Can Tesco expand and succeed in North America?

Résumé du document

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.

Extraits

[...] It is possible that all these agreements, even if they make the trade easier between these countries, are a barrier in that they increase competition by encouraging, or non-restricting the establishment of a partner country firm in another country. To conclude we can say that the main barriers, in the USA, are linked with competition and prices that have a very strong impact on the establishment of a new company. In fact, the quality-price ratio is really high in America and may be difficult to reach. Once you are established in the US, it could be easier to enter another North American market, because of trade agreements between these countries. [...]

[...] It ensure that foods are safe and in compliance with applicable safety standards. A pre-marketing testing is required in all cases.[38] Customs The United States apply the Harmonised Customs System that is several custom tarifications depending on the origin of products. The duties for Canada and Mexico, bound by the agreement of the ALENA, are either non-existent or very reduced rates. There is also a preferential rate for countries included in the Generalised System of Preference, that is to say, most of the developing countries.[39] This might be more an opportunity than a barrier, depending on the country you are coming from. [...]

[...] (See appendix Trade agreements Since the NAFTA, Canada has direct access to the North American market, which represents over 430 million of people. In addition to eliminating tariffs, NAFTA provides procedures for border facilitation, movement of personnel or product certification.[25] Canada is also involved in many others trade and economic organisations, some with Europe, allowing easier trade between the countries. (See appendix To conclude on Canada, we can say that the main barriers for the establishment of foreign firms are the structure of the distribution that makes the setting up of these companies really difficult in terms of logistics. [...]

[...] - Barriers to the Globalization of Retailing , Susan Christopherson www.interexlebanon.com www.interexlebanon.com Regulating Food Safety Risks in the European Union and North America: Distinctive Regulatory Policy Styles, Grace Skogstad www.interexlebanon.com Can Walmartization be Stopped? [...]

[...] Consequently they could glut the market, opening widely spread local stores, where the customers can get familiar with. A good thing to do could be to adopt a vertical integration strategy, which allows reducing production costs, and makes logistics easier, leading to some economies of scale, and, so more competitive prices, keeping quality. You can also count on the development of the online retailing, to increase brand awareness in the targeted markets. References Internet Tesco Annual Review & Summary Financial Statements 2005 (17/10/2005) ‘Chief Executive's review'. URL:http://www.tescocorporate.com/annualreview05/d/d.html. [...]