Tesco's International Market Expansion: Strategies and Challenges

This case study critically assesses Tesco's international expansion strategies, focusing on their ventures in Japan, the US, and India. It examines the factors that led to Tesco's withdrawal from the Japanese market, including fluctuations in economic variables, high competition, unfavorable demographic factors, and the failure of the hypermarket format. The case study also evaluates Tesco's expansion into the US market, highlighting issues such as expensive infrastructure, lack of economies of scale, marketing and strategy issues, and intense price competition. Furthermore, it assesses the attractiveness and challenges of the Indian food retail market to Tesco, considering factors such as a large target audience, increasing disposable income, and less competition. The analysis provides insights into Tesco's international business decisions and the complexities of global market expansion.

ESSAY
(TESCO)

CASE STUDY

INTRODUCTION
Tesco introduced in 1919, London
Hold top position in UK and 3 n the globe
Total 5400 stores 14 markets other than UK.

1. Critically assess those factors that compelled Tesco to withdraw
from the Japanese Market.
• Fluctuations in the economic variables
• High competition
• Unfavorable Demographic factors:
• Lower preference to Western cuisine:
• Failure of hypermarket format
• Limited scope
• Prospective threat of new clicks-and-mortar entrant
• Falling supermarket sales

REASONS TO WITHDRAW FROM JAPANESE MARKET

REASONS TO WITHDRAW FROM JAPANESE MARKET
1.Company failed to meet the
demand of customers
• The customers in Japan are
frequent shoppers.
• The Japanese buyers need wide
choice of offerings
• The target customers in Japan
were suspicious about the
quality of offering in
hypermarkets

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• Market state
• Intense and cut throat
competition.
• Declining market
• Low profitability

TESCO
PERFORMANCE

2 Critically assessment Tesco expansion into the US market
It was identified that company invested into expensive infrastructure
whose only 1/3rd capacity was used.
Due to lack of optimum use of physical resources it was stated that
venture was doomed from outset.
Thus, because of lack of materialization of economies of scale
company was forced to take withdrawal decision from US market.
The entity has to pay £150 million un addition to previous £1bn write
down of capital to leave the loss making US business.

REASON TO ENTER THE US MARKET
The intrinsic factors making the U.S. market fascinating for Tesco
• Size and growth of market.
• Increased market potential in rural areas.

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Intrinsic factors making the US market favourable for entity.
• Brand recognition.
• Effective knowledge of US market through studies etc.
• Good knowledge and experiencein retail industry.
• Creative store format that presnt rivals.
• Efficiency in managing risk