Analysis of Tescos Profitability in China - Research Proposal Example

Tesco in China: Evaluating Progress Background Tesco is the largest food retail company in Britain and the third largest in the world, providing coverage to about 14 countries in its 6,784 stores. This means that it has a wide coverage compared to many of the companies in its category, making it easier to venture in to any country that has potential of making its sales increase. Its choice of China was a well-calculated move given that China is now the largest economy in the world and the increasing population is giving the company a higher chance of becoming more profitable. This analysis is based on the need to understand whether the company is making as much profit as it is expected in such a large economy. Ideally, Tesco has made it easier for more people to attain different aspects that will allow the company to beat close rivals and whether the venture has been profitable so far. Many of the companies in the China have to undergo joint ventures with local companies, and the probability of getting profitable needs to be examined based on what is sold and how it meets the food retail segment across the world. Tesco utilises innovation methods that aim to meet the demands of the society while making more money for its ventures. The problem is that the Chinese market is not like the rest where Tesco has been doing well. Tesco has to make more changes to its business programs, and this analysis examines whether the China has met the core demands that Tesco places when working on various products. It will also detail the growing need for the company to use its strengths and capitalise on its opportunities to deal with any threats to its business model. The goal is to evaluate the success and look for any ways of making the company grow its portfolio. Literature Review When looking for a way of increasing one’s portfolio, expansion becomes one of the most important aspects to pursue in the market. A good way of looking at expansion is looking at the entry strategies that will improve the company’s profitability within the shortest time possible (Hill, & Hill 2011: 123). Conducting a research is one of the best ways of doing so, but also coming up with a company that can support the new company through an alliance or a merger can assist in improving the way things are done. Eventually, people have to understand that the success of any company depends on the expansion mode chosen (Schmid 2006: 250). Market expansion does not come risk-free. It has its difficulties and only be a successful when one becomes familiar with the new market. The idea is to approach this idea of an expansion with some caution, but also with enthusiasm to make things work out (Kerin 2012: 130). Any new company that wishes to make it big has to look for the different ways of meeting the core attributes that will improve and expand into the new markets, as several things are needed to make the brand work (Schmid 2006: 252). First, the new company has to work out a strategy that will increase its profitability by making it the niche in the market. This will require a stable brand that can use the resources of a local company to boost its presence in the new market (Patterson 2008: 45). The goal is to create a brand that will increase and improve business stability before entering into a new market. The development of a strategy involves a deeper analysis of the potential competitors and the possibility that new clients will like the new brand (Kuester 2012: 88). The management must work out the relevant ventures that will lead to a better market through an understanding of what is happening in the country (Patterson 2008: 47). The market has many barriers that could reduce the company’s probability of meeting its core growth needs. The company must also look at the localised knowledge and the culture present to ensure that the markets run according to the intended plan (Hill, & Hill 2011: 125). The competition present is also a starting point and the company must look at the different ways of maximising the attributes present as a means of improving the company’s chances of making a better choice of the product to get into the country (Schmid 2006: 265). This will also create an understanding of what the company wants to project to the rest of the world. Ideally, the only means of providing better services is by making better choices and understanding the important factors that will boost the company’s presence in the market (Patterson 2008: 55). Understanding what time to enter into a market will be a crucial aspect that any company, whether an SME or a MNC, has to make. The new market requires different strategies that will also depend on the product being sold and its life cycle in the market. The company can choose whether it wants a waterfall model or a sprinkler model (Schmid 2006: 259). The waterfall model will allow the company to take a systematic analysis of the progress made as well as the impact each stage has on the growth of the company’s portfolio in the new market. This will involve the making choices in what to do at the initial stage, the conception of the products needed in the market, the analysis and design of the products for the new market (Kuester 2012: 95). The main goal of the company is to become profitable and become a niche brand in the new market. Making this a reality is what makes the company grow and develop beyond its limits. It will also allow the company to meet the core attributes that define the construction of the product line