University of Suffolk: Tesco's International Business Expansion Plan

This report analyzes Tesco's potential entry into the Pakistani market, focusing on cross-cultural considerations and international business strategies. It examines the importance of cross-cultural analysis, key elements of the international environment, and the influence of culture on decision-ma...Read More

International business

EXECUTIVE SUMMARY
The entire report is based upon Tesco who wants to enter into new foreign country i.e.
Pakistan. Also, for that the company needs to identify the culture of a company so that effective
results can be generated. Along with this, there are many key elements needs to be determined
where Tesco should understand the internal and external environment so that effective outcome
can be generated. Further, by analysing culture of different country will help to examine the
overall performance of a company in order to generate better outcomes. Also, there are many
opportunities and risk identified within a country which is related to managing cross-cultural
differences and this in turn help to meet the defined aim of a company. Further, it can be stated
that due to expansion in foreign country, company should understand about the foreign entry
mode and that is why, Tesco opt joint venture in which it will tie up with small firm in order to
understand the country’s background and culture.

INTRODUCTION
International business (IB) refers to trade of goods, services and technology from one
country to another. The present study also shed a light upon different ways through which
international business can be managed and effectively used by the company. Further, with the
help of IB, company sustain an effective brand at global level and also improve the business
performance. Through IB, company take an advantage of specialized expertise and uses range of
factors that assists to deliver the goods and services into international marketplace. The chosen
firm for this report is Tesco which is one of the op international firm who is operated at global
level by offering range of products to their customers and sustain the brand image as well.
The report will critically evaluate how potential opportunities and risk of doing business
in a cross-cultural environment can be effectively managed. Further, it will evaluate the
management responses that need to be taken by the chosen company to improve the overall
performance. Moreover, it will justify the recommendation in order to attain cross-cultural
proficiency that is essential to attain success.
LITERATURE REVIEW
Importance of cross-cultural analysis to enter into new market
According to Shenkar and et.al (2020) if a business wants to enter into new market, there
is a need to have a proper study on cross-cultural because it assists to expand knowledge beyond
the confinement and also assists to meet the requirement of a company. This in turn also assist a
business to determine the cultural beliefs and values for the country so that effective action can
be taken. As per the view of Hofestde, who assist business to identify the culture of country, so
that further steps can be taken accordingly. Also, in order to enter into new country, company
should train their employees that assists to handle the conflicts across culture and this in turn
contribute to improve the performance of a company (Shenkar, 2021). Therefore, with effective
knowledge of cross-culture company ascertain the differences and similarities which in turn
cause positive impact over the business and determine importance of entering into new market.

Elements of the international environment which have an impact on the activities of international
firms.
There are factors several should be consider in order to expand the business in the new
territory. The culture difference is major factor that should be considers in order to know about
the desire and want of local market because there are different perception of people in order to
think about the value and desire of local people. In Pakistan people are very possessive about
their and culture so that they consider the product accordingly. That is why it is not possible that
the product will going to run in the market at high demand. The legal and regulatory issues are
also play important role in business because there are different rules and regulation that are
followed by company (Goldstone, 2018). The range of the product will decided according to
consider all this factor There are local laws and regulation guidelines can be achievable in order
to reviewing some aspects. When the business expanded overseas there are so hazards are faced
by company because it can be barrier for the company as well as change in tax rate are affect the
business. So to overcome this issue it is necessary to collect the relevant information from legal
counsel so it can be help the business for further expanding.
Moreover, another factor is foreign government consideration for reviewing overseas
option for business such as exchange rates of currency because there are different currency of all
the countries and it important to consider the currency rates. The access that are need for material
and resources in order to consider the communication of that country. People have different
perception in order to use their own language and the local people are not going to use another
language so it can be the challenge for business for suppliers and buyers because they are not
going to communicate at one direction (Alonso, Solis and Santoni, 2020). Also, the customer
satisfaction is important to get their feedback and run the business by considering all these
factor. The role of government also played important role in order to program the business
because there are different policies are followed by the owner of the company while expanding
that is why it can be impacted negative on the organisation. Also, employment laws are different
and it important to consider because when the firm hire local employees it can be benefit for the
company because they all know about the regional place and market demand.
That is why there are necessary to follow those laws that are in favour of employees so
that it can help to improve the productive of the company. The psychological factor are need to

