International Business Expansion Plan: Tesco in France

Desklib provides past papers and solved assignments. This report analyzes Tesco's potential for success in the French market.

1BUSINESS PLAN ON TESCO
International Business
Business Plan on Tesco Supermarket International Setup in France
Student’s ID:
University Name:
Author’s Note:

2BUSINESS PLAN ON TESCO
Table of Contents
1. Introduction............................................................................................................................4
a. International business:........................................................................................................4
b. Overview of TESCO supermarket:....................................................................................4
2. Background analysis..............................................................................................................5
a. Is there a market for Tesco internalisation in France?.......................................................5
b. Brief background of the country hoping to do business....................................................5
c. Culture characteristics of France and Tesco towards the business plan.............................5
d. Contingency plan if in case TESCO does not work in France...........................................5
e. Hofstede’s typology for France’ culture............................................................................6
f. Cage framework..................................................................................................................7
g. External analysis of Tesco international............................................................................8
h. Internal analysis of Tesco supermarket..............................................................................9
i. Competitive advantage for Tesco international and their competitors...............................9
3. Market Selection..................................................................................................................10
a. Concentration vs Diversification......................................................................................10
b. Best Trade Areas..............................................................................................................10
c. Target market definition...................................................................................................10
d. Selection of target market................................................................................................11
e. Demography of the business............................................................................................11
5. Market Entry........................................................................................................................11
a. What is Tesco market entry strategy into this international business and country?.........11
b. What influenced their choosing the method of their market entry?.................................12
c. How does Tesco international select their clients, distributors and partners?..................12
d. What are their negotiating conditions?............................................................................12
5. Operation management in Tesco international....................................................................12

3BUSINESS PLAN ON TESCO
a. 4Ps of marketing...............................................................................................................13
b. Operational requirements of Tesco..................................................................................14
c. Benefits of operations management for supply chain process.........................................14
d. Critical success factors of Tesco international as per Pestle analysis..............................15
e. International growth strategies of Tesco in France..........................................................15
f. KPIs..................................................................................................................................15
6. Product and price strategy....................................................................................................16
a. Product and service selection for target market...............................................................16
b. Standardisation vs. adaptation with pricing strategy........................................................16
7. Communication Strategy......................................................................................................16
a. What is Tesco international brand?..................................................................................16
b. Positioning of Tesco international in target market.........................................................16
c. Communication tools used by Tesco................................................................................17
d. Communication budget....................................................................................................18
8. Business plan........................................................................................................................18
9. Recommendations................................................................................................................18
10. Conclusion..........................................................................................................................19
References................................................................................................................................20

4BUSINESS PLAN ON TESCO
1. Introduction
a. International business:
International business is defined as doing trade of products and services around the world in
various countries. This is facilitated either through controlling the business operations from a
central headquarters or through setting up units of the organisation in operating countries.
Organisations and businesses have been expanding country by country gradually. More the
company is expanded more will be its reputation and dominance in the market. Expanding of
business and organisation to international markets is called as internationalisation of the
organisation. In the following description, the factors that need to be acknowledged regarding
internalisation of business will be discussed in a brief manner. The organisation selected for
this purpose is Tesco private limited company. This will provide better insight into the
concept of international business planning.
b. Overview of TESCO supermarket:
Tesco supermarket is one of the largest supermarkets in the world. It is operated under Tesco
private limited company, which functions in retail industry. Tesco supermarkets are stores,
which include the retail groceries and other few household non-food products. Mainly the
supermarket of Tesco are operated under the company name i.e. Tesco. However, in few of
the latest supermarkets of Tesco use the name as Tesco superstore (Ryu and Simpson, 2011).
There are around 6,553 small and large stores of Tesco spread across the world. Tesco is a
leading name in the retail industry of United Kingdom. The main business of Tesco was
retiling grocery items but gradually, the market and business of Tesco was expanded to other
non-food items (Prange and Verdier, 2011). The international expansion of the business of
Tesco is already actively carried out across almost every continent. Its services and
operations are active in all over the world. Recently, the company has been thinking to
expand its business to some more countries (Knight, 2015). Therefore, there is a need of
considering all possible necessary factors before internationalising the organisation in any
other country, which in this case is France.