and make changes before releasing the product to the market (Schmid 2006: 291). The sprinkler strategy on the other hand looks at a diversification entry plan. This will only be possible if the company can take into consideration the available mechanisms and meet its ideals within the shortest time possible (Kerin 2012: 135). This requires high standardisation of the activities the company has through capitalisation of that which works best for the market as a whole. The strategy used will also partly depend on the strategy the company chooses (Kuester 2012: 102). If it is a joint venture, franchise, outsourcing, or wholly owned subsidiaries, the company has to make a choice that will influence the client positively and expand the company to greater heights within the shortest time possible. The importance of this is to get new means of producing products that will target and reach the market from different localities within the shortest time possible (Kotler & Keller 2009: 115). This will describe the risks expected as well as the ability to counter them when the time is right. The problem is that they are hard to identify, and that only means having more to do with the production methods in use as well as the risks involved by trading in regulated or non-regulated markets (Kerin 2012: 196). The aim of getting the strategy right is to make better choices for the sake of meeting the core attributes of the society. The important thing is for the management to engage with the employees in creating the best position that will make the company stand out from the rest of the rivals in the market. Despite being a new market, the company can still deal with the entry from an informed point of view and make the best choices to create a brand that will cause ripples in the market. Research questions The main research question is “What entry strategy has Tesco used in China to make it profitable within the retail industry?” To answer this question, the following objectives will guide how the analysis of this report will be undertaken. The aim is to make sure that every part of the Tesco strategic growth is noted and taken into consideration. The objectives of this analysis are 1. To analyse the major strategy used by Tesco in China 2. To critically examine the impact that Joint ventures have in making the company profitable in the new market 3. To evaluate the impact that Tesco has in the market given the regulation aspects present in the Chinese market 4. To recommend any changes that could see the company grow its portfolio 5. To define the best entry strategy that will meet the different needs noted by the management 6. To understand whether Tesco is making steady or slow progress in the country and what its future plans are for its clients Methodology and Research Methods Making a determination of the right methodology to use in a research will always be an important part of any research. This makes it easier to deal with issues that will make it easier to meet the core demand of the research while making it easier to answer the research question objectively. To research methodologies have been chosen, and the philosophical underpinnings to define this process are available. The data collection methods have also been established. Research strategy and underpinning philosophy To establish the impact that the Chinese market has on Tesco, the only way of getting this is by using research strategies that will boost the chances of getting precise answers. The strategies chosen for this research include grounded theory and case study. A research strategy is one that shows how the researcher seeks to answer the research questions and meet the objectives of the same (Sanders et al. 2009: 600). This will provide the overall direction of meeting and answering the question at hand. It provides new means of dealing with the time and resources available as a means of getting things done within the chosen platform. A case study is a good strategy because it is an empirical investigation of a phenomenon within its real-life context. Using it will assist in understanding the situation based on technical scores attained from this process. The grounded theory will be used to prove that a systematic analysis of data is possible and can be used to create an understanding of the market. It provides the right position for the understanding of what is ideal and how to deal with it for the sake of meeting the core demands of the research conducted. It will also be applicable in meeting the main philosophical underpinning of epistemological concern. This will deal with the understanding of what constitutes the acceptable knowledge in the field of study that will provide a distinction of the processes involved. The other philosophical underpinning will be positivism, which links up with the case study in defining the observable social reality that will provide answers to the probability of getting the right platform to meet the core demands of the society at all levels of interaction. Research design The research design to be used is the descriptive design. The reason for using this is because the dynamic nature of this study and the ability to flexibly use the case study and the grounded theory to achieve the main goals. Conducting a longitudinal study is critical in that the time lapse may change the variables and provide the researcher with an understanding of how the question develops over time. A combination of both the descriptive and longitudinal study would make it easier to deal with the main choices of both the company and