TESCO PLC: Leveraging Global Knowledge Tesco PLC, the United Kingdom-based retai

Question

TESCO PLC: Leveraging Global Knowledge

Tesco PLC, the United Kingdom-based retailing giant had been in Asia for a little over a decade and sales and profits were already comfortably outstripping those in the UK and other Tesco areas. Yet it was clear that every Asian market was unique. Thailand, Malaysia, and South Korea had been great successes, yet Tesco had failed completely in Taiwan and operations in Japan were not going well at all.

Tesco’s international expansion strategy has responded to the need to be sensitive to local expectations in other countries by entering into joint ventures with local partners, such as Samsung group in South Korea, also making sure to appoint significant portion of local personnel to management positions as part of their internationalization strategy, referred to as the TESCO Project.

Questions:

1- The United States and France are more culturally similar to the UK than are Thailand and Malaysia, yet TESCO failed in the former two and has been highly successful in the latter two. How might you explain this difference?

2- What is the role of global teams in sharing best practices across a firm’s global operations? What advice would you give to make the teams more effective?

3- How would Tesco’s business model translate into policies of recruitment, training and development, and career management across the Group?

Explanation / Answer

1) While the countries of United States and France are culturally more similar to UK where Tesco was already operating, it should be noted that there was already a giant retailer such as Walmart which was present in US and thus gaining market share would have been difficult in those countries. On the other hand, Thailand and Malaysia were emerging economies and there was space for a retailing giant to enter the market. Also once Tesco was able to tailor the offerings suited to local market through formation of alliances and joint ventures with local parties, their businesses in these countries proved to be a success.

2) The global teams should have regular interactions and teams from various function such as operations, supply chain, finance etc. should meet and exchange best practices to ensure that knowledge within the firm is disseminated across geographies. Also in order to have better effectiveness in these communications, it is best to develop a communication framework and decide on a common language for communicating across global teams. Also necessary skill and training needs to be given to employees to understand the nuances of communication and cultural differences in a global environment.

3) Tesco's business model involve procuring items at efficient prices in the local or international markets and then sell the products via their retailing stores. So in order to be efficient, it is necessary to have a good understanding of the local and international markets. For sound people policies to be in place which in turn will drive up efficiency, it is necessary to have a system of people moving around geographies so that knowledge is disseminated and also growth of people is accounted for. So the fundamental of career management is Tesco should be growth within the geography and then progress on to take more responsible positions in diverse geographies.

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