Business Strategy for Market Expansion

This document discusses the business strategy for market expansion, including Porter's Five Forces analysis and strategic plans for Tesco in Brunei. It explores the threat of new entrants, bargaining power of buyers and suppliers, threat of substitutes, and competitive rivalry. The document also provides recommendations for Tesco's market expansion in Brunei, such as introducing new brands, diversification, cost-price leadership, and sustainability practices. It concludes with a strategic plan, SWOT analysis, and action plan for Tesco's entry into the Brunei market.

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BUSINESS STRATEGY
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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.

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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.

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 New product development of diversification can be an appropriate strategy for
facilitating a strong presence in the retail sector of Brunei (Cook, 2017).
 Establishing competitive advantage unique to the other existent players in Brunei, like
zero-carbon supermarket, which is difficult for a supermarket chain with numerous
operational activities (tesco.com, 2019).
 Tesco can adopt cost-price leadership in the new market by utilizing financial backing
and existing capabilities for controlling the operational cost of the business, which can
result in reduced price structures.
 Tesco can utilize the existing contacts in Asia for entering and growing in the retail
sector of Brunei.
 Tesco can utilize its existing strong communication and financial resources for
planning an effective and efficient establishment in the market (Baker, 2016).
 Engaging the local audience by conducting events and activities for the strategy of
sustainability can co-create the sense of value for both the sides, Tesco and local
consumers of Brunei.
 The vision of being the most valued brand by the involvement of loyal staff, strong
consumer base and communities can be applied by adapting strategies in accordance
with the policies and value of Brunei.
 Tesco can undergo a comprehensive market research for understanding the consumer
demand and preferences and the human resource availability for restructuring the
management style for the new market.

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Response to P4: Strategic Plan
The strategic plan of Tesco for entering into the newer market, can be aimed at the following
strategies:
 Diversification strategy- The diversification strategy can be implemented by
understanding the market demand and consumer preferences of Brunei. The
diversification for Tesco can be the incorporation of store theme for unique customer
experience in different Tesco supermarkets (Goworek, McGoldrick & McGoldrick,
2015). The theme should be based upon an efficient and effective staff engagement in
association with the incorporation of local specialities in the Tesco stores, in
accordance with different regions of Brunei (Hitt, Li & Xu, 2016).
 Differentiation strategy- Tesco can adopt differentiation strategy by incorporating the
practice of sustainability in the new markets of Brunei. Tesco has proved to be a
sustainable brand, which has successfully eliminated the activities causing carbon
footprint by restructuring the operational process. Sustainability practices can be
facilitated through the existing control system and by the process of backward
integration (Hanson et al., 2016). Backward integration will allow Tesco to have the
operational freedom, will respond to the potential challenge from bargaining power of
supplier and will help with aligning company’s values with internal process.
 Cost-price leadership- Tesco already enjoys a competitive advantage from cost-price
leadership by controlling operational activities through competitive pricing and
effective supplier selection (Morschett, Schramm-Klein & Zentes, 2015).
Strategic Plan:
 Mission statement and vision statement- The mission statement of Tesco for the
strategy of market expansion can be, ‘To achieve a significant strategic position in

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the retail sector of Brunei by creating value for consumers, shareholders, employees
and the community’.
 Core values- The core values of Tesco will be similar to its original values of
sustainability, effective consumer experience, fair and inclusive staff policies and
shareholder profit. The core values of Tesco is majorly concentrated of becoming a
socially responsible retailer in the local or international market.
 SWOT analysis-
Strengths
 Diversified stores
 High brand value
 Wide reach
 Cost-price leadership in existing markets
 Innovation and technological implementation
 Financial resources and efficient human resources
 Effective system for supply chain network (Derwik & Hellström, 2017).
Weakness
 In the year 2018, Tesco experienced a decrease in share prices of more than 9
percent which resulted from the decreasing profit rates.
 Low cost strategy of Tesco can backfire the company by building the
perception of ‘low quality products’.
Opportunity-
 Market expansion
 Product and service diversification
 Expanding the reach of online shopping

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Threat
 Increasing rate of competition due to moderate threat from new entrants
 The availability of local products in small stores in Brunei
 The absence of strong supplier network during a new market expansion
 Action plan- The action plan of Tesco should first concentrate on the strategy of
market research for understanding the market of Brunei. Tesco needs to build a strong
network of supplier chain or can undergo backward integration for ensuring efficiency
and low cost of operation. Tesco can incorporate unique customer experience
activities by involving customers in the process of message communication. Tesco
can communicate the values of sustainability like zero-carbon strategy for building a
positive brand image in Brunei (McDONALD, 2016). Lastly, Tesco can adopt the
strategy of business alliance for a wider presence and for building strong contacts.
 Yearly objectives- The yearly objectives of Tesco should concentrate on increasing
the reach, convenience and value of the brand in Brunei. Tesco can aim at establishing
a new store by monitoring the performance of the existing store’s capability of
creating a strong brand value in the community and among customers.
 Long-term goals-
 Significant market share in the retail industry of Brunei
 Customer and staff loyalty by involvement and inclusive policy respectively
 Market reach and supplier connection in the market of Brunei
 Establishing or sourcing facilities for backward integration for few product
offerings like vegetables and fruits.

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References:
Baker, M. J. (2016). What is marketing? In The Marketing Book (pp. 25-42). Routledge.
Cook, S. (2017). Measuring customer service effectiveness. Routledge.
Derwik, P., & Hellström, D. (2017). Competence in supply chain management: a systematic
review. Supply Chain Management: An International Journal, 22(2), 200-218.
Friedman, H. H., & Gerstein, M. (2017). LEADING WITH COMPASSION: THE KEY TO
CHANGING THE ORGANIZATIONAL CULTURE AND ACHIEVING
SUCCESS. Psychosociological Issues in Human Resource Management, 5(1).
Goworek, H., McGoldrick, P. J., & McGoldrick, P. J. (2015). Retail marketing management:
Principles and practice. Pearson Education Limited.
Grant, R. M. (2015). Five Forces of Competition. Wiley Encyclopedia of Management, 1-4.
Grünig, R., & Kühn, R. (2015). Analyzing the relevant industries. In The Strategy Planning
Process (pp. 97-110). Springer, Berlin, Heidelberg.
Hanson, D., Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic management:
Competitiveness and globalisation. Cengage AU.
Hitt, M. A., Li, D., & Xu, K. (2016). International strategy: From local to global and beyond.
Journal of World Business, 51(1), 58-73.
McDONALD, M. A. L. C. O. L. M. (2016). Strategic marketing planning: theory and
practice. In The marketing book (pp. 108-142). Routledge.
Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic international management
(pp. 978-3658078836). Springer.

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tesco.com (2019). Tesco - Supermarkets | Online Groceries, Clubcard & Recipes. [Online]
Retrieved from https://www.tesco.com/