What Risks Are There for Tesco’s Entering Foreign Markets?

What risks are there for Tesco’s entering foreign markets?

Have they been successful?

History

Tesco were originally set up in England where they have expanded and gained market share through competitive pricing and a strong brand image of “every little helps”. Their original stores sold only food however due to increasing competition tesco have ventured into different market segments such as: cd’s dvd’s online music downloads and even a catalogue similar to that of Argos showing their huge diversification to cater for the mass market in the UK.

They have recently ventured into the US market which is monopolised by the worlds biggest retailer, Wal-Mart. Marks and Spencer and Sainsburys have both attempted to launch in the USA however they have failed due to the dominance of Wal-Mart.

Tesco also recently expanded into the Chinese market of food produce however can they compete with the domestic retailers. Their impact on the world market is shown in appendix 1 as they have used their huge dominance in the UK to advance sales in the foreign market.

Corporate Culture

Tesco believes that no one else tries harder for consumers and they treat people like they want to be treated but is this corporate culture enough to succeed in a foreign market. They have become market leaders in the UK however they cannot expect this success abroad, as the market will differ from the UK.

Expansion into China

As Tesco’s knowledge of the Chinese market is limited, they will need to ensure their knowledge is comprehensive enough to compete with the already well-established brand in the Chinese market. And there is the language barrier which may cause a lot of communication problems for both managers and employees when there is a problem. The actual stock sold will have to be changed to local consumer demand and they will have to ensure that there is extensive market research to enable a successful launch.

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