Evaluate global business strategies, assess cultural and economic influences, examine international market entry decisions, and determine effective approaches for sustainable global expansion.
Global business strategy refers to the policies and strategies which an organization develops with the aim of expanding into the global market. It is the most pivotal process of each entity which facilitates expansion of the customer base, helps in accessing the new resources, lowering labour cost, diversifying risk, attaining economies of scale and also enhances the overall brand recognition. Due to the difference in economies, culture, system of governance and market dynamic within the diverse countries there is an urgent need for developing the global business strategy. For students seeking reliable academic support in the UK and searches for services such as write my assignment, this analysis provides a well-structured, in-depth overview of global business strategy, offering clear analytical guidance suitable for higher education coursework.
Tesco is the multinational retail organization which involved towards offering large variety of product and services that include grocery items, books, furniture, petrol, software, telecommunication, financial and internet services. The organization is situated at more than 11 countries and provides employment opportunity to over 4673 people worldwide (Description of Tesco, 2024). The term state context implies for all the internal condition and factors of a country such as political stability, culture, industry regulation, legal framework which impacts the overall commercial activity. The current essay describes the evaluation of Tesco's global business strategy which aids in establishing its presence in the large number of countries successfully.
With the introduction of globalization and constant advancement in technology, each organization is aiming at expanding its operation globally that aids in earning higher amount of profits. Organization's ability to cope up with the diverse cultural context supports in determining the firm's efficiency and productivity to operate in a highly uncertain market. On the basis of research conducted by Coe and Yeung, it has been depicted that “globalization through network” is one of the most significant aspect which connects financial and commercial capital across the globe (Hong, 2021). They further explicated that this network is not merely a collection of cities beside it is a web of relationship which help in adequate distribution of resources and support in generation of new and innovative ideas. There is large number of factors such as cultural, economic condition, laws and regulation, political stability, resources, market size and competitors that should be evaluated while forming the global business strategy. In the current time due to Brexit, change in inflation and interest rate, change in social preference, technological up gradation and increasing focus on environment, Tesco faces issue in effectively carrying out its operations in global strategy. In order to overcome all the external environment issue, Tesco has developed four basis global strategies by utilizing Barlett and Ghoshal ‘s typology theory.
Culture is one of the major factors which need to be carefully studied before entering into new market. There is difference in taste, preference and goals between citizens of diverse country because of which it is crucial to explore the same. According to Hofstede's cultural dimension theory, there are six crucial dimensions that should be studied before entering into the new market. This framework includes Power- Distance Index, Uncertainty Avoidance Index, Individual Vs collectivism, Long term v/s short term, and indulgence versus restraint (Hofstede's cultural dimension, 2025). Based on the view point of Benito et al, (2022) it has been explicated that Hofstede's cultural model supports in enhancing understanding regarding the diverse culture and thereby contributes in managing the firm's overall policies effectually. Further, this framework concentrated on the management of diverse culture which aids in mitigating the scope of misunderstanding and also supports in optimising collaboration and communication. On the critical note, Aqidawati, Sutopo and Pujiyanto (2020) stated that this model is unable to capture the complexity of various social cultures which creates issue in adequately exploring the current norms and values of the country. Moreover, there is a difference in the values and understanding of each individual which could not be explored with the help of this cultural model.
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The success of organization could be hindered by inefficiency in understanding the preference and culture of the particular country. This could be understood from the case of Tesco while entering into US market in the year of 2007 (Tesco's expansion in US, 2024). Tesco does not consider preference and mindset of US consumer while designing their stores which ultimately fails to fulfil their needs. In Europe, customers frequently visit supermarkets and places emphasis over purchasing goods in a smaller quantity. These factors were kept in mind while designing supermarket in US that fails to resonate the customers’ needs. In America, customers like to have personal interactions with salesperson whereas Tesco has introduced self services cashier machine which creates dissatisfaction among the customers.
Moreover, American likes to explore diverse brand and used to purchase in bulk so that they don’t need to visit supermarket frequently. Tesco was unable to carefully understood and evaluate the needs of customer that leads failure in the international expansion. Along with this, cultural issue was also faced while expanding Tesco's operation into China (Tesco's expansion in China, 2024). There is a huge difference in the culture of Chinese & western consumer and inefficiency in understanding the customers need was major issue in successfully entering into the new country. Chinese customers are variety seeker who prefers to purchase from the diverse shops and explore specialist trader for particular product rather than buying all product form one place (Kumar et al, 2021). Unlike UK, Chinese consumers are not loyal to one brand which also results into organizational failure. Tesco has introduced membership scheme with the aim of developing loyalty by offering additional discounts but this strategy fails to attract customers which ultimately leads Tesco's failure within China.
