Tesco’s attempted to extend its business into US market. The opening a chain of grocery stores ‘Fresh & Easy’ has incurred a 186million loss in 2010-2011. Tesco withdrew from the US market eventually with a loss of 1.2billion pounds. Despite the familiar language, the US market is highly competitive and US shopping cultural are not as uniform as might be excepted.
The aim of this report is to critically analyse the failure of Tesco in the US market. I will use SWOT analysis, TWOS Matrix and internationalisation …show more content…
Competitive threats are coming from others global retail giants or US based retailer who may be able to offer lower prices and greater variety as well as have more established networks in the US market.
Risky because many others UK retailers (Marks and Spencer, Sainsburys, Laura Ashley, etc.) had failed enter US market. Tesco entered into US market at the downturn in the world economy crisis (crash in 2007-2008).
TOWS matrix (MindTools, 2016) is used to discover, we can illustrate how Tesco determine their competitive position and growth potential in the US market.
To maximize their opportunity to the new market by using their strengths, they trumpeted Fresh & Easy as a European version of Trader Joe’s, develop a chain that offered high quality yet affordable, groceries with an emphases on fresh product, including ready to eat meals. Focus on own-label produce rather than the usual vast range of US brands.
To minimise and overcome the weaknesses, they take advantage of their opportunities, establish a large distribution centre, which enabled it to manufacture high-quality food, and developed follower-supplier relationships with their U.K. suppliers (Lowe & Wrigley, …show more content…
Building brand awareness also a key factor to ease of entry and penetration of the company in the new market for a successful market entry. Tesco and others UK company should understand the necessary of establishing thoughtful and strong PR strategies in the pursuit of selling their brands to the local consumers.
When Tesco operations in the US were an attempt to duplicate its operations in the UK because it tried to standardise instead of localising them. Tesco struggled in the US market and forced to exit one of the reason was due to lack of local partner which made very difficult to approach and succeed in US market. Therefore, they should develop localisaition strategy that fit into the target market‘s culture just like what they did in South Korea. Deep local market research and analysis is necessary when come to mature market before initial rollout because new entry need gain the share of the existing players as the local market left not much scope for the