Assessing Tesco's Entry Strategies for Emerging Markets - Report

This report examines Tesco's entry strategies into emerging markets, focusing on the Indian market as a case study. It begins with a research proposal outlining the aims, objectives, and rationale for the study, emphasizing the importance of globalization and market entry strategies for retail firms. The report delves into the concept of globalization, different entry modes (foreign direct investment, joint ventures, mergers & acquisitions), and the benefits and challenges associated with each. A PESTEL analysis is employed to assess the macro-environmental factors influencing Tesco's entry into the Indian market. The research utilizes both primary and secondary research methodologies, including a Gantt chart for project timeline. The report concludes with recommendations for Tesco, reflecting on alternative research methodologies and providing a comprehensive overview of the subject matter.

Research Project

Abstract
The present report is based on Tesco, one of the leading global sector retail firm of UK. Report
will shed light on the concept of globalisation and how it is useful for Tesco in understanding the
emerging market needs and trends. It will provide a deep insight about the mode which is
available for taking entry into the emerging markets by taking into consideration all the macro
environmental factors with the help of PESTEL analysis.

TABLE OF CONTENTS
TABLE OF CONTENTS..............................................................................................................2
LO 1.................................................................................................................................................3
P1. Preparing research proposal..................................................................................................3
Background of the study..............................................................................................................3
Research aim and objectives........................................................................................................3
Rationale of the study..................................................................................................................4
Significance of the study.............................................................................................................4
Literature review..........................................................................................................................5
Theme 1: Overview of globalization...........................................................................................5
Theme 2: Different entry modes associated with globalization..................................................5
Research methodology.................................................................................................................7
Gantt chart / Timeline..................................................................................................................8
P2. Research methodology........................................................................................................10
LO 2...............................................................................................................................................13
P3.Conducting primary & secondary research project considering costs, access & ethical
issues..........................................................................................................................................13
P4. Data analysis and findings...................................................................................................14
LO 3...............................................................................................................................................20
P5...............................................................................................................................................20
Enclosed in PPT.........................................................................................................................20
Conclusion.................................................................................................................................20
Recommendations......................................................................................................................21
LO 4...............................................................................................................................................22

P6. Reflection............................................................................................................................22
P7. Alternative research methodology.......................................................................................22
REFERENCES..............................................................................................................................24

LO 1
P1. Preparing research proposal
Topic: To assess entry strategies that can be employed by UK retail sector firms for entering in
emerging market: A study on Tesco
Background of the study
Entering the emerging market with a strategy can help companies in acquiring the current
market & business opportunities, competitive advantage. For a company who is thinking of
entering into emerging market, a proper market entry strategy should be formulated and designed
in line with the business goals and objectives. A market entry strategy is considered as the
distribution plan and method of delivering company's goods or services to the new target
customers and market as well. Before entering into market and developing of market strategies it
is very important to make a detailed analysis of the present market competitors and its possible
customers. A company entering into new market should make a deep study on the current market
trends, customers demand, preferences and buying behaviour, government policies and business
plans & strategies as followed by the competitors firms in growing and sustaining in the
competitive world seeking competitive advantages. The study here is based on Tesco, which is a
British multinational groceries and general merchandise retailer store. Tesco was founded by
Jack Cohen in the year 1919 as group of market stalls. Tesco deals in wide range of products and
services such as books retailing, clothing, electronics, petrol, software, financial and internet
services, telecoms. Tesco is the third and ninth largest retailer in the world when measured in
terms of gross revenues and revenues concept. Globalization is defined as a process of
interacting of one country economy with the economy of the world. Globalisation has lead to
increase in entry in new emerging market (Cassia and Magno, 2015). Foreign direct investment
is defined as a process of investment undertaken by any business firm or individual because of
interest in business operations located in other country. It comes with ownership or controlling
interest in foreign company. The research project will define strategies of making entry into the
emerging market by UK retail sector. Also, report will define about research methodology and
research philosophy used along data collection & analysing method for completing this project.
Research aim and objectives
Aim:

