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TESCO GOES

Jennifer Noinaj, Valentina DeLoof, Seun

GLOBAL
Kale Ezeagbor
Agenda
Overview: 1. Our Argument
Tesco 2. Tesco’s Background
Strategy
Concepts
3. Entry Strategies
Tesco 4. Tesco’s Successes
Successes 5. Carrefour
Case #1 6. Pepsi
7. Tesco Today
Case #2

Tesco
Today
Tesco's core competencies have
influenced their process of developing
and implementing international
business strategies. This has lead to
success in global expansion.
Using their past experiences, Tesco can
monitor and analyze the situation in
the United States to be successful in
the market.
Overview:
Tesco
Strategy
Concepts
Tesco
Successes

Case #1

Case #2

Tesco
Today
Overview:
Tesco
Strategy
Concepts
Tesco
Successes

Case #1

Case #2

Tesco
Today
Overview:
Tesco
Strategy
Concepts
Tesco
Successes

Case #1

Case #2

Tesco
Today
Overview:
Tesco
Strategy
Concepts
Tesco
Successes

Case #1

Case #2

Tesco
Today
http://economictimes.indiatimes.com/News/News_By_Industry/Services/Education/Tesco_comes_calling_at_Indian_B-schools/articleshow/1289287.cms
Competitive Advantage
Overview:
 Strong competencies
Tesco  Marketing
Strategy  Store site selection
Concepts
 Logistics
Tesco
Successes  Inventory management
 Tesco product offerings
Case #1

Case #2

Tesco
Today
Which foreign markets?
Overview:
 >200 nation-states
Tesco  Balance: benefits, costs, risks
Strategy  Variables
Concepts
 Size
Tesco
Successes  Present wealth
 Future wealth
Case #1
 Living standards
Case #2  Economic growth

Tesco  Long-run profit potential


Today
Which entry mode?
Overview:
 Joint Ventures
Tesco  Strategic Alliances
Strategy  Facilitate
entry into foreign markets
Concepts  Share costs & risks
Tesco  Share management know-how
Successes
 Wholly Owned Subsidiaries
Case #1  Greenfield Ventures
 Acquisitions
Case #2
 Quick to execute
Tesco  Investing in known revenue/profit
Today
Success Strategies
Overview:
 Strong integration
Tesco  Asian companies with experience in the
Strategy market
Concepts
 Financial backing
Tesco
Successes  Retailing capabilities
 Transnational strategy
Case #1
 Adapting to the market
Case #2  Staying on track

Tesco
Today
Carrefour’s Background
Overview:
 Carrefour is a French international
Tesco hypermarket chain, with a global
Strategy network of outlets.
Concepts
 Carrefour operates mainly in Europe,
Tesco
Successes
China, Colombia, Brazil, Argentina and
in the Dominican Republic, but also has
Case #1 shops in North Africa and other parts of
Asia.
Case #2

Tesco
Today
Going Global
Overview:
 For its international expansion,
Tesco Carrefour adopted the route of forming
Strategy alliances with local partners.
Concepts
 Its first international venture was in
Tesco
Successes
Belgium, where it opened an outlet in
association with Delhaize Fréres-Le-Lion
Case #1 , in 1969.
 Carrefour's first venture outside Europe
Case #2
was its hypermarket in Brazil in 1975.
Tesco
Today
Business Strategies
Overview:
 In foreign markets, Carrefour was
Tesco careful to customize its operations to
Strategy the preferences of local customers.
Concepts
 In 1978, Carrefour developed a hard
Tesco
Successes
discount store format, under the name
Ed, in France.
Case #1  Instead of selling imported French
products, Carrefour sold local products
Case #2
through its stores.
Tesco
Today
Entry into South Korea
 Carrefour chose to venture into the Korean
Overview:
Tesco
market on its own without a local partner, due to
which it failed to understand the market.
Strategy
Concepts  The company employed most of the top
management personnel from France and this
Tesco was not viewed favorably by the local
Successes
employees.
Case #1  The company failed to localize its stores and the
products sold according to the needs and
Case #2 preferences of Korean consumers.