5BUSINESS PLAN ON TESCO
2. Background analysis
a. Is there a market for Tesco internalisation in France?
There is no Tesco international in France at present time. However, Tesco expanded its
business in France during 1990s but due to its failure, it was withdrawn from France.
However, there is a scope for Tesco in the market of France and its expansion might not be
that unsuccessful this time (Wood et al. 2016).
b. Brief background of the country hoping to do business
France is one of the constituents of European Union and stands on third position in case of
economy among the other countries of European Union (Pluta-Olearnik, 2011). As per the
statistics of previous year, it was sixth country to have the strongest economy in the world.
The main industries of France include manufacturing sectors, tourism, textiles, food
processing and few more industries (Ryu and Simpson, 2011). As Tesco is a retailing
company and handled food-processing business, there is a mark available for Tesco in
France.
c. Culture characteristics of France and Tesco towards the business plan
Now talking about the culture of France, the culture of France especially Paris is one of the
best culture of the world. According to the data revealed by BBC, the country was positioned
among the four most influencing counties in the world (Diallo, 2012). The positive culture of
France is the outcome of successful historical incidents, forces from foreign and other
external factors and the geography of the country. France has given valuable contribution in
the areas like cinema industry, literature, fashion, science, technology and cuisines
(Ghazinoory et al. 2016). It also has military, economic and political significance in the
world. It was also the heart and core of high culture between the period of 17th and 19th
century.
d. Contingency plan if in case TESCO does not work in France
If Tesco does not work in France, then the contingency plan developed is regarding its
promotion and change in marketing strategy. In the contingency plan, the marketing strategy
will be developed according to the buying pattern of the customers of France (Yüksel, 2012).
This will help in assessing their demands. This will help in serving them with more suitable
products and services.

6BUSINESS PLAN ON TESCO
e. Hofstede’s typology for France’ culture
Figure 1- Hofstede typology
(Source- St2.depositphotos.com, 2019)
The culture of France can be evaluated through Hofstede’s five cultural dimensions, which
are as follows:
Power distance- There is high power distance in France. People belonging to upper class
dominated the people belonging to the lower class (Hofstede, 2011).
Individual vs group orientation- There is individualism among the people and culture of
France.
Uncertainty avoidance- There is high uncertainty avoidance in culture of France. People of
France are very concerned about avoiding any type of uncertainty in their chorus and tasks
(Hofstede, 2011).
Masculinity vs femininity- Both men and women have equal parts to play in the social culture
of France. However, there is anti-feminist mentality in the civil society of France.
Long vs short-term orientation- The culture and society of France is long term oriented.
f. Cage framework
As Tesco international is focusing on internationalisation of its business, it is required to
devise an international, plan and strategy for the company (Sparks, 2011). This can be done

7BUSINESS PLAN ON TESCO
with the help of CAGE framework, which stands for cultural distance, administrative
distance, geographic distance and economic distance.
Figure 2- CAGE framework
(Source- Tesco plc. 2019)
Cultural distance- By moving into another culture i.e. France will create language barrier for
the country. There will be more such impacts on the company, due to which, cultural distance
is high for Tesco.
Administrative distance-The administrative aspects of Tesco international business in France
will be related to changing currency, trading, rules, regulations, and foreign policies of
France (Cavusgil et al. 2014). Therefore, administrative distance is high for Tesco while
moving the business to France.
Geographic distance-The actual physical distance between France and unite kingdom not
much. Therefore, the geographic distance is less for Tesco in this case.
Economic distance- The economy of France stands on sixth position, whereas the economic
ranking of UK is on 5th position. Therefore, both the countries have similar type of economic
value. Thus, the economic distance for Tesco, will be less in this case.

