Assignment on Assignment on TESCO (Public Limited TESCO (Public Limited Company)Company)

Student Name: NAFIS CHOWDHURY Student ID: 13313106018

Course Name: INTERNATIONAL TEXTILE BUSINESS MANAGEMENT

Course Code: GM 534 Program: Master in Textile and Clothing Management

Campus location: Yonsei University, Seoul,South Korea.

1.Company profile1.Company profile

Tesco started life in 1919 when Jack Cohen started selling surplus groceries from a stall in the East End of London. Mr Cohen made a profit of £1 from sales of £4 on his first day.

The Tesco brand first appeared five years later in 1924 when he bought a shipment of tea from a Mr T. E Stockwell. The initials and letters were combined to form Tes-co and in 1929 Mr Cohen opened the flagship Tesco store in Burnt Oak, North London. The brand continued its rise in the 1930s when Mr Cohen built a head quarters and warehouse in North London, and in 1932 Tesco became a private limited Company. . In 1947 Tesco Stores (Holdings) Ltd floated on the stock exchange with a share price of 25p.

Tesco.com is a wholly-owned subsidiary offering a complete online service, including tescodirect.com and tesco.net. The company also offers a range of both online and offline personal finance services. Tesco showed its expansionary zeal early on by buying up rival shops. In the 1950s the retailer bought 70 Williams stores and 200 Harrow stores, followed by 97 Charles Philips stores and the Victor Value chain in the early 1960s. Throughout the 1990s, Tesco expanded even further, and continued it’s international expansion

1. company profile1. company profileIn response to a growing Eastern European market, Tesco opened stores in Poland,

Hungary, Slovakia and the Czech Republic. Tesco also expanded into Taiwan, Thailand and South Korea.

The company purchased the UK-based T&S, a convenience retailer, while in Poland it

bought HIT, a hypermarket operator, in 2002.In November 2003, the company purchased the small Turkish hypermarket chain,Kipa. The chain operated five hypermarkets in the Aegean region with reported

salesin 2002 of £124 million, pre tax profit of £4.7 million and over 1,500 employees.In early 2004, the company announced that it was purchasing the family-run chain,Adminstore, which operates the Europa, Harts and Cullens grocery outlets in theLondon area, for £53.7 million. Over the years their business has grown and we now operate in 12 countries

around the world, employ over 530,000 people and serve tens of millions of customers every week. For the year ended February 2004 Tesco PLC achieved revenues that totalled

£33,557 million, an increase of 18.7% against the previous year’s revenues that were£28,280 million they have always been committed to providing the best shopping

experience. Today they continue to focus on doing the right thing for their customers, colleagues and the communities they serve.

 

2. What are the main international markets of the company? What 2. What are the main international markets of the company? What percentage of the firm’s annual sales come from its home market? percentage of the firm’s annual sales come from its home market? What percentage comes from other countriesWhat percentage comes from other countries

The home country of TESCO company is United Kingdom. The annual income from the home country by last year was amounted to 72% in 2014.

The main international markets of the TESCO company are Hungary, Ireland, Poland, Japan, Korea, Thailand, and Malaysia. The annual sales from these countries amounted to 20% in 2014.

The remaining 8% was sold throughout the revenue of market share.

 

3. Explain two international business activities of the 3. Explain two international business activities of the company?company?

International business activities refer to any business activities that cross national boundaries. These activities can be categorized into four basic types: importing and exporting, licensing, strategic alliance and joint venture and direct investment. Businesses can choose among these activities while expanding their operations to international markets or face these activities of foreign companies in local markets.

Two international business activities of TESCO Company:

Joint venture: Retailing is a local business. Customers love local and

regional products; we pride ourselves on having local people running our operations; and we use local knowledge to source and to allocate space to the most popular products. However, lots of what we do – especially behind the scenes – is best done in the same way across our markets. We are increasingly realizing our vision to win locally by applying their skills globally.

