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Strategic Analysis of Tesco for UK and US Markets

Strategic Analysis of Tesco for UK and US Markets

Brief background

As the Tesco used the corporate strategy like diversification, it has begun its Tesco bank and Tesco hope its bank could offer mortgages for its customers, also Tesco has buy a restaurant in UK. Although Tesco’s supermarket has taken the biggest market share in the UK market, but it is decrease in 2012-2013. So this means the Tesco’s business met problem in the UK market. One of the major challenge for Tesco was that the discovery of equine DNA in beef and other meat products throughout the UK industry. So the Tesco should do some change on its business strategy in the UK market.

As the biggest retailer in the world, these years Tesco met some problem as its expanded market, such as the Japan market and the U.S market. In the US market, Tesco named their store a new name fresh& easy. As the Tesco makes wrong strategy in US market, its entry mode is FDI, this makes Tesco pay a lot of money on the distribution build and on the store design. Also Tesco do not localization on the US market, thus it failed in the US market. Tesco should learn something new about how to expand its foreign market, such as localization and choose a right entry model to entry foreign market.

As Tesco’s annual report(2012) has said that Tesco is one of the world’s largest retailers with operations in 14 countries. But its business met some problems in recently years. As it has entry the US market for several years, US market does not make any profit. Also in the UK market, Tesco’s supermarket face the problem of the reducing market share.

Aim and objectives

The aim of study is to assess the Tesco strategic choosing and if they using right or wrong strategic.

The objectives are to:

  1. Provide a general overview of the Tesco business running in the US and UK.
  2. Analyze the business environment in the US and UK
  3. Analyze the retail market environment in the US market
  4. Identify and assess the Tesco value chain in the US retail market
  5. Identify what problems Tesco has meet on its business in recent years.
  6. Identify if Tesco face finance problem when its entry the US retail market and after entry the US market, if the Tesco has problem with cash flow or something else in finance.

Research questions

What is the Tesco advantage in the UK? It is can be keep in other countries market?

What kind of strategy that Tesco using recent years, how it’s working?

Did Tesco choose right strategy in the US market?

After entry US market, when Tesco has nonprofits in the first year, what kind of decision that Tesco has made and how it influence its business.

MNEs how to avoid failed or reduce its lost in the new market.

Likely source of literature

The conduct this research there are three types of literature sources will be used to discussion of the topic. Including primary literature sources, secondary literature sources and reference guides (Naoum,2013)

  1. Primary literature sources: the first-hand testimony or direct evidence. Includes academic research journal, refereed conferences, and reports.
  2. Secondary literature sources are cite from the primary sources, for example textbooks, newspaper articles, and magazine and construction news.
  3. Reference guides are useful for find out the basic questions quickly, such as dictionaries and handbooks.

Literature sources

Author/s Year of publication Source Topic Issues investigated Remarks
Dunning, John H; Lundan, Sarianna M 2008 book Multinational enterprises and the global economy This book show the MNE activity and how its effects on the economic and social well-being of developed and developing countries This book could offer support theory in academic fields to discuss when Tesco entry US market and its effects on the economic.
Peng, Mike W 2009 book Global strategic management -this book show some theory about how MNE entry other countries.

-it is show how to analysis a new market for MNE

-some basic strategic theory, such as five forces, VRIO theory, and value chain.

-evaluate the value chain of Tesco and using VRIO to analysis its value chain

-use five force to analysis the US retail market and UK market.

– find out if the Tesco has some problem in entry mode, such as if the Tesco should use FDI.

Datamonitor 2010 Journal article Tesco PLC In this article, it has discuss the financial performance for Tesco, corporate profits, retail industry and SWOT analysis for Tesco. – This article has shown a lot information about Tesco in the year of 2010. It could help to find out in recent years, how Tesco business going and easy to find out if the Tesco has some problem.
MarketLine 2011 Case study Tesco Case Study: U.S Grocery Retail The article states that Tesco PLC has entered in the grocery market of the U.S. with its fresh and easy stores. It further presents various features of U.S. grocery market including it is massive in size and scale, highly competitive industry and its market shares are difficult to attain. -it is could find how U.S retail market going on 2011 and why Tesco is not running well in the U.S market

-basic on this case study, it could provide some evidence that if the Tesco has choose wrong strategic in the US market.

MarketLine 2014 Journal article Tesco PLC SWOT Analysis

This article give a over review for Tesco in the year of 2013 and SWOT analysis for Tesco

-this article show that how the business of Tesco run in 2013 and what kind of problem it may face in the future.

-this article focus on the UK market for Tesco. Not mention too much about US market.

Youngok Kim, Sidney J Gray 2008 Journal article The impact of entry mode choice on foreign affiliate performance: the case of foreign MNEs in South Korea This paper mainly focused on the influence to the MNEs that entry the South Korea.

It shows different entry mode may have different performance for MNEs.

-this article has provide some good case that how the entry mode influence the MNEs business, when analysis the Tesco market in the US, this article could give some basic evidence. But as there are different countries, some of its case could not use.
Helbaek, Morten, Lindset Snorre, McLellan Brock 2010 book Corporate finance -this book is discuss the how the corporate do investments and what kind of risk they may meet and risk mananement -from the annual report from Tesco, it could see how the Tesco financing situation and use the theory form this book to analysis the Tesco cash flow and try to find what going wrong in the US market.

Research methodology

Research strategy

Source of Data

The source of data will be collected mainly from Tesco annual report, newspaper, academic journal article and academic report which based relevant with Tesco Plc. Also some finance detail will get from e-databases of uclan library website.

Data collection

Data will be collection from the literature directly.

Methods of Data analysis

Wolcott (1994) stated that methods of data analysis are used to describe facts, highlight useful information, detect patters, develop explanations and test hypotheses. Among several of data analysis methods, content analysis, typology and taxonomy as well as descriptive statistics will be used.

Typology and taxonomy method is used to analyze the qualitative data. It can identify different kinds of data, thus forming sub-groups with the general construction project risk category. It can also clarify the relationship between the concepts.

Descriptive statistics is a summary to describe the basic features of the data in a study. It helps ones to simply large amounts of data in a sensible way. Content analysis is a method for summarizing any form of content by counting various aspects of the content. It is useful to analyze and understand the collections of text(Strauss and Corbin,1990).


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