Essay about Tesco - International Strategy

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EXECUTIVE SUMMARY After years and years of pursuing Sainsbury as the United Kingdom’s largest retailer, Tesco PLC broke through in 1995 and has become not only the largest retailer in the UK, but also the world’s 4th largest retailer, trailing only Wal-Mart, Carrefour and Germany’s Metro AG. Originally, Tesco’s soul focus was the retail grocery market. As of February 2010, the grocery market continues to be Tesco’s largest source of revenue and it has accounted for more than 50% of Tesco’s £ 59.4 billion of sales. Further, Tesco does not limit its operation strictly to the United Kingdom. Currently, Tesco resides in 13 countries worldwide and operates 1,911 stores across Europe and Asia. The company has also expanded in the United…show more content…
By doing so, they have placed more of an emphasis on non-food products – clothing, photolabs, televisions, flowers, pharmaceutical products, etc. – which have higher profit margins than Tesco’s traditional source of revenue, groceries. From here, Tesco differentiates its subsidiaries from its previous owners by aggressively negotiating with local suppliers, implementing its customer loyalty program, adding gas stations to the property, opening its stores for 24 hours and by offering discount brands to go along with its “good, better, best” value pricing strategy (Corporate Watch Site). Also, within the past two years Tesco has been outsmarted by Asda and Sainsbury in price-comparison initiatives and targeted marketing campaigns in UK. This has lead to trailing growth trends and stagnating market share for Tesco as displayed in Exhibit A (Tesco UK PDF). This is in turn, places more of an emphasis on the company’s growth and profitability in foreign markets.
Generally speaking, Tesco targets emerging markets such as the Czech Republic while working to take advantage of the large consumer markets in both China and the United States. In addition to company acquisitions such as its Fresh and Easy stores in the United States, Tesco looks to joint ventures to stimulate growth as exemplified by Samsung Group (Samsung and Tesco Home Plus) in South Korea and Tesco Lotus in Thailand. Despite the recession, Tesco showed 10.1% profit growth in 2009 on $96
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