Business Report : Tesco. Tesco Essay

1190 Words Apr 20th, 2015 null Page
Illustrative cases ----Drivers for divestment
Tesco
Tesco is the third largest retailers all over the world. It was founded in 1919 by Jack Cohen from a market stall in London’s East End. Now it operates in 12 countries around the world with over 530,000 employers and serve tens of millions of customers every week (http://www.tescoplc.com/index.asp?pageid=11). The revenue was £70.9bn and profit before tax was £2.3bn in 2013 (http://www.tescoplc.com/index.asp?pageid=71). Tesco enter China in 2004 by acquisition 25 supermarkets from Ting Hsin International Group in China and acquisited 90% of shares in 2006 (http://www.cn.tesco.com/AboutTesco.html). So the entry mode of Tesco is joint ventures (JV). After nine years in China, Tesco folds its unprofitable operation into China Resources Enterprice (CRE) and give up on trying to crack China on its own.According to Tesco annual report in 2014, the pre-tax profits fell by 91.9% to 112 million pounds in China and sales fell by 4.6%.
Tesco is extremely successful in the UK and around the world, but encounter failure in China, there are many reasons on “tripod” view that can explain this phenomenon. To start with, there are some unsuccessful experiences from the view of resources-based. It continues to use the British model instead of localization in China. Tesco uses British executive instead of Chinese, set its stores at the outskirts while Chinese customers prefer shopping in the city center, using centralized management…

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