TASK PERFORMANCE

- PRE-FINALS-
ATHENA LEILA S. BORDAN BSBA MM3A

1. Why did Tesco’s initial international expansion strategy focus on developing nations?
- Tesco's early plan for global expansion concentrated on emerging countries because
of the enormous growth and expansion possibilities they offered. This is primarily
due to the lack of fierce rivalry in those developing countries. Tesco, for instance,
concentrated on growing in Asia and Eastern Europe's rising markets. The cause of
this was the lack of fierce rivalry in the developing economies of Eastern Europe and
Asia, which created enormous opportunities for the business to expand. Tesco could
easily create a significant customer base and a noticeable presence in such nations
due to the absence of competition. By having a substantial market share in such
nations, it may consequently become the market leader there. This would benefit the
company in boosting sales and earnings. However, this was more difficult to achieve
in the developed markets of North America and Western Europe due to the fierce
local competition in those regions.
2. How does Tesco create value in its international operations?
- There are many factors that create value for Tesco such as the company devotes
considerable attention to transferring its core capabilities in retailing to its new
ventures, the company hires local managers and support them with a few operational
experts from the United Kingdom, the company’s partnering strategy in Asia is a
great asset because the companies Tesco has teamed up with are good and have a
deep understanding of the markets in which they are participating, the company and
its partners bring equally useful assets to the venture which increases in the
probability of success, and the company focuses on markets with good growth
potential but that lacks strong indigenous competitors.
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 is able to share ideas and use ideas from the Asian companies. The risk is that
the companies involved could pull out, steal Tesco ideas, or fail and leave Tesco with
debt. The risk is mitigated by Tesco being involved only 50/50. The benefits of joint
ventures is that it can help your business grow faster, increase productivity and
generate greater profits. A successful joint venture can offer an access to new markets
and distribution networks, increased capacity, sharing of risks and costs with a
partner, access to greater resources including specialized staff, technology, and
finance Joint ventures often enable growth without having to borrow funds or look for
outside investors.
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's experience in the United Kingdom has shown that no single format can
entirely penetrate a market. For this reason, the company has developed a range of
formats from convenience stores to hypermarkets that it deploys to meet the needs
and opportunities it encounters in each country. In my opinion, Tesco had done a lot
of research before deciding to open in the United States market and believes that each
market is unique and requires a different approach. Due to its status as a developed
nation, the United States has a unique market and has a lot of fierce rivals in every
one of its markets, so there's a great chance that Tesco could lose to one of them if
they let their guard down.