Beside this, Tesco has also faced huge failure in Japan due to difference in the culture of both the countries. Tesco has invested over 250 million pound but unable to capture Japanese market as it has only 1% share in the grocery market (Tesco expansion in Japan, 2025). Tesco explained that inability to manage cost was the major issue behind the closures of the organization. However, they were unable to understand the issue of cultural difference which was major reason behind their failure. Tesco have ignored customer's preference towards purchasing high quality as well as efficient product and does not concern over offering excellent experience at the supermarket (Demartini and Taticchi, 2020). Tesco's stores are generally large in size due to which it is not possible to offer high quality services to its customers. Moreover, there is high loyalty within Japanese that create obstacles in attracting customers. Tesco's experience from China, Japan and US indicates the significance of critically evaluating the culture of Host country which aids in taking the most adequate decision while expanding into an international market.
However, Tesco has effectively learned from its experience and understood the significance of evaluating culture before entering into market. Understanding the culture of Host country helps in avoiding the situation of miscommunication and aids in fulfilling the needs and demand of the consumer successfully. This also enables organization to build prominent and trusted relationship with the customers and partners of Host country which in turn leads effective international expansions. While expanding business operation within South Korea, Tesco has focused on adapting their culture which is major reason behind the successful working of the business entity (Tesco market expansion in South Korea, 2024). People in South Korea are highly dependent over technology; having long working hours, high travel time and use public transportation due to which Virtual stores has been established by Tesco. Tesco identified that people in South Korea do not have time to visit supermarket on daily basis rather than prefer purchasing goods while going to the work. In this context, Tesco has established virtual stores at bus stops and subways which help in attracting the large number of customers.
In this context, a customer needs to download Home plus app and then Scan QR code of the product which they needs to buy. This order is shown in their online shopping basket and delivered to their home once the payment has done. It has been identified that large number of order are placed between 10 am to 4 pm when people are commute to their work. Further, customers are provided with opportunity select time for home delivery so that their products are delivered on timely basis (Home plus app of Tesco, 2025). Tesco's virtual store app was downloaded by more than 900000 people in a year and currently Tesco is No 1 online retailer brand within South Korea with 22 Home plus virtual stores. Tesco has effectively understood the cultural and lifestyle of Korean people which helped them in successful global expansion.
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Beside this, political condition of country is another significant factor that impact on overall international expansion of the business entity. According to the institutional theory, it has been identified that entity's ability to align with all the legislation and regulation indicate its capability to expand internationally (Abdulwase et al, 2020). Government of Host country established rules with the aim of encouraging transparency, protecting workers and ensuring fairness while carrying out the business operations. However, ineffective evaluation of government regulation and its implication could result into negative impact on the overall success of business entity. This could be understood from the case study of Tesco while entering into Chinese market. Tesco has entered into the country when there was huge concern and focus over utilizing home country product.
Government has started “Made in China’ Campaign to promote local businesses which encourages country's citizen to boycott product of MNCs and international firm. This has ultimately developed issue in influencing Chinese customer due to which Tesco was unable to maintain its stability in the market (Tesco's expansion in China, 2024). On the other hand, alignment with political regulation helps firm in managing long term stability within the country (Krummel, 2022). Companies aligning with political regulation help in gaining the trust of local people and authorities that contributes in creating positive image and goodwill in the mindset of customers. Government of India has necessitates that 30% of total product should be purchased from the local firms as to managing their economic position. In this regard, Tesco is involved towards purchasing products of worth 170 million pound from local businesses which aids in effectively aligning with all the regulations (Tesco Expansion in India, 2024). Further, firm is involved in partnership with local farmers which aids in sustainably carrying out their operations.
