Failure of TESCO in Overseas Market: Cultural, Regulatory and Institutional Factors

GLOBAL BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
QUESTIONS...................................................................................................................................3
Defining to what level can failure of TESCO be attributed to cultural differences between two
nations..........................................................................................................................................3
Explaining to what extent can failure be attributed to regulatory and institutional framework
between the nations......................................................................................................................6
What other forces might have contributed to failure of TESCO in oversees market..................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Global business environment is defined as one of those elements that has encompasses
different types of factors such as external and internal that has driven the sales and profits margin
of many companies above stakeholder’s expectations. Each factor that cover in this term put
direct impact on varied firms, whether it is small or large. It influenced the decision-making,
operational and functional activities of organizations in both positive and negative manner. The
current assignment will be based on TESCO, which falls under the category of leading
supermarkets in the UK. It is one of those multinational companies in the retail industry that has
expanded its venture into varied nations. The study will explain to what extent can failure of
chosen firm be attributed to differences in culture values, and institutional & regulatory concepts
between UK and China. Furthermore, the report will justify what other factors might have
supported to failure of supermarket in the oversees market.
QUESTIONS
Defining to what level can failure of TESCO be attributed to cultural differences between two
nations.
The decisions of the Tesco towards the Chinese market was a failure as this organization
was not able to understand the Chinese consumer. This was due to the failure of this organization
in being able to manage the cultural differences in the consumers of China and UK. The secret
weapon of this organization which was the club card failed very miserably in this organization.
This was a marketing weapon of the organization which brought great success to this company in
UK and some other big countries. However, in China the differences in the culture and values of
the organization was the reason that it effected the organizational operations (Jeon and et.al.,
2020). Many experts argued that Tesco should have looked towards the cultural differences in
the UK and China.
The Tesco's strategy and the cultural value differences between the foreign developing
market was great as it effected the organization to perform and process the consumers. It was not
just Tesco which failed in the Chinese market there were many other organizations which failed
to understand the market of the China. This organization failed to utilize the retail attribute's
theory which clearly suggests the conduction of the comparative analysis of the consumer
interest. The factor which determined the visits of the consumer in China to visit the super

market stores in China was not satisfactory in production of local product, employees and brand
recognition.
The cultural differences between the UK and Chinese customers could be understood
with the help of Hofstede model, in term of considering each of their dimensions that define
clear differences between these to nations and preferences of residents (COUNTRY
COMPARISON, 2020).
Power distance-
Failure of TESCO is attributed to cultural differences in high level, because people in
both nations have different perspectives. For example, China scores high in this dimension,
which means individual person in this nation adopt culture according to that they trust that
inequalities amongst population is acceptable. While in the UK, people may believe that no one
prefer to accept inequalities, they may have aspiration beyond their rank. According to this
difference, organization is unable or deal with key challenges to run venture or setup that in
China.
Individualism-
In the UK and China, individuals follow different culture and conduct their practices
accordingly, which may create issue for TESCO to sustain in new market (What is the Hofstede’s
Cultural Dimensions Theory, 2020). For example, Chinese prefer to follow collectivist culture
that mean they prefer to act in interest of teams or group of peoples. While, UK residents take
preferences to work individually, as it may create problem for company when both nations
employees may work together that provide outcome in term of failure.
Masculinity-
As china and UK scores equal in this dimension of Hofstede's culture differences model,
their residents may work together when organization take approach to enter into China with
existing skilled and talented employees. Chinese and Britishers may sacrifice their leisure, needs
and family just to prioritize their work. According to this scoring, service people may provide
their services until quite late at night. For these types of individuals leisure time is quite essential
as they prefer to work harder.
Uncertainty avoidance -
China scores low in uncertainty avoidance as the key dimension of cultural differences
between both nations, where TESCO may effort to run its venture. The population in the UK and