Successfulness of Tesco in Internationalising Its Operations - Case Study Example

Tesco Introduction The global business environment has grown quite dynamic in recent times (Kerr & Perdikis, 2014). Various sectors of the global market environment have undergone massive transformation thereby making international business quite competitive. In response to the current changes in the global business environment, international companies have restructured their mode of operations to match the modern changes. Tesco is among the companies that have shown improved performance in the modern global business environment. In essence, Tesco has established various strategies that have been of great importance in its internationalising efforts. This report seeks to evaluate the successfulness of Tesco in its internationalising efforts. The report also focuses on highlighting the mechanisms that Tesco has employed in different markets in the quest to succeed in the international business arena. Successfulness of Tesco in internationalising its operations Tesco has emerged as one of the most successful multinational retailers in the world. The company operates in various continents, and critical analysis of its expansion plan depicts that more international penetration is expected. It is imperative to identify that Tesco is one of the largest retailer and private employer in the UK (Bhatia, 2008). The company has portrayed positive advancement in terms of international expansion in the past few years. Essentially, it can be observeed that the company has utilised the available expansion opportunities to reach notable international markets such as Europe, Asia and North America. Apparently, the company’s business operations in Asia and North America appear to have taken roots. The profits generated from the company establishments in Asia and North America have continued to grow from time to time. Essentially, penetration into the international business environment appears to have accommodated Tesco’s core objectives such as profit maximisation and an international image. Currently, the company’s operations outside the UK market constitutes about 64% of the total market coverage. The success of Tesco in the international business arena has been as a result of many factors. For instance, the business concern values acquisition of small rival retail firms in the. The acquisition strategy has been of great importance to Tesco’s expansion strategies since it eliminates unnecessary competition. In addition, acquisition of small firms has broadened Tesco’s economic base thereby giving it a competitive advantage over the established rival firms such as the Walmart. Tesco has unique marketing strategies that facilitate its continued penetration in the international market. For instance, the company has developed several advertisement mechanisms to suit the different markets in which it operates. The company has ventured into online advertising to enhance global coverage. Some of the online platforms that the company uses for advertisement include the social media and its official website. Schnedlitz (2010) states that advertisement on the social media sites such as the Facebook and Twitter has become very popular in the present generation. Essentially, over one million people visit at least one online social media sites every hour, and this gives business enterprises an opportunity to advertise their products and services to large number of people. In essence, it can be identified that Tesco has not been left behind in the use of modern technology in advertisements. Another strategy that has contributed to the successful internationalisation of Tesco business operations is the adoption of a unique public relations approach. The company has a broad employee body that is composed of people with varied talents and capabilities. All the employees have been coached to operate under a common organisational culture to enhance uniformity of operations in the various international markets. Even though Tesco’s operations are not perfectly similar in all markets, they portray some uniformity in terms of quality of products and services offered. In essence, quality of services and products offered by Tesco has been of great significance in its expansion programme. The approaches adopted by Tesco to penetrate the international market are inexhaustible. Another approach that the company has employed to enhance the successful internationalisation of its business activities is positioning. Research has shown that positioning is an influential factor when it comes to business success or failure. Tesco has realised the importance of strategic positioning in all its markets. Essentially, Tesco locates its establishments in areas that are easily accessible to the target customers. In this regard, customers can access the products without much struggle. It is important to note that some business failure because of poor positioning and inappropriate assessment of the area to locate the business. Companies should always ensure that the area chosen to establish a business are accessible to potential customers (Corbae, Jensen, & Schneider, 2003). The most valuable resources that a business concern can have are the customers. In this regard, planning of business activities should always focus on promoting the customers welfare. Companies should never allow their customers to struggle searching for products. The Tesco Company has made effective use of the branding market technique. Branding can be described as the practice of developing a unique image of a company’s products to differentiate them from those of its competitors. Branding improves the value of products and aids in building customer loyalty with the product being offered. Basically, branding has enabled Tesco to survive the stiff competition posed by the major competitors in the global business world such as the Ahold, Metro and Walmart. Tesco’s pricing mechanism is yet another strategy that has contributed to its global success. The company sells its products at a price affordable to the target customers. In essence, Tesco employees varied pricing strategies in different markets. The company recognises that people are not in the same financial bracket and, therefore, pricing is based on the customers’ purchasing power. The establishments located in areas where the population is composed of low-income earners charge less price compared to locations where the targeted population is composed of economically stable individuals. Basically, pricing is a technical undertaking and firms should always be cautious when it comes to setting of selling prices for commodities in various markets. It is important to note that when deciding the selling price of a product in any location, it is usually advisable to consider the purchasing power of the target population and the prices charged by competitors. The practice of human resource is yet another factor that has contributed to the success of Tesco in the international business environment. Apparently, Tesco prides itself for proficient human resource management