TESCO Plc and CRE Joint Venture: Benefits, Drawbacks, and Resources

This report analyzes TESCO Plc's strategic decision to enter the Asian market through a joint venture with China Resources Enterprise (CRE). The introduction highlights the significance of globalization and various market entry strategies, emphasizing the aim to evaluate the benefits and drawbacks of joint ventures. The literature review explores the concept of joint ventures, their advantages such as market expansion and resource sharing, and disadvantages including potential conflicts and complexities. The research methodology employs a descriptive research design and an inductive research approach to collect and analyze data. The report investigates the resources required for the joint venture's success, including cultural understanding, financial performance, and brand image. The conclusion and recommendations summarize the findings, providing insights into the strategic implications of the joint venture for TESCO Plc's global expansion. The report emphasizes the need for careful planning, research, and resource allocation to navigate the challenges and maximize the opportunities presented by the joint venture.

Business strategy

Table of Contents
CHAPTER 1 Introduction................................................................................................................1
Chapter 2 Literature review.............................................................................................................2
Theme 1: To understand the concept of Joint Venture...............................................................2
Theme 2: To analyse the benefits and drawbacks that an organisation goes through while Joint
venturing at international level....................................................................................................2
Theme 3: To determine the resources that are needed by TECSO Plc while joint venturing
with China Resources Enterprise (CRE).....................................................................................3
Chapter 3 RESEARCH METHODOLOGY ...................................................................................4
Chapter 4 Results ............................................................................................................................8
Chapter 5 Conclusion and Recommendation 450..........................................................................14
Conclusion ................................................................................................................................14
Recommendation ......................................................................................................................14
Chapter 6 Reflection......................................................................................................................15
REFERENCES .............................................................................................................................16
APPENDIX ...................................................................................................................................18

CHAPTER 1 Introduction
Globalization is the process of interaction among people and companies, government at
worldwide and it is consider one of the most effective process in which a business companies are
looking to expand their current business and to get many opportunities as well. Thus, there are
different technique through which the business can enter in new or international market such as
Joint Venture, direct exporting, Franchising. Through research it has been analysed that
globalization is apparent in the growth of world trade as a proportion of output. In addition to
this, the globalization also mean that the countries liberalize their import rule and also welcome
the foreign investment into many sectors that helps in the growth of an economy. Therefore, it
results in freeing up the productive sectors t investment and the productive sectors to export
which results in win-win situation.
Therefore, the aim of the report is to describe pros and cons of Joint venture for a
company in order to enter into new and international market. This research report is also based
upon the TESCO Plc which is one of the leading retail company in UK and now it want to enter
in Asia through joint venture with China Resource Enterprise in order to become the world's
biggest food retailer company. Through this report, researcher describe the benefits and
drawback that an organisation goes through while Joint venturing at international level.
Currently, the quoted firm has only around 130 shops in China while on the other side China
Resource Enterprise has around 3000 stores, that is why TESCO Plc wants to captured the
opportunity to enter in China Market by joint venturing CRE in order to hold its own market in
Asia.
Aim:
“To evaluate the benefits and drawbacks of Joint Venture to enter international
markets.” A case on TESCO Plc.
Objectives:
 To understand the concept of Joint Venture.
 To analyse the benefits and drawbacks that an organisation goes through while Joint
venturing at international level.
 To determine the resources that are needed by TECSO Plc while joint venturing with
China Resources Enterprise (CRE).
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Chapter 2 Literature review
Theme 1: To understand the concept of Joint Venture.
According to Miller and Weinberg (2017) joint venture is the business entity that is
created by two and more parties in which both the companies has to share ownership, shared
returns and risk. Thus, joint venture is the temporary business association between two or more
person for profit without forming a permanent partnership and both the business maintain their
independence as well. It has been further analysed by the author that in order to gain a positive
synergy from their competitors, different companies expand either by introducing more capital or
through a process of joint venture.
On the other hand, Yan and Luo
(2016) stated that joint venture is engaging between the firm to expand their geographical market
participation, create the economies of scale and also help to lean new skills and technologies, this
also helps to strengthen the existing market position. The main motive of joint venture is to enter
into new foreign market and to enhance the international market power as well.
