BA3101

International Business Trade

10 Task Performance 1

Tesco’s International Growth Strategy

1. Why did Tesco’s initial international expansion strategy focus on developing

nations?
 Tesco's early development plan concentrated on underdeveloped
countries since they offered the best chances. Tesco had the best
chances for expansion and success in these markets since there were few
rivals and a lot of room for growth. They also allowed the corporation to
sell products to clients who had never seen them before, resulting in the
creation of a new customer base for its goods and services.
2. How does Tesco create value in its international operations?
 Tesco was able to add value to its overseas operations by supplying items
to the foreign market that were not generally accessible and met a need
from local consumers. Because these items were not generally accessible
among local rivals, Tesco had a significant edge when entering the
market. They were able to charge higher rates and significantly boost
sales volume by supplying items that were only available to these
customers. Tesco went into growing regions with few rivals in order to
secure the success of these items, creating a supply and demand
situation. They also made sure to work with local partners that were
familiar with the market but lacked Tesco's finance and trade capabilities.
3. In Asia, Tesco has a history of entering into joint-venture agreements with local
partners. What are the benefits of doing this for Tesco? What are the risks? How
are those risks mitigated?
 Tesco benefited from forming joint ventures with local partners by
establishing a strong cultural sensitivity to the local market and
consumers. Asian nations have a high context culture, which necessitates
the development of interpersonal interactions with them in order for
businesses to succeed. It assured that the corporation would have the
chance to create ties with the locals and increase their cultural awareness
of the market by recruiting local people, such as managers, to operate the
local operations. The benefit of these acts is that they develop
connections and trust, which reduces the risks of investing in these
 companies and assures that they have a good growth potential. Tesco
was also able to generate a steady client base for their products and a
cost edge over future competitors by establishing a footing in these
regions. This cost advantage would enable them to reduce their prices in
order to drive out any new competitors and assure Tesco's win.
 Tesco's greatest danger was the responsibility that comes with being a
foreign firm in an unknown market and making huge blunders. Tesco
mitigated this risk by partnering with local partners that are already familiar
with the culture and market, lowering the danger of making a mistake due
to cultural misunderstanding.
4. Tesco’s entry into the United States represented a departure from its historic
strategy of focusing on developing nations. Why do you think Tesco made this
decision? How is the U.S market different from other markets that Tesco has
entered?
 Tesco decided to exit the US market because they were successful in
other international markets and knew what it took to conduct business in
other nations. They also took sure to do their homework before jumping
into the market, in order to minimize the dangers. Finally, they felt that the
rising economy and property values in the US market would help them
succeed.
 When Tesco was entering a market with existing strong rivals, the US
market is different from other markets. Tesco also lacked business
analytics and technology, two key components for success in emerging
countries. Tesco would be unable to acquire market domination without
these advantages.