Tesco's SOSTAC Strategy for Market Entry into Singapore

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SOSTAC STRATEGY FOR TESCO IN SINGAPORE
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SOSTAC STRATEGY FOR TESCO IN SINGAPORE
Table of Contents
Introduction......................................................................................................................................3
Company Background.....................................................................................................................3
Information on the International Market.........................................................................................4
Task One..........................................................................................................................................5
PEST Analysis.............................................................................................................................5
SMART Analysis.........................................................................................................................6
Porter’s Generic Cost-Differentiation and Ansoff Matrix Analysis............................................8
Product, Price and Promotion....................................................................................................11
Rough Budget............................................................................................................................12
Task Two.......................................................................................................................................13
Evaluation of Tesco’s current SOSTAC strategy in the UK.....................................................13
Task Three.....................................................................................................................................15
Implementation of the Marketing Strategy of Tesco in Singapore............................................15
Conclusion.....................................................................................................................................17
References......................................................................................................................................18
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SOSTAC STRATEGY FOR TESCO IN SINGAPORE
Introduction
Any organisation related to any industry in any situation looks forward to opportunities to make
sure that organizational objectives are reached with relative ease. However it must be made sure
that the new environment where the opportunity resides is effectively analysed. This process can
help business organisations to understand the characteristics of outer environment as well as the
truthfulness of the opportunities (Hamilton, 2018). Therefore, gaining effective amount of
knowledge related to the external environment is one of the most primary acts for any
organisation in terms of making an entry into any new market. The study that will be conducted
below will take into account the different processes by which any e rational business
organisation can gain knowledge about certain aspects related to its external environment. It is
expected that the scenario presented in this study will be helpful for readers to understand how
different analytical processes can help business organisations to effectively grow in new
environments.
Company Background
Tesco Plc is rated as one of the most popular and successful organisations in the UK market as
far as groceries and general merchandise business is concerned. The Organisation was founded
in 1919 and since then it has been one of the leading retail business in the United Kingdom. The
company was founded by Jack Cohen and back then it was known as a group of market stalls.
The organisation is currently headquartered at Tesco House, Shire Park. More than 6500 shops
across the world have made Tesco a global leader as far as the retail business is concerned
(Tesco.com, 2019). The organisation generates its capital by shares and it is also one of the main
public limited companies in the United Kingdom. The firm operates in countries such as United
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SOSTAC STRATEGY FOR TESCO IN SINGAPORE
Kingdom, Ireland, India, Czech Republic, Hungary, Thailand, Poland and Malaysia. Therefore it
can be said that the organisation has a huge consumer face and John Allan the chairman of Tesco
has been very e effective in maintaining a competitive and sustainable culture.
There are different kinds of services that Tesco has to offer to its large consumer base. Services
such as supermarket, Hypermarket, super store and convenience shop are the main attractions as
far as Tesco is concerned. The huge workforce also makes Tesco one of the powerful
competitors as far as the Retail Industry is concerned. Above 460,000 helps Tesco to effectively
serve its large consumer base.
Information on the International Market
Singapore is regarded as one of the most economically impactful countries located in South East
Asia. In 2018 Singapore represent gross domestic production of over 480,000 million Singapore
dollars. This is a start that can easily motivate any organisation coming from other Western
countries due to the fact that there is scope for development. One of the most impactful statistics
from 2018 was that 18% of the gross domestic production in Singapore resulted from wholesale
and retail trade (Department of Statistics, Singapore Government, 2019). This can easily
motivate organisations such as Tesco to invest heavily. Countries such as United States have
been responsible for large about of foreign direct investment. A staggering amount of over 330
billion Singapore dollars invested by the United States of America as FDI state that Singapore is
very fruitful environment as far as developing business is concerned.
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SOSTAC STRATEGY FOR TESCO IN SINGAPORE
Task One
PEST Analysis
Political
The political risk in Singapore is quite low and enjoys the lowest risk in the continent. This leads
to higher stability to do business in this region and have better standard of living. However, some
laws prevail which might restrict the freedom of speech and the laws also supports the same
which is mainly for the opposition parties (Zhang et al., 2015).
Economic
The market of Singapore is very much vibrant and free economy in nature which is developing at
a very fast pace. The per capital income is highest in the ASEAN market. Corruption free market
supports fluidity in the business sector and it is one of the competitive markets. The backbone of
the market is the educated and the motivated workers who help in development of the business
framework of the Singapore market. This is being backed by the investment made by the
government to diversify the economy. Further, cheap labor source from other countries is
helping to save cost and earn higher profits.
Social
It can be seen that like other eastern countries, the family value is very much high. The younger
generation follows the western culture and every resident is very much hard working. The urge
to do something has increased the nation’s productivity and is helping the business sector to
make power purchases (Chen, 2016). This is being marked by higher literacy rate s primary
schools has reserved certain percentage of attendance in the school. Thus, it is making them to
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SOSTAC STRATEGY FOR TESCO IN SINGAPORE
have a better command over the English and Chinese languages which attract international and
foreign trade.
Technological
The advancement in technology has helped Singapore to prosper in the international market.
Here internet is paying a crucial role in advancement which is increasing the connectivity with
other countries as well (Wouters, 2015). This has helped in lowering the cost for many business
units so that they could connect with them easily. There has been sharp rise of 70% broadband
connectivity and is helping multinational to increase their operations in Singapore.