consider because some of the factors such as motivation, perception, learning, attitude and
beliefs (Rahman and Singh, 2019) . Customer's perception are important to consider because it
helps to increase productivity of the organisation. It also help to increase the brand value of the
company in the new market.
Influence of culture in decision making in the foreign market
In the opinion of Shams and et.al., (2021) culture has a great impact within international
market. Culture also impact how employees are managed at different levels within a global
market. Company also have positive outcome with regard to gain knowledge from culture. A
positive culture within a business environment assists to raise the performance and gain
competitive advantage as well. Moreover, Sharma and et.al., (2020) also investigated in their
study that culture diversity within a business always lead to make better decisions because
managers get different views from their employees and this in turn cause positive impact over
the business performance and sustain the brand image as well. Apart from this, it can be reflected
that culture impacts how employees are best managed their views and priorities so that company
can easily enter into new market and make effective decision for the welfare of a company.
Beside this, it has been reflected that the influence of culture in a decision making
process might also affect the results to enter into new market. Such that if manager get a view
from different employees and they collect information from those who do not have much
knowledge then it will lead to make wrong decision that affect the business performance. Hence,
it can be stated that culture affect the business either in positive and negative manner (Van
Assche and Lundan, 2020). This is also supported from the cultural theories such that according
to functionalist theory, it has been identified that there are different categories of culture which is
serve as a many function so it is depend upon the company how they threat with their employees.
Benefits and challenges that arise from effective management of cross-cultural differences
As per the view of Ratten (2020) with proper understanding of cross-cultural differences,
it can be stated that there will be more effective hiring practices where range of diverse talent
pool can be selected. Along with this, there will be improved interactions between
communication with staff and vendors. Further, company can generate a better outcome and
sustain the brand image as well. However, Ghauri, Strange and Cooke (2021) critically analysed
that it might be face difficulties in face of prejudice or negative cultural stereotypes. Also, this

challenge affects the overall performance of a company and create negative impact over business
as well. Further, it can be stated that if a management can manage cross-cultural differences, then
it will be benefit to company because it offers a broader and more adaptable range of products
that assists to gain strong competition in the new market.
Ghauri, Strange and Cooke (2021) shared their views and stated that the benefit which
arise from effective management of cross-cultural differences is such that the team will be
diverse and perform better as compared to work individually. Thus, it can be stated that through
cross-culture team, company let people understand by cultural sensitivity and raise local
knowledge so that company can easily improve their business performance and sustain the brand
image as well. Ratten (2020) argued that due to cross-cultural differences, there will be conflict
arises between working style across teams and this in turn cause negative impact over the
business performance. For example, approaches of team work and collaboration may be vary to
person to person and if a business wants to expand the business into new international firm, it is
necessary to develop a cultural values so that effective outcomes can be generated.
Thus, it can be stated that management across cross-cultural differences within a
company might have its pros and cons. So, it is depend upon the business how they deal with the
situation so that the challenges do not affect the overall performance of a company. Further, the
chances of conflict within a business should not affect the productivity of a company.
ANALYSIS AND DISCUSSION
Management responses to realise the opportunities available
As Tesco wants to enter into new market and that is why, management should establish
ways in order to realise the opportunities available in a market. For that different responses are as
mentioned below:
 It is necessary for the quoted firm to understand the communication style of different
cultures which in turn assists to determine the ways through which different employees
work together (Shams and et.al., 2021). Also, it can be stated that with the help of come
cultures communicate calmly and the discussion is entirely based upon facts and acting
decisively. That is why, this helps to understand the opportunities available to the
company.

 Always develop an effective communication style which in turn reflected that there
should not be any misunderstanding between the employees. If the employees does not
possess the same, ensure to use training and development sessions so that all the
employees will understand about each other (Buckley, 2021). Moreover, it can be
reflected that individual should be more flexible towards different culture and less certain
when own culture is right in all circumstances. Thus, it can be stated that with the help of
effective communication style, company can generate an effective outcome.
 Tesco can also develop effective motivation method into the business which in turn help
to improve the overall performance and let employees understand about their own
performance (Buckley and Casson, 2021). As they all working with different cultural
people and that is why, an effective outcome can be generated. Also, when expanding
into other geographical location, company needs to employing a cross cultural team and
also seeking to benefit from talent through remote employment. This is possible when
adopting effective rewards and motivation style so that effective results can be derive.
 Managers and senior management should not frustrate with the changing environment
and always support to teams so that they stand with company (Shenkar and et.al., 2020).
Also, they should not show any frustration that is dictated by different cultural values
because it makes them more difficult to survive within a business. Hence, it become very
difficult for the company as well as employees. So, there should not be any difference
between culture so that effective outcomes can be generated. Along with this, it can be
also stated that the way to combat from this situation is such that to open a cultural
differences and also understand the environment.
Appropriate methods of international market entry and development.
There are many international market entry methods available for Tesco which help to
improve the overall performance. The list of methods is as mentioned below:
Exporting: It is a direct sale of goods and service into another country and considered as
a lowest risk method. Also, the method is cost effective and company only required
transportation that help to transfer the product from one country to another. In this type of entry
method, company requires majority of cost involved within export and it only required
involvement from an importer.

