Question:
Pick an international company of your choice. Describe and analyse one marketing challenge that
the company recently (since 2010) faced in a foreign market, but not in its domestic market. To
analyse the marketing challenge, use the concepts and tools discussed in the lectures.
This assignment should have the following components:
1. A brief introduction to the company and its product
2. A brief description of the foreign host market
3. Describe the marketing challenge (including what the challenge was, when it took place, and
what its likely cause was)
4. Critically evaluate why the company’s response to the challenge has been or has not been
effective
Word limit:
2000 words (excluding reference lists/bibliographies and appendices).
Other Requirements:
In all instances, references to credible sources (scholarly or applied), rather than pure
unsubstantiated opinion, will provide the strongest level of support for and credibility to the
assumptions, arguments, analyses, justifications and conclusions you will make.
Refer appropriately (where needed) to concepts, models, etc. covered in class, the text and other
materials to support your assessment and demonstrate your understanding, knowledge and ability
to integrate the concepts in a practical setting.
Book Used:
Hollensen, Svend (2014). “Global Marketing,” Prentice Hall, Sixth Edition
Course Content:
• Module Introduction and the Decision Whether to Internationalize
• Theories of Internationalization and International Competitiveness
• Deciding, Which Markets to Enter
• Market Entry Strategies
• Global Marketing Programme: International Product Decisions
• Global Marketing Programme: International Promotion
• Implementing and Coordinating the Global Marketing Programme
Answer:
Introduction
This report was commissioned to investigate a current marketing challenge faced by an organization, in this case, Tesco, in a foreign market, but not in its domestic market. Tesco entered the United States in 2007 and shortly after five years in 2013 they exited the US market. After right away over five years of set-up in the United States, Fresh and Easy, one of Tesco’s grocery store chain vacated the US marketplace. From the US, Tesco carted far off by giving up more than 150 their stores to Ron Burkle, the tycoon and owner of Yucaipa Cos (Ndungu 2014). Furthermore, Tesco needed to pull the plug on some of its outlets and in addition laying off a few several permanent workers (Brickley 2013). The investigation draws in respect for Tesco’s nonattendance of social adaptation, general marketing frameworks and low-level client service provoking Tesco’s unsuccessful US undertaking. Furthermore, analyses tell that buyer enthusiasm for Tesco’s convenience stores stood irrelevantly, and that major hardship finally invited Tesco’s departure from the US. The account presumes that Tesco agreed to fight from the beginning given the perplexing of US customer solicitations and their convenience general stores.
Background of Tesco
Tesco is an open association established in the United Kingdom. Its home office is in Cheshunt, Hertfordshire. The company set on track in its operations in the year 1919 the minute Jack Cohen commenced some market backs off. In the next years years taking after the completion of World War I, the venture faced animated advancement with the ultimate objective that there were more than 100 outlets under their name by 1939. At first, Tesco did not simply connect with its processes in the United Kingdom immediately, also drew in its processes on the retail of perishable goods in a manner of speaking (Ndungu 2014). In any case, early in the mid-1990s, the association began separating its procedures both in the extent of products and furthermore geologically. In light of the above, the association today has pragmatic involvement in the retail of foodstuffs close by other all-purpose stock, for instance, clothing, contraptions, books, furniture, programming, web and cash related service products. As to, Tesco is considered the third greatest association in its business, working with outletsall over several countries in Europe and Asia (Ndungu 2014).
To the extent of revenue generation, in any case, it is the second greatest overall retailer working with more than 7300 stores over all nations where they are operating (Tesco.com 2015). Apart from being recorded on the London Stock Exchange (LSE), Tesco got incorporated as one component of the FTSE 100 Index. Consistent with the association reports toward the completion of the essential quarter in 2015, Tesco’s market collection was 18.1 billion pounds, to be exact, the 28th greatest association in the LSE. The processes of Tesco are not flippant in the United Kingdom, with part of its stores being there (3300 stores). The Tesco administrationhas associated all methodology and approaches to fortify the association’s bases in the mission for continuing to be appropriate to the United Kingdom business components. In this way, Tesco highlights unique stimulated arrangements intended for passing on quality offers to customers at improved qualities, more sharp costs, broader product ranges, and furthermore better and upgraded services.This report would draw upon important aspects that donated to the let-down of Fresh & Easy after discoursing Tesco’s sudden departure from the US market.
The Marketing Challenge
Tesco at first announced its plans to leave the US in April 2013 in the wake of revenue collection backlash of £1 billion over a 6-year time path. Tesco, with Yucaipa, far ahead decided on a course of action in September 2013 that combined the proposition of 150 Fresh and Easy outlets, and its dispersion and production workplaces (Thesing 2013). The course of action was set apart, sorted out, made capable by Tesco CEO Philip Clarke (Thesing 2013), and got US court underwriting in the same year in November (Brickley 2013).
