Tesco PLC: International Strategies for Entering the Australian Market

This report delves into Tesco PLC's international management strategies for entering the Australian market. It begins with a market and company analysis, highlighting Tesco's skills and capabilities. The proposed entry mode is a joint venture with an Australian company to facilitate promotion and establish a customer base. The report outlines international strategies for gaining market share, including cooperation with local companies, efficient employee transfer, and effective internal management. It addresses motivation and leadership within cross-cultural teams, emphasizing cultural sensitivity and communication. The multinational structure of Tesco PLC is examined, along with HR recommendations for recruitment, training, and employee motivation. Marketing considerations focus on innovative advertising and product differentiation. The report concludes that Tesco can succeed in the Australian market through strategic joint ventures and sustainable growth initiatives. Desklib provides access to similar solved assignments and study resources for students.

Running Head: International Management
International Management

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Executive summary
Tesco PLC is a retail business involved in supermarket activities. The company is settled in the
UK market. Also Tesco is further aiming to target the Australian market. The first part of the
report includes the market and company analysis, with this analysis the company got to know its
skills and capabilities. Further Tesco company shall enter into the market by forming a joint
venture with another Australian based company. This will automatically initiate promotion for
the company and provide customer base as well. The below mentioned is the extended part of the
report which includes the international strategies which the company shall adopt in order to gain
market share of Australian market as well. It will further provide an overview of the activities
which Tesco shall initiate in the international market to gain competitive edge. Further, the
international strategies and activities of Tesco PLC are discussed below.

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Contents
Executive summary.....................................................................................................................................1
Introduction.................................................................................................................................................2
Synopsis of Part-A........................................................................................................................................2
Entry mode for Tesco in Australian Market.................................................................................................3
International Strategy for Tesco..................................................................................................................4
Motivation and Leadership in Cross-Cultural Teams...................................................................................5
Multinational structure of Tesco PLC...........................................................................................................5
HR Recommendation...................................................................................................................................7
Marketing Consideration.............................................................................................................................7
Conclusion...................................................................................................................................................8
References...................................................................................................................................................9

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Introduction
This assignment is in alignment with the task 1 which included the strategies of Tesco Company
to grow in the international market of Australia. The earlier report provided optimum
information about the market analysis of the company and the environment in which the
company is planning to expand. This task is further in adjoinment to the initial task provide the
entry mode and the strategies with which the company will implement the expansion process.
Tesco PLC is a British multinational company involved in a retail business. The company is
headquartered in the United Kingdom having a huge human resource of around 460,000
employees. Tesco was originated by Jack Cohen in the year 1919; the company is already
conducting their business activities worldwide by managing 6553 stores globally (Tesco, 2014).
Further, with the purpose of growth and expansion the company initiates to introduce their
supermarket activities in Australia. The report includes the activities of the company to expand
their business internationally.
Synopsis of Part-A
From the market analysis of Australia conducted in Part A of the report, the following are the
facts that came into consideration:
 The Australian economy for initiating the activities of the company is strong as the
Australian government is very keen in implementing policies for the benefit of the
localities of the country. Also, due to the existence of financially strong political system
and presence of optimum workforce, the market environment would assist Tesco in
initiating business development (Armstrong, et. al., 2015).

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 Further, talking about the legal environment, the country charges a corporate tax of 30%
on the outsider companies earning revenue in their geographical boundaries. Thus, this
factor can act as a challenge for the company; as Tesco earned high profits resulting to
which, they have to pay high taxes as well. There are many other laws which are to be
complied with the companies entering in Australia, some laws are food safety law,
employment law etc.
 Australia is regarded as the financial hub for the supermarket business, thus the company
will earn ideal growth in the Australian environment. Along with growth, the fact shall be
noted that there are already many supermarket companies prevailing in the market and all
other competitor companies also have captured an adequate market share (Aydin, 2016).
 The cultural environment of the country implies that there is less diversity among people.
The power distance implies that there is less inequality in the country, the individualism
dimension of cultural analysis shows that people prefer concerning about their issues
only, then do not involve in the matter of other people. Masculinity being a moderate
show that the company gets an advantage to earn well, as the major products of the
company includes items which are mainly used by women in household chores
(Cavusgil, et. al., 2014).
Entry mode for Tesco in Australian Market
The best entry mode for the Company Tesco to expand in Australia would be Joint Venture.
Joint Venture is an international strategy under which two businesses pool resources to
accomplish a specific task; it helps a foreign company to capture the local market of other
partner company. Tesco will earn well in the Australian market if they create a joint venture with

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any other Australia based company (Czinkota, & Ronkainen, 2013). There are various benefits
which a joint venture will provide to Tesco which are explained below:
The process will share the risk of Tesco with the other company by coming in a joint venture.
The fact is obvious that entrance in a business involves a huge degree of risk, with this process
the risk will get shared with other company already existing in the Australian industry.
It will get easy for Tesco to enter in the supermarket industry, as the other partner of the joint
venture would already have its business holding in the Australian market (Meiners, Ringleb, &
Edwards, 2014). As the fact is seen as per the cultural analysis of the country, that people and
market are less inclined to know new products coming in the market, due to which it gets
difficult for new companies to survive in the Australian market. Thus with the joint venture, the
company will face fewer difficulties in surviving.
If Tesco choose the market entry of joint venture with other company of similar profile then the
company can receive benefit of economies of scale, as they pool their resources and capabilities
(Morschett, Schramm-Klein, & Zentes, 2015).
International Strategy for Tesco
With the initiation of joint venture strategy the company Tesco can clearly focus on the industry
in which the company has to enter. Choosing the right strategy for the company to expand is not
easy but venture will definitely assist the company in their goal expansion. The company can
further involve into cooperation with other Australian company for carrying its business
activities (Nahavandi, 2016). Partnership with a local company will help Tesco to survive in the
Australian market and eliminate competition. With this effect, the company will get ease in