The aim behind imitating current study is to assess entry strategies that can be employed
by Tesco for entering in emerging market (India).
Objectives
 To assess the trend of globalization.
 To evaluate benefits associated with the aspect of globalization.
 To identify entry mode which assist Tesco in entering in emerging market like India.
 To recommend strategies to Tesco in relation to attaining benefits from strategy such as
globalization.
Rationale of the study
The reason behind conducting such study on entry strategies in the emerging market is to
assist companies like Tesco in making easy and cost effective entry in the foreign market. With
the help of such research study company can assess the mode of entry which is considered as the
best suitable means for making entry in foreign market. With the increase in globalisation factor,
more companies are encouraged to carry on their businesses across the global market so as to
gain more competitive advantage and profit (Giachetti, 2016). Through the thematic analysis of
entry strategies in emerging market as employed by most of UK companies such as Tesco, it can
be easily assessed that which entry mode will be beneficial for company in short as well as long
run. This research project will shed light on the benefits of entering into global market and what
challenges it has to face in competitive world to survive.
Significance of the study
After conducting the research study related to the entry strategies in the new emerging
market it can be assessed that it has provided significant benefits to the company such as Tesco
as well as the scholars in conducting their own activities. It has help company such as Tesco in
formulating various effective and efficient business plans and strategies which assist in smooth
functioning of business in making entry into the foreign markets. Company can design its
investment and financial decision process with the help of information provided in the study.
This can helps in elimination of risk factor associated with entry in emerging market. Further
more, the study will also support scholars and researchers in completing their research project

and study. Scholars can get brief summary from the research project for conducting hypothesis
and other research activities.
Literature review
Theme 1: Overview of globalization
As per Dau and et.al., (2017), globalisation in simple terms means integration of one
country's economy with the world economy. It is considered as an economic process which
involves integration as well as interaction among the companies, people, and government across
the world. Integration also involves goods, products, services, technology, economic resources,
capital resources and data. Thus, globalization is also involves the extension of social and
commercial relationship across the world economy. Globalization has increased because of the
factors such as improvement and advancement of the transportation and communication
technology which has lead to the growth of international trade, processes, ideas, and business
culture in the companies such as Tesco.
On the contradictory part Nikolova, Rodionov and Afanasyeva, (2017), argued that by
bringing globalisation in the economy, it is creating threat to the agriculture sector industry for
most of the developing and underdeveloped countries across the whole world. Djelic and Quack,
(2018), evaluates that because of globalisation process in the long run period has lead to the
increase in business trade and operations as a result of which the employment generation
opportunities has also increased for the public at large all over the countries which are involved
in this.
Stearns, (2016), identifies that globalisation has affected the world economy by inflation
caused in the market economy. The increase in the demand factor for necessities such as food,
water and energy etc. has lead to a sudden rise in the prices of various commodities making them
very expensive. The inflation in the food prices has affect millions of the world population which
are generally poor people at high risk. On this Cygler and et.al., (2018), said that, because of the
competitive pressures created on many companies such as Tesco in the world economy it has
provided improvements in the corporate as well as financial governance, provides better
protection to the labour class, increased awareness among consumers related to factors such as
income inequalities, climatic changes etc.