In addition to this, van der Meer-Kooistra and Kamminga (2015) stated that a joint
venture is entered between two or more parties in order to extract the qualities of each other. In
This method, one company may posses a special characteristic with other company might lack
with and similarly, the other company also has some advantages which another firm cannot be
achieve. Therefore, the two companies can enter into joint venture in order to generate synergies
between them for gain high advantages and these companies are work on the economies of large
scale in order to give the cost advantages.
In the same way, TESCO Plc also wants to enter into Asian market though joint venture
and gain high competitive advantages as well. Therefore, company mainly pursue the joint
ventures for mainly accessing a new market and particularly emerge into new market as well. In
the same way, TESCO also wants to enter into new market as it wants to sustain its brand image
in new country. And take the concern through e-mail
Theme 2: To analyse the benefits and drawbacks that an organisation goes through while Joint
venturing at international level.
As per the view of Gao (2019) as TESCO Plc uses joint venture with China Resource
Enterprise then it helps the organization to scale up with their limited capacity and also gives a
high competitive advantages to both the organization in order to generate the economies of
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measurability. Further, it has been further analysed by the author that when one organization
enters into joint venture with another organization, then it opens a vast market which further has
a potential in order to grow and develop itself. For example, when TESCO Plc of UK enters into
a joint venture of China Resource Enterprise in order to enter into Asian Market, then the
company of UK has the advantage of accessing Asian Market with different variant of
diversification of choice. But on the other side, Chen and Ross (2019) critic that the flexibility
can be restricted for TESCO Plc when it enter in new market by using Joint venture as a market
entry mode. As both the companies has to share profit and decisions are also taken by both firms
and this leads to loss of flexibility. Further, all the partners have different objectives for the joint
venture and this also brings different level of expertise, investment and assets into venture.
Helland and Sovinsky (2019) stated that joint venture gives an added advantages to
upgrading the products and services with respect to technology and even the marketing can also
be done with different innovation platform and technology up-gradation also assist in making
products and services at efficient cost. By providing the best products and services to their
customers at low rate also aim of joint venturing and in the same way, TESCO Plc also uses the
same strategy in order to make its brand image in market. On the other side, Müller and Zaby
(2019) argues that joint venture as a market entry mode takes time and efforts to build the right
relationship and partnering with another business because it may arises the problem of different
culture, management styles that result in poor integration and co-operation. Apart from this,
creating joint venture may result in more complex tax arrangement and also consider one of the
costly methods among other market entry mode. Further, as TESCO Plc wants to enter in foreign
market then it requires a lot of research and planning as it helps a firm to provide success
otherwise it leads to loss.
Therefore, as TESCO Plc uses joint venture as a market entry mode then there may be
chances that technology is an attractive reason for a firm to enter into it because using advance
technology, a firm can produce a superior quality of products and also helps to save a lot of
money and thus, joint venture also access to technology and resources as well, even all the risk
are also shared at equally and help to gain high competitive advantages as well.
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Theme 3: To determine the resources that are needed by TECSO Plc while joint venturing with
China Resources Enterprise (CRE)
As per the view of Gersch and Franz (2019) while entering into new market through joint
venture, TESCO Plc should first determine that the partner's national culture and company's
financial performance. This is so because it has been analysed that cultural values and
perspective shape the way people think and as China Resource Enterprise has its 3000 stores at
world level then it helps TESCO Plc to establish its unit at Asian market. As CRE has good and
better financial performance which shows that the TESCO Plc can establish its unit through
joint venturing. Further, the firm should also determine whether the other business has its brand
image and provide all the necessary resources at the time of establishing unit.
In addition to this, Miller and Weinberg (2017) stated that TESCO Plc should also make
proper research about that foreign country in which it will go to establish its unit. Because it
helps to determine the scope of investing in it and also identify whether the business will be
reach towards success or not. Through the market research, the quoted firm will easily determine
the external and internal environment and even take steps as well in order to cope with this.
