Global Business Expansion: A Case Study of Tesco in Hungary

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Business Organisations and Environments in a Global Context
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Table of Contents
Introduction:....................................................................................................................................3
Information on the selected business organisation:.........................................................................4
Analysis of allocated business environment of Tesco:....................................................................5
Application of an appropriate analytical approach:.........................................................................7
Conclusion:....................................................................................................................................11
References:....................................................................................................................................12
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Introduction:
The assessment provides the learning of the organisation and its expansion in the global market
to spread the business and attracts international customers to become strong in the competitive
edge. The report gives the learning of the Tesco Company which is based on the retail business
situated in the United Kingdom. The company plans to expand the business in the global market
through the aid of modification in the operational activities. The report gives the study of the
internal market analysis to help out the company to expand in the global context. Alternatively,
the company entered the global market to become the giant in the competitive market and
imprison the huge market share. The assignment gives a brief knowledge of the internal and
external business environment. Alternatively, the company has various threats and opportunities
which give the impact on business growth.
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Information on the selected business organisation:
Tesco Company is based on the retail business and has various stores in the United Kingdom.
The company have listed in the top 10 organisation in the country of UK in the perspective of the
profit and is the 3rd largest retail chain store worldwide. Tesco founded by Jack Cohen in the year
1919 and the turnover of the company is calculated as 53 pounds in each year. The company is
registered in the London Stock Exchange and the company has also various services such as
Tesco club board, petrol pump, home shopping, Tesco Express and much more. On the other
hand, the company has effective marketing and operation strategies which give aid to develop
the business in the international market (DellaVigna, et. al., 2017). The company takes aid from
the various techniques to develop the business in different countries to reduce the cost and
achieve the profit margin. The company has a huge market value which is helpful to maintain the
goodwill in the market.
Tesco Company has spread the business in Hungary in the past year 1995 to open the retail
stores in that country and provides the online platform to sell the products. The company opened
200 stores in the various place of the country and this is analysed that the company contributes
1% in the economy of the country. On the other hand, the supplier of the Tesco supply the huge
number of products in the UK and the supplied cost of the product is 100 million. The Tesco
have sales of 85% which is accomplished by the aid of local products (Alt, et. al., 2015). The
main aim of the company is to provide quality service to the customers to satisfy their
requirements. The company has the responsibility for the communities which is the main concern
of the goodwill of the Tesco Company.
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Analysis of the allocated business environment of Tesco:
The economic condition of Hungary is quite good and has the freedom score is 66.7 and the
country have the 55 number listed in the freest economies in the worldwide. The economic
condition of the country is enhanced with the help of the political and legal sector. The country
planned to become the market-driven economy which is good for the new business entrance. The
sector taxes and government plays an essential role to attain the goal of the country and enhance
the economy of the country. Hungary has a great market to spread the business which is helpful
to grow the economic condition of the country and increase the opportunities to imprison the
huge market share.
On the other hand, the foreign direct investment (FDI) is helpful to assist the country to achieve
the high gross domestic products in the country (Heritage, 2018). The investment is the main
source to modernize the operations of the country and the developed export rate of the country is
helpful to develop the country on the economic level. The Tesco decide to expand their business
in Hungary so that spread the business like the economy of the country increased.
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(Figure 1: GDP growth rate of Hungary)
(Source: Statista, 2018)
Above mention, graph describes the increment of the continuous gross domestic products in the
Hungary Country and the growth rate of the domestic product is up to 4% which analysed in the
year 2018. The graph shows the constant stage of the economy of Hungary in the concern of
gross domestic product.
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Application of an appropriate analytical approach:
Any business wants a suitable and accurate analytical approach in their business so that manage
the operations of the company in an effective way. The manager of the business should
implement the relevant framework to expand the business in the new market. The macro
environment is helpful to determine the various ranges of activities in the proper manner. There
are various tools and techniques which give aid to analyse the business environment but PESTLE
analysis and Porter’ Five Force Model is the main technique which mentions underneath:
PESTLE Analysis:
 Political environment: The political factor is the main element which plays an essential
role in the business of the Tesco so this is necessary for the manager of the business to identify
the political role of Hungary. The government of the country assists the business venture to
facilitate the exercise in the effectual way (CIPD, 2018). The Tesco is the well known retail
company of the UK which based on the democratic situation of the government. Alternatively,
the government of the country must explore the FDI so that enhance the various range of the
factors in the country. So, Tesco must analyse the environment of the political factor so that
easily deliver the goods and services in the proper way.
 Economical environment: The economic factor is the main thing which affects the
economic condition of the business venture. It is necessary to facilitate the business of the
company with the help of the proper economic analysis. The actual commencement of the
operations and management of the company based on the economic situation. So, it is necessary
for the manager of the company to analyse the economic condition of Hungary to grow the
business in the country accordingly (Widya Yudha, et. al., 2018). The GDP rate of the country is
analysed 4% in the year 1990 and it becomes the major change in the entrance of the 21st
century. The Western European Nations rate is 7% which is high from the Hungary Country
because the country has a high rate of jobless people.
 Social environment: The social environment is also the main element which makes the
business grow in a different place. The manager of the company analyse the social culture of the
country through the local people opinion so that understand the culture of Hungary. This is
helpful to grow the business because than the company supply the products which are popular in
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that country. The EU policy is the main feature which strengthened the business and settled in
Hungary to operate the business in an effective way (Fozer, et. al., 2017). The company must
provide quality products to the customers so that grow the opportunities in different market.
