Top European and American corporations have noticed long ago that home markets did not give them sufficient opportunities for growth, and started expanding to those countries which offered them possibilities to obtain large revenues in future. UKs top supermarket Tesco regards international expansion as one of key determinants of its success in the world market. In this investigation it is expected to provide recommendations for the development of Tescos international strategy.
The paper seeks to address this question by hypothesizing that China needs to become the key international destination for Tesco and the companys current state enables it to get well-positioned in Chinas retailing market in the following years. Primary attention is devoted to the determination of marketing mix components for Tesco in the new market and development of efficient methods of further marketing research. Characteristics of Tescos International Strategy. Tesco is one of the largest players among supermarket retailers in the UK.
The range of services which the supermarket offers is literally unlimited. Tesco offers both food and non-food products, according clothing, electric appliances, entertainment goods and many other items. The managers of the store are sure that the large variety of products offered to the customers ensures the increasing profitability of the company. Tesco operates both in the international and in the home market. Tesco has expanded in twelve countries, including Poland, Hungary, the Czech Republic, Slovakia, Thailand, Malaysia and others.
Even though its share in relatively small in the international market, it has been growing during the last years. Tescos major competitors in the world market are Wal-Mart, Target, Carrefour and others. One of the major current competitors which Tesco has in the domestic market is Sainsbury because it is ranked second by the market share in the UK. Due to the efficient allocation of resources, Tesco has won the battle for the market share. TESCO has won the store wars, toppling Sainsburys from the number one spot after 10 years.
The supermarket rang up pounds 13. 8 billion last year putting it pounds 400 million ahead of Sainsburys. (Kevan 1998: 2). The reason of this victory can be found in efficient pricing and consumer-oriented strategy applied by the company. Tesco managers combined high quality of products which attracts customers with relevant prices, and this increased the sales. Besides, innovation schemes have been applied by Tesco managers. Another reason of Tesco growing profitability is the quality of its human resources.
The strategy of Tesco recruitment consists in employing people with great skills and high potential and providing very favourable working conditions for them. One of the recent innovations applied by the management include profit-share schemes which enable employees to participate in the profits of the company. The companys profit-share scheme, which is now the biggest of any private- sector UK company, is expected to pay out more than pounds 40 million in bonuses. The 106,000 staff included in the scheme will receive an extra four per cent on top of their pay. (Shillingford 1999, p. 46).
In order to attract more customers, managers of Tesco constantly consider the variety of products offered and new markets in which the company could start offering its products. They constantly check for new products which can be needed by customers. Tesco has got involved in the e-commerce business due to its increasing importance in the world. Overall, Tescos advantage in comparison with ASDA and Sainsbury can be summarized in the following way, according to Tescos deputy chairman: If you wander around different stores, you might well be puzzled as to why one has higher revenues than another.
The answer, I believe, depends to a large extent on how you deal with customers, which in turn depends on how you deal with your own staff. (Child 2002: 137). Conclusion. Tesco currently occupies a highly competitive position in the world retailing market. Due to its well-balanced international strategy, the company has already expanded in many countries in Europe and Asia and increased the shareholders value as the result of these expansions. Tesco is growing faster than its competitors and thus needs to keep expand its activities internationally to obtain a larger share of the world market.
Tesco has the highest growth potential in the industry of supermarket retailing, even in comparison with retailing giants which are much larger than Tesco by size. China gives Tesco a great opportunity for worldwide expansion because the number of consumers will be constantly growing in this country. Even though competition is currently large in Chinese market and represented by both local and international companies, Tesco is able to establish a firm position in this market by applying all of the tools which made it so successful in the domestic market and put at the top of the industry.
Tesco has already expanded into many countries and it could search domination in such markets as, for example, Poland, Thailand, or South Korea. However, the growth potential of China is much larger than of the mentioned countries. By providing extensive investments into China and starting to conquer Chinese market, Tesco will be capable to ensure that its potential for growth in the following years will be fully realized.
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