Tesco's Globalization Strategies and its Success in South Korea

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Case Details:

Case Code : BSTR242
Case Length : 20 Pages
Period : 1995-2006
Organization : Tesco
Pub Date : 2006
Teaching Note :Not Available
Countries : South Korea
Themes : Globalization | International Business
Industry : Retail

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Tesco's Global Operations

Tesco entered Ireland in 1979, when it acquired a 51% equity stake in 3 Guys stores owned by Albert Gubay. In 1986, Tesco divested itself of the store when it found itself unable to sustain its operations in the country as customers were rejecting the British products that it sold in its stores. During the late 1980s and the early 1990s, Tesco examined the options available in the US and European countries, after the government's regulations regarding the out of town stores.

In December 1992, Tesco entered France by acquiring an 85% equity holding in Catteau supermarkets, which operated under the Cedico brand with 72 superstores, 7 hypermarkets, and 24 small stores.

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However, Tesco failed to sustain itself in the market due to competition from French retailers like Carrefour and Promodès. In 1995, a law was passed in France which prohibited the opening of new large retail stores...

International Strategy

Tesco had learnt some lessons on globalization from its bitter experiences in France and also from other companies like Marks & Spencer , the UK-based clothing retailer. Its experiences in France gave it an insight about the functioning of different markets.

Tesco realized that business strategies that were successful in the UK would work in the other markets only if they were given a local flavor. The company also learnt that it was important to hire local staff and use personnel from the UK to spread knowledge about the company.

In the case of Marks & Spencer, the company tried to offer typically British products to customers in other countries. It opened its first store in France in 1975 and the next store in 1977. In France, sophisticated and fashionable customers did not like the garments styled in a typically British manner. In other European countries, shoppers found that they could obtain better quality products at lower prices locally. Marks and Spencer also ventured into Canada in the early 1970s, but it was considered to be a store for senior citizens...

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