Questions

1. As Tesco expands overseas, can it succeed by using the same strategies it has used in the United
Kingdom? Why or why not? What factors should it consider while formulating strategies in global
markets?

It is significantly unlikely that Tesco can succeed in expanding overseas by using the same strategies as it did
in the United Kingdom. There are several reasons for it as to why it won’t work the same way in other
countries too. Firstly, consumers’ behavior and tastes are different in every country dependable on their culture
and religion. For example, if Tesco decides to create its presence in Pakistan it has to decide on its product
range to be made available in the stores. This is because Pakistan being a Muslim country would want to
consume only those products that are under the category of “Halal” and since Tesco is a UK brand many of its
products may not meet the criteria of being “Halal”. Secondly, the technological aspect is another reason that
Tesco needs to consider designing a different strategy for every country it wants to expand its operations. The
UK is a developed country where internet penetration rate and technological advancement along with literacy
is high as compared to other developing and underdeveloped nations. Hence, if Tesco decides to expand its
operations in these countries it might prove to be challenging for them because the adaptation rate of
technology is low in these nations and consumers are not tech-savvy given the low literacy rate.

Accordingly, the level of competition is another factor that explains why one universal strategy might not be
suitable for other countries too when going global. For example, if Tesco decides to operate in Australia it
would have to face immense competition from gigantic companies such as Woolworths, Aldi, and Coles who
have significantly penetrated the Australian market. Woolworths is the largest company in Australia and the
second-largest in New Zealand by revenue would make it difficult for Tesco to compete and position itself in
Australia. Also, Aldi a discount supermarket that has gained a considerable amount of market share despite the
competition where Lidl (a German supermarket chain) is also deciding to make its presence in Australia would
pose a major threat to Tesco. Hence, for Tesco to expand in other countries it needs to design a market
strategy that best caters to the market dynamics of the targeted country.

The factors that Tesco must consider while formulating strategies in the global market include all the macro-
environmental factors that might affect the operations of an organization. To begin with, legal and economical
factors must be evaluated by Tesco to determine the monetary and fiscal policy of a country to modify the
prices that best fit the buying power of the consumers. Cultural and social factors should also be taken into
consideration since consumers in different countries have varied tastes and preferences that must be
comprehended carefully by Tesco. This is because of the power shift from producers to consumers and gaining
a comprehensive understanding of their demographics would guarantee a good start and position in the foreign
market.

Political factors are also of great significance when formulating a global strategy. Countries with political
instability have weak law and order system which is a significant threat for foreign brands who may be
dominated by the local brands of the country. Hence, Tesco needs to understand where it stands considering
the political aspect of a country while designing a strategy accordingly. Lastly, competition is a factor which
must also be considered by Tesco so that a versatile competitive strategy is developed that would help Tesco to
position itself in the foreign market effectively and tactically compete with the established brands in that
market. A thorough analysis of these factors would allow Tesco to formulate a strategy that would not only
ease out its operations in the global market but would also enable it to grab many new prospects offered and
fill up the gaps in the targeted market.

2. What are the ways in which Tesco connects with its customers to provide more value for them?
Which is your opinion would serve Tesco the best?
Tesco’s main goal has been to attain a lifetime customer loyalty by creating customer value. To create value
for customers, Tesco needed to understand its customers’ buying behavior and show responsiveness to their
changing tastes and fashion. It started connecting with its customers by initiating a Customer Relationship
Management Program in 1995.

Through its CRM initiative, it started offering Club cards to its frequent buyers where they were offered with
loyal shoppers points on the purchases they made. It signified the fact that Tesco was showing importance to
its customers. Also, Tesco gathered valuable data whenever these customers would swipe their cards while
making purchases. With this, Tesco was able to track the buying behavior of its customers to comprehend their
tastes and preferences in creating value for them. Moreover, with the data Tesco was able to know the most
preferred items of its customers and who were offered with special vouchers for these items. Tesco went
beyond in connecting with customers by offering special assistance to its high-value customers, such as valet
parking, personalized calls from the store managers, and other benefits to strengthen up their loyalty towards
Tesco. Subsequently, Tesco has also come up with an annual Customer Question Time that polls nearly 12,000
customers to get their direct feedback relating to the product offerings by Tesco.

Tesco has gone beyond trying to connect with its customers to achieve its goal of having customer lifetime
value by providing ease and convenience to its customers. Tesco has designed its stores in such a way that
allows its customers easy navigation. Its ‘Express” stores are designed to be the smallest of all its stores that
only caters the grocery items whereas its “Home Plus” stores are designed to be the largest ones where non-
foods items are sold. Accordingly, it has also created its online presence to provide ease of shopping to its
customers through online stores and online banking. Its TescoDirect allows customers with the option of
guaranteed next day delivery from store pick up and it is also deciding on drive-thru supermarkets further
easing the grocery shopping for its customers. Tesco has also launched its own three mobile applications
embedded in the iPhone. One of which allows its customers to scan their club cards with an iPhone camera
hence, mitigating the need to carry card while on shopping. The second app allows its customers to find a
nearby Tesco store and the third app is a wine app that enables the customers to take a photo of the wine they
desire to purchase. Always on the roll, Tesco has developed a website suited for smartphone users for non-food
products and a grocery app with a scanner to scan the barcode. Tesco has also worked to improve its
responsiveness by making sure that as soon as a customer queue is about to form another counter is
immediately opened. Lastly, it has also introduced a self-service checkout facility for its customers.

In my opinion, the club cards and its initiative towards creating an online presence are so far the best. The
reason being club cards encourages the customers to think that Tesco appreciates their efforts and their
decisions to opt for Tesco. This in turn creates customer loyalty. Moreover, club cards have significantly
enabled Tesco to understand the buying behavior of its customers allowing them to create value as per their
customers’ needs. This initiative has significantly benefitted Tesco to identify its most valuable customers and
then offer them privileges to retain their loyalty towards Tesco. As far as online presence is concerned, Tesco
can gather invaluable data highlighting its customers’ preferences. It can include, the number of times a
customer was present on a particular product page, which items it had browsed, and which items it had
dropped before a check out to know the reasons behind not purchasing that item. All this information would
significantly enable Tesco to optimize its understanding of its customer’s mindsets and create value for
customers accordingly. Lastly, let’s not forget the benefits that its online presence has provided to its
customers, further solidified their loyalty towards Tesco which has been the ultimate goal of Tesco from the
beginning.