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Tesco in America

Essay by   •  April 26, 2011  •  Case Study  •  893 Words (4 Pages)  •  2,274 Views

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1. Tesco decided to expand into the highly competitive US market as the company has had an International development strategy in place for the past ten years and also due to the fact Tesco is currently the 4th largest retailer in the world and is currently the UK's most successful supermarket it is a natural progression for the Board of Directors to continue to try to grow and expand the business and to strive to capture a share of the large market that exists within the United States thus enabling them to lead the industry in growing market share . As the company has been extremely successful within the United Kingdom, Central and Eastern Europe and the Far East and also due to the dwindling opportunities existing within the United Kingdom, they now have the ambition and a business model to enter the US market. Due to the detailed market research undertaken Tesco hope to aim their product at both higher and lower income families, within a multi-cultural society and to introduce a store where the consumer can purchase all their products under one roof and due to this research Tesco have the opportunity to succeed where other major British companies have failed.

2. The reason Tesco decided to use the name Fresh and Easy for the US stores although the brand name Tesco has been used for all the other international activities may be due to the fact that the Tesco name is unknown in the US or alternatively the name is known by US consumers but the company are looking to protect their name in the event that they fail to capitalize in the low cost convenience stores market. Also due to the detailed market research undertaken the company have decided to market the stores with the objective of the products being fresh, good quality food at affordable prices, and the store being both easy to reach with the neighbourhood and also with an easy layout within the store, enabling the consumers life to be made simpler.

3. Tesco may not meet their original target for store openings by 2010 due to the global economic crisis that occurred, unfortunately for Tesco the economic crisis hit the US in mid-2007 just as it was beginning to open its stores and also within this timeframe three of the states in which Fresh and Easy stores were opened had been the most seriously affected areas of the US. Within this period a large portion of the American consumers may have faced unemployment, crippling debts, therefore having an adverse effect on the amount of cash spent on groceries therefore this created problems for the stores with fewer customers' spending money within their stores. In March 2008 it was reported sales targets were being missed by 70% and the stores had a very weak footfall and then at the end of March 2008 the Fresh and Easy store opening programme was frozen for three months although the programme did resume at the end of the three month period, this three month time frame will have an adverse effect on the



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