Market Failures

Group members: Jack, Tawan

Case study: ​Tesco

Best Buy in UK
Walmart in Germany
Mattel (Toy company) in China
Tesco in the US
eBay in China
McDonalds in Bolivia
Others.

Instructions
Assess each of the factors that a business has to consider when entering a new market. Decide
if the factor was a contributing cause for the failure in expansions.

Include a link in APA for each factor that supports your answer.

Factor Why or why wasn’t this a contributing factor to a failure

in market expansion

Taste, Trend, Cultural Practices Tesco normally opens an hour early for UKs to grab a
coffee before work. They provide new things that
Americans did not have but just not enough benefit for
Americans to walk in.

For taste, Tesco spent two years and $1 billion

researching to adjust their ready-to-eat meal recipe to fit
the preferences and lifestyle of Americans.

Operating cost and cost of product November 2007 to April 2013, six years. They have
operated 2 billion dollars in operating cost.

"Tesco entered the U.S. market in November 2007 with

almost a $500 Million investment."

"The supermarket group booked a loss of 1.2 billion

pounds ($1.8 billion) for the U.S. misadventure, which
helped send net profit for the year down 96% to 120
million pounds ($183 million)."

Rate of Expansion Some of their stores in California and Nevada where

people barely used trains. Since the stores nearby train
stations were the most successful in the UK, Tesco
wanted to apply it in the US but failed to study the
 lifestyle of each city.

"They opened the first retail store in Los Angeles,

California. Soon after that, they started opening more
branches across the state of California and eventually
expanded into Arizona and Nevada."

Timing (how is the economy doing
when they are expanding?)
"The 2007 financial crisis is the breakdown of trust that
occurred between banks the year before the 2008
financial crisis. It was caused by the subprime mortgage
crisis, which itself was caused by the unregulated use of
derivatives. This timeline includes the early warning
signs, causes, and signs of breakdown. It also recounts
the steps taken by the U.S. Treasury and the Federal
Reserve to prevent an economic collapse. Despite these
efforts, the financial crisis still led to the Great
Recession."

Local Competition ● Trader Joe's

● Whole/Wild Oats
● Bristol Farms
● Albertsons
● Wal-Mart
● Vons/Pavilions
● Ralphs

Branding issue Tesco normally opens an hour early for UKs to grab a
coffee before work. They provide new things that
Americans did not have but just not enough benefit for
Americans to walk in.

Strength: Weakness

The brand has a reputation from the UK and Americans are a tough consumer and since
has a very wide range of targeted consumers. many Americans are Nationalist, it is difficult
They also did research preparing themselves for them to open to new things especially if it
for the lifestyles of American. competes with their national products.

Opportunity Threats

If Tesco targets the right region, timing, and There are already many existing competitors
customer, their business can really go in the US which is a tough part of investing in
through the roof by one decision. the US.
APA:

● Geoghegan, T. (2011, May 04). Why is tesco struggling in the US? Retrieved February
04, 2021, from ​https://www.bbc.co.uk/news/magazine-13190124
● LANDON, P., Hallidaysays:, L., Phillipssays:, S., Rileysays:, J., & Maddiesays:. (2019,
May 27). Why Tesco failed in the U.S. Retrieved February 04, 2021, from
https://globalmarketingprofessor.com/why-tesco-failed-in-the-u-s/
● Onikoyi, O. (2019, October 02). The failure of Tesco in the USA. Retrieved February 06,
2021, from ​https://medium.com/swlh/the-failure-of-tesco-in-the-usa-d2823842ffbb
● Mattinson2021-01-14T09:03:00+00:00, A. (2021, January 14). City snapshot: Tesco
posts Christmas sales growth of 8.1% AS Covid costs mount. Retrieved February 06,
● https://www.usatoday.com/story/money/business/2013/04/17/tesco-exits-usa/2090801/
● https://www.thebalance.com/2007-financial-crisis-overview-3306138
●