Tesco Expansion in China

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INTERNATIONAL BUSINESS REPORT

(SPRING-2016)

Submitted to:

Sir Shahzaib Khan

Submitted by:

Abdullah Zahid (7500)

Moomal Siddiki (11428)

Munazza Khalid Saeed (6793)

Subhan Ali Khan (7535)

Syed Umair Kazimi (7698)

Syed Zeeshan Haider (7542)

TESCO

MULTINATIONAL GROCERY AND MERCHANDISE RETAILER

BUSINESS DESCRIPTION

Tesco is one of the few largest food retailers in the world, operating 2,318 stores in 13 countries which include UK, Europe, and Asia and employing over 326,000 people.  Tesco primary market is UK and company also provide its online services through tesco.com. Tesco sells more than 40,000 food products along with clothing and non-food lines. The company is one of the Britain’s largest petrol independent retailers and also provides other retailing services which include Tesco personal finance, which is the joint venture with The Royal Bank of Scotland.

History

Tesco was founded by Jack Cohen in 1919; he started selling groceries from a stall in East End of London.  In 1924, the brand name Tesco first appeared on tea packets that were shipped by Jack from Mr. T. E Stockwell. The initials of T. E Stockwell and Cohen developed a brand name Tesco and first Tesco store was opened in Burnt Oak, Edgeware in 1929. The brand continues its success, and Mr. Cohen opened the brand headquarters and warehouse on 1930 in North London. In 1932, Tesco became a private limited company.

Following the success Tesco opened its first self-service store in St. Albans in 1948, showing its expansion from stores to supermarkets Tesco expanded rapidly during the 60s and its name became familiar in selling household goods and clothing.  In 1968, Tesco opened its first largest superstore in Europe in Crawley, West Sussex. In 70s Tesco started to build its national stores with also diversifying the products. In 1974, Tesco inaugurated its first petrol station in the central cities and became UK's largest independent gasoline retailer.

In the 1990s, Tesco continued to expand its international expansion and opened its stores in eastern European market along with Poland, Hungary, Slovakia and the Czech Republic. Tesco also expanded into Taiwan, Thailand, and South Korea. Tesco not only expanded its stores internationally but it also expanded the range of its products to toys, electronic items, furniture, etc. In 1992 company launched its slogan 'every little help' and in 1995 Tesco launched its club card scheme which helped the company to overtake its rival company Sainsbury's as UK’s largest food retailer. In 1996, Tesco introduced its first 24hour store and in 2000 tesco.com was launched which helped the company to grow more in geographical and product aspect both.

In 2002 company purchased the UK-based retailer named T&S, while in Poland it bought a hypermarket operator HIT. In 2003, Tesco bought small Turkish hypermarket chain 'Kiya' which was operating in five hypermarkets in Aegean region, it was reported that company faced a huge profit after purchasing the Turkish chain. In 2004, Tesco bought a family run business Adminstore buying all grocery outlets of adminstore in London. In the same year company entered into the broadband market. In 2006, Tesco opened its stores in the US under the name of 'Fresh and Easy'. In 2008, Tesco purchased some of the stores in Scotland. In 2009, the first Tesco Bank was launched with the joint venture of Royal Bank of Scotland.

Tesco club card

Tesco club card is the loyalty card scheme that was introduced in 1995, it is the smartest move taken by Tesco Company which provided the company to earn great profit. Club card provides a facility to customers to gain 1 point on each 1£ they spend. These points must be saved to at least 150 points for which customers will receive vouchers; vouchers can be spent in store shopping, online services. It can also be used to achieve discounted day trips, magazines, hotel breaks, restaurant tokens and other offers. The validity of theses vouchers are 2 years.

Tesco club card boost allows the members to get 50% discount on the products which were labelled under Tesco. Tesco club card fuel save was launched on March, 2014, which was a new way to offer saving money on fuel.  This club card fuel saving allows the members 20p off every litre of fuel and for every spent of 50£ on Tesco store or online customers receive 2p off every litre.

EXPANSION OF TESCO IN CHINA

Why expand in China?

The fact that China is one of those countries which is developing at an increasing rate and also has massive population is reason enough to expand in China. The vast population of China will also result in a huge market size. Also, the market is not broadly controlled.