Business Strategy for Market Expansion

Running head: BUSINESS STRATEGY
BUSINESS STRATEGY
Name of the Student
Name of the University
Author Note

1BUSINESS STRATEGY
Response to P3: Market expansion
Porter’s Five Force Analysis-
o Threat of new entrants- The strategy of entering into a retail business is easy in
comparison to the other major industries but it reflects major challenges in regards
with competing with the existent retail chain in a particular business environment.
New retail business may find it difficult to build contacts for experiencing
profitability in the given market scenario. However, with strong financial backing and
significant resources, new entrants can build a strong customer base after establishing
the brand name. Therefore, the threat of new entrants can be considered as medium.
The threat of new entrants in the retail industry in Brunei can be responded by
growing the brand, Tesco through the use of financial resources and by practicing
strategies with the set values and vision, which is to be valued by the strong base of
customers, communities, the human resource management capabilities and through
the available supplier connection in other regions of Asia (Friedman & Gerstein,
2017).
o Bargaining Power of Buyers- The bargaining power of buyers is usually low in the
retail industry as the prices in the retail businesses are fixed with the number of
brands present as well as the options of the retail chain also plays a major role in
determining the rate of negotiation of the buyers. However, in the system of bulk
buying, the buyer can experience a moderate power of negotiation in the retail
industry. In the region of Brunei, there is only a single departmental store, Hua Ho
Departmental store, which reflects popularity or significance. Therefore, the
bargaining power of buyers is very low. This advantage of having lower bargaining
power of the buyers can be targeted by Tesco by introducing newer product range in
Brunei in accordance with the local popular brands.

2BUSINESS STRATEGY
o Bargaining Power of Suppliers- The bargaining power of suppliers is low to moderate
in retail industry as there are numerous suppliers ready to serve the big brands in retail
business (Grant, 2015). However, the suppliers can exert pressure in the new entrants
due to the lack of contacts in the market. The supplier can be a threat with the strategy
of forward integration. The brand, Tesco will have to build a similar strong network
of supplier in Brunei as in United Kingdom for becoming significant in the
international market. The financial resources and the capability of managing human
resources through the application of values and fair principles in the business, Tesco
can respond to this challenge of moderate rate of bargaining power by suppliers.
o Threat of substitutes- The retail industry in general reflects a wide range of substitute
due to the large number of small and big businesses selling the same brands as the
retail chains. Retail chains comprise of a range of brands, which can be readily
available in local retail outlets (Grünig & Kühn, 2015). However, Brunei has only a
single major retail chain player, which limits the option of buying variety of products
under a single roof. Therefore, the threat of substitute is low in the retail industry in
Brunei. But the threat of substitutes in regards with the availability of individual
products/brands of the supermarket chain, can be higher for a ‘new entrant’.
o Competitive Rivalry- The competitive rivalry is low to moderate in the region of
Brunei because of the lack of retail chain business. The moderate rate of rivalry in the
retail industry of Brunei can be responded by incorporating the existing competitive
advantage to the newer international market. Tesco can communicate the strategies
adopted for eliminating the carbon footprint of the business activities for positioning
itself like a ‘sustainable and responsible business’ in Brunei.
Tesco can undergo market expansion in Brunei by:
 Introducing new brands, which holds significance for local consumers.