Tesco in Turkey

Tesco in Turkey
Case Code: BSTR407
Case Length: 15 Pages
Period: 2002-2011
Pub Date: 2012
Teaching Note: Not Available
Price: Rs.500
Organization: Tesco Plc.
Industry: Retail
Countries: UK, Turkey
Themes: International Business, Globalization
Tesco in Turkey
Abstract Case Intro 1 Case Intro 2 Excerpts


In December 2011, Tesco Kipa, the Turkish arm of the leading UK-based retailer, Tesco Plc. (Tesco) entered into an agreement with Turkey-based supermarket chain Ardas Gida Dagitim Sanayi & Ticaret AS (Ardas) , to acquire the 21 stores that Ardas operated across the country.

This was Tesco's most major acquisition in Turkey after it entered the market in 2003 by acquiring the Kipa Kitle Pazarlama Ticaret ve Gida Sanayi AS (Kipa) chain. Post acquisition, the company was called Tesco Kipa. It grew rapidly and within five years, it was operating through 77 stores in different formats.

Though Tesco had been operating in the country for several years, it had not managed to become one of the top players in Turkish retail. For the financial year ending February 2011, the contribution of the Turkish operations stood at £ 700 million out of Tesco's total revenue of £ 60.9 billion. Tesco's US operations with revenue of £ 495 million, and Japanese venture with £ 476 million were behind Turkey as far as revenues were concerned.

After Tesco announced its exit from Japan in August 2011, citing failure to build a successful and scalable business as the reason, analysts predicted that Tesco would exit from the USA, Turkey, and China, where its performance was not up to the mark. But others were of the view that Tesco would continue operating there. According to analysts from Barclays Capital, "Although this sale is likely to cause investors to look toward potential exits of other loss making/underperforming markets (US, China, Turkey for example), we believe Tesco views these countries as much longer-term growth opportunities than Japan was ever likely to be, and therefore the decision to exit is significantly harder."

Tesco showed no signs of exiting the market. On the other hand, it announced that it intended to expand in Turkey and increase the number of stores to 150 by the end of 2012. Mike Arnott, Trading Director of Tesco Kipa, said, "We may consider acquiring some Turkish retail chains as we are open to all possibilities to grow in Turkey." Observers, however, remained skeptical about Tesco's future prospects in the market.

Buy this case study (Please select any one of the payment options)

Price: Rs.500
Price: Rs.500
PayPal (11 USD)

Custom Search