8BUSINESS PLAN ON TESCO
g. External analysis of Tesco international
The external analysis of Tesco international can be performed with the help of PESTLE
analysis.
Factors Description
Political
factors
 If Tesco internationalises to France, then the governmental rules
and regulations of France will have to be complied in the business
operations of Tesco (Ryu and Simpson, 2011).
 Tesco will get affected by the conditions of roads and other
transportation infrastructure of France.
Economic
factors
 As the economy of France is a step behind UK’s economy, Tesco
might pose some effects on its financial sectors.
Social factors  There will be shift of culture and society for Tesco international
while moving into France (Ghazinoory et al. 2016).
 The preference of products sold by Tesco may majorly differ in
France as compare to United Kingdom.
Technological
factors
 The technological factors like digital platform of Tesco will pose
same kind of effect on business of Tesco regardless of its locations
(Yawar et al. 2017).
Legal factors  Laws and regulation of France will have to be followed by Tesco,
while performing business in France.
 The punishments of law violation and criteria for it will be
differing for Tesco international.
Environmental
factors
 Tesco will have to perform its business sustainably in France.
 The sustainability policies of Tesco international will have to be
amended a little according to rules in France.
Table 1: Pestel Analysis
(Source: Learner)
h. Internal analysis of Tesco supermarket
SWOT analysis is used for finding out the strengths and weaknesses of the external
environment of Tesco supermarket can be analysed easily. Along with strengths and

9BUSINESS PLAN ON TESCO
weaknesses, the threat and opportunities for the company can also be analysed with the help
of SWOT analysis.
Strengths Weaknesses
 Tesco has strong and large brand
portfolio.
 It has dominant position in the
retail industry of United Kingdom
(Yoo et al. 2011).
 Tesco has been recognised for its
excellent quality services and
products.
 High inventory cost due to ineffective
inventory management.
 The company was accused of fraud in
the year 2017.
 Share prices of the company have
been decreasing in the recent time.
Opportunities Threats
 Tesco has the opportunity of growing
its business by offering low costs.
 The company has the opportunity
of developing its business through
its online websites and portals (Reis
et al. 2011).
 Company can perform well during
its initial stage of internalisation in
France by offering higher
discounts.
 The company has threat from its
rivals like Lidl, which is also top
grosser in French market.
 The devaluation of currency may
create negative impact on the business
in France.
 Tesco will have to face pricing
competition if internationalised in
France.
Table.2- SWOT analysis
(Source- learner)
i. Competitive advantage for Tesco international and their competitors
Tesco will face competitors from several new and some existing rivals in the market.
Competitors like Aldi and Lidl will be a great competition for Tesco. Besides, there are some
other rivals present in the market of France like Euronics, Systeme U and Leroy Merlin
(Schaltegger and Burritt, 2014). Tesco has a great brand portfolio, which will be one of the
great competitive advantages for the company during its internationalisation in France. Other

10BUSINESS PLAN ON TESCO
competitive advantages for Tesco will be its highly updated technologies and gadgets. These
will help the company in performing their operations in much better ways as compared to its
most of the rivals in France (Leuschner et al. 2013).
3. Market Selection
a. Concentration vs Diversification
When a product has high ability and potential to grow, then concentration strategy is used by
companies. Bananas, corned beef and fresh beef are some of the most popular products of
Tesco. The company can use vertical growth strategy to gain a strong competitive
environment in France. Diversification strategy is used when the company has gained much
reputation and experience in the market (Hautz et al., 2013). This strategy should be used by
Tesco after the concentration strategy, as the company becomes aware of the vertical and
horizontal concentration strategy. Concentric diversification enables the company to focus on
the features that it had gained in the market of UK.
b. Best Trade Areas
An area from which a community or a company generates maximum of its customers is
called the best trade area for a company. Tesco has a large chain of supermarkets, superstores
and hypermarket all over Europe. It operates in more than 12 countries and 476,000
employees at these stores. The majority of customers of Tesco are from the United Kingdom.
The aim of Tesco at France should be to meet the high demand of customers and should be
able to combine the advantages of digital technology to its physical stores.
c. Target market definition
According to Morgan (2012), target market is the segment of particular market in which a
marketing campaign is focused. This involves the process of identifying the most profitable
areas in a market to launch its new products and services to the customers. The strategy of
target marketing consists of segmentation of market and choosing which segment is
appropriate for the new products and resolution of products that will be offered in those
segments (Sparks, 2011). Tesco should use this strategy to launch their new products in the
French market. The company should target a particular group of customers to buy their
products and gain feedback from them.