Theme 2: Different entry modes associated with globalization
Gorostidi - Martinez and Zhao, (2017), assess that the mode of entering in the emerging
market is influenced by a number of different internal as well as external factors such as type of
industry, government plans and policies, infrastructure conditions & facilities etc. Company such
as Tesco while entering into new market with new product launch should focus or considers
factors such as the current market trends and need, persisting level of competition, the
uniqueness of the product to be launched and attractive price value. The entry mode into new
market can be done through various options such as foreign direct investment, joint venture,
merger & acquisitions etc.
As per Meschi, Phan and Wassmer, (2016), Joint venture is the business entity which is
created by two or more parties having characteristics of shared ownership, returns and risk factor
and governance. Companies such as Tesco pursue joint ventures for following reasons such as
for accessing new market & emerging markets, for gaining efficiencies of scale by combining all
the business assets and operations, to share risk bearing factors of investments or projects, to
determine skills and capabilities. On this view point Bertrand and et.al., (2016), said that Joint
venture is a costly mode of entry for companies sometime. The aim of joint ventures is to
develop shared resources but companies emphasizes on development and protection its own
proprietary resources which brings management conflict.
Paul and Benito, (2018), also monitors that Foreign direct investment is another mode of
entering into the foreign market. Foreign direct investment is a process of making investment
either directly or indirectly with the help of Financial Institutions. It can be done by making
purchase of shares, property or any assets of the company. It is an investment strategy in the
form of making a control ownership in the business operations in one country economy by
another company such as Tesco in another country. The extent of foreign direct investment
allowed in a particular country depends on the government regulations and guidelines of the
same country in which investment is made. It is considered as the easiest mode of entry as
modification can be made at any point of time as per the conditions and opportunities prevailing
in the economy. On the other hand Zhang, Zhao and Ge, (2016), argued that making of foreign
direct investment will give low rate of return to company.
Lebedev and et.al., (2015), also identifies that Merger and Acquisitions can be one of the
way of making entry in the new emerging market. As with merger and acquisition provides quick

access to international market along with high market power with capturing competitive
advantages, acquiring new & better technology. It also helps in reducing the level of competition
for the company. On the contradictory part Xie and Li, (2017), said that merger and acquisition
adopted as entry mode in emerging new market brings cultural clash in the companies, which can
lead to failure. Sometimes when diverse product or service lines are brings together through the
process of acquisition, it can lead to issues or difficulties in the management of company's
business resources and operational competency.
As per the views of Bende - Nabende, (2018), Foreign direct investment provides huge
benefit from the perspective of company in form of access to the global market, resources,
technology as well as business processes. This also supports company in reducing the overall
cost of production of business and provides ease to deal with market fluctuation and competition.
On the other hand Donghui and et.al., (2018), argued that economy of any country is unstable
and unpredictable as it gets affected by market fluctuations very easily. Unstable political
systems can create negative impact on the performance of company as well. Also, one of
disadvantage of foreign direct investment is legal system of country in which investment is to
made.
Theme 3: Macro environmental analysis of Tesco
Song, Sun and Jin, (2017), PESTEL analysis provides detail about all the operating
challenges faced by Tesco Plc in the prevailing macro environment other than competitive
forces. PESTLE analysis of Indian (Bangladesh) retail industry is as follows:
Political Factors: Policies and regulations made by Indian government are changing
continuously. This in turn imposes threat in the front of company as changes need to be done in
current framework accordingly. However, FDI related policies will support the operations of
Tesco in the country like India.
Economic Factors – These factors mostly affects the leverage costs, demand, profits and
prices. Tesco should remain aware of changes taking place in the taxation policies or any other
factors thereby affecting the finance accessibility. Economy of India is developing and trying to
recover from the influence of recessionary condition occurred in 2008. Hence, this in turn place
direct as well as negative impact on customer’s purchasing power and thereby company’s
profitability as well.

