TESCO IN

JAPAN
 Porter’s Five Forec

Michael Porter's famous Five Forces of Competitive Position model provides a simple
perspective for assessing and analysing the competitive strength and position of a
corporation or business organization
THREAT OF NEW ENTRANTS
• Economies of scale
• Product differentiation
• Capital requirements
• Access to distribution channel
DETERMINANTS OF SUPPLIER
POWER
• Availability of substitute
inputs
• Supplier’s product
differentiation
• Buyers’ switching costs to
other input
THREAT OF SUBSTITUTE
PRODUCTS
• Relative price of substitute
• Relative quality of substitute
• Switching costs to buyers
RIVALRY AMONG EXISTING
FIRMS
• Number of competitors
• Relative size of competitor
• Industry growth rate
• Fixed cost Vs variable costs
• diversity of competitors
BUYERS POWER
• Number of buyers relative to
sellers
• Product differentiation
• Buyer’s profit margin
• Buyers’ threat of backward
integration
 CORE COMPETENCES

• Core competencies are those capabilities that are critical

to a business achieving competitive advantage. A core
competence should be "competitively unique". To qualify
as "core", a competence should be something that other
competitors wish they had within their own business.
• The starting point for analysing core competencies is
recognising that competition between businesses is as
much a race for competence mastery as it is for market
position and market power. Senior management cannot
focus on all activities of a business and the competencies
required undertaking them. So the goal is for management
to focus attention on competencies that really affect
competitive advantage.
The core competences of Tesco are:
• - Skills in customer relationship management
• - Designing and implementing supply systems that
effectively link existing shops with the Tesco.com web
site
• - Ability to design and deliver a "customer interface"
that personalises online shopping and makes it more
efficient
• - Reliable and efficient delivery infrastructure (product
picking, distribution, customer satisfaction handling)
• -high quality research before entering to a market
• -Better product with better quality
• -better product with affordable price and better facility
The international strategy followed by Tesco is also its core competences
• Flexibility
• each market is unique and requires a different approach
• Localisation
• local customers, local cultures, local supply chains and local regulations
require a tailored offer delivered by local staff - less than 100 of Tesco's
International team are ex-pats
• Being focused
• to be the leading local brand is a long term effort and takes decades,
not just a few years
• Being multi-format
• no single format can reach the whole of the market. A whole spectrum
from convenience to hypermarkets is essential and you need to take a
discounter approach throughout 
• Develop capability
• developing skill in people, processes and systems and being able to share
this skill between markets will improve the chances of success in
challenging markets
• Building brands
• brands enable the building of important lasting relationships with
customers.
 
 LOCALISATION AS A PART OF
GLOBALISATION
• Globalization is the process by which businesses
create value by leveraging their resources and
capabilities across borders, and includes the
coordination of cross-border manufacturing and
marketing strategies.
• Localization, refers to the actual adaptation of
the product for a specific market. The
localization phase involves, among other things,
the four issues such as linguistic, physical,
business and cultural, and technical issues
Advantages of localisation as part of
globalisation
• Extension and expansion of market
• Exploitation of resources overseas
• Taking advantage of economies of scale
• Acquiring economies of scope: building and
using foreign market expertise in against their
rivals
• Easiness to understand the market
• Adaption of market variation
Disadvantages of localisation as part of
globalisation
• Divert resources from domestic to
international markets
• Going overseas is a permanent learning
process. You need to constantly adapt to new
and changing environment.
• Reputation of brand may affect(various
product and services)
• Tesco has varied its entry method in each region. In newly
created markets in central Europe Tesco acquired stores
from competitors (Kmart) and the state at low cost. In East
Asia it follows a partnership approach whereby it enters
new markets through joint ventures with local retailers.
This gives it initial scale and access to knowledge of local
political and institutional conditions, as well as a ‘local
face’. Such partnerships are often followed by the
acquisition of larger stakes Initial investments were rather
small to minimize the risk.
• Tesco has entered its first and culturally most proximate
markets with a fairly unchanged retail model (‘global’) but
adopted a local strategy when it entered the East Asian
markets (‘multinational’).