Feasibility of Tesco's Expansion in Mexico

I have about Tesco and
country Mexico

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Background information of Tesco:..............................................................................................3
Discussion of business environment of Tesco in relation to Mexico:.........................................4
Analysis of business scenario:.....................................................................................................6
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Tesco is a public limited company that is headquartered in United Kingdom. It was
founded in 1919 by Jack Cohen and operates in retailing sector. Main products of this
organization are Supermarket, Hypermarket, Superstore, and Convenience shop (Barkin, 2019).
Tesco is planning to expand its operations in Mexico with the motive of having broader audience
and increment in customer base. The objective of this report is to evaluate the feasibility of this
expansion. Pestle and porter’s 5 forces model are analytical tools that are used in this report for
analysing the strategical planning of expansion in Mexico. Former, aims at studying macro
environment and its impact on business operations while later, evaluates competitive
environment of firm and its influence on profitability of business. This analytical tool determines
effectiveness of organization to grab available opportunities and hinder possible threat for
smooth and efficient functioning of business.
MAIN BODY
Background information of Tesco:
Tesco was established in 1919 and founder of an organization was Jack Cohen. This firm
consists its operations in retailing sector. It is headquartered in London, England, UK. The entity
is a public limited company with market share of 26.9 percent. It has diversified operations in
various areas such as, retailing of electronics, books, furniture, clothing, telecoms, software,
financial services, and toys. This firm operates internationally and key areas in which it serves
are United Kingdom, South Korea, India, Ireland, Czech Republic, Hungary and Slovakia. Major
competitors of Tesco are Asda, Sainsbury’s, Morrison’s, Walmart, Aldi, and Lidl. While
considering market structure, it can be stated that Tesco has Oligopoly market structure because
it has operations in international market and requires huge investment hence, has contains high
entry and exit barriers (Chernopyatov, and et.al., 2018). Pull strategy is adopted by this
organization and invests highly on branding and promotion to encourage customer attractiveness.
On evaluation of financial performance of Tesco, it can be analysed that its revenue is £55917
million, £57491 million, and £63911 million in 2017, 2018, and 2019. Along with, loss of £54
and profit of £992 and £1320 in 2018 and 2019. Organization is considered as ninth largest entity
in world while measuring in terms of revenue. It has earning per share of (0.49), 14.77 and 13.65

in 2017, 2018 and 2020. While projecting performance of Tesco it can be estimated that, firm is
expected to increase its sales and distribution activities in upcoming year.
Discussion of business environment of Tesco in relation to Mexico:
Business environment consists of external and internal factors that influence functioning
and performance of company. Hence, evaluation of these factors is vital for enabling effective
decision-making power of managers and owners of business so that they can formulate efficient
strategy for increment of scope and position of business (Cockayne, and et.al., 2018). Tesco
needs to evaluate and study business environment of Mexico for analysing risk factor associated
with expansion of its business operations in the country. Mexico is situated in southern portion of
North America. Macro environment of Mexico can be studied by application of Pestle analysis.
Acronym PESTLE indicates Political, Economic, Social, Technological, egal and Environmental
factors of external forces. It is an effective framework that studies external environment of
business to evaluate its growth and expansion opportunities and identify as well as reduce
chances of risk or threats.
Factors of Pestle analysis for the purpose of evaluating business environment of Mexico for
identifying opportunities and threats of business expansion by Tesco is discussed below:
 Political factors: This includes factors such as, fiscal policies, trade policies, political
stability, trade tariffs, monetary policies, taxation policies etc. analysis of political
situation of Mexico states that it has good relations of trade with most of the countries
such as USA, UK etc. which provides opportunity to Tesco for operating effectively in
Mexican market without much trade related issues. Even it has neutral international
conflicts that smoothens functioning of multinational company in the country. On the
contrary, while focusing on the threats it can be analysed that political corruption is
increasing among country. With intention of persona benefit political leaders are
preferring bribes which is affecting profitability and performance of both local and
international firms (Duarte, and et.al., 2019, August).
 Economic factors: It covers employment rate, inflation rate, deflation rate, foreign
exchange rate, labour laws, consumer disposal income, gross domestic product, foreign
direct investment etc. Mexico has high poverty rate and unemployment rate which
ultimately reduces disposal income of population and hence, serves as a threat to Tesco.
In addition to it, increasing interest rate is also a threat. While on the contrary, country