Tesco's Experience in the Middle Kingdom

Case Code: BSTR303
Case Length: 20 Pages
Period: 2002-2008
Pub Date: 2009
Teaching Note: Available

Price: Rs.300
Organization: Tesco
Industry: Retail
Countries: UK
Themes: International Business, Globalization Business

Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

The 2000s witnessed the entry of several international retailers into emerging markets. The reason for this could be as much attributed to saturated markets and cut-throat competition in developed countries as to the untapped opportunities in emerging markets. Tesco, the UK-based retailer, operated in several emerging markets in Europe and Asia. The case focuses on the entry and expansion strategies of Tesco in the Chinese market. Tesco made several international forays in the 1990s and 2000s. Tesco developed an international strategy that involved having consistent processes and policies while making localization efforts that took into account cultural differences and local preferences.

The Chinese retail sector offered huge opportunities for international retailers with the average annual growth in the last 20 years being around 15 percent. Tesco entered China in 2004, after several successful Asian ventures including Thailand, South Korea, and Japan. The Chinese market was a very different market in terms of tastes and preferences from the other markets that Tesco operated in. Therefore, it decided to enter the country through a joint venture so that it could learn about the market through its partner, which had operated in the market for several years. Also, by the time Tesco entered China, other multinational retailers like Wal-Mart and Carrefour were already well established in the market.

The case discusses how Tesco faced the challenges in an emerging market like China by adopting strategies to suit that market. Some of the strategies like entry and expansion strategies, store management, and localization strategies are dealt with in detail. The case ends with a discussion on the challenges that Tesco faces in the country.

Issues

The case is structured to achieve the following teaching objectives

Study and analyze the entry of Tesco in an emerging market such as China
Examine Tesco's expansion into China
Examine how Tesco implemented the localization strategies in China
Study how Tesco achieved a balance in implementing its global retailing best practices and localizing to suit the needs of Chinese customers
Examine the challenges faced by Tesco in China
Gain insights into the growth and development of the retail industry in China

Introduction

Background Note

Tesco's Global Operations and Strategy

Tesco Enters China

Expansion Strategies

Store and Merchandise Management

Localization Strategies

The Challenges

Exhibits