SMART Analysis
The smart analysis is conducted below:
Objective Analysis
Specific The main strategy is to expand in the markets of
Singapore. It is quiet specific because of high brand
value of Tesco and global recognition through
which they can easily capture the regional markets.
Setting of different regional goals will help in this
cause (de Wijs, Witte and Geertman, 2016).
Measureable The strategy is measureable through regular market
penetration and entering the Singapore in new
ways. For this, online store will be fruitful and
giving the customers an easy access to the
products. A brand awareness will be created in the
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minds of the consumers
Achievable It is quiet achievable if Tesco conducts strategic
partnerships with other retail stores in Singapore.
The building of the relationship will be given more
stress (Cormier and Elliott, 2017). For this, local
suppliers will be contacted so that Tesco could
have highest value customer-support partner
outside their home country and generate several
sales goals which could be achieved easily. Further,
merger and acquisition could also take place for
penetrating the market easily.
Relevant The strategy is quiet relent due to the strong
financial stability that Tesco have in their daily
operations. The financial requirements are
addressed properly and proper steps are being taken
to overcome financial risks. In addition,
distribution costs are giving more emphasis in
accordance with the demand of the products made
by the customers (de Wijs, Witte and Geertman,
2016).
Time bound Time is the most important factor for Tesco to enter
the markets of Singapore and make profit out of it.
A time frame of 6 months has been prepared by
Tesco for entering the markets of Singapore.
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Table 1: SMART goals
Source: Learner
Porter’s Generic Cost-Differentiation and Ansoff Matrix Analysis
The analysis of Porter’s Generic Cost-Differentiation is done below:
Cost leadership
This strategy will be used by Tesco to gain competitive advantage through a greater competitive
edge in the market. This shall be done by the help of reducing the cost of operation during the
growth stage of the company so that higher rate of profit could be earned and keeping the price
of the products relatively low (Cormier and Elliott, 2017).
Differentiation
Differentiation helps to differentiate the products and services from the others. Tesco will make
good market research and bring in innovation in the products so as t create different products in
the markets which will have longer durability, and are of high quality.
Focus
Tesco trough a good market and after undressing the various niches of the Singapore market they
have decided t enter that market. Hence, creation of brand loyalty is given more stress and it is
considered as the key element for success in the market (Schawel and Billing, 2018).
Choice of strategy
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SOSTAC STRATEGY FOR TESCO IN SINGAPORE
It is essential for Tesco to choose a particular strategy while entering the Singapore market. This
will create a separate identity for them. For this, certain risks need to be taken ad use the
resources quiet well.
Image 1: Porter’s Generic Cost-Differentiation
Source: (Cormier and Elliott, 2017)
Ansoff matrix
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Image: Ansoff matrix
Source: (de Wijs, Witte and Geertman, 2016)
Market penetration: This will allow Tesco to focus increasing the sales in the new market
through increasing the market share (Schawel and Billing, 2018).
Product development: This focuses on to develop products which are very much unique in the
market and cater the needs of the new market. For this Tesco needs to understand their ability to
create new products and meeting the requirements of the new market.
Market development
Tesco needs to use new technologies which will increase the quality of the product. Further, they
need to indentify the potential customers for their products who will help in earning higher
amount of profit by catering the needs of different consumer segments (Yin, 2016).
Diversification
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Products needs to be very much diversed. For this, various risks could be taken which needs to
be mitigated effectively (Gurcaylilar-Yenidogan and Aksoy, 2018).
Product, Price and Promotion
 Product: As Tesco is a retail supermarket chain, their products are retail items, which
specifically target the daily necessities, especially groceries and clothings, and are varied
in nature and usage. However, Fan, Lau and Zhao (2015) argued that since Singapore is
an Asian Country, their culture and general food habit is vastly different from the UK,
which is the home country of Tesco. This requires Tesco to understand the specific
customer demands and expectations in Singapore and design their product ranges
accordingly. For instance, unlike the customers in the UK, customers in Singapore will
demand various types of food grains and vegetables as groceries in Tesco.
 Price: The pricing strategy of Tesco has to be adjusted as per the economic conditions of
Singapore. as Liu et al. (2017) opined that the average price of food and groceries
products in Singapore is lesser than in the UK, Tesco will have to adjust the price range
for their groceries retail products in order to make them attractive in the eyes of their
customer base in Singapore. Moreover, Tesco will also have to arrange for festive and
periodic discounts in their products at the time of local and international festivals in
Singapore, which will attract more customers, increasing their sales figure.
 Promotion: As Tesco will be a new organisation in the retail market of Singapore, they
will have to heavily use the advertising mediums in order to enhance their brand
popularity and spread their brand name. For instance, Rahmani, Emamisaleh and
Yadegari (2015) stated that the social media has grown to be a popular medium for
communication among young people, so Tesco can utilise this in order to reach out to the
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young generation of Singapore in a much easier and faster way. Moreover, they can also
use promotional events and large discounts in order to attract more customers in
Singapore.
The strategy will be implemented through various steps:
- Setting of clear goals which will include the level of sales
- Making proper research about the market of Singapore by attending various trade shows
- Properly studying the competition level so that products could be modified
- Choosing the right mode of entry i.e. franchise, lease or anything else
- Figuring out the financial needs for supporting the venture planned by Tesco
- Lastly, preparation of documents of strategy which will have all the details about the
entry strategies
Rough Budget
The budget is analyzed below:
Category Amount ($)
Locational rental 15000
Staffs 12000
Equipments 8000
Travel 3000
Public relations 6000
Decorations of stores 9000
Advertisement 8000
Total 61000
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