Essay on Tesco - International Strategy

Words: 4062
Pages: 17

EXECUTIVE SUMMARY After years and years of pursuing Sainsbury as the United Kingdom’s largest retailer, Tesco PLC broke through in 1995 and has become not only the largest retailer in the UK, but also the world’s 4th largest retailer, trailing only Wal-Mart, Carrefour and Germany’s Metro AG. Originally, Tesco’s soul focus was the retail grocery market. As of February 2010, the grocery market continues to be Tesco’s largest source of revenue and it has accounted for more than 50% of Tesco’s £ 59.4 billion of sales. Further, Tesco does not limit its operation strictly to the United Kingdom. Currently, Tesco resides in 13 countries worldwide and operates 1,911 stores across Europe and Asia. The company has also expanded in the United …show more content…
The biggest problem with Tesco’s international strategy is its accumulation of debt. In light of a frustrated economy, Tesco has been forced to restrict its efforts in increasing store space in the United Kingdom and in continuing its growth into new markets. Meanwhile, Tesco has looked to grow its current markets while accelerating debt repayment schedules. Further, an on-going issue in its international business operation resides in its reliance on the supply of local farmers. Pressures imposed by its supermarkets with respect to standards of shape, size and quality of products and to demanding production and delivery schedules push farmers beyond capacity. As a result, reports of supplier exploitation continue to be raised against Tesco and other retailers including Carrefour. In 2002, both retailers were found guilty of charging slotting fees to carry manufacturers’ products and charging additional fees for advertising and product display opportunities for suppliers (Corporate Watch Site). INTERNAL ENVIRONMENT ANALYSIS In evaluating Tesco’s success in international markets, Tesco understands that customers in China are different from those in Hungary. The company does not try and run its international operations out of their office in the UK. Instead, they develop management groups filled with experienced business managers as well as knowledgeable local personnel in order to remain close to their customers and to adapt quickly as needs and want