Since the mid-1990s, they have built an international business with more stores than in the UK, which has delivered more than £1 billion trading profit for the first time – larger than any of their UK competitors. With strong market positions, they are well positioned to move into the next phase of growth

Strategy alliance:Tesco has evolved an international strategy based on six elements: Be flexible - each market is unique and requires a different approach Act local - local customers, local cultures, local supply chains and local

regulations require a tailored offer delivered by local staff - less than 100 of Tesco's International team are ex-pats

Keep focus - to be the leading local brand is a long term effort and takes decades, not just a few years

Be multi-format - no single format can reach the whole of the market. A whole spectrum from convenience to hypermarkets is essential and you need to take a discounter approach throughout

Develop capability - developing skill in people, processes and systems and being able to share this skill between markets will improve the chances of success in challenging markets

Build brands - brands

Strategy: Directly address Marks & Spencer Super-premium product and price Limited to high-value added items Attract up market shoppers Capture margin in new category Aim to provide complete basket Same quality as national brand To be the brand to choice Increase margins vs. branded

Directly address limited assortment (e.g. Aldi) Cheap and basic Limited to low-value added items Targeting specialty niches with products Recently renamed Healthy Eating to Healthy Living to

stretch to non-foods Help parents improve diet Minimum use of artificial ingredients

Strategic business unit: Tesco has chosen to pursue a strategic business unit (SBU) across all of

its business areas in order to maximize the degree of competitiveness within the individual market areas. According to Mockler (2002), The SBU would cover… the strategic foundation; size and scope of the operation; strategic thrust; the kinds of products or services sold and delivered; service quality and image; product/service brand identification and image; breadth of the product/service line; functions performed by the company; distribution outlets; customer market served; geographic market served; ownership; and financial targets. Tesco operates using four strategic business units - Core UK, which handles United Kingdom grocery operations, International, which handles international holdings, Non-Food, which handles sales of electronics, home goods and other non-food items sold in Tesco Extra and other stores, and Retailing Services, which manages financial services, the Tesco.com web site, and Tesco Telecoms services (Tesco, 2008).

  4. Choose one of the international markets of the 4. Choose one of the international markets of the company: (a) Explain 5 cultural elements of the selected company: (a) Explain 5 cultural elements of the selected marketmarket

Culture is essential for the success of international business but balancing the culture is extremely difficult because Tesco operates in different parts of the Europe and Asia, each country being culturally different from the other, cultural differences provide challenges to international managers in marketing products, managing workforce and dealing with host country governments.

The dimension of culture includes: The social organization of society Religion Customs and tradition Political levels Aesthetic systems (e.g. music, arts, literature, language.) 

Cultural elements in California, USA:This most recent expansion provides insight into the use of the strategic business unit for development of international markets. Most noticeably, Tesco has tailored their product offerings and branding to the local market and culture.

All aspects of the store's marketing and design were custom-tailored to the market region in which they were opening. The name, Fresh and Easy, was intended to take advantage of Californian culture and values. Their product offerings within the store, with a strong emphasis on fresh fruits and vegetables, natural and organic food, halal food, were intended to not only appeal to the tastes of the local culture but also to fill a gap in the current supermarket offerings within the region

The locations, which are primarily urban, small footprint locations in city centres and underserved neighborhoods, are intended to not only take advantage of the chance to enter an underserved market but also to fit the market needs of the surrounding areas and to integrate seamlessly into the neighborhoods. These alterations to the core product (a small supermarket along the lines of a Tesco Express) have allowed for a successful entry into the Californian market, as Tesco have adapted to the local culture rather than attempting to import an unaltered product into an area.

(b) How does the company adjust products/services, packaging, (b) How does the company adjust products/services, packaging, promotion, advertising, and so forth to maximize its success in the promotion, advertising, and so forth to maximize its success in the

selected marketselected market??