Based on the view point of Kar, Bansal and Mishra (2021) it has been identified that sustainability policy of the country is another significant factor that needs to be evaluated before expanding business operations. In the current times, each country is aiming at carrying out all the operations with least negative impact on the environment, society and community. Global organizations should identify sustainable goals of the country based on which policies should be formed. Inefficiency in aligning with sustainable policies results in creating huge amount of legal obligations that ultimately leads failure of international expansion. Tesco's expansion strategy based on Bartlett and Ghoshal's typology in Hungary could be used effectively for understanding the significance of understanding sustainable policies while entering into the international markets. It has been determined that Hungary Stood on 35 positions within world for managing sustainability in the country. Tesco have planned to increase the number of stores in Hungary for which it is aiming at clearing nine hectors of Oak forest (Smith, 2023). Moreover, firm is also planning to develop a mall above water reservoir which will ultimately impact overall environmental condition within the country. Besides this, Tesco was also claimed for involving green washing cases and undertakes forced labour which indicates the firm's inefficiency in sustainably carrying out all its operations. Due to this reason, Tesco has also been charged a fine of 247000 pound for providing misleading information in advertisement which was the major issue in expanding business operations in international markets effectively (Tesco's expansion in Hungary, 2024).
Along with this, economic condition of the host country is another significant factor that needs to be carefully evaluated before expanding business operations. In this context, organization should analyse mortgagees’ rate, inflation and GDP growth rate of Host country before expanding its operations. In this context, rise in the inflation rate creates issue in sourcing raw material and labour at reasonable rate which ultimately impacts the overall working of the business entity (Woohyoung, Kim and Hwang, 2020). Further, exchange rate is another crucial economic factor which should be critically evaluated before expanding operations into the new country. Appreciation or depreciation in the country's currency will change the cost of raw material for the company and also impact the overall attractiveness of the product for the customers.
This factor should be critically evaluated which assist in identifying the type of policies that should be incorporated within the country. From the case of Tesco entering into US market, impact of economic factors on global market strategy could be clearly understood. Tesco entered into US in the year of 2007 with the aim of expanding its market reach and thereby enhances overall sales as well as profitability of the company. In the year of 2008, financial crisis occurred in US that has reduced overall purchasing power of the country's citizen which ultimately impacts overall sales of the company (Financial crisis in US, 2024). Moreover, Tesco has not concentrated over offering coupon to Americans as it could save their money and aids in attracting the large number of customers. This incident has helped Tesco in understanding the significance of effectively evaluating economic position of each country before entering into the market.
However, this experience has created huge impact on overall global business strategies of Tesco. Firm has switched over conservative business development strategy in alignment with the conservation risk assessment which ensures successful expansion. Under this, country has made the policy for not entering into the diverse countries at particular time as it may create issue in managing policies according to the economic position of the country effectively. This strategy was most appropriate as there was high complexity of the business lines and lower profitability level of retail organization (Kalasin, Cuervo‐Cazurra and Ramamurti, 2020). Moreover, firm has also started critically evaluating economic position of country which helps in managing overall cost and financial position of the business entity. For instance while entering into India, Tesco has identified that there are large number of cost conscious consumer and huge amount of poverty within country due to which Tesco have focused on offering product at minimum prices. Due to this reason, firm has emphasised over sourcing raw material from local farmers which helps in providing growth opportunity to them and also assists in sustaining long term stability within the country.
Availability of the resources is another major factor that needs to be critically analysed before entering into any country. Many organizations enter into new country without identifying whether the required resources for production process are available in the country or not (He and Li, 2020). This inaccurate evaluation creates issue in successfully carrying out the firm's operations leading to failure of organization. On the basis of resources dependency theory, an entity's ability to acquire resources has huge impact on overall success of business entity (Resource dependency theory, 2024). In this regard, organization should identify the type of personnel, technology, raw material and experts that are available in the country based on which the most accurate decision could be taken. Company that are focusing on entering into developing countries generally face this issue due to the lack of adequate infrastructure in the country.
Moreover, retail organization could not source their product from large distance as it offers perishable goods which ultimately result into increasing wastage and cost of the business entity (Kurpayanidi et al, 2020). For example: Tesco has shut down its operation in Thailand in the year of 2021 due to the unavailability of local resources which ultimately increases overall expenses of the organization. In Thailand, Tesco needs to purchase perishable goods from large distance which create issue in effectively sourcing fresh product at a reasonable cost which ultimately leads to firm's failure. There was supply chain disruption in Thailand which also creates issue in timely gaining all the required material and ultimately results into failure of international expansion. In the context of global supply chain, Tesco has faced issue in managing complexity related to the transportation logistics, cultural differences and custom regulations. In Thailand, Tesco have been criticised for unethical sourcing of material and violating labour regulation due to which it was unable to gain the trust and confidence of local people (Tesco's expansion in Thailand, 2025). Moreover, Tesco was also criticised for destroying Rainforest by sourcing palms oil which has created huge amount of supply chain disruption. This incident defines the significance of accountability and transparency within supply chain management for expanding business globally.