Further, as TESCO combine with China Resource Enterprise and also uses it's brand name to
enter into new market, then fir should make sure that choice of partner is correct and it provide
all necessary resources at the time of establishment such as human resource, financial resource,
technological resource etc. If these resources are available then it will help a business to
successfully enter into new market and make foreign investment as well.
Chapter 3 RESEARCH METHODOLOGY
It is the process which is used to collect information and data for making correct
decisions in business. Therefore, it main purpose is to inform action, to prove a theory and also
contribute to developing the knowledge in a field of a study (Flick, 2015). In the same way,
using research methodology, a researcher will easily attain the aims and objectives of the study
and thus, it is as mentioned below:
Research Design:
It is the program to answer the question. Research design and methods are complex but
closely related, because effective good research design which ensures the information obtain will
aid reply research question more effectively. There are mainly three types of research design
such as exploratory, descriptive and conclusive (Gersch and Franz, 2019.). Investigator is
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individually interested in describing the case or situations in descriptive research design. It is the
research design which is theory based that is made by collect, analysis and presents gathered
information. In the exploratory research design, investigator's thoughts are principally dependent
on their personal disposition about specific topic. In this study, investigator will be utilised the
descriptive research design for accomplishing the aims and objectives of research which is
related to benefits and drawbacks of joint venture to enter into international market by company.
Through this, researcher will collect the appropriate data and information for completing
research. This can help to accomplish the aims of research which will adopted by researchers that
is to evaluate the benefits and drawbacks of Joint Venture to enter international markets. This
can impact on the sales and profits for company.
Research Approach:
It is the process and programs which consist of the stages of wider expects to detailed
method of collection, analysis and interpretation of data in the research. There are three types of
research approach such as deductive, inductive and abductive. Deductive approach tests the
validity of assumptions. On other side, inductive approach approval to the outgrowth of new
concepts and broad (Kumar, 2019). As compared to, Abductive research approach begins with
surprising figures and research procedure is dedicated their explanation. In this research,
investigator will be utilised the inductive research approach for attaining the result of study
which is related to benefits and drawbacks of joint venture to enter into international market by
company. Through this, researcher will collect the appropriate data and information for
completing research. Through this, researcher will collect the appropriate data and information
for completing research. This can help to accomplish the aims of research which will adopted by
researchers that is to evaluate the benefits and drawbacks of Joint Venture to enter international
markets. This can impact on the sales and profits for company.
Research Philosophy:
It is the impression about the mode in which information relating to process can be
collected, analysed and utilised. It is the large topic which deals with source, nature and
improvement of knowledge. The research philosophy will reflect the essential assumptions of
researcher and these assumptions serve as base for the research strategy. There are mainly four
research philosophy such as pragmatism, positivism, realism and interpretivism. Researchers
explain factors which are incorporated the human interest (Bresler and Stake, 2017). Realism
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philosophy completely relies in the thought of independence of the reality from human mind. On
other side, positivism is only comply with the actual or fact knowledge that is gained through
observation. In this research, study findings are normally noticeable and quantitative. Last,
pragmatism which means that there are various modes of explaining but so single point of view
can give the accurate image and there are multiple actualities. From above research, investigator
will be utilised interpretivism research philosophy for attaining result of study which is related to
benefits and drawbacks of joint venture to enter into international market by company. Through
this, researcher will collect the appropriate data and information for completing research (Flick,
2015). Through this, researcher will collect the appropriate data and information for completing
research. This can help to accomplish the aims and objectives of research which will adopted by
researchers that is to evaluate the benefits and drawbacks of Joint Venture to enter international
markets. This can impact on the sales and profits for company.
Data collection:
It is the procedure of gathering data from all the relevant sources to discover reply to the
study problem, test the hypothesis and evaluate the result. Data collection methods are divided
two types such as primary and secondary method (Marshall, Coleman and Reason, 2017).
