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 Strategies in South Korea

Entry and Expansion Strategies

In the early 1990s, consumers' demand for a modern shopping experience in South Korea was increasing owing to rapid economic growth and increasing disposable incomes. The government had adopted protectionist policies and the retail sector was not open for foreign direct investment.

The retail sector was dominated by mom-and-pop stores , which accounted for about 80% of the total retail sales in the country at that time. By 1996, the regulations governing the retail industry had been eased, but South Korea still did not have a conducive business environment to operate in, especially where foreign retailers were concerned (Refer to Exhibit IV for a note on retail industry in South Korea).

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In the aftermath of the East Asian Financial Crisis , the South Korean government eased regulations pertaining to FDI in order to attract foreign direct investment (FDI) into the country...

Looking Ahead

Initially, Tesco did not have any hypermarkets in the UK and it expanded its international operations by opening hypermarkets abroad. This proved to be an advantage, as Tesco did not try to replicate its standard practices in the UK in other countries and instead started afresh according to the local needs and demands. When Tesco began opening hypermarkets in the UK, its international experience was very useful. Tesco's lessons in localization helped it serve its customers better. For example, in Britain, where there was a high concentration of immigrants, Tesco's stores offered specific products to cater to their needs...


Exhibit I: Tesco's Turnover & Operating Profit (1995-2006)
Exhibit II: The Tesco Way
Exhibit III: Tesco - International Operations
Exhibit IV: Retail Industry in South Korea

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