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- Tesco’s Stumble into the US Market
But that didn't make the UK-based chain immune from many costly mistakes as it entered the US market in Tesco's story makes ideal Harvard Business School case material for teaching everything from multinational strategy to on-the-ground logistics. Marketing professor John A. Sean Silverthorne: Each country poses its own obstacles for multinationals entering new geographies.
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But that didn't make the UK-based chain immune from many costly mistakes as it entered the US market in Tesco's story makes ideal Harvard Business School case material for teaching everything from multinational strategy to on-the-ground logistics.
Marketing professor John A. Sean Silverthorne: Each country poses its own obstacles for multinationals entering new geographies. Your recent case on Tesco highlights challenges faced by companies coming to do business in the United States.
John Quelch: The United States is an unusually competitive and cluttered market. It is tough to succeed without a clear and sustainable point of differentiation. While successful grocery retailers are expanding internationally, the odds are long. Wal-Mart tripped up badly in Germany. Tesco's international forays have hitherto been successful—with the possible exception of Japan.
Tesco intelligently elected to concentrate on fast-growing, emerging economies in Eastern and Central Europe and in southeast Asia. Its modus operandi has been to joint venture with a local retailer, acquiring good store locations and local management talent in the process. Tesco deserves credit for not taking a "me-too" approach in its US strategy.
Tesco entered the California, Arizona, and Nevada markets with a new retail concept: a neighborhood market emphasizing fresh produce and meats, and good quality but value-priced prepared meals. Q: The company did a serious amount of homework before entering the United States, including sending 50 British executives to live with California families. But it seems the advance team didn't learn all that it should, such as the notion that designing stark stores with concrete floors wouldn't necessarily appeal to American tastes.
What can other companies that are thinking of moving into the United States learn about Tesco's early fact gathering and strategy development? A: I suspect that Tesco had a view on what would work before sending its executives to live with those California families.
The result was perhaps a bias toward gaining evidence in support of a predetermined strategy. California is a car culture. Most households undertake a weekly shopping expedition, supplemented with stock-up purchases at convenience stores. A small neighborhood market's success depends on enough consumers changing behavior to buy a higher proportion of their groceries on a more frequent basis.
This could work in inner-city locations where younger shoppers might buy their evening meal on the way home each day, but it is less likely to work in the suburbs. And finally, fresh produce was prepacked rather than loose on the shelves.
While this can actually improve freshness, consumers perceive the opposite. Q: Tesco decided initially to fill its US management ranks mostly with British expats instead of hiring locally. How did that strategy work for them? What can we all learn? Therefore, Tesco did not have immediate access to local retail savvy, not just in store design and assortment but also in the critical area of store locations. Foreign managers, transplanted from the UK, might not readily have these kinds of insights.
And as a greenfield newcomer, Tesco would not necessarily attract California retailing's best and brightest talent as it would assuredly do in the UK.
Q: As sales remained under plan, Tesco execs halted development of new stores temporarily and made adjustments to those stores already open, such as shifting product mix, allowing some coupon discounting, and expanding hours. Do you have advice for companies about revisiting original assumptions? Do companies new to the American market have to do this reassessment more frequently or look for different things? A: Tesco has not been afraid to listen to its customers, learn from its mistakes, and make appropriate midcourse corrections.
The assortment was expanded by items; stores that were originally stark and unwelcoming—to project a value price feel—were painted in pastel colors; and more signage was added. Weekly price specials were increased to build store traffic. Perhaps Tesco's original rollout plan was too ambitious. It assumed that Tesco would get everything right on the first try. On the other hand, Tesco rightly aimed to scale the concept as soon as possible so that fixed overhead investments in its own distribution centers could be spread across a larger number of stores.
First, are Tesco's problems in the United States a result of poor strategy or poor execution? The latter problem is obviously more correctable. On the other hand, Tesco has lost time; competitors have responded to its initiatives by incorporating some of Tesco's approaches in their own merchandising and assortment selections. The second question is how long the Tesco board will permit management to hemorrhage losses in the United States.
Originally, Tesco announced a five-year plan to profitability that would come due in Q: The case ends with Tesco in the fourth year of its five-year plan, with largely disappointing results.
Correct decision? Tesco has the resources to continue, and the US market's size remains a juicy target if Tesco can get it right. UK retailer Tesco was very successful penetrating foreign markets—until it set its sights on the United States. Its series of mistakes and some bad luck are captured in a new case by Harvard Business School marketing professor John A.
Key concepts include: Entering the US, Tesco deserves credit for creating a neighborhood market approach—emphasizing fresh produce and meats, and good quality but value-priced prepared meals. By not partnering or hiring local executives, Tesco missed the opportunity to learn more about the habits and needs of target customers.
Tesco rightly aimed to scale the concept as soon as possible so that fixed overhead investments in its own distribution centers could be spread across a larger number of stores. Perhaps Tesco's original rollout plan was too ambitious, with executives assuming that the company would get everything right on the first try.
Tesco has listened to its customers, learned from its mistakes, and made appropriate midcourse corrections. Q: What issues do students have to answer as they make their way through the Tesco case? A: There are two questions that students must wrestle with. Sign up for our weekly newsletter. Interested in improving your business? Learn about fresh research and ideas from Harvard Business School faculty.
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Tesco’s Stumble into the US Market
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After Tesco CEO Terry Leahy announced serious resources had been committed to developing a format that would be popular with American consumers, investors responded with some skepticism with a small drop in the company's share price. The stores were being mothballed , with hope of reopening them when the economy improves. In February it was reported that despite rumors, Tesco would not be selling or closing the chain. In a Chapter 7 manner , stores would be liquidated and closed within the next few weeks. On November 20, , the U.
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Очевидно, когда Танкадо умер, рядом находились свидетели. Согласно словам офицера, который отвел Дэвида в морг, некий канадский турист сегодня утром в панике позвонил в полицию и сказал, что у одного японца в парке случился сердечный приступ. Прибыв на место, офицер увидел мертвого Танкадо, рядом с которым находился упомянутый канадец, и тут же по рации вызвал скорую.
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