in all of its establishments. Actually, the efficiency in human resource management has given Tesco an upper hand in the international business environment. The employee body of the company comprise of over ten thousand workers that are linked by a strong work culture. The company has had skillful human resource management body that has ensured smooth operations of the business activities. The ability of an organisation to manage and maintain the employees determines its performance in the long run (Doole & Lowe, 2008). In essence, maintaining employees saves a company a lot of resources since the training and orientation costs are eliminated. In addition, long stay of employees in an organisation facilitates the growth of talent and the necessary experience required for quality performance. In this regard, companies should establish policies that enhance long stay of employees to reduce the cost of training and recruitment. The internationalisation programme of Tesco has been a success in that over 80% of the business established outside the UK have become operation. In addition, customers in the international market have developed loyalty to Tesco products thereby promoting continued global development. The company’s friendly relations with other firms in the industry has enabled the internationalisation programme to proceed as planned. However, the journey to the global business environment has not been easy for Tesco Company. For instance, its first entry in the US market failed drastically and suffered a huge loss amounting to about $1 billion for six consecutive years. Generally, entry into the international markets for the Tesco has been characterised by financial failures in the initial stages. However, the markets in Asia and Central Europe have shown wide acceptance of Tesco business activities. In most cases, expanding business operations into the international markets is faced with numerous challenges that might lead to termination of the expansion plan or poor performance of the parent company. The poor performance of a business concern in a new market negatively affects the cash flows of the parent company. In this regard, the cash outflows exceed the inflows thereby making daily operations of the company difficult to run. The commitment and determination to serve by Tesco workers have contributed to the success of the company in its internationalisation programme. In essence, the company’s employees are reliable during the smooth and hard business operations of the company. A rational assessment of the employees depicts that the workers form part of the company. In this regard, the employees dedicate all their efforts towards the success of the company. The Tesco management values its workforce, and this has been a major factor in the company’s success. The workers are assured of reputable remuneration packages and conducive work environment. Research has shown that the relationship between employees and the management team is very crucial as far as a company’s future life is concerned. Many scholars argue that business enterprises should always build friendly relations with the employees to increases chances of future development especially in competitive business environments. Tesco has established a competent research team whose core task is to explore new market opportunities and expansion channels. The research team is composed of innovative members who update the management on the emerging global market trends. Through research, Tesco has been able to develop a variety of products that were not in its catalogue in the ancient years. In this regard, Tesco has been able to capture new customers and maintain the existing ones. In essence, the company’s research strategy has facilitated nurturing of talents and establishment of a variety of product brands that are tailored to meet the customers’ needs. Actually, Tesco has embraced an innovative approach to entry in the global market. The company’s research engines provide full knowledge about the market composition and consumption behaviour to facilitate smooth entry and minimal resistance. Research has shown that some companies fail to succeed in the global environment due to insufficient knowledge regarding the international market consumption patterns. The international market is quite broad and, therefore, sufficient knowledge is a key factor to success in the global market environment. Recommendations Some of the things that Tesco should do to enhance full penetration and success in the global business environment include: Develop an effective online ordering and payment platform. The modern technology has taken over almost all the business activities. In the modern days, most business transactions are done via the internet for convenience and time maximisation. In this regard, Tesco should consider establishing sound ordering and payment online systems to reach as many markets as possible. Establish efficient risk management strategies. The global business environment exposes the operations of the company to various risks. Some risks such hacking and systems failure might cause huge loss to the company that might terminate its operations. For this reason, Tesco should establish reliable risk management strategies to avoid suffering fatal losses. Partner with some international companies in the same line of business. Partnering with already established global companies would expand the marketing capacity of Tesco and thereby improve its profit margin. Therefore, the company should utilise the available opportunities for establishing a global partnership to add weight to its internationalisation agenda (Broberg, 2006). Conclusion The global business world has become quite competitive. Millions of firms storm the global business every year. In this regard, business concerns wishing to join the global business world should establish function plans. The Tesco’s internationalisation programme has been a success. However, the programme has experienced several challenges that made the company exit some international market. Tesco should considered developing structures that accommodate the full use of the modern technology to increases the chances of succeeding in the global business environment. In summary, business enterprises should have well-developed expansion plans to succeed in the international business arena. Reference list: Bhatia, S. C. (2008). Retail management. New Delhi: Atlantic Publishers & Distributors. Broberg, M. P. (2006). The European Commissions jurisdiction to scrutinise mergers. Alphen aan den Rijn: Kluwer Law International. Corbae, G., Jensen, J. B., & Schneider, D. (2003). Marketing 2.0: Strategies for closer customer relationships. Berlin [u.a.: Springer. Doole, I., & Lowe, R. (2008). International marketing strategy: Analysis, development and `implementation. London: Cengage Learning. Kerr, W. A., & Perdikis, N. (2014). A guide to the global business environment: The economics of international commerce. Cheltenham, UK [u.a.: Elgar. Schnedlitz, P. (2010). European retail research 2010. Wiesbaden, Germany: Gabler. Read More