This study examines the international business strategies adopted by Tesco for its expansion and development is South Korea. Tesco is a global brand and a world leader in the retail food industry. Using qualitative secondary information, this dissertation presents a market analysis and discusses the FDI policies of the target market to analyze the external factors contributing to the expansion of the company. The findings suggest that the expanding retails sector and the favourable government policies led to the expansion of Tesco in South Korea. Tesco was well suited for its expansion because of the firm’s internal resources including size, experience and expertise. The dissertation concludes that the multi-national or multidomestic approach adopted by the company was underlying success factor that contributed towards the success of Tesco in South Korea. Its multi-domestic or multinational corporate structure and strategy is clearly reflected through its market entry, leadership, business strategies and its growth and expansion strategy. The dissertation also highlights several initiatives undertaken by the company since 2008 that lead to exemplary success and compares it with its competitors’ unsuccessful strategy.
Table of Contents
1. Dissertation
2. Executive Summary
3. Introduction
4. Research Question
5. Research Objectives
6. Literature Review
6.1 Globalization and Internationalization
6.2 Factors Influencing Business Decisions for Internationalisation
6.2.1 Internal Factors
6.2.2 External Factors for Globalization
6.3 Types of international strategy: Multi-domestic vs. Global
6.3.1 Global Strategy
6.3.2 Multi-domestic Strategy
7. Research Methodology
8. Findings
8.1 Market analysis
8.2 FDI Strategy of the Host Market
8.3 Market Entry Strategy
8.4 Averting Challenges Faced by Tesco
8.5 Strategic Leadership of the Company
8.6 Business Strategies
8.7 Analysis of the Finding
9. Conclusion
10. Consultancy Report
10.1 Executive Summary
10.2 Introduction
10.3 Key Findings
10.4 Conclusion
10.5 Recommendations
11. References
Research Objectives and Themes
This dissertation examines the international business strategies employed by Tesco in South Korea, specifically analyzing how the company successfully navigated cultural and market-specific challenges while competitors like Wal-Mart struggled. It investigates the impact of corporate governance, market entry methods, and localization strategies on international retail success.
- Localization strategies in international retail expansion.
- Comparative analysis of multinational vs. global organizational strategies.
- The role of strategic leadership and joint ventures in market entry.
- Management of cultural, human, and business differences in overseas markets.
- Evaluation of FDI policies and their influence on retail sector development.
Excerpt from the Book
Market Entry Strategy
Upon liberalization of the South Korean market, Wal-Mart attempted to make its way into the new market by building its own stores in remote urban areas of the South Korean cities where real estate prices were relatively lower than the main commercial centres. It was a clear replication of Wal-Mart’s US strategy of smaller-city store build-up. Wal-Mart succeeded in opening up a total of only 16 stores in all of South Korea; with having only one store in the Seoul metropolitan area. With this, the company failed to achieve the economies of scale. WalMart anticipated that the Korean consumers, like those in the US, would drive to its remotely located stores for bulk price shopping. However, this location strategy proved to be contrary to the South Korean consumers’ lifestyle and shopping behaviours. Korean consumers preferred buying smaller units of goods more frequently and thus favoured accessibility to a store more over bulk price buying (Retail 360, 2012).
Unlike several other supermarkets giants, Tesco adopted a localization strategy for its expansion in the South Korean market. Adhering to this strategy, the company chose to enter the market through a joint venture with Samsung, which is a conglomerate operating in a wide range of businesses and a major local partner. Through this joint venture, Tesco was able to leverage Samsung’s knowledge of and know-how of local market while focusing its attention on transferring its core retailing capabilities to the new market. While other supermarket multinational companies like Wal-Mart and Carrefour tried to replicate their tested home countries’ strategy in South Korea, Tesco did not attempt to repeat the British version of its retail business in South Korea. Tesco went on a path of gradually increasing its stake in the company until it acquired 95% of its stake; however, the company continued to localise its stores (Retail 360, 2012).
Summary of Chapters
Introduction: Provides the context of Tesco's international operations and establishes the research questions regarding their success in South Korea compared to global competitors.
Literature Review: Explores theoretical frameworks of globalization, internationalization, and the distinction between internal and external drivers of business strategy.
Research Methodology: Outlines the qualitative, case-study-based approach used to gather information through secondary research and academic sources.
Findings: Presents the market analysis of the South Korean retail sector and evaluates the strategies Tesco used to address challenges and drive performance.
Conclusion: Synthesizes findings to demonstrate that a decentralized, multinational organizational structure is superior to a standardized global strategy in culturally distinct markets.
Keywords
Tesco, South Korea, Internationalization, Market Entry Strategy, Multi-domestic Strategy, Globalization, Retail Industry, Localization, FDI Policy, Corporate Governance, Homeplus, Samsung, Joint Venture, Competitive Advantage.
Frequently Asked Questions
What is the core focus of this dissertation?
The dissertation examines the factors contributing to Tesco's success in the South Korean retail market and analyzes the international business strategies they adopted.
What are the central thematic areas of the research?
The research focuses on market entry strategies, localization of retail models, the impact of FDI policies, and the effectiveness of multi-domestic versus global organizational structures.
What is the primary research question being addressed?
The primary research question is how Tesco sustained growth in South Korea while global competitors failed, and how they managed sensitive cultural and business issues in a foreign market.
Which research methodology is employed?
The study utilizes a qualitative research methodology based on a case study approach, relying on secondary data from academic literature, business reviews, and reputable industry reports.
What does the main section cover?
The main body covers market analysis, host market FDI strategies, market entry tactics, strategic leadership, and a comparative analysis of Tesco against competitors like Wal-Mart.
Which keywords characterize the work?
Key terms include Tesco, South Korea, Localization, Internationalization, FDI, Multi-domestic Strategy, and Competitive Advantage.
Why did Wal-Mart fail where Tesco succeeded?
Wal-Mart attempted to replicate its US global strategy, including remote store locations and dry-good heavy product ranges, which clashed with South Korean shopping habits, whereas Tesco localized its approach through a partnership with Samsung.
What is the 'Homeplus' concept?
Homeplus is a localized store format that serves as a 'customer parliament' by integrating community education facilities, cultural centers, and specialized services, which built significant brand loyalty.
What role does the 'virtual store' strategy play?
Virtual stores at train stations allowed tech-savvy South Korean commuters to shop via QR codes, significantly boosting online sales and demonstrating Tesco's adaptation to local technological culture.
What is the key takeaway for other multinational companies?
The primary recommendation is that multinational firms should prioritize deep knowledge of local culture, form strategic synergies with local partners, and adopt a flexible, decentralized organizational structure.
- Citar trabajo
- Mayer Taylor (Autor), 2011, The Success of Tesco’s International Expansion in South Korean Market. Examination and Analysis of Key Factors, Múnich, GRIN Verlag, https://www.grin.com/document/267070
