Tescos Joint Venture in India - Case Study Example

TESCO’S JOINT VENTURE IN INDIA By Tesco’s joint venture in India Part I Tesco is a renowned grocery and retail company whose headquarters are located at Cheshunt in the United Kingdom (Warshaw, 2010,p. 2). With a spread network across 12 countries, the multinational boasts of being the second largest retailer in the world by revenues. Its main competitor in terms of market presence is Walmart, which records a bigger revenue value. Founded by Jack Cohen in 1919, Tesco initially was as a chain of market stalls (Warshaw, 2010, p.2). By the 1990s, the company had diversified to great lengths and it from only dealing with grocery items, the company indulged in retail of electronics, books and even furniture. Coming from a status of 500 stores, the company rose to almost 2500 stores (Warshaw, 2010, p.3). The strategy attributed with reaping the results was the one in which they could purchase in bulk expensive products, with the aim of achieving economies of scale, and later sell the commodities in smaller quantities at cheaper prices. This style of business seemed to appeal a large section of the social group, considering that a large number of the population was not capable of purchasing the commodities at the high expenses (Leahy, 2012, p.6). With these came popularity to which further boosted the sales levels of the company in the financial reports are referred to for evidence. Tesco has never limited itself from viewing the bigger picture and thus expansion projects continue to be some of the agendas in the board meetings (Betty, 2007, p.15). Proposed acquisitions, better markets and innovation of procedures continue to be deliberated by the company’s board of directors. It is clear to them that, for an elaborate plan to be successful, thorough analysis is crucial. Now, there is a proposed international joint venture in India regarding Tesco and Tata (Davey, 2014, p.1). The fact that the two companies command huge money flows is an attestation to the magnitude of the project in respect to capital and input required. With Tata enjoying some level of the retail market in India and Tesco having its fair share of the world retail market, the collaboration is a positive move for both entities. The proposed union is believed to be worth around 140 million and is set to see the forming of two brands by the name Star Bazaar and Star Daily (Kay, 2014, p.1). A receipt of approval from the Indian Foreign Investment Board was been drawn and awarded to Tesco, giving them permission to operate. In the agreement, Tesco promised to supply goods to both Star Bazaar and Star Daily Stores (Kay, 2014, p.1). The fact that India is an Asian country indicates that the most of the population are likely to be observing the ideology of utmost respect for one another; more to that they are expected to be advocates of peaceful coexistence as the Asian community is known for that trait. With that, it implies that much as a business transaction is important to landing a deal, the transaction will be greatly supported by the relationship between the two parties. Chances of losing business are very high and thus it is imperative that Tesco manages its relationship with the Indian community especially through an effective public relations department (Shaw, J. 2010, pp.1-25). Such coexistence is sure way to build confidence, which eventually will lead to better business deals in the future. Patience is important considering that most Western oriented business people are used to utilizing hard sell methods. They tend to persuade individuals forcefully to take up deals in the hope that they attain their targets and meet their own deadlines (Potter, M. 2011, p.1). Indians in particular are tuned to Buddhism. By that, it means that they hold to belief that an individual should not only be in business for capitalism only but also for enabling a sustainable environment. With that, Tesco Company should formulate strategies that will not only favour profits on their part, but will also improve the environment around which they are based (Shaw 2010, pp.1-25). Initiatives such as city cleaning come as ways of exercising their public social responsibility. Another issue to be considered by Tesco while considering the joint venture in India is a set of mind among many Indians. They are made to perform their duties, not only to completion but also become creative while at it. Such a convention would surely boost the company’s efficiency, which would be reflected through profits. For this reason, Tesco should establish a strategy in which they could tap into the creative abilities of its Indian workers. Thus, it could be achieved by promoting for innovation in activities carried out in the company making the entire process less effective and more beneficial. Despite the cultural state described above about India, the effects of globalization, the strict cultures of the people are beginning to loosen up. Probably due to the Western influence, certain observed practices and beliefs that may seem to put Tesco in a precarious condition are reducing gradually. Thus, it is some good news to the management of the firm, as it would reduce the agony and cost of observing some trends. The evident changes so far are liberalization of the Indian economy and weakening of endogamy in their forms of lifestyles. With such