From the stakeholder’s outlook, the course of action considered a rapid departure from the market, trading the larger piece of properties for one association and conclusion Tesco’s cash associated responsibilities in the US. Tesco in like manner got permits as an element of the course of action that could be traded for up to 32.5% esteem (Thesing 2013) in Yucaipa’s new association. Perhaps, Tesco might have gotten to proceeds by such esteem given Yucaipa’s notoriety in making vexed fundamental requirement dealers turn an advantage (Brickley 2013). The £80 million progress to Yucaipa’s new association set up to work the Fresh and Easy stores was the first region of sensitivity in the direction of Tesco and its stakeholders. In the fabulous arrangement of things, regardless, this progress was aninconsequential accident to a, for the most part, accommodating course of action.
Strikingly, the plan was moreover favourable to accomplices and the broader gathering influenced by the Fresh and Easy undertaking. The game plan engaged 150 stores to continue to be open and secured the work of 4,000 US personnel with the immaterial transformation of their working lives (Telegraph.co.uk 2017). All in all, the plan gave Tesco and its stakeholders with a rapid departure from the US market, with inconsequential upcoming budgetary obligations and the likelihood of immediate advantage. A direct extraction process during the time going before 2013 might have been a predominant leave methodology however with the attempts adversity signifying £1 billion (Telegraph.co.uk 2017) by April 2013, a quick leave remembering the ultimate objective to bind the financial mishaps of the undertaking was an intelligent game plan.
Evaluation of Cause and Response
Tesco has had distinctive intermediate triumphs in regard to its reputation of working up and evolving new retail stores both in the vicinity and in a couple of various countries where it works (Burt, Johansson and Dawson 2016). Regardless, the discussed truth did not aid in confirming the accomplishment of its Fresh and Easy trademark in the US. There are several causes and outlooks pertaining to the mistake of Tesco to get the United States market, as shown by numerous mechanical onlookers and first examination. The evidence in this fragment fundamentally emphases on what these sort of social events donated in the disillusionment of Fresh and Easy that achieved the unpredicted departure of Tesco’s undertaking in the US back country. While there can be several clarifications for the mistake of Tesco in the US, maximum mechanical savants and market specialists has perceived three great explanations: entry strategy, market analysis and the assessment of risk.
Risk Assessment
Risk assessment insinuates the destiny of any deficiencies anticipated from the formation of a particular enterprise later on. In the mission for business augmentation past neighbourhood edges, risk assessment highlights as a champion among the most important pre-improvement practices vital by all path to an association going for a certifiable market competition in the new backcountry. As demonstrated by marketing and trade examination, the risk assessment by Tesco included as one reason provoking to its departure in the US market. The strategy for thinking for the above discoveries its start in the going with two substances. In the first place, Fresh and Easy was set up with an essential concentration in California, Nevada, and Arizona, on account of their distant closeness from decently greater fundamental supplies (Telegraph.co.uk 2017). Heartbreakingly, Tesco fails to consider the way that the above districts were making due from a natural monetary subsidence appropriately of the land market fall (Tuttle 2013). In this way of such a change, the particular danger in the undertaking of Fresh and Easy extended. In line with a further examination by Burt, Johansson and Dawson (2016), the consequences of the store expansion continued and expanded the intrinsic risk in Tesco’s undertaking in the US support and retail business.
Moreover, not long after the theoretical investigation was finished, the segment of Tesco’s Fresh and Easy in the US essential need market demonstrated a basic nonappearance of master dealers in the mid-market popularity (Jary and Wileman 2016). When it got that learning, Tesco skipped on the open entryway going for abusing the high market hole through the establishment of little stores that could without quite a bit of an extend to encounter the solicitations of mid-market consumers. Regrettably, it worked out that the buyer’s solicitations were tougher to encounter than projected in the risk assessment. Not long following in the wake of setting up different mid-retail outlets (Thesing 2013), Tesco comprehended that the reason behind the lack of mid-retail convenience outlets in the grocery industry is a result of the US customer preference towards shopping largely and occasionally at the big supermarkets like Costco and Trader Joes. As a result the need for mid-retail stores were absent.
Entry Strategy
Already, Tesco moved toward its multinational undertakings with great social care and affectability by altering its operations to come across the solicitations and circumstances of the close-by customers. When arriving in the US market, regardless, Tesco needed to ‘make others move to its music’ (Butler 2012) with the help of convenience stores that copied the ever-predominant Tesco Express outlets of the UK (Telegraph.co.uk 2017).
This basic entry framework fails to speak to the social blunders that happened among British and American buyers. Europeans carry out more non-stop essential supply trips, where Americans are usual in going for more frequent visits to the supermarkets less occasionally (Morris 2013). It suggested the convenience stores did not touch the solicitations of the US buyer paying little respect to its reputation in the UK. Investigate emphasises that buyer devotion in getting large amounts of products in the US balances travel and evacuating costs for US customers (Pike 2015), driving them in the direction of Fresh and Easy’s greater adversaries.
