Tesco Entry Into the U.S.a
In 2006, after a considerable amount of research, Tesco announced that it will finally enter the U.S. market branded as “Fresh & Easy”. A year later, Tesco entered the U.S. market by applying new strategies for success and market entry compared to the ones that were used in the past. In the past, Tesco’s strategies for global expansion were (1) to aggressively enter markets in developing nations, (2) focusing on markets that were less competitive, and (3) entering through acquisitions. Tesco used completely different strategies to enter the U.S. market. First, the company announced that they will grow softly by entering markets on the west coast. The grocer entered the California, Nevada, and Arizona markets less aggressively compared
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The U.S. market is much more competitive, “In 2006, there were approximately 34,000 traditional supermarkets, each with sales of over $2 million, offering a full line of groceries, meat, and produce” (U.S. Bureau of Labor Statistics – Grocery Stores). Tesco concluded that they would have higher returns and much more success in developing nations because there was more to gain vs. competing in developed nations where there was tighter competition and less market share to gain. Competing in a highly competitive market is one of the risks or disadvantages that Tesco will endure in the United States. Another risk that Tesco could face in the U.S. market is the limited growth due to the fact that the company entered on a later and smaller scale vs. on an “earlier and larger scale that would allow them to capture significant first mover-advantages that will bolster their long-run position in that market” (Hill). Although Tesco is expected to have less of the long-term rewards due to the choice of entry, it will ultimately endure less risks and will have the chance to learn more about its new markets. We believe that Tesco will succeed in some of the U.S. markets where convenient and express grocery stores are in demand such as in major metropolitan areas but could struggle in areas where competitors such as Wal-Mart dominate, for example the Midwest.
Tesco has moved from being the number 4 competitor in the international market to