Case Study Of Tesco's International Expansion Strategy

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JCB chose to enter India via a joint venture, as opposed to some other entry mode because of high trade tariffs made export to India difficult. The Indian government enforced regulations by requiring foreign investors to have joint ventures with local companies even though JCB want to do it alone. At that time, JCB believed that the Indian construction market will grow into a larger market. As a result, the company wants to get access to the Indian market to gain advantage over global competitors. At the end of 1990s, the joint venture was making progress in selling backhoes which let them gain 80 percent share of Indian market. This joint venture gave JCB advantages because they can understand the market and political acceptance. JCB did not …show more content…
If Tesco enter an established market with strong competitors, it would be hard for them to compete since they will have to spend a lot of money to stay competitive. Instead, they pick developing countries with a strong growth trends that they can easily enter. In 1994, Tesco entered Hungary with acquisition of 51 percent stake in Global grocery chain. At that time, it has 43 stores, but by 2011, it has 115 markets with 90 smaller stores which lead Tesco to be a market leader in Hungary. Then, Tesco obtained 31 stores in Poland from Stavia in 1995. In the next year, they added 13 stores acquiring from Kmart in Czech Republic and Slovakia. Tesco decided to acquire these markets in foreign countries, and help them rebuild their internal structure in order to regain the market. They have foreign members to better understand their country’s market in order to fit the needs of local customers. Thus, they were able to build and expand many stores in a few years. This shows their strong knowledge in acquiring markets in developing …show more content…
There are benefits for Tesco doing this type of business like using the ideas from Asian companies. Tesco expanded to Thailand where they bought 75 percent of shares from Lotus, a food retailer with 13 stores. By 2011, the company had acquired 750 stores. In 1999, Tesco entered South Korea, and they partnered up with Samsung to develop a chain markets. This continues to Taiwan, Malaysia, and China. It took Tesco three years to carefully do research and discussions with partners to entered China market. Tesco decided on 50/50 joint venture with Hymall, a market chain controlled by Ting Hsin. They had been operated in China for six years because they had a deep understanding of Chinese market. As a result, Tesco had over 100 stores in China with 4 million customers every week. The deep understanding of other cultures with the right potential partners, Tesco was able to enter foreign market, and be able to expand the local market. The risks are companies can pull out and leave Tesco with debt. The risk is mitigated by the 50/50 deal that Tesco involved

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