Internationalization and Market Entry Strategy of Tesco Plc

Individual Report
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Current state of internationalization of the company, countries and market in which Tesco
operates........................................................................................................................................3
Entry mode that company has chosen to internationalize its business........................................4
Company’s firm specific asset along with ownership advantages that it may have....................5
Country’s specific asset along with location advantages that company can have.......................6
Ways of performing in this country by Tesco.............................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11
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INTRODUCTION
International management can be defined as a process and activities of managing business
operations in organization that serve products and operate in more than 1 market (Luthans and
Doh, 2018). This present study is based on Tesco Plc that is well known British multinational
and merchandising retailer, headquartered in England. It was founded in the year of 1919 by Jack
Cohen. This study is going to discuss about internationalization and ways by which companies
can take advantages of external opportunities in new market. It will discuss appropriate mode of
market entry that has been chosen by Tesco along with advantages and reasons. It will also
discuss firm specific asset such as technology and country’s specific asset such as characteristics
of customers and others.
MAIN BODY
Current state of internationalization of the company, countries and market in which Tesco
operates
Internationalization is a process of making something international or it can also be said that all
actions that are being performed by one company for bringing a place under the protection of 2
or more nation (Santangelo and Meyer, 2017). There are several companies in retail sector of the
UK that have expanded their businesses in other countries and internationalize their company.
One o the main examples of this is Tesco Plc. Tesco is British multinational groceries retailer
that has around 6,900 shops. It has supermarkets, hypermarkets, superstores and convenience
shops. In regards to internationalization it is stated that Tesco has expanded its business outside
the UK and to around 11 countries. It expanded its international operations in Eastern Europe
and currently in Asia for its growth (Success of Tesco’s International Expansion in South Korea
Market, 2014).
South Korea is one of the attractive markets for multinational companies because of improved
economy and several countries’ advantages. Tesco has also made an effective growth in South
Korea. Tesco stated and said that there are several factors that may affect performance and
productivity of the company such as market environment of the country in which company wants
to operate. There are several countries where this company operates such as: Thailand, Poland,
UK, Slovakia, Czech Republic, Malaysia, Hungary, Ireland and others. So, it can be said that it
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has an effective strategy of internationalization that makes it able in becoming successful and
make market entry successful. So, overall it can be said that one of the main strategy such as
joint venture makes it able in internationalization (Luiz, Stringfellow and Jefthas, 2017).
Entry mode that company has chosen to internationalize its business
There are several companies who have entered into new markets but some of them become
successful and rest of them got failed. There are several factors that may affect success and
business expansion such as internal factors, external factors, financial stability, human resources
and others. But one of the main factors that plays a vital role in making market entry successful
is market entry mode or strategy. Selection of market entry after analysing advantages and
disadvantages can make it either successful or failure. It depends on the market where company
wants to entre, financial ability and products that it wants to sell. So, in regards to Tesco Plc it is
found that it mainly focuses on joint venture with local firms, acquisition and Greenfield
investment (The International Strategy of Tesco PLC, 2017). One of the main aims of choosing
these modes of market entry is to become the market leader in the foreign country. By making
use of this strategy it became successful in European countries, in Asia and South Korea.
Joint venture: It is a business arrangement or one of the effective modes of market entry. In this
type, 2 or more than 2 parties agreed to pool their resources for accomplishing common or
specific task (Parameswar, Dhir and Ongsakul, 2018). All parties share markets, asset,
intellectual property, knowledge and profit. There are several advantages of reasons of selecting
this mode as market entry and increasing sales into new market. Some advantages that Tesco has
taken by making use of this mode of market entry include:
 Access to distribution networks and new market.
 Increased capacity.
 Access to new knowledge, capacity, skills and skilled staff that can help in attracting
customers and increasing sales.
 Access to market resources and resources of other company such as technology, finance
and others to the great extent.
Rather than advantages there are some limitations of this entry mode that can be solved out if
company focuses on increasing its own strengths and skills. Some limitations of this market
entry mode include:
 Lack of flexibility or adaptability.
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