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Can Tesco expand and succeed in North America?

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case study
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30 pages
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  1. Executive summary
  2. Introduction to retail market
  3. Tesco's international expansion
    1. Entry methods
    2. Business formats
    3. International success
  4. North American retail market
    1. USA
    2. Canada
    3. Mexico
  5. Tesco's differentiation from Wal Mart
  6. Conclusion and recommendations
  7. References
  8. Appendix

In the first part of this report we evaluated Tesco's international expansion to date, taking their main global competitors into consideration. Results showed that Tesco has one main strategy that they use to approach international markets. Although, the company uses a different entry method and business format for each new market. The main global competitor Tesco faces is Wal-mart, Ahold, Carrefour and growing Lidl. Tesco success is visible through their market leadership in Eastern Europe.

In the second part, we identified the most important barriers in the USA, Canada and Mexico that are quite similar and consist of competition in price, due to Wal Mart's monopoly. This factor also makes it control the whole North American retail market. Thus, it imposes on its competitors prices that are difficult to compete with, which make establishment more difficult (the lower costs of production and logistics have to be reached before entering the market if a firm wants to be able to compete). Otherwise, multilateral trade agreements like NAFTA changed a lot the three markets, making them turn on one another, and, consequently, making it more difficult for foreign companies to enter the market.

Finally, we highlighted how Tesco can distinguish itself from the world leader Wal Mart in the region of North America. The North American market showed us there is a big influence of cultural diversity on the eating habits of American consumers. Therefore supermarkets such as Wal-Mart, have adopted their own way of selling their products to meet consumer needs. In order to compete with Wal-Mart, Tesco needs to consider convenience stores instead of hypermarkets and also a pricing strategy to win the trust and confidence of new consumers.

[...] However, mutual agreement on sanitary regulations is critical to increasing integration in this market.[60] Appendix F Mexico - barriers Presentation of the retailing market We can say that Mexico is maybe the most interesting of the 3 North American markets in that a firm that succeed in establishing itself to Mexico will probably succeed in some Central or South American countries, and that because of the similarities between these countries, like languages or even some traditions and beliefs. Moreover, Mexico is one of the most dynamic countries of Latin America and has quite a big influence on other countries, less developed, who are following its example. [...]


[...] Politics Large retailers have used their market and political power to influence regulations in the transport industry, to reduce their costs, and in trade policies.[52] The American politics are also quite protectionist and tends to favor their own companies, or those from North America. The American market is divided into internal economic areas and each area has its own distribution network, and some politic rules, as taxes, can depend on the state you want to establish your company in. This makes quite different your establishment, according to the state. [...]


[...] Finally, we highlighted how Tesco can distinguish itself from the world leader Wal Mart in the region of North America. The North American market showed us there is a big influence of cultural diversity on the eating habits of American consumers. Therefore supermarkets such as Wal-Mart, have adopted their own way of selling their products to meet consumer needs. In order to compete with Wal-Mart, Tesco needs to consider convenience stores instead of hypermarkets and also a pricing strategy to win the trust and confidence of new consumers. [...]

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