Licensing: It allows another company in a target country to use own property which is
intangible in nature like trademark, production technique and patent (Shenkar, 2021). As a result,
the licensee will pay a fee in order to be allowed the right to use that property. This type of
method requires very little investment and also gain high return on investment so that company
and sustain the brand image at international level.
Franchising: It is somehow similar to licensing method but the rules of this entry mode
ae quite strict. This include specific processes need to be followed and components must be used
in manufacturing so that effective results can be determined. In this method, the control is in
hands of franchisee because franchisee will be going to use the rights.
Joint venture: Another entry mode where two company establish a jointly owned
business in which one of them will be local business while other who wants to enter into new
market (Van Assche and Lundan, 2020). Through this company will sustain the brand image and
also determine the ways through which it can generate a string control over the foreign market.
Among all, Tesco will use Joint venture as a market entry mode because the environment
and external environment of the country is quite different from UK. So, it will be better to join
with local business and start offering products to the people. This will help to gain the local
knowledge and allow to share cost as well. Though there are some other challenges associated
with this market entry mode which include deciding who will invest and how to share profit. So,
initially when Tesco select to who the company wants to considered for joint venture, it can
select and decide the ratio of profit loss. This in turn assist to generate effective outcome and
establish a brand image at global level so that customer can enjoy the products and services
offered by them.
Recommendations to achieve cross-cultural proficiency to attain success in Pakistan
In order to sustain the brand image at global level, it is essential for Tesco to improve the
overall performance and focus upon cross-cultural proficiency. Thus, there are different ways to
improve the same and some of them are as mentioned below:
 It is suggested to the company to focus upon creativity in which cultural competence
increases creativity in a problem-solving. This in turn generate a result of new
perspective and strategies so that effective outcomes can be generated. Focusing upon

creativity will help an individual to generate a better outcome and develop more ideas.
Such that when people from different culture are working together their views are
generated and arise which in turn cause positive impact.
 It is also recommended to Tesco to start designing team where employees work together
and generate a sense of team work. Through this, the understanding between team
members will increases and also raise the performance (Verbeke and Yuan, 2021). The
biggest advantage of this strategy is such that company will be able to meet the defined
aim within a specified tenure. Whereas, mutual understanding develops between the team
members so that effective outcome can be generated. This in turn also reflected that in
future, there will be increase in appreciation for other perspective so that the chances of
unity increases.
 Training and development is another way which can be used by the quoted firm and
determine the ways through which cross cultural issues can be managed. For that,
company should hire a trainer who can provide effective way to improve the overall
performance and let their employees understand about the cross-cultural issues. Also, it
can be stated that this increased empathy and adaptability where employees can be more
productive and work together so that goals can be meet (Bahoo, Alon and Paltrinieri,
2020). Therefore, it can be stated that when management changes in routine and strategic
direction can occur, this will help to adapt the same more rapidly and provide training to
employees so that they can adjust accordingly.
 The senior management of a company should be active listener and have a clear
communication so that their thoughts and ideas can be delivered easily to each other. This
in turn also assist to understand them easily and create a better outcome for the
company’s welfare and generate a best outcome (All about cultural competence and
workplace culture, 2021). Through this method, managers will understand their
employee’s view and then recommend the same so that the ideas can be clearly and
concisely shared with an aim to improve the performance.
Overall, it can be reflected that through this ways, Tesco can generate a cross-cultural
benefit to their employees and a sense of mutual understanding can be developed which helps to

improve the brand image and improve working environment as well. Through the above
mentioned ways assist company to improve the performance and generate better outcome.
CONCLUSION
By summing up above report, it has been concluded that international business plays an
effective role in order to generate an effective outcome. As Tesco wants to establish the brand
image at new country and that is why, it will consider Joint venture and new market entry mode
which help to improve the business performance. Moreover, the report summarised that cross-
culture issues affect the business performance and that is why, company needs to understand the
issue and comply with recommended ways that help to attain success in new foreign market.
In addition to this, the report concluded that there will be many risk and benefits arise due
to cross-cultural management. Further, culture also plays an important role in the company’s
overall performance because it makes employees able to motivate and improve the performance.
Apart from this, it has been concluded that management of Tesco should develop effective ways
that assists to generate a better outcome and improve cross-cultural teams. This in turn attract
new customers and employees so that company can improve financial performance. Overall, it
can be reflected that due to expand a business in foreign country, it is essential to consider its
external environment and make effective steps.

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All about cultural competence and workplace culture. 2021. [online]. Available through:
<https://www.indeed.com/career-advice/career-development/cultural-competence>.