11BUSINESS PLAN ON TESCO
d. Selection of target market
The group of individuals who have similar needs, interests and understanding, should be the
target market of any company. Tesco should understand the lifestyle of people, highest age
group, and income of their consumers, education and occupation, dominant gender, social
status of their customers for the selection of target market (Sparks, 2011). The company
should create a group of individuals with similar interests and manufacture their products as
per the requirement. An individual of age 50 has different interest and want different products
than that of 20 years old (Sparks, 2011). At the starting, the company shall need to face many
difficulties, but if once it becomes capable to handle the market, the company could easily
gain high profits.
e. Demography of the business
The customers of Tesco are generally, the middle-class people with average income. The
customers belonging to the age group of 25-34 are the people, who are interested in the
products offered by the company. The company in France should also focus on this age group
to get better outcomes. The Paris winter sale is famous all over the world, where customers
shop with a high discount. The sales of the company can easily rise by offering discounts to
the customers (Miečinskienė et al. 2014). The company should perform a survey describing
the interests of the customers, which will help with the demographics of the nation,
5. Market Entry
a. What is Tesco market entry strategy into this international business and country?
The company started expanding its business to other countries of Europe in 1995. The firm
encourages the employment of females at senior position. The recession period made the
company to lose its customers largely, but after that the quality, pricing techniques and
expansion of stores helped the company to retrain its position. The company plans to open
small convenience stores, which would change the habit of getting healthy groceries and
becoming more health conscious (Gaudio, 2013). The strategy of Tesco, which it used in US
to attract more customers by opening these small stores is that, they want their customers not
to drive far and find convenience to these stores. Tesco has a great competitor in France,
which is Auchan. The pricing strategy of the company should be reasonable. The company
should provide a large variety of fruits and vegetables, which many of the stores are not able
to provide.

12BUSINESS PLAN ON TESCO
b. What influenced their choosing the method of their market entry?
Market entry strategy is essential for a company, entering a new market. It acts as a tool to
clarify the aim of company. The clear goal of Tesco to provide good quality of groceries all
around the world influences the company to expand its market. The company uses the native
companies to establish itself and then gain profits. The competitor of Tesco in France has a
great reputation and the company is expanded to over 15 countries. As the company is in UK,
it needs to be more customers focused, provide its goods and services at a lower price and
gain brand value (Hudák et al. 2017).
c. How does Tesco international select their clients, distributors and partners?
The supply chain of the company is continuously increasing and helping the customers to
satisfy their needs. The suppliers of the company have major control on the market and they
are organized well. Manufacturers need to supply their products directly to the distribution
centres rather than the stores (Hudák et al. 2017). The clients of Tesco help the company to
gain flexibility and study the myriad ways to enhance their products.
d. What are their negotiating conditions?
Negotiation of big supermarkets with their suppliers and distributors shows the shadiest area
of retailing (Lowe et al. 2012). The suppliers want to tell the price as high as possible, the
distributor wants the most profit and the clients need the product at the cheapest price. Tesco
focuses on their customers rather than any of these. These supermarkets use wide range of
psychological and strategic tactics to withdraw the best price from the manufactures. The
tactics includes, misunderstanding of customers to disturbing the suppliers. Recognition is
required for any type of organization before negotiation (Xie and Allen, 2013). A supplier
always has the fear of losing his business and the company wants to give the least to
suppliers. The power in these suppliers, clients and partners are not divided equally and they
try to negotiate hard to manage those powers.
5. Operation management in Tesco international
Managing the organisational activities and business practices in an organisation for
accomplishing the organisational goals in an efficient manner, is called as operation
management. The operation management is the most crucial part for the success of
organisation (Huo, 2012). The operation management of Tesco can be understood with the
help of the marketing mix tools used by the company.