Tesco
Today
What Went Wrong
 The company wanted to attract the
Overview:
Tesco customers by providing them high
Strategy
quality products in bulk at low prices.
Concepts  Initially, customers in South Korea were
Tesco enthusiastic about the warehouse style
Successes of Carrefour stores, but most of them
were not bulk purchasers.
Case #1
 In contrast to other countries where
Case #2
Carrefour was successful, South Korean
customers especially housewives,
Tesco preferred a clean and sophisticated
Today
atmosphere along with low prices
Consequences
Overview:
 On April 28, 2006, France based
Tesco Carrefour SA (Carrefour) sold its 32
Strategy hypermarkets in South Korea to E.Land
Concepts Corporation for $1.3 billion (1.75 trillion
Tesco Won).
Successes
 The sale marked the exit of Carrefour
Case #1 from the South Korean organized retail
market.
Case #2

Tesco
Today
Unlike Tesco
 Carrefour failed in the store site selection
Overview:
Tesco  Did not offer customers the appropriate
Strategy products
Concepts  Ventured to an international market
Tesco without a local partner
Successes
 Failed to understand the new market
Case #1  Employed most of their management
personnel from France instead of hiring
Case #2
local people
Tesco
Today
Pepsi’s Background
 An American multinational corporation with
Overview:
Tesco
interests in manufacturing, marketing and
selling a wide variety of carbonated and
Strategy non-carbonated beverages
Concepts
 The Pepsi Cola Company began in 1898 by
Tesco
a Pharmacist and Industrialist Caleb
Successes
Bradham, but it only became known as
Case #1 PepsiCo when it merged with Frito Lay in
1965.
Case #2  PepsiCo is a world leader in convenient
snacks, foods and beverages with
Tesco revenues of more than $39 billion, over
Today
185,000 employees, in various countries.
Global Business
Overview:
 Pepsi adopted a route of forming
Tesco alliances with local partners.
Strategy  In 1966 Pepsi enters Japan and Eastern
Concepts
Europe which were its first international
Tesco
Successes
ventures.
 In 1972 Pepsi became the first foreign
Case #1
product sold in, the then, U.S.S.R.
Case #2
 In 1985 Pepsi enters China.

Tesco
Today
Entry into China
 Entered into a joint venture with a Chinese
Overview:
Tesco partner: Sichuan Pepsi-Cola Beverages
Strategy
Company Limited.
Concepts  Pepsi proceeded cautiously, taking small
Tesco stakes in joint ventures, because of China’s
Successes difficult and unpredictable investment
climate.
Case #1
 Pepsi was a beverage giant in China, with
Case #2 40 wholly-owned and joint ventures,
including 15 bottling plants and four snack-
Tesco food factories, and employs 10,000 people.
Today
What Went Wrong
 PepsiCo’s joint venture with Sichuan, its
Overview:
Tesco partner, was brought down by disputes
Strategy
over profits, government intervention
Concepts and management style.
Tesco  PepsiCo accused Sichuan of financial
Successes irregularities and keeping Pepsi out of
the management.
Case #1
 Making life tougher for Pepsi was the
Case #2
government’s heavy intervention in the
market. The government requires them
Tesco to devote 30% of their investment to
Today
developing local brands.
Consequences
 As the majority shareholder, Sichuan
Overview:
Tesco appointed all important personnel positions –
legal representative, managing director and
Strategy
Concepts general manager.
Tesco  Pepsi and Sichuan fell out over future
Successes strategy and management style.
 It invested over $800m with annual revenues
Case #1
of $700m. It pays an average of $50m in
taxes to the Chinese government each year.
Case #2
 Pepsi is losing a lot of money.
Tesco
Today
Unlike Tesco
Overview:
 Pepsi’s partner for joint ventures and
Tesco strategic alliances undermined them.
Strategy  Did not have clear agreements with one
Concepts
another
Tesco
Successes  Lacked local responsiveness
 Lacked understanding of the political
Case #1
climate: China’s government
Case #2

Tesco
Today
Overview:
Tesco
Strategy
Concepts
Tesco
Successes

Case #1

Case #2

Tesco
Today
Tesco
Recommendations
Overview:
 Strong , established competitors
Tesco  Trader Joe’s &Whole Foods, County
Strategy Market
Concepts
 Competencies  Advantages
Tesco
 Strong brand identity
Successes
 Expanding store sites: lower-income
Case #1
 Regional employee selection

Case #2  Varied product offerings

Tesco
Today
hanks for listening.