Social Factors – Social factors such as attitudes, beliefs, values etc. affects the demand
as well as profitability aspect of Tesco. Nowadays customer are becoming more and more health
conscious which has led to change in the quality and development of new range products as per
the consumer demand. In the context of India, large number of customers do not prefer to buy
expensive products or services as they are highly price conscious in nature. Thus, in developing
countries like India (Bangladesh) firm can attain success only when it offers appropriate quality
products at discounted or lower prices.
Technological Factors - The advancements or changes in technology aspects has
provided numerous new opportunities for Tesco by making development and introduction of
online shopping facilities with home delivery, self-service checkout points. In India, now
shopping habits of customers shifted from traditional to online. Thus, by selling products or
services through online store company can maximize both sales and profitability. This has
provided convenience and ease to the customers thereby reducing the cost of labour. Also, Tesco
has make efforts by adopting Carbon footprint method for reducing pollution and saving energy.
Environmental Factors - Tesco has adopted carbon footprint method & committed to
reduce to 50% by the year 2020. Tesco has also made efforts in minimizing waste produced in
their stores by increasing and making customers social conscience. Hence, for attaining success
in emerging market like India Tesco is required to perform business activities in an eco-friendly
manner. Hence, company can attract more customers by laying emphasis on the aspect pertaining
to environment sustainability.
Legislative Factors - Government policies and legislations has directly impacted the
performance of Tesco. In India, for carrying out business operations smoothly Tesco is required
to comply with all the related laws & legislation namely health & safety, employment Act etc.
From the above literature review, it can be concluded that Tesco is one of the retail store
of UK which wants to expand its business operations across the globe because of globalisation
by using foreign direct investment as one of the entry mode and keeping in mind all the macro
environmental factors by way of conducting PESTEL analysis.
SWOT analysis of Tesco with respect to emerging country India
Strengths Weaknesses
 Low cost strategy negatively impact

 Diversified product range
 Superior technological usage
 Effectual supply chain network
profit
 Unavailability of highly skilled
workforce
Opportunities
 Company has opportunity to capture
high market share in India by offering
products at lower or discounted prices
 Further, option of online shopping will
also aid in the profitability and
customer base enhancement of firm.
Threats
 Changing customer’s preferences
 Stiff competition from supermarket
giants
Research methodology Research type: The basis of preparing research project is qualitative because with this the
study topic can be explained better with the use of relevant reasons, opinions, meaning
and motivations. It will also help in providing deeper insight in the problem or issues
coming in making research projects. It further helps in developing various ideas,
hypotheses and methods for conducting quantitative research. The qualitative research
helps researcher in assessing or evaluating feelings, behaviours, thoughts, attitude of
research participants. Research approach and philosophy: The research approach suitable for qualitative
research project is inductive in nature. This inductive approach of research project
provides deep observation and theory related to the data. Research philosophy is of two
types viz. Positivism and Interpretivism. Positivism philosophy deals with existing theory
for developing hypotheses. Data collection is limited and interpretation of data has to be
done in objective manner under this type. The philosophy used in completing research
project is Interpretivism provides better understanding of the research project as it relates

with all the values, ideas and thoughts used for making different interpretation along with
all ethical aspects. Interpretivism philosophy is best suited as it provides detailed
information about given topic. Data collection: The data for this research project is collected from both the primary as
well as secondary sources. Further the data will be collected with the help of secondary
source such as from books, journals, articles, statements etc. Questionnaire will be
prepared for collecting data from the managers of Tesco. Sampling: The method selected is Purposive sampling technique. It is a process of
collecting sample in form of non-probability sample by emphasizing on the
characteristics of the objective of the study as well as the population level. This method
helps in identification, selection and gathering of information relevant for conducting
study. With the help of Purposive sampling technique, 10 managers of Tesco have been
selected for survey.
 Data analysis: The data collected from primary and secondary sources are then analysed
for better understanding and interpretation. Concept of thematic analysis is used in
research project which will be based on different themes. These themes are prepared on
the basis of questionnaire and presented in the form of graphs for better and easy use.
These graphs will aid in decision-making process. Microsoft excel has been used for
making proper presentation as well as interpretation of the data gathered. Tables and
graphs are made for better understanding. All the numerical data are analysed with the
help of spread sheet excel & statistical tools such as mean, median etc.
Gantt chart / Timeline
Timeline
Activities /
weeks
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Research topic
selection
Drafting aims
and objectives
Developing brief
outline
Doing LR by
evaluating books