Strategic Analysis: Tesco's Global Expansion into the Japanese Market

This report provides a comprehensive analysis of Tesco's global strategy development for entering the Japanese market. It examines various factors such as factor endowments, firm structure, strategy, rivalry, and demand conditions using Porter's Diamond model. The report highlights the importance of understanding Japan's unique geographic and climatic challenges, technological advancements, and education system. It also discusses Tesco's management ideology, organizational structure, and the role of domestic rivalry in fostering competitiveness. Furthermore, the analysis delves into the demand conditions in the UK economy for Tesco's products and services, emphasizing the company's competitive advantage through quality and reasonable pricing. The report concludes that Tesco's success in Japan hinges on its ability to adapt to local market demands, leverage technological advancements, and maintain a competitive edge through innovation and quality service.

Global Strategy
Development

Table of Contents
INTRODUCTION...........................................................................................................................1
1) Factor Endowments ....................................................................................................................1
2) Firm structure, strategy and Rivalry............................................................................................2
3) Demand Conditions.....................................................................................................................4
4) Related & Supporting Industries.................................................................................................5
Analysis...........................................................................................................................................7
REFERRENCES ..........................................................................................................................9

INTRODUCTION
Global strategy development has been defined in the manner that it focuses on defining
the strategy, focuses on the process of strategy formulation and also explains about the role of
senior management within that process. The chosen company is TESCO. The company mainly
belongs to the tertiary sector. The company's annual revenue amounted to almost 53 billion
British pounds in the United Kingdom and the Republic of Ireland. TESCO currently mainly
operates in 13 countries. (Rindzeviciute, E., 2015).In the company, there are around 420,000
people approximately are working currently in the worldwide. The chosen country is Japan
where the company neds to take so that it can expand themselves in that particular country also.
1) Factor Endowments
A factor endowment which shows that for the purpose of manufacturing, how many
resources are there at its disposal which has been used for this purpose. It can be land, labour,
money and entrepreneurship. The basic factor endowments which includes are the natural
resources, infrastructure, skilled labour, communications, geographic location, demographics,
climate, technology, education. TESCO is basically involved in the retailing of books, clothing,
electronics, furniture etc. So the natural resources factor does not affect the working of TESCO
company because it does not relate to the production purpose but its the main function is that
they have to provide services with respect to the retailing of particular sectors.
Japan is already a technically advance country so its easier for the country to provide
infrastructure to the TESCO company. (Srivastava, A. K., 2017). Although the company has
started their business into the online form so it does not need major terms of support with respect
to the infrastructure. Under the TESCO company, the people who are working for the company
are already smart and enough to handle the pressure in terms of giving the services to their
customers. The labour should be comfortable in working in the collaborative manner. So
according to this particular factor the labour is fully skilled in terms of working that's why they
truly support the company while working in the Japan country.
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When the culture of the company is so supportive and they have to work within the team then its
the natural thing that the communication among the employees of the company is very good. In
terms of the geographic location of the country it is the island country in East Asia.
The country is in terms of nature is mostly mountainous and rugged due to which
frequent earthquakes, tsunami and volcanoes has came on the frequent basis.(Bosch-Bayard, and
et.al., 2016).For establishing themselves in that country or opening the store then they have to
think twice about this matter. For operating in this country they can give their services through
the online mode also. According to the latest data of population of Japan there are 59% people
who is in the age group of 15 to 64 years. And the services provided by the TESCO company,
they majorly takes interest in that. Although the company need to do the deep study in terms of
understanding the culture of Japan so that they can also earn larger profits from this particular
country.
The climate of Japan country is mostly temperate in terms of nature. In the northern area, the
winter remains very prominent, temperate in the central regions and tropical on the southern
islands. In every area the rains are abundant in terms of nature and in the summer and autumn
season the country is mostly hit by typhoon and torrential rains. So for operating in the Japan
country, they have to think in a strategic manner because the weather of that country is not very
consistent and due to situated on the island they have to face natural calamities on the frequent
basis.
So climate somewhere creates hindrance in the working of the company. In terms of technology
the country is very advanced so for making amendments in the way of providing services to the
Japan country people they can support the TESCO company for making their way of working
more smoother, easier and effective in nature. (Mbalyohere, C. and Lawton, T. C., 2018). The
education system of Japan country is very advanced and also very good in terms of checking it.
From the school it has been infused into the children that how they have to work within the team
and how to use their time into the effective manner. That's why the country's businesses are very
advanced as well as very technical in terms of nature. Due to which there is a larger possibility
of accepting the services of the TESCO company because they have the basic understanding of
analysing the things from every aspect.
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2) Firm structure, strategy and Rivalry
TESCO company has the long term corporate vision with the focus on that to be the
mostly high valued business to the customers the company has served.