Market Analysis
Tesco’s inspection of the US basic need business moreover fails to get the significance set on its store representation. In the US making and upholding a perfect store picture is key to develop and advance a retailer’s market situation (González-Benito and Martos-Partal 2012). Investigate exhibits that advancing, store vibe and service, and furthermore marketing drawing in quality are key fragments that add to the customers’ clear photo of the retailer (Hsu 2013). Despite substantial exploration into US buyer consumptions, Fresh and Easy’s pre-packaged make and limited product assurance nosedived to bring around US purchasers. The procedure of self-checkout and inconsequential stages of client service wound up being ‘confusing and uninterested’ (Tuttle 2013) for clients that were, for the most part, accustomed to full service (Bateson 2012).
The Fresh and Easy trademark was feeble with US clients, and its essential and standard advertising frameworks did negligibly to lift its store picture. The essential need chain similarly debilitated esteem-loving clients with a nonappearance of tickets and tokens, (Hsu 2013) the nearness of which, had backed the accomplishment of Tesco hugely in the United Kingdom.
Fresh and Easy similarly was unsuccessful in isolating itself from its opponents reasonably. Along these lines, challengers such as the Trader Joes agents dress in Hawaiian shirts, distribute morning coffee to clients and disperse free markers to children is all the more charming to US customers and offers a powerful buyer experience (Vickers 2013). The nonappearance of prominence that Tesco set on its outlet picture and purchaser reliability furthermore facilitated the Fresh and Easy dissatisfaction.
Conclusion and Recommendation
The Fresh and Easy section in US were prepared to fight the alteration by means of general stores set up for the UK grocery business yet inflowing the US marketplace. The obliged usage of self-service checkouts exhibited an unmistakable nonattendance of attention on customer service and did almost nothing to aid its evident business picture. Tesco’s incapability to promote Fresh and Easy in an exceptional and powerful way pushed purchasers to its competitor’s, while it’s past the due attempt to adapt to the charitable solicitations of US customers wound up being shy of what was required. Tesco, regardless, even fail to recreate its compelling processes of the UK when arriving in the US market. Tesco must have merged with the greater opponents in the US daily need industry-addressing purchasers with colossal marketing endeavours, unparalleled client service and an extensive product assurance as in its UK stores. Taking in the wake of participating dealers in the greater market would have deliberated Tesco, as a fan, to get to advanced advantages by product detachment and speak to a significant expert in a particular claim to fame.
References
Bateson, L. 2012. Why Tesco’s Fresh & Easy turned Americans off. [online] the Guardian. Available at: https://www.theguardian.com/business/2012/dec/05/tesco-fresh-easy-turned-americans-off
Brickley, P. 2013. Yucaipa Cos. wins approval to take over about 150 Fresh & Easy Neighborhood Market stores. [online] WSJ. Available at: https://www.wsj.com/news/articles/SB10001424052702304607104579214300926712182
Burt, S., Johansson, U. and Dawson, J., 2016. International retailing as embedded business models. Journal of Economic Geography, 16(3), pp.715-747.
Butler, S. 2012. Fresh, but not so easy: Tesco joins a long list of British failure in America. [online] the Guardian. Available at: https://www.theguardian.com/business/2012/dec/09/fresh-not-easy-tesco-british-failure-america
González-Benito, Ó. and Martos-Partal, M., 2012. Role of retailer positioning and product category on the relationship between store brand consumption and store loyalty. Journal of Retailing, 88(2), pp.236-249.
Hsu, T. 2013. Fresh & Easy fail: Tesco exits U.S. after profit tanks 96%. [online] latimes. Available at: http://www.latimes.com/business/la-fi-mo-fresh-easy-tesco-us-20130417-story.html#axzz2n3DALdwq
Jary, M. and Wileman, A., 2016. Retail Power Plays: From Trading to Brand Leadership. Springer.
Morris, R. 2013. Fresh & Easy failure: Can UK firms make it in the US? – BBC News. [online] BBC News. Available at: http://www.bbc.com/news/business-22168463
Ndungu, K., 2014. Analysis of TESCO. GRIN Verlag.
Pike, S., 2015. Destination marketing. Routledge.
Telegraph.co.uk. 2017. Tesco’s Fresh& Easy: a timeline in pictures. [online] Available at: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10299870/Tescos-Fresh-and-Easy-a-timeline-in-pictures.html?frame=2537633
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Thesing, G. 2013. Tesco to Sell Fresh & Easy to Burkle’s Yucaipa in U.S. Exit. [online] Bloomberg Businessweek.Available at: https://www.bloomberg.com/news/articles/2013-09-10/tesco-to-sell-fresh-easy-to-burkle-s-yucaipa-in-u-s-exit
Tuttle, B. 2013. Tale of Two Supermarkets: Why Fresh & Easy Flopped and Fairway Flies High | TIME.com. [online] TIME.com. Available at: http://business.time.com/2013/04/18/tale-of-two-supermarkets-why-fresh-easy-flopped-and-fairway-flies-high/
Vickers, E. 2013. Tesco expected to scrap struggling US grocery chain Fresh & Easy. [online] the Guardian. Available at: https://www.theguardian.com/business/2013/apr/12/tesco-us-fresh-easy
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