Product and services: Food, household, clothing, electronics mobile,entertenment,

health and beauty Tesco bank Tesco developed new products and services to sell to existing

customers Products: Segmented private label Expanded non-foods Services: Banking and financial service Telecommunications

Product innovation : Markedly higher levels of own-label products at Fresh & Easy

than conventionally found in US food retailing (over 50% of products own-label)

Each Fresh & Easy store incorporates a „kitchen table with a ‟crew member offering food samples and menu suggestions in an explicit attempt to build the Fresh & Easy brand

UK food retailing acknowledged as having „world class skills in ‟the chilled/prepared meals segment, but this is the first time this skill-set has been exported wholesale to the US from the

The example of the TESCO’s Subsidiaries:Tesco Distribution Ltd.

Tesco House Delamare Road Cheshunt Hertfordshire T&S Stores PLC Apex Road Brownhills Walsall 

Packaging: TESCO packaging is different than others. TESCO

making the packaging system according to the customers need and satisfaction. There are different packagings where customer can easily identify and buy the products. So the company can increase the sales volume. Promotion:

The promotion techniques are followed:Weekend offer, 50% discount sales,Independence Day discountsFree products offerBuy more save more promotion April, 2015Monthly special sale promotionWeekly special sales promotionsSocial media (face book, twitter) for promotional offersMobile marketing through this company usually provide

offer to the customer and sending sms

Advertising: TESCO advertisement has been different from the other

company. The company shoots the advertisement with celebrity of Europe and Asia. In which there are different states speaking different languages. So the company has planned to shoot the ads according to their respective languages and actors. The ads will be reached to the people through electronic and print media like TV, radio, news paper, magazines etc.

a) Trialing of formats b) Innovative location strategies c) Digital marketing 

Trialing of formats • In the run-up to the opening of the first Fresh & Easy stores the press reported that Tesco executives had concealed the firm’s market entry plans by posing as film industry moguls

• The real Tesco operation carried out by Terry Leahy s ‟handpicked group, posted to Santa Monica between March and October 2005 was even more covert

• Group posed as International Research Resource Ltd, group set up and tested mock-up of potential store in West Coast warehouse

• Transnational retailers usually focus on deriving competitive advantage from back region spaces. Tesco entered USA unusually determined to protect „front region knowledge‟

Innovative location strategies Fresh & Easy has opened in a range of different locations, across

the income/class/ethnicity range e.g. Compton in South (Central) Los Angeles; Hollywood, a stone’s throw from Mann s Chinese ‟Theatre and Manhattan Beach

Tesco has been prepared to go into partnership arrangements and develop stores in areas which have long been neglected by the main corporate food retailers

Whilst Fresh & Easy s contribution to these “underserved ‟markets” is clearly not altruistic, its stated desire to serve “all kinds of neighborhoods” is an important and innovative dimension of the firm’s market entry strategy

Digital marketing Fresh & Easy has been extremely innovative with its use of

contemporary digital marketing techniques in order to spread the message of the new brand in the US

Simon Uwins, Chief Marketing Officer, uses his „blog on the firm’s ‟website in order to have a „conversation with customers and potential ‟customers. His blog is designed to add clarity to the firm’s mission, and to demonstrate that Fresh & Easy are living up to this statement

The firm treats Wins blog – together with blogs written by others on ‟Fresh & Easy – as “any other type of PR”. As Uwins remarks “We’ve started to talk to bloggers and that’s working really quite well. We invite them to [store] launches and stuff…they’re getting to know us…we’ve got lots of positive blogs written about us now

  

References:References: Griffin, R., & Pustay, M., (2010). International Business. 6 th edn., Prentice

Hall, New Jersey, USA. Ball, D., McCulloch, W.H., Geringer, M., & Frantz, P.L. (2010).

International Business: The Challenge of Global Competition. 12 th edn., McGraw-Hill, USA.

Fairfield-Sonn, J. 2001. Corporate culture and the quality organization. London: Quorum Books.

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