The company also serve to some of the communities in which they provide services. Their focus
is on the corporate strategy is in terms of the successful international retailer. And also want to
become stronger in the non-food sector. Having the long term corporate strategy determines the
success into the positive manner. (Sutter, and et.al., 2015). By focusing and making the target
enables the company to grow into the positive manner with unique ideas and innovation.
Through this type of planning makes a discipline and fair environment within the company due
to which everybody in the team is aware about their defined roles and responsibility. The success
has been determined through by taking smaller steps with respect to the target achievement.
Because with the combination of smaller steps it reaches to the final level of the target. Having
the long term vision also creates the opportunity to add valuable customers into their circle and
somewhere they become permanent customer of the company. For making the business very
highly valuable it important that to focus on the quality of products and services provided by the
company. The quality has been assured by checking all the parameters with respect to the expiry
date of the product and whether the product is in good condition or not.
Management ideology and structure of the company somewhere act as the advantage as well as
the disadvantage for the company. TESCO company's management ideology is based on the
democratic style of leadership which is also known as the participant leadership. This is the trend
in the company that employees voice has been heard on the immediate parameter at the time of
decision making. (Katsikeas, and et.al., 2019). The type of leadership which is followed by the
company motivates the employees and as a result the organisation provides good services to their
customers. By not considering some of the ideas of their employees and not implemented in the
practical manner somewhere hurts the employees. It has happened due to the reason that because
there are lots of ideas but only single idea can be implemented for reaching towards the target.
TESCO follows the hierarchical organisational structure. In this type of structure, positions and
obligation are divided into many parts for ensuring that the work will be done into the efficient
and smoother manner. Due to the division of work in many parts among the different employees
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it has been observed that due to some ego clashes, conflicts has arises. As a result they hurt each
other up to the some extent.
The competitiveness of the company has been improved through the presence of the domestic
rivalry. Until and unless there is no healthy competitor in the market then the company do not
try themselves to stretch up to the higher extent. Because of the presence of domestic rivalry it
has been observed that the urge has been arise within the company to come up with unique ideas
and innovation in the market. Due to presence of domestic rivalry the company creates the
competitive advantage by providing the unique services and products to their customers.
(Stefanska, M. and Nestorowicz, R. eds., 2015). This kind of competition enhances the company
to think continuously about their growth so that they can remain consistently strong in the market
place. And this can only be possible when the company makes changes in their way of working
and execution of task into the different manner. That's why presence of domestic rivalry is very
important for the growth of company.
3) Demand Conditions
Within the UK economy, the products and services provided by the TESCO company is
in terms of retailing of books, clothing, electronics, furniture, toys, petrol, software, financial
services, telecoms and internet services. So according to the Porter's Diamond model, the
competitive advantage has been created by the company by providing the quality services and
products with the reasonable rate. And the TESCO company is unique and different in terms of
providing the services at the lower rate due to which customers attract on the larger scale. And
the competitive advantage has been used by the company at the national level as compared to
other country or another economy. Due to demand of products and services there is a circulation
in the economy has continuously moving due to which the company has to think into the
consistent manner that how to be innovative in terms of strategic manner. As a result, the
company creates competitive advantage due to which competitors also feel the fear to upgrade
themselves according to the period of time. (Jobin, and et.al., 2019).Otherwise, they will loose
the market share at such a large scale in the international market. So nature of the home demand
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of the products and services creates the competitive advantage as well as follows the main
thought of porter's diamond model.
Due to demand in the market and it is specially in the sophisticated manner from the side
of demanding consumers then it forces the company to think into the out of box manner.
TESCO understand the need of their consumers then it will be the great opportunity for the
company to enhance their capabilities. Because different kinds of demand in the market forces
the company to give those kind of services which can match with the choices of their customers.
By launching different kinds of products and services in the market it enhances the capabilities
of the company and reaches to the next higher level as compared to their previous situation.
(Biscop, S., 2016). Having the kind of sophisticated demanding consumers in the market place,
challenges the company to grow themselves otherwise they will loose the market share. In this
manner, they also comes in the category of competitive advantage. In this competitive world,
consumers have lots of options so the company has to be proactive in nature so that on the faster
pace they can fulfil the demand of their consumers. In this way, it has followed the main essence
of the Porter's Diamond model also.
With respect to the porter's model, it has been observed that While TESCO follows the
competitive advantage parameter in the national market as compared to the other country or
economy. It has impacted the demand in terms of quality as well as the innovation. Due to
demand in the market every company has tried in a faster manner with the competitive approach
that they will first serve to their customers. Due to this reason also TESCO company more
focuses on the quality and on the innovative ideas so that they can stand strongly in the market
for the longer period of time. In this it makes the company shifted towards the competitive
advantage criteria. Somewhere it has been observed that for giving the services on the first
number within the market place, some companies compromise on the quality parameter. And
sometimes innovation does not remain very attractive for the customers due to which up to the
some extent the sales of the company also get affected by it. In the overall manner, demand is
one of the strong parameter which leads the company towards the growth of company.
