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Contents
Introduction.................................................................................................................................................3
International marketing and the main differences to local marketing..........................................................4
The scope and key concepts of international marketing..............................................................................5
Internal and external capabilities of the company (SWOT).........................................................................6
Environmental analysis for Tesco (PESTEL)..................................................................................................8
Industry analysis (Porter’s Five Forces)......................................................................................................9
Market entry strategy.................................................................................................................................10
The product, pricing, promotional and distribution approach....................................................................11
Conclusions...............................................................................................................................................12
References.................................................................................................................................................13
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Introduction
Tesco is a multinational British retailer of groceries and other goods with its corporate office in
Welwyn Garden City, Dorset, England, United Kingdom. It ranks ninth in terms of revenue and
third in terms of gross revenues among all retailers worldwide. In the UK, France, Hungary,
Malaysia, and Thailand, it leads the grocery market and has outlets in 12 different countries in
Asia and Europe (Aiello et al., 2020) Tesco provides a wide range of goods and services, such as
food, apparel, home goods, and financial services. The business is a market leader in UK e-
commerce and has a significant online presence. The London Stock Exchange has Tesco's stock
listed for trading.
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International marketing and the main differences to local marketing.
International marketing is the process of adapting a company's products and services to suit the
needs of customers in multiple countries (Tien et al., 2019). It involves adapting the product to
the local market, including the language, culture, and customs. International marketing also
involves understanding the laws and regulations of each country, as well as the local
competition. The main difference between international marketing and local marketing is the
scale of the operation. International marketing requires a greater understanding of different
cultures and customs, as well as an understanding of the local laws and regulations. Local
marketing is more focused on a specific geographical area, and may not require as much
understanding of different cultures.
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The scope and key concepts of international marketing.
The scope of international marketing is much wider than that of domestic marketing, as it
includes not only the marketing mix, but also the political, economic, social, and cultural
environments of the countries in which the company is doing business. The key concepts of
international marketing are the same as those of domestic marketing, but they must be applied in
a cross-cultural context. Political factors, such as the stability of the government, trade barriers,
and currency exchange rates, can have a major impact on international marketing. Economic
factors, such as the level of economic development, inflation, and interest rates, can also affect
marketing decisions. Social factors, such as the culture, religion, and demographics of a country,
can also influence marketing decisions (Wilkins et al., 2019). And finally, cultural factors, such
as language and communication styles, can make it difficult to market products and services in
another country. To be successful in international marketing, companies must understand all of
these factors and how they can affect the marketing mix. They must also be able to adapt their
marketing mix to the specific needs and wants of each country.
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Internal and external capabilities of the company (SWOT).
Strengths
Scale: Tesco is the UK's largest retailer, with a market share of around 27.4%. It has over 3,400
stores in the UK, as well as operations in several other countries.
Brand: Tesco has a strong brand and reputation, built up over many years. It is the second most
valuable grocery brand in the world, worth an estimated $10.7 billion.
Cost base: Tesco is a vertically integrated company, with its manufacturing, distribution and
logistics operations. This gives it a cost advantage over many of its competitors.
Online presence: Tesco has a strong online presence and is continuing to invest in this area. In
the UK, it is the third largest online retailer, with around 18% of the market.
Weaknesses
Reliance on the UK market: Tesco generates around two-thirds of its sales and profits from the
UK market. This makes it vulnerable to economic conditions in the UK.
Exposure to the competitive grocery market: The grocery market is highly competitive, with
several large retailers operating in the UK. This puts pressure on Tesco's margins.
High level of debt: Tesco has a relatively high level of debt, which stood at £12.5 billion at the
end of 2017. This could put pressure on the company if interest rates rise or the economy
deteriorates.
Opportunities
Online growth: Tesco is continuing to invest in its online sales, which are growing at around
20% per year.
Expansion into new markets: Tesco is present in several countries outside the UK, including
Ireland, Poland and Thailand. It is looking to expand into new markets, such as the US.
Cost efficiencies: Tesco is looking to drive cost efficiencies through its business, including by
closing underperforming stores and by rationalising its product range.
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Threats
Discounters: The growth of discounters such as Aldi and Lidl continues to put pressure on
Tesco's market share in the UK.
Recession: There is a risk of a recession in the UK, which would impact Tesco's sales and
profits.
Competition: The grocery market is highly competitive and Tesco faces competition from
several large retailers, both in the UK and internationally.
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Environmental analysis for Tesco (PESTEL).
PESTEL is an acronym for Political, Economic, Social, Technological, Environmental, and
Legal (Matovic, 2020). This framework can be used to evaluate the external factors that can have
an impact on a business.
Political factors: The UK political environment is stable, and Tesco has not been impacted by
any major political events in recent years. The government has been supportive of the retail
sector, and Tesco has benefited from this.
Economic factors: The UK economy is currently in a period of growth, and this has been
positive for Tesco. Consumer confidence is high, and spending on groceries has increased.
Inflation is low, and this has helped to keep Tesco’s prices competitive.
Social factors: There has been a trend towards healthy eating in the UK in recent years, and
Tesco has responded to this by offering a wide range of healthy food options. There is also a
growing demand for convenience, and Tesco offers a variety of convenient shopping options,
such as online delivery and in-store click-and-collect.