 Technical environment: The advancement of technology is an important element in the
success of the business so the company determines the suitable technology in the company to
deliver the products to the target customers. The high tech companies are helping to develop and
modify the system of the company so that make the innovative changes and get a better outcome.
Hungary is focused on the Eco-innovation so that make the business which wan to success in the
country must facilitate in the proper way. So, it is necessary for the Tesco Company to use the
eco-innovative technique which is helpful to not to harm the environment of the country.
 Legal environment: The legal element of the country is the main thing which needs to
analyse by the manager of the Tesco Company so that based on the firm legislation. The
manager of the business analyse the viability of the legislation so that the company executes its
operations in an effective manner. The manager of the company must understand the legislation
of the country so that it makes differ from the EU. The Employment Act, health and safety Act,
Environment Act and much more are the main legislation which needs to follow by the
employees.
 Environmental environment: The manager of the Tesco must analyse the
environmental factor so that manage the starting of the operations of the Tesco to enhance the
business venture in the different market (Khan, et. al., 2015). The Tesco understand the safety of
the country’s environment so that the manager of the country creates the plan to take aid from
the various dynamic condition of the environment so that positively accept their business. This is
necessary to analyse the harmful elements which affect the environment so that the manager
makes the proper solution to successfully spread the business.
Porter’ Five Force Model:
 Competitive rivalry: The competitive rivalry is the main model of the five forces which
analyse the competitors in the market. This model is helpful for the manager of the company so
that creates an effective strategy according to the competition to get an effective outcome at the
end. The company takes a relevant decision after applying the model of competitive rivalry.
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 Supplier power: The supplier power is reflected in the bargaining of the price of the
products which supply to the customers. The company needs a huge number of the supplier so
that the price of the product is stable on the basis of the profitability. The less number of
suppliers is a disadvantage for the business so that it is necessary to increase the number of the
supplier.
 Bargaining power of the customers: The customers are the main aspect so it is
necessary to analyse the bargaining power of the customers (Mathooko and Ogutu, 2015). The
company should reduce the price of the product so that there is less option to make bargaining on
the products which are helpful for the business with the lower price.
 The threat of new entrants: The new entrant in the market is the main issue for the
success of the business which makes a negative impact on the market share of the company. The
company should create their products more effective so that the product gets more popular as
compared to the competitors.
 The threat of substitutes: The new entrants and threat of the substitutes are the main
issue for the company because it directly impacts on the success of the company (Adi, 2015).
The company has the major loss when customers change the company so it is compulsory for the
company to create quality and unique products from the competitors so that company establishes
as the unique selling proposition in the terms of products.
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(Figure 2: Porter’s five force model)
(Source: By author)
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Conclusion:
It concluded from the above assessment that the Tesco planned to open the store chains in
Hungary which is the best decision for the company to expand the business in the global market.
The economic situation of Hungary is stable because the gross domestic products are constantly
increasing in the country. Alternatively, Hungary has a suitable environment for the new
business establishment because the government of the country allows the new entrant in their
country. Alternatively, the report also provided the study of the external and internal
environment which is helpful to analyse the advantages and disadvantages of the country in
terms of the company. The report provided the knowledge of Porter’s five force model which
analyse the competition in the business environment. So, it analysed in the report that micro and
macro environment business is helpful to success, growth, and expansion of the business in the
competitive edge.
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References:
 Adi, B., 2015. An evaluation of the Nigerian telecommunication industry
competitiveness: application of porter’s five forces model. World, 5(3), pp.15-36.
 Alt, E., Díez-de-Castro, E.P. and Lloréns-Montes, F.J., 2015. Linking employee
stakeholders to environmental performance: The role of proactive environmental strategies and
shared vision. Journal of Business Ethics, 128(1), pp.167-181.
 CIPD, 2018. PESTEL analysis [Online]. Available at:
https://www.cipd.co.uk/Images/pestle-analysis-example_tcm18-27108.pdf. [Accessed on: 1
April 2019].
 DellaVigna, S., Lindner, A., Reizer, B., & Schmieder, J. F., 2017. Reference-dependent
job search: Evidence from Hungary. The Quarterly Journal of Economics, 132(4), PP.1969-
2018.
 Fozer, D., Sziraky, F.Z., Racz, L., Nagy, T., Tarjani, A.J., Toth, A.J., Haaz, E., Benko, T.
and Mizsey, P., 2017. Life cycle, PESTLE and multi-criteria decision analysis of CCS process
alternatives. Journal of cleaner production, 147, pp.75-85.
 Heritage, 2018. Hungary Economy: Population, GDP, Inflation, Business, Trade, FDI,
Corruption. [Online]. Heritage. Available at: https://www.heritage.org/index/country/hungary.
[Accessed on 29 November 2018]
 Khan, U.A., Alam, M.N. and Alam, S., 2015. A critical analysis of internal and external
environment of Apple Inc. International Journal of Economics, Commerce and
Management, 3(6), pp.955-961.
 Mathooko, F.M. and Ogutu, M., 2015. Porter’s five competitive forces framework and
other factors that influence the choice of response strategies adopted by public universities in
Kenya. International Journal of Educational Management, 29(3), pp.334-354.
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