Tesco originated in the aftermath of World War I by purchasing and selling surplus military supplies. The company be- came a readily identifiable feature of the UK retail scene. Known as a “Pile it high, sell it cheap” retailer with outlets in almost every town and city, Tesco knew its place in the class-basedpecking order of the UK market, in which chains such as Sainsburys and Marks & Spencer met the needs of consumers with more disposable income and more refined tastes. During the recession of the mid-1980s, a new chairman ushered in a new management team that changed the corporate culture and its market position radically. Relying on a cohort of young, talented executives with an innate understanding of the UK consumer market, Tesco became a store to meet all UK shoppers’ needs. It crushed the competition, including the Walmart-backed Asda. Tesco’s approach to become market leader was to improve every aspect of its operations, including distribution, marketing, land acquisition, and product innovation. The key driver was a change in corporate culture to emphasize attention to people. The new management prized loyalty and commitment from staff and was determined to make Tesco the employer of choice in the retailing sector. Tesco's international foray began with its entry into Ireland in 1979 through the acquisition of a 51 percent equity stake in 3 Guys stores owned by Albert Gubay . In 1986, Tesco divested itself of its stake in the stores when it found that customers were rejecting the British products sold there... By treating the market as an extension of the UK operations, they neglected to adapt to local Irish tastes and suppliers which resulted in a general distrust on the part of the local consumers due to the fact there were few Irish products offered for sale (Palmer, 2004). Like Walmart would do in Germany, they also made a poor choice in their wholly owned purchase as the stores they acquired were mostly in poor, less densely populated locations not well suited for Tesco’s products. Tesco sold their stores to an Irish supermarket chain in 1986. Interestingly, Tesco re-entered the Irish market in 1997 with the purchase of another food retailer, this time securing the position as largest food retailer in Ireland with 109 stores. Although cautious initially to not repeat errors which led to customers’ distrusting the Tesco brand, the company again failed to meet customers’ expectations. Legal problems concerning female employees’ dress code and a revelation that the company was regularly overcharging customers in error and not fully refunding the charges created new distrust for Tesco on the part of the Irish consumers (Palmer,2004). Learning from previous mistakes and with scale surpassing all other Irish food retailers, Tesco adopted a “buy Irish” campaign to improve their image and currently over half of the products sold in their Irish stores are Irish made or grown. They purchase over €650 million in Irish products each year for export to their global stores (Tesco, PLC, 2008). In the smaller and less distant cultures of central Europe this had worked well—then came France. The setback across the Channel was no great surprise; UK competitors such as Marks & Spencer had also found the British–French cultural gap too wide, even though France was Britain’s nearest neighbor. In fact, Tesco made English its operating language, which was more challenging in France than in the other countries where it operated. In 1992, Tesco attempted entry into the French market partnering with a small regional chain through the purchase of 85 per cent stake, in hopes of expanding it into a national wide brand. Hindered by a downturn in the market and concern across Europe as Walmart entered Germany while Carrefour and Casino expanded, Tesco was handicapped by their lack of experience in global markets. Ultimately it became apparent that the amount of effort needed from the domestic office to sustain the French market exceeded the profits returned to the company, and Tesco chose to divest from the market to focus their attention on the more profitable domestic and international markets (Palmer, 2004). Yet as an example of the need for retailers to plan for divestment in conjunction with market entry strategy, it took three years for Tesco to locate a suitable purchaser for their French stores, finally selling the chain of 90 stores to Promodes in 1997. What international entry mode can be used in the Irish and French market other than acquisition.
Tesco originated in the aftermath of World War I by purchasing and selling surplus military supplies.
The company be- came a readily identifiable feature of the UK retail scene. Known as a “Pile it high, sell it cheap” retailer with outlets in almost every town and city, Tesco knew its place in the class-basedpecking order of the UK market, in which chains such as Sainsburys and Marks & Spencer met the
needs of consumers with more disposable income and more refined tastes. During the recession of the mid-1980s, a new chairman ushered in a new management team that changed the corporate culture
and its market position radically. Relying on a cohort of young, talented executives with an innate understanding of the UK consumer market, Tesco became a store to meet all UK shoppers’ needs. It crushed the competition, including the Walmart-backed Asda. Tesco’s approach to become market leader was
to improve every aspect of its operations, including distribution, marketing, land acquisition, and product innovation. The key driver was a change in corporate culture to emphasize attention to people. The new
management prized loyalty and commitment from staff and was determined to make Tesco the employer of choice in the retailing sector.
Tesco's international foray began with its entry into Ireland in 1979 through the acquisition of a 51 percent equity stake in 3 Guys stores owned by Albert Gubay . In 1986, Tesco divested itself of its stake
in the stores when it found that customers were rejecting the British products sold there... By treating the market as an extension of the UK operations, they neglected to adapt to local Irish tastes and
suppliers which resulted in a general distrust on the part of the local consumers due to the fact there were few Irish products offered for sale (Palmer, 2004). Like Walmart would do in Germany, they also made a poor choice in their wholly owned purchase as the stores they acquired were mostly in poor,
less densely populated locations not well suited for Tesco’s products. Tesco sold their stores to an Irish supermarket chain in 1986. Interestingly, Tesco re-entered the Irish market in 1997 with the purchase
of another food retailer, this time securing the position as largest food retailer in Ireland with 109 stores.
Although cautious initially to not repeat errors which led to customers’ distrusting the Tesco brand, the company again failed to meet customers’ expectations. Legal problems concerning female employees’ dress code and a revelation that the company was regularly overcharging customers in error and not fully refunding the charges created new distrust for Tesco on the part of the Irish consumers (Palmer,2004). Learning from previous mistakes and with scale surpassing all other Irish food retailers, Tesco adopted a “buy Irish” campaign to improve their image and currently over half of the products sold in
their Irish stores are Irish made or grown. They purchase over €650 million in Irish products each year for export to their global stores (Tesco, PLC, 2008).
In the smaller and less distant cultures of central Europe this had worked well—then came France. The setback across the Channel was no great surprise; UK competitors such as Marks & Spencer had also found the British–French cultural gap too wide, even though France was Britain’s nearest neighbor. In fact, Tesco made English its operating language, which was more challenging in France than in the other countries where it operated. In 1992, Tesco attempted entry into the French market partnering with a small regional chain through the purchase of 85 per cent stake, in hopes of expanding it into a national wide brand. Hindered by a downturn in the market and concern across Europe as Walmart
entered Germany while Carrefour and Casino expanded, Tesco was handicapped by their lack of experience in global markets. Ultimately it became apparent that the amount of effort needed from the domestic office to sustain the French market exceeded the profits returned to the company, and Tesco chose to divest from the market to focus their attention on the more profitable domestic and international markets (Palmer, 2004). Yet as an example of the need for retailers to plan for divestment in conjunction
with market entry strategy, it took three years for Tesco to locate a suitable purchaser for their French stores, finally selling the chain of 90 stores to Promodes in 1997.
What international entry mode can be used in the Irish and French market other than acquisition.
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