Technological factors: Tesco has been a leader in the use of technology in the retail sector.
They were the first supermarket in the UK to launch an online shopping service, and they have
continued to invest in online and mobile shopping options. They have also introduced self-
service checkouts and in-store digital screens.
Environmental factors: Tesco is committed to minimising its impact on the environment. They
have introduced several initiatives to reduce their carbon footprint, such as using LED lighting in
their stores and investing in renewable energy.
Legal factors: Several regulations impact Tesco, such as food safety laws and employment laws.
Tesco has a strong compliance team that ensures they meet all relevant legal requirements.
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Industry analysis (Porter’s Five Forces).
Industry analysis is a tool that helps businesses identify opportunities and threats in the
marketplace. It can be used to assess an industry's overall profitability and attractiveness. Tesco
is considering entering the grocery industry in the United States. This industry is already
dominated by a few large companies, so Tesco would need to be aware of the competitive forces
at play.
The first competitive force to consider is the threat of new entrants. The grocery industry is not
easy to enter, as it requires a significant investment in infrastructure and distribution. Tesco
would need to be able to compete on price and convenience to attract customers.
The second competitive force is the threat of substitutes. Grocery stores compete with other
types of retailers, such as convenience stores and online retailers. They also compete with
restaurants and meal delivery services. Substitutes can be a threat to profitability if they offer a
better value proposition to customers.
The third competitive force is the bargaining power of buyers. In the grocery industry, buyers
have a lot of power because there are many options available to them (Mugo, 2020). They can
choose to shop at a traditional grocery store, a discount store, or an online retailer. They can also
choose to cook at home or eat out. Buyers have a lot of choices, so grocery stores need to offer a
compelling value proposition.
The fourth competitive force is the bargaining power of suppliers. Grocery stores rely on
suppliers for food, beverages, and other merchandise. Suppliers have some bargaining power, but
they are also dependent on grocery stores for their business. This relationship is usually
balanced.
The fifth and final competitive force is the intensity of rivalry among existing competitors. The
grocery industry is very competitive, with companies constantly vying for market share. Tesco
would need to be prepared to compete on price, convenience, and customer service to be
successful.
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Market entry strategy
A market entry strategy is a plan for how a company will enter a new market and gain a
competitive advantage. There are several different strategies that a company can use, and each
has its advantages and disadvantages. One common strategy is to simply enter the market and
start selling products or services. This can be a quick and easy way to get started, but it can also
be risky if the company is not prepared to compete against existing businesses (Schoemaker et
al., 2018). Another strategy is to form a joint venture with a local company. This can help the
company to reduce risks and costs, but it can also limit the growth potential. Tesco could use
either of these strategies to enter the market in India. Both would have their advantages and
disadvantages, and it would ultimately be up to Tesco to decide which one would be best for
their business.
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The product, pricing, promotional and distribution approach
The product, pricing, promotional and distribution approaches differ when using a variety of
international markets. The product may be the same, but the pricing will differ based on the
country's economic conditions. The promotional approach will also differ based on the culture.
For example, in some countries, television advertising is the norm, while in others, more
personal approaches such as face-to-face selling are used (Kulsum, 2022). The distribution
approach will also differ. In some countries, distribution is through a network of dealers, while in
others, the company may have its stores. The different approaches used in each country need to
be carefully considered to ensure that the company's objectives are met.
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Conclusions
Tesco should enter the international market because it has the potential to be a profitable venture.
Additionally, expanding into new markets can help Tesco to offset some of the risks associated
with being solely reliant on the UK market. There are several ways in which Tesco could enter
the international market, such as through franchising, joint ventures, or setting up wholly owned
subsidiaries. The most appropriate option will likely depend on the country or region in which
Tesco is looking to expand. Tesco will need to carefully consider the potential benefits and risks
associated with each option before making a decision. Additionally, it is important to ensure that
Tesco has the necessary resources and capabilities in place to successfully enter and operate in a
new market.
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References
Aiello, L.M., Quercia, D., Schifanella, R. and Del Prete, L., 2020. Tesco Grocery 1.0, a large-
scale dataset of Kulsum, N.M., 2022. Road Safety Association (RSA) Social Marketing
Communication in Changing the
Behavior of Young Drivers in Indonesia. Journal of Humanities and Social Sciences
Studies, 4(2), pp.200-208. grocery purchases in London. Scientific data, 7(1), pp.1-11.
Matovic, I.M., 2020. PESTEL analysis of external environment as a success factor of startup
business. ConScienS, p.96.
Mugo, P., 2020. Porter’s five forces influence on competitive advantage in telecommunication
industry in Kenya. European Journal of Business and Strategic Management, 5(2),
pp.30-49.
Schoemaker, P.J., Heaton, S. and Teece, D., 2018. Innovation, dynamic capabilities, and
leadership. California management review, 61(1), pp.15-42.
Tien, N.H., Phu, P.P. and Chi, D.T.P., 2019. The role of international marketing in international
business strategy. International journal of research in marketing management and
sales, 1(2), pp.134-138.
Wilkins, S., Butt, M.M., Shams, F. and Pérez, A., 2019. The acceptance of halal food in non-
Muslim countries: Effects of religious identity, national identification, consumer
ethnocentrism and consumer cosmopolitanism. Journal of Islamic Marketing.
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