MK180: Global Business Perspectives - Project 3

Entry Strategy and Strategic Alliances

Project Description:

Chapter 13 of your textbook is about Entering Developed and Emerging Markets (pp. 412 – 432). Review the
chapter and based on your own understanding and any additional research, if needed, answer the following
questions.

Review the Management Focus “TESCO INTERNATIONAL GROWTH STRATEGY” (pg. 415) in Chapter 13 and
then answer the following questions:

1. Why did Tesco’s initial international expansion strategy focus on developing nations?
2. How does Tesco create value in its international operations?
3. In Asia, Tesco has a history of entering joint-venture agreements with local partners. What are the
benefits of doing this for Tesco? What are the risks? How are those risks mitigated?
4. When Tesco decided to enter the United States, this represented a departure from its historic
strategy of focusing on developing nations. Why do you think Tesco made this decision? How is
the U.S. market different from other markets Tesco has entered?

Submit your work in at least 3 paragraphs to Project 3 in Moodle.

 FOR INSTRUCTOR USE ONLY

Grading Rubric
Grading accepts a start value of 100. Points will be deducted for failure to fully complete or meet the stated requirements.
Grading: 90-100 = Represents work of superior quality (A); 80-89 = Represents work of good to very good quality (B); 70-79 =
Represents adequate command of class content (C); 69 and below = Represents work that shows a need for development or
improvement (F); 0 = Represents plagiarized work (F).

MK180: Global Business Perspectives (BCM)

Student:
Instructor:
Date:

Student Learning Outcomes:

SLO 2 – Explain how a country’s political, social, economic, and legal system(s) will influence the path globalization
takes.
SLO 3 – Discuss how culture dictates and influences all aspects and implementation of business values.
SLO 5 – Describe the factors that must be considered when brands and organizations decide to enter a foreign
marketplace.
SLO 6 – Identify and discuss barriers to entry that are related to supply chain management and logistics.
SLO 9 – Discuss how global brands integrate product offerings on an international scale.

Project 3

Possible Your
Description of requirements
Points Points
After reviewing Chapter 13 and based on your own understanding and any
additional research, answered the following questions in at least 3 paragraphs:
SLO-5, SLO-9 Why did Tesco’s initial international expansion strategy focus on 25
developing nations?
SLO-9 How does Tesco create value in its international operations? 20
SLO-6 In Asia, Tesco has a history of entering joint-venture agreements with 25
local partners. What are the benefits of doing this for Tesco? What are the risks?
How are those risks mitigated?
SLO-2, SLO-3 When Tesco decided to enter the United States, this represented a 30
departure from its historic strategy of focusing on developing nations. Why do
you think Tesco made this decision? How is the U.S. market different from other
markets Tesco has entered?
TOTAL 75

YOUR SCORE: ________

Instructor Comments:
 1. Why did Tesco’s initial international expansion strategy focus on developing nations?
They were looking for a market with lots of potential for long-term growth but few competent rivals.
Tesco was looking for a location with plenty of potential, a large client base, and few competitors in the food
retailing space. Developing nations, especially those in Asia, satisfied these requirements.
Tesco has adopted a relatively unique worldwide development strategy in the grocery business. As opposed to
going up against well-known corporations in established economies like the US and Western Europe, Tesco
prefers to investigate areas with enormous expansion potential but few current rivals. By using this technique,
the company may increase its overseas market share without entering crowded areas by using its expertise.

2. How does Tesco create value in its international operations?

The corporation primarily uses acquisitions, joint partnerships with local businesses, and greenfield
investments to access international markets (Mosley & Barrow 2013). Within five years of entering a new
foreign country, the corporation wants to be the market leader there. With barely a decade or so of
worldwide experience, Tesco already operates in around a dozen European and Asian nations. The
organization may significantly cut the time it takes to launch operations in new regions and the expense of
national deployments by using a common model like TOM. It collaborates with other businesses, which aids in
its expansion. The emphasis on local managers' development has been very beneficial.

3. In Asia, Tesco has a history of entering joint-venture agreements with local partners. What are the
benefits of doing this for Tesco? What are the risks? How are those risks mitigated?
One advantage is that Tesco is now the second-biggest firm in the global grocery industry, after
Walmart, thanks to its overseas outlets. Tesco, though, could be the most prosperous abroad. All of his
overseas endeavors were profitable in 2019. When Tesco adopted joint venture agreements with local
partners, it may have run the following risks: By licensing, a business that joins a joint venture bears the risk of
giving its partner control over its technology. Joint ventures are a useful tool for reducing risk. Another thing
to consider is that a joint venture does not provide the business the strict control over the subsidiaries that it
would require in order to take advantage of location or experience savings. Nor does it provide a business with
the tight control over a foreign company, it could have to launch well-planned, worldwide offensives against
its competitors. The third danger associated with joint ventures is that if investing businesses' aims and
objectives change or if they adopt divergent opinions about the best course of action, the shared ownership
arrangement may spark disputes and power struggles. Numerous studies show that in joint ventures, conflicts
of interest regarding strategy and goals frequently occur. These disputes, which typically result in the
venture's breakup, are more common when it involves businesses of various nationalities. Changes in the
relative negotiating power of the venture partners frequently lead to such confrontations. When it comes to
partnerships between a foreign corporation and a local firm, as a foreign partner's expertise of local market
circumstances grows, the local partner's experience becomes less important. This strengthens the foreign
partner's bargaining position, which eventually leads to disagreements over control of the venture's strategy
and goals. It is decided to mitigate these issues by forming joint ventures in which one of the partners has a
majority interest.

4. When Tesco decided to enter the United States, this represented a departure from its historic
strategy of focusing on developing nations. Why do you think Tesco made this decision? How is
the U.S. market different from other markets Tesco has entered?
Research shows that the probability of survival increases if an international company enters a domestic
market after several other foreign companies have already done so. For the late entrant can benefit by observing
and learning from the mistakes made by early entrants. I believe Tesco made this decision after establishing itself
in developing country markets. The company already had partnerships, financial stability and greater possibility of
investments with greater risk. After all, the US market is distinguished by being an established market with a large
number of competitors.