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purchasing raw material and recruiting human resource within the country only. If the company
aligns its activities with other company which equivalently famous in Australia, then marketing
process of Tesco will initiate automatically.
As Tesco has efficient employees in their outlets of UK, thus the company can transfer their
employees to Australia on a temporary basis so that the company can easily manage the internal
management activities and the new recruits are taught by the senior management of the company
(Papadopoulos, & Heslop, 2014).
Motivation and Leadership in Cross-Cultural Teams
In the process of expansion in another country, the company needs to employ local people.
Further as discussed earlier they also need to transfer some experienced employees from their old
outlet to new organization so that they can manage the business activities efficiently. Thus, they
need to manage them by communicating efficiently with the workforce. Firstly the management
needs to understand the cultural sensitivity present in people, coming from the different culture
the expatriates feel left alone in the organizational culture. This results in degradation in the
growth of organization. Thus, Tesco shall implement group activities so as to initiate efficient
communication further in order to lead the management shall effectively monitor the activities of
employees and they shall make them understands the vision of the organization so that they work
accordingly (Samaha, Beck, & Palmatier, 2014). An ideal leader is one who understands the
vision and missions the organization and initiates their workforce to work accordingly so that
personal along with professional objective is fulfilled.

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Multinational structure of Tesco PLC
(Source: Org Chart, 2017)
Tesco being a multinational company already has an efficient multinational organizational
structure. As the company is retail departmental business so the organizational structure of the
company is simple and efficient and effective as well. Tesco follows the hierarchical structure of
an organization, the structure s further segregated in divisions which ensure that the work is
circulated properly. The decentralized system of management helps the organization work in an
effective manner as they now receive authority along with responsibility. The group at the top of
the management holds maximum responsibility and authority. All other people are accountable
to the top level of management. The board of directors of Tesco includes 10 members which
include non-executive as well as executive directors (Org Chart, 2017). The business scope of
the company is overlooked with the organizational structure chart, and the chart of the
companies signifies an optimum growth in the international market.

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(Source: Org Chart, 2017)
The above-mentioned chart is the organizational structure chart of the store. It shows that there
are four levels of the management process, thus activities like bureaucracy and red tape are
reduced. Managers of different stores are segregated resulting to which collaborative politics is
not present in the organizational culture.
HR Recommendation
It is the duty of a human resource manager to initiate recruitment and selection process and then
train the employees to achieve the organizational objective. They need to drive the focus of
employees towards achievements of corporate goal. They shall take care of the interest of
employees along with expatriates and motivate them so that their personal goal is also fulfilled.
As they are settling in the international market, due to which the company shall take care of the
culture of both the countries and then act accordingly (Samaha, Beck, & Palmatier, 2014).

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Marketing Consideration
In order to capture the market share, Tesco needs to advertise their product through innovative
means so that people get attracted towards the brand and initiate to purchase the product. As
there is cut-throat competition in the market due to which the company needs to create product
differentiation so that the customer shift to buy their products. Further with the aid of joint
venture, they shall aim to adopt the Australian culture and then work accordingly for better
performance (Turnbull, & Valla, 2013).
Conclusion
Thus, in the limelight of aforementioned events, the facts that shall be considered are the
company Tesco can easily prevail and succeed in the Australian market. Furthermore, the
supermarket industry of Australia has numerous competitors existing in the market, so in order to
create a brand image, the company needs to initiate joint venture so that sustainable growth is
implemented.

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References
Armstrong, G., Kotler, P., Harker, M., & Brennan, R. (2015). Marketing: an introduction.
Pearson Education.
Aydin, R. (2016). An integrated marketing and engineering approach to product line design with
consideration of remanufactured products (Doctoral dissertation, The Hong Kong
Polytechnic University).
Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L. (2014).
International business. Pearson Australia.
Czinkota, M. R., & Ronkainen, I. A. (2013). International marketing. Cengage Learning.
Meiners, R. E., Ringleb, A. H., & Edwards, F. L. (2014). The legal environment of business.
Cengage Learning.
Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic international management.
Springer.
Nahavandi, A. (2016). The Art and Science of Leadership -Global Edition. Pearson.
Org Chart., (2017). tesco company organisational structure chart example. Viewed on
September 13, 2017 from < http://www.orgcharting.com/tesco-company-organisational-
structure-chart-example/>
Papadopoulos, N., & Heslop, L. A. (2014). Product-country images: Impact and role in
international marketing. Routledge.

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Samaha, S. A., Beck, J. T., & Palmatier, R. W. (2014). The role of culture in international
relationship marketing. Journal of Marketing, 78(5), 78-98.
Tesco, P. L. C. (2014). Annual report and financial statements 2014. TESCO http://www.
tescoplc. com/media/417/tesco_annual_report_2011. pdf.
Turnbull, P. W., & Valla, J. P. (Eds.). (2013). Strategies for international industrial marketing.
Routledge.