Otherwise, it can also degrade the status of the company by not providing the quality services to
their customers.
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4) Related & Supporting Industries
The presence or absence of supplier industries and related industries that are
internationally competitive plays a very important role in following the essence of Porter's
diamond. (World Health Organization, 2016).TESCO is majorly involved in providing the
retailing services in some sectors to their customers.
The products which has been delivered to their customers is possible through the support system
of their suppliers. So its very important to make good relationship with their suppliers from the
company's perspective. The importance of suppliers needs to be taken into the consideration
way. Because the retail company only runs on the basis of supply of products into the company.
And the suppliers who creates competitive advantage at the international level has the capability
to provide unique products to the company. (Gcaza, N. and Von Solms, R., 2017). That's why its
really important to understand that the suppliers act like a heart for the retail companies. And in
the case of emergency situation if the supplier does not support to the company then it will
degrade the position of the company in the eyes of customers as well as at the international level
also. The presence of supplier always gives the support system to the company in all kinds of
situation. So the company needs to value about the products provided by the suppliers and give
them a thank you gesture for supporting into such a manner. That's why presence of suppliers act
as the key role in terms of internationally competitive nature.
With the support of similar kind of industries which are internationally competitive in nature.
Due to this kind of support company gets experience while meeting to different leaders of the
company. In this way, with the mixture of getting experience of similar industries creates the
opportunity for new kind of idea which makes the company competitive in nature. And also
gives the advantage to grow into the positive manner. At the international level, when industry
gets support from the similar kind of industries then the company gets more power to grow and
perform in a very positive manner beyond the expectations of the customers as well as the
market also. So for becoming competitive advantage at the international level it needs to
understand that the exchange of ideas among the industries gives the capability and urge to
perform more and more better. In this manner, the porter's diamond model has been followed by
the competitive advantage nature of the industry.
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There are four major element of Porter's Diamond which includes the factor endowments,
demand, supporting industries and firm rivalry. The other two additional elements are
government and chance. (Mikkelsen, and et.al., 2015). The success of the TESCO company also
depends on the decision of government. The influence of taxes can be seen on the prices of
products offered by the company.
Somewhere company has to made amendments in their policies according to the decisions given
by the company. Another part is the chance parameter which involves the luck which is also very
important for the success of the business. There are many factors which is out of control
regarding the prosperity of the company. At least they can be monitored so that decisions can be
taken and adopted according to the changing market conditions.
Analysis
Within the post COVID-19 period of time, the factor endowments parameter somewhere
affects in the working of the company. The firm strategy also changes after the post COVID
period of time. (Fura, and et.al., 2017). The TESCO company also again formulate the working
way and strategy of the employees. And the competitors who exist in the market also get reduced
because in the pandemic situation only those businesses can stand in the market who are strong
in terms of nature. Other businesses gets shut down or after the post COVID period of time they
have to establish their businesses again. There are certain demand conditions which is necessary
for the final delivery of products to their customers. It includes the domestic demand, capabilities
of the company which creates new kinds of innovation. There are some demand conditions
which impacts the quality of the product as well as the innovation also. After the post COVID
period of time, there are limited suppliers in the international market due to which its a very
challenging task for the company to provide services within the period of time.
Group of clusters of industries also act as the major role in the market to fulfil the needs of their
customers. (Kienzler, M. and Kowalkowski, C., 2017). After the post COVID-19 period of time,
government and chance parameter plays a very important role for reviving the market conditions
of the companies at the international level. The government has made many amendments
regarding the policy of the economy so that the economy and circulation of money gets balanced
out into the positive manner. TESCO company has adopted various changes in their way of
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working during this pandemic situation and also after the post COVID period of time. The
company has adopted the digital strategy for communicating with their customers and also open
the gate for online shopping. Due to this reason customers do not need to go out of their home
and products get delivered at their home within the prescribed period of time.
The company also takes care about the hygiene conditions and pack the products with the proper
guidelines and in the safer manner also. With the use of digital technology it gives the chance to
the company to operate into different manner. TESCO basically deals in the retailing of different
types of products like toys, books, clothing, food and electronic items. So these kind of items can
be delivered easily to their customers with the facility of online services or home delivery.
Digital technology act as the boon in the world of business.(El Talla, and et.al., 2018). Because it
has saved various kinds of businesses before shutting them down completely. So in the similar
manner, TESCO company performs very well even in the pandemic situation as well as after the
pandemic situation. In this way, company has extend themselves with a new way and grow into
the different manner without the interruption in their services.
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