Primary data collection which refers to that information is gathered for the first time utilising
surveys, interview and experiments. On other side, secondary data collection where the
informations are gathered from already published data like journals, newspaper and books. In
this research, investigator will be utilised the primary source like questionnaire for collecting the
data for attaining the result which is related to benefits and drawbacks of joint venture to enter
into international market by company (Teherani and et.al., 2015). Through this, researcher will
collect the appropriate data and information for completing research. Through this, researcher
will collect the appropriate data and information for completing research. This can help to
accomplish the aims and objectives of research which will adopted by researchers that is to
evaluate the benefits and drawbacks of Joint Venture to enter international markets. This can
impact on the sales and profits for company.
Sampling:
Sample is group of people, objects which are taken from larger populations for
measurement. The sample can be representative of the population to ensure that can generalise
the findings from the research sample to population as whole. There are mainly two types of
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sampling such as probabilistic and non-probability method. Probability sampling in which people
are selected randomly in relation to determine the suitable sampling frame based on the research
(Hughes and Sharrock, 2016). On other side, non-probability sampling, not all the members of
the populations has chance top participate in the research but it effective when it is unworkable
and impractical to conduct the probability sampling. Investigator will be utilised the random
sampling method in which they are selected 20 respondents in relations to benefits and
drawbacks of joint venture to enter into international market. Through this, researcher will
collect the appropriate data and information for completing research. Through this, researcher
will collect the appropriate data and information for completing research. This can help to
accomplish the aims and objectives of research which will adopted by researchers that is to
evaluate the benefits and drawbacks of Joint Venture to enter international markets. This can
impact on the sales and profits for company.
Data Analysis:
The procedure of evaluating information utilising analytical and formal rationale to
examine each element of provided data. It is simple procedure of examining, inspecting and
transforming the data with objective of finding the useful information. Therefore, it also helps
the decisions making. It is the process of studying, transforming and modelling data with aims of
findings useful data. There are two types of data analysis like qualitative which means to non-
numeric informations such as interview, notes (Dougherty, Slevc and Grand, 2018). On other
side, quantitative data analysis, turns the raw number into some meaningful information through
the critical thought and it gives accurate outcome with the help of SPSS. Research select the
thematic analysis, because it aids to determine accurate benefits and drawbacks of joint venture
to enter into international market in effective manner. Through this, researcher will collect the
appropriate data and information for completing research. Through this, researcher will collect
the appropriate data and information for completing research. This can help to accomplish the
aims and objectives of research which will adopted by researchers.
Ethical Consideration:
It can be determined as one of the most essential portion of the study. There are many of
principles relating to the ethical consideration which includes:
 It has to be ensured protection of privacy of research participants.
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 It can be ensured that adequate level of confidentiality of research information in the
study (Müller and Zaby, 2019).
 Any kind of misleading information and representation of primary data conclusion is
biased manner should be avoided.
 Data protection act should be followed such that personal data should not be leaked or
shared without the permission.
 Any misrepresentation or figure about the aims and objectives of the study must be
avoided (Gersch and Franz, 2019.).
Limited of study:
It is critically essential for researcher to be striving to minimize the range of limitations
throughout research process. There are many limitations in conducting the research such as:
 Researcher can formulated aims and objectives of research too wider. They can specify in
which modes the preparation of aims can be narrowed, so that the level of focus of the
research can be raised.
 If sample size is too small, so that statistical evaluation will not be able to determine
important relations with set data (Kumar, 2019).
 The selection of research area is also limitation of research. The scope of discussions in
research is hope in many levels compared to the works of experienced scholar.
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Chapter 4 Results
Theme 1: The most beneficial mode of entry in international market
Option Respondents
Joint venture 11
Direct Exporting 4
Partnerships 3
Total 20
Interpretation: From the above graph, it can be interpreted that out of 20 participants, 11
respondents replied that joint venture is the most beneficial mode of entry in international
market. 4 participants said that direct exporting is the most beneficial mode of entry in
international market. 3 respondents replied that Partnerships is the good mode of entry in
international market of Tesco. Therefore, joint venture as a market entry mode takes time and
attempts to build the right relations as well as partnering with another enterprise because it may
9
Joint venture Direct Exporting Partnerships
0
2
4
6
8
10
12
Column B

develops the problem of various culture, administration forms that result in poor integration and
co-operation.
10