Tesco Expansion Case Study

4. Expansion and Diversification

Tesco grew organically, and also through acquisitions, until it owned more than 800 stores in UK. A major drive for Tesco expansion is its innovative use of technology to satisfy customers’ needs and grow investors’ money. Tesco was one of the first to build self-service tills and use cameras to reduce queues. Originally specialising in food and drink, it has diversified into areas such as clothing, electronics, financial services, telecoms, home, health, car, dental and pet insurance, retailing and renting DVDs, CDs, music download, Internet services and software.

Tesco introduced a loyalty card branded 'Club card ', in 1995 and later an Internet shopping service. In 1997 Tesco and Esso (part of

Tesco motives for international growth

Internationalization motive of a firm could be proactive or/and reactive - Albaum et al. (1994, p. 31). Proactively the major drives include opportunity in foreign market, desire to grow profit, technology competence and market intelligence. Reactively, is the saturation of domestic market, excess capacity and strong competition in local market driving down profit; all these factors are the motives for Tesco expansion into International market in order to gain presence.

Initially, Tesco Plc did not have any hypermarkets in the UK but it expanded its international operations by opening hypermarkets abroad. When Tesco began opening hypermarkets in the UK, its international experience was very useful to serve its customers better. For example, in Britain, where there was a high concentration of immigrants, Tesco 's stores offered specific products to cater to their needs. It entails that Tesco’s motive for international growth also include building an international brand and using market intelligence from both home and international to compete among market leaders in global retail

Markets targeted

Tesco domestic shops deal with a wide range of products but not all products and services are meant for all types of consumers. Identifying the target market is essential in the development of an international marketing plan. In its international marketing approach Tesco’s strategic business unit (SBU) enables the company to focus on product offering and market segment which separates the whole market into geographic and demographics areas.

Geographically Tesco is concentrating its efforts in countries and regions where it has strong market positions. Exiting in most Asian countries and continuous expansion into Central and Eastern Europe indicates geographic focus; for example selling its operations in Taiwan to Carrefour and purchasing Carrefour 's stores in the Czech Republic and Slovakia. According to Tesco Plc. “we entered the Slovakian market in 1996 through the acquisition of seven K-Mart Department Stores. Today we operate over 150 stores, and employ over 9,000 people. We are proud to be one of the country’s most recognised and trusted brands”. Source: Tesco Website in