardine, Alexandra, 2006) which were widely known as “ready meals” by British customers yet barely exist in large parts of America. Rajiv Lal, of Harvard Business School, has found a fatal weak point of the U.S. market, which is the lack of prepared foods in American supermarkets. According to Rajiv, people in the U.S. cannot live without prepared foods. They can eat them for over three days a week. However, it is absolutely not the case in Britain where most people do not rely on prepared meals. There are even certain ones who can live off ready meals for three weeks( Economist 2007). As it can be concluded, Tesco has reasonably used the loophole in the American retailing market and in the mean time successfully expanded its international business.
As the same case as that in the U.S. market, Tesco had also done enough investigations on the Chinese market for nearly four years before stepping into it. Tesco entered the Chinese market in 2004 and it currently owns 96 supermarkets and 12 express stores in total throughout China(The independent 2011). With the increasing demand of the market, Tesco decided to deliver food to customers by ordering on the internet. According to Chinadaily, at the end of 2011, Tesco coorporated Taobao.com, which is the largest online shopping platform in China, to offer general products for babies and young mothers(Chinadaily 2012). It was also observed that Tesco has been paying more attetion to online shopping as they are trying to gain a stronger position in the retailing industry.
Neil(2006) has indicated that Tesco will not apply the same sort of...