One of the largest retailers in the world, UK-based Tesco Plc. (Tesco), operated in several countries across the world. Its international strategy was to acquire local companies, turn them into subsidiaries, and operate them while maintaining the local ethos. At the same time, Tesco brought some of its time-tested best practices into these countries. One such country where Tesco operated was Turkey, which it entered in 2003 attracted by the huge growth potential, high purchasing power, and growing young population that the market presented. Tesco acquired a local store chain, Kipa, in the country and operated as Tesco Kipa. However, Tesco was not able to perform as per its expectations in the country – it failed to expand rapidly and its presence stood limited to only certain regions. It also faced huge competition from other international retailers like Germany-based Metro and France-based Carrefour, which had a formidable presence in Turkey. The local stores and traditional markets with their strong and wide presence across the country also provided products and services on a par with the multinational retailers. Tesco Kipa failed to make profits and the losses started to mount after 2010. The solution lay in expanding rapidly and gaining a pan-Turkey presence, which called for huge investments. The parent company, which itself was facing problems in its home market, was not keen on investing more funds in expanding its Turkish operations. At the same time, Tesco witnessed a change in leadership and the new CEO, Dave Lewis, wanted to shed some non-core assets, including loss-making international operations. This made Tesco decide to exit Turkey. The case discusses in detail the retail landscape of Turkey, the factors that made the country attractive to several international retailers, the entry and expansion strategies of Tesco in Turkey, the changing face of competition in the market, and the factors that led to Tesco’s exit.

Business Environment Case Studies | Case Study in Management, Operations, Strategies, IT and Systems, Case Studies

Business Environment Case Studies Case Studies | Case Study in Management, Operations, Strategies, IT and Systems, Case Studies

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Issues

The case is structured to achieve the following teaching objectives:

	Determine how the environment in emerging economies affects the strategies of global companies
	Examine the reasons that prompt the retailers to go in for international expansion
	Understand the reasons for divestment in global retail

Contents

INTRODUCTION

THE RETAIL BEHEMOTH

TURKEY – THE RETAIL LANDSCAPE

TESCO IN TURKEY

EXPANSION

THE GOING GETS TOUGH…

…IN OTHER MARKTS

TROUBLES IN TURKEY

THE CHANGING LANDSCAPE

TESCO’S EXIT

EXHIBITS

Keywords

Tesco,Turkey,Retail,Overseas markets,Political aspects,Economic aspects,Cultural aspects,Country analysis,Competition,Competitive advantage,Emerging markets,Strategic decisions,Entry mode,Exit,International markets

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