changes, the Indian market is expected to be more open for business compared to their previous systems, which put the citizens as a closely-knit organization. Thus, Tesco can grow and develop exponentially with the support of Tata Trent, a fate that would be very much welcome among the boards of directors of Tesco (Shaw 2010, pp.1-25). Part II One element evident in the study of the project regarding Tesco’s joint venture in India, is the presence of cultural differences. Strong cultural beliefs held by citizens in India should be placed in the structures enacted by Tesco (Shaw, J. 2010, p.1). It explains the need for analysis on cultural theories and models that would turn favourable for Tesco. As highlighted above, lack of establishment of these systems, the implementation of the project would not be as successful as desired. Thus, following I will try to address that issue with a series of unambiguous points directed at enabling Tesco successfully implement the project by considering the Indian culture. The points mentioned will have a significant impact to the respective society. 1. Planning- here the management draws the goals of the company through vision and mission statements. 2. Staffing- here the management conducts thorough recruitment drives aimed at effective staff development does this. 3. Organizing- this is done through use of resources, managers allocate and set activities directed at producing at effective costs. 4. Directing- it refers to the manner in which the leadership in the company helps steer the employees in order to achieve certain set targets (Leahy, 2012, p.5). There are different orientations that influence the management. They dictate the performance of activities in the organization. Below I will illustrate how different perceptions by managers may influence the way in which they run the company. The points mentioned may be of great use to Tesco Company considering the project under focus. 1. Time focus: Some cultures are likely to be monochronic while others are polychronic. The difference is that the monochronic-focused individuals perform one action after another through a system of schedules while a polychronic individual applies the concept of planning hence they can multitask. 2. Time orientation: This element is divided across the lengths of the past, present and the future. Future oriented individuals are concerned with managing the expected future outcome, while the past oriented individuals concern themselves with matters of the past. They employ the use of past goals to help direct the company. Present oriented individuals, on the other hand, paid the most attention to short-term objectives, which dictate the way they perform their activities (Darby 2011, p.1). 3. Power value orientation: A company ought to understand the level of preparedness of the people where they intend to venture in terms of accepting to be controlled. While some people are hierarchical in a way of thought, others tend to employ a less constrained system of equality. Use of the form of organization that promotes equality in an area composed of people with the hierarchical line of thought would be less appropriate. 4. Competition: A competitive culture motivates individuals to aspire to gain wealth and perform well. A cooperative culture on the other end is less competitive; rather it seeks to build consensus and relationships. Individuals here focus on building each other’s confidence and not the performance on itself. Tesco should find a way of managing both lines of thought, as they are essential in ensuring the company’s activities are performed to excellence (Darby 2011, p.1). 5. Action and being: These two conventions hold different perceptions on how activities are done. Action oriented people tend to take up the initiative of carrying out activities by themselves. Individuals in the being category tend to live for the moment, thus seeking to enjoy the experience than the achievement. 6. Space: Some communities prefer narrow relationships; this can be explained by the expectation of some people that you make a personal acquaintance with them before conducting business deals. However, others opt for the public orientation where a forum is established through a group for instance. 7. Communication: This refers to the degree of relating a message to the context. Some cultures prefer high context levels whereby the message is hidden in the context and others prefer low context levels where the message is open. 8. Structure: It describes to the organization of a firm through which strategies are implemented. A company could either employ an individualistic approach, which targets at achieving singular goals with self-reliance advocated. An alternative approach is the convention of collectivism in which targets are pursued as a group with the advocacy on teamwork (Potter 2011, p.1). The perspectives highlighted above share the major factors that are worth consideration by Tesco with reference to the joint venture in India. Observation of the cultural issues raised is sure to build a huge customer based on improving the efficiency of their factors of production, resulting in exponential profits (Potter 2011, p.1). References Betty, J. (2007). The Work Foundation Praises Tesco. The Work Foundation , 1(2), 13-24. Darby, S. (2011). Other Businesses. 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