Tesco Case Study Globalization Definition
|Case Code||:||BSTR242||For delivery in electronic format: Rs. 400;|
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges
ThemesGlobalization | International Business
|Case Length||:||20 Pages|
|Teaching Note||:||Not Available|
The case focuses on the UK based Tesco's globalization strategies and its successful foray into the South Korean market. One of the largest retailers in the world, Tesco's initial experiences with globalization was not successful. However, subsequently Tesco started localizing its stores and products according to the international markets. It entered South Korea in the year 1999 by forming a joint venture with a well established local retailer -Samsung. The joint venture helped Tesco acquire in-depth knowledge of the market and also helped it acquire the best store locations. Tesco began operating in the country under the well established 'Home Plus' banner. Tesco localized its stores according to the preferences of the Korean consumers and brought in some of its global best practices into the country.
The company's operations grew rapidly in South Korea and it emerged as the second largest retailer in the country.
» Evaluate Tesco's globalization strategies
» Study and analyze the entry and expansion strategies of Tesco in South Korea
» Examine how Tesco localized its retail practices in South Korea.
» Appreciate Tesco's efforts to integrate its global best practices with local strategies in South Korea
Tesco, Samsung Tesco, Globalization, Localization, International Business, International Expansion, Entry Strategies, Expansion Strategies, Global Supply Chain Management, RFID, E.Land, Retail Industry in South Korea, Store Formats, Hypermarkets
Tesco's Globalization Strategies and its Success in South Korea- Next Page>>
In this article, we critically analyse the September 2015 decision of the UK retailer Tesco to sell its highly profitable South Korean subsidiary Homeplus to private investors. For over a decade since market entry in 1999, Homeplus had grown steadily to achieve a market-leading position through a process of strategic localization in which Tesco's global business practices were selectively adapted to meet the specific needs of the South Korean market. Against this backdrop, we explain the exit decision through theorising the dynamic intersection of home and host market factors that developed contemporaneously from 2010 onwards. On the one hand, worsening market conditions and financial pressures in a post-crisis UK domestic market drove Tesco to refocus on its home operations and, ultimately, identify saleable assets to offset mounting debts. On the other hand, steadily growing resistance within the South Korean market from competitors, regulators, labour and consumers caused sales growth to stall and then start to decline. Our analysis contributes to the economic geography literature on retail divestment by conceptualising the relational process of divestment decision-making that encompasses the intersection of home and host market pressures as well as conditions across the wider portfolio of subsidiaries. The research is particularly distinctive in its profiling of this coevolution of drivers, and in distilling the different ‘domains’ of host market contestation. The analysis also has wider significance in the context of the broader literatures on economic globalization that have tended to focus heavily on processes of expansion and market entry and far less on the instances of failure and exit that are an integral and inevitable part of these wider dynamics.