the market. It will also boost the development process compared to the other designs types and sub-types. A mixture of both the fixed and flexible methods would be ideal, but it is important o be careful on the choices made at this point. SPSS will be used to conduct an analysis of the data collected. It will be used to provide descriptive statistics and help in the prediction of numerical outcomes. Another form of analysis that will be used will include the use of recursive abstraction for those data sets that need no coding for analytical purposes. This will involve the summarisation of datasets until the end result provides a more compact and easily discernible dataset that provides an inference based on the summaries. Data collection methods Data collection can be through primary or secondary sources. The important thing is to create a qualitative or quantitative understanding of the process before coming up with the best selection for the data needed. Primary sources will emanate from review of previous researches, understanding the impact Tesco has had in the society based on people’s reviews, understanding the impact Chinese markets have on Tesco through key informants from the company. The secondary sources will be from an analysis of the financial reports as well as the key reports from all departments. Any technical departments will also be inspected and evaluated to define their impact on the company in the new market. Collection will also feature some semi-structured interviews and secondary source analysis to assist in creating a strong understanding of what is happening within the market. These interview questions will be or a few suppliers, distributors and company management to help frame the real picture through the case study. It will inform the researcher on the best course of action for the entire process. Limitations of the research One of the important aspects that might be problematic is the lack of goodwill amongst interviewees to provide the right information. To counter this, the research will seek to check on reliability by limiting biases through multiple interviews. The secondary source analysis will also allow the researcher to meet the core demands of the research by creating an understanding of what is present. The other issue is whether the management will be willing to provide its reports for validation purposes. This research is however replicable and valid based on the main aspects that define it. Construct validity will be sought to check on the viability of having Tesco attain a better standing in the market. Data Gathering Activity Details of Sample Method of Data Analysis Which Research Objective This Data Informs. Case study All available empirical information SPSS 1, 2, 3 Grounded theory Recursive abstraction 4, 5, 6 Ethical considerations To meet the core demands of this analysis, certain ethical issues will be under consideration. The first is looking at the confidentiality of the issues discussed in the semi-structured questions. They will be under lock and key to avoid any one accessing them other than the researcher and the team allocated to assist in the process. The results that may be automated will remain stored in the computer and will be password-protected. Only authorised persons will have the password and get access to the results. The computers will also be password protected to avoid unauthorised access of the same. The use of cloud services will also be used, as the results will also be copied to the drive to help in storage. This will protect from any eventuality that could lead to the loss of the soft copies in the desktop machines. During the entire analysis period, all the processes will take place and updates will be saved to the drive component of the email to keep it safe. This will make it easier to deal with any changes and access the information from anywhere, provided it is safe. The use of the Gmail drive application will be a good idea, given that access is online and only those authorised will get the results. The ability to deal with the technology malfunctions that could destroy the data will make up most of the considerations. Planning The budget proposals will be drafted and finalised in four (4) business days prior to the review by the board. The semi-structured interviews will be through by the end of ten (10) working days. The dissemination will be handled within four (4) working days to all relevant persons. The collection will be in ten (10) working days to necessitate the review and determination of the usable and non-usable copies. The analyses will take a period of thirty (30) working days to meet the critical aspects of the society. Results will be revealed with four (4) business working days after the review. The chart presents a graphical representation of these activities. References Hill, A. & Hill, T. (2011) Essential operations management, London, Palgrave Macmillan. Kerin, R.A. (2012) Marketing: The Core, New York, McGaw-Hill Ryerson. Kotler, P. & Keller, K.L. (2009) "1". A framework for marketing management (4th ed.), London, Pearson Prentice Hall. Kuester, S. (2012) MKT 401: strategic marketing & marketing in specific industry contexts, University of Mannheim. Patterson, L. (2008) Marketing metrics in action: creating a performance-driven marketing organisation, Boston, MA, Racom Communications. Saunders, M., Lewis, P. & Thornhill, A. (2009) Research methods for business students, 5th ed., Harlow, Pearson Education. Schmid, S. (2006) Internationales management, 5th ed., Berlin, München-Wien-Oldenbourg. Read More