Entry & Expansion Strategy: Tesco in Japan
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Case Code: BSTR297 Case Length: 18 Pages Period: 2000-2007 Pub Date: 2008 Teaching Note: Not Available |
Price: Rs.300 Organization: Tesco Industry: Retail Countries: Japan Themes: International Business, Globalization Business |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Tesco's Global Operations and Strategy
Tesco's international foray began with its entry into Ireland in 1979 through the acquisition of a 51 percent equity stake in 3 Guys stores owned by Albert Gubay . In 1986, Tesco divested itself of its stake in the stores when it found that customers were rejecting the British products sold there...
Tesco's Entry into Japan
Tesco's first Asian venture was in Thailand in 1998 through a joint venture with the Lotus chain. As it got a good response in Thailand, Tesco decided to expand into other Asian countries, and sensed an opportunity in the Japanese market. Japan was the world's second biggest retail market. There were several opportunities available for companies which provided products and services that offered quality, style, luxury, and convenience. It had a well developed consumer base with high amounts of disposable income...
Expansion Strategies
In order to further strengthen its foothold and expand its presence in the Japanese market, Tesco went on to acquire a few more retailers which were not performing well in the market. In April 2004, it acquired Fre'c (Fresh and Cost), located in Chiba and Saitama. The company was not doing well and had an outstanding debt of ¥ 10 billion. As part of the acquisition, ¥ 3 billion of Fre'c's debt was paid by C Two-Network...
Localization Strategies
The look and feel of Tesco Express stores in Japan was very local and the stores were designed keeping in mind the Japanese mentality. They were located in central areas within the city as the Japanese did not like to travel long distances for shopping...
Outlook
The markets of Asia, especially Japan, had proved tough for foreign retailers. This was mainly due to the inconsistant shopping habits of Japanese consumers and the fierce competition. The failed attempts by firms such as Carrefour and British drugstore Alliance Boots signified that the Japanese market was a tough nut to crack. Even one of the biggest local retailers, Aeon, witnessed an 18 percent fall in its operating profit to ¥156.04 billion for the year ended February 2008 in its supermarket business...
Exhibits
Exhibit I: Tesco: Store Formats
Exhibit II: Turning Points in Japan's Retail Industry
Exhibit III: Timeline of the Alliance between Tesco and C Two-Network
Exhibit IV: Japan's Top Ten Retail Stores
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