Beside raw material, lack of technology advancement is also another significant issue that faced by the firm of developed countries while entering into the developing countries. Many companies are known for their smart technologies and effective services that offered to the customers (Abbasi et al, 2021). Lack of adequate infrastructure resists firm to provide similar services to the customers which leads to higher dissatisfaction. Tesco has been recognized for using smart technologies in its operations which aids in providing effective services to the customers. However, Tesco was unable to introduce similar technology in Bangalore due to inadequate infrastructure and lack of knowledge within the country's population. Each organization should carefully evaluate knowledge and technology availability within the country before expansion.
On the other hand, Tesco have efficiently used technology for expanding its operation in Slovakia which helps in maintaining long term stability within the country. Tesco was first retail organization in the country to offer online delivery services and thereby attracted the large number of customers (Chen et al, 2020). In this context, Tesco has offered its customer with 20000 lines of frozen and fresh food product, basic household items and non-food items such as magazines, newspaper and toys which helped in managing its stability within market (Tesco's expansion in Slovakia, 2023). Along with this, number of competitors and its influence in Host countries needs to be critically evaluated before expanding internationally (Byrne, 2020). Large number of competitors and high loyalty of customers within Host country creates major issue for the companies in managing its stability within the international market. Tesco have adopted an effective global market strategy in which it generally involved in forceful takeover and acquisition of local supermarket of Host country which help in reducing competition and also support undertaking of international expansion. For example; Tesco has acquired Thailand Lotus for 142 million pound for entering in Thailand, acquired Associated British Food for expand in Ireland, acquire Tsurukame chain in Japan which aids in effectively entering into new countries (Global business strategy of Tesco, 2024). This strategy has helped Tesco in reducing overall competitors within countries and also support in effectively sustaining competitive edge within international market.
Based on the view point of Li, (2020) it has been determined that three-fold embeddedness model should be used by each organization while expanding its operation internationally. This model explicated that network, societal and territorial are the three factors that should be carefully examined by each organization before entering into the new country. This model considers various barriers while entering into the market that includes local regulation, cost of entry, society and community. For example: From the above case of Tesco, it can be stated that firm was not able to effectively collaborate with three major factors that lead to major international failure. In support of the above author, Adedoyin and Zakari (2020) entailed that social embeddedness is related to all the adjustments that firm undertakes in relation to institutional, economic and cultural environment of the country. Territorial embeddedness is related to degree of changes that an organization needs to initiate due to political and economic condition and policy of the particular country.
Lastly, Network embeddedness refers to companies’ ability to merge and support local business of host country which will help in their overall development and growth (Gao and O’Neill, 2020). By effectively aligning with the model of embeddedness an organization could adequately manage all the macro factors of the country that leads international expansion. For example; Tesco expansion in Ireland was undertaken after evaluating the pivotal factors that aids entity in managing its stability in the country (Tesco expansion in Ireland, 2025). Tesco is able to generate profit of 119.6 million pound and capture a market of 24.2% in Ireland indicating successful international expansion.
Conclusion
By summing up the report, it has been determined that there is large number of factors that should be considered before expanding business into new country. It has also identified that Tesco was not able to effectively undertake all the factors due to which firm was not able to manage it expansion in various country. From the Hofstede model, it has determined that culture difference is most crucial factor which is creating issue in managing stability within US, China and Japan. Tesco was not able to understood American's preference of not visiting supermarket frequently, ineffective loyalty policy in China and lack of firm's ability to offer high quality product to Japanese which creates issue in attracting customers. Further, political regulation and economic condition of host country are also critical factor influencing overall global business strategy of company. It has identified that Tesco expansion in US at time of financial crisis which reduces overall purchasing power of customers. Further, China's policy of utilising local product also creates issue in attracting larger number of customers. Moreover, inefficiency in aligning with sustainability goals and identifying adequate resources availability is crucial factor that impact on overall international expansion of the business entity. Along with this, Companies should align with Model of embeddedness which aids in taking decision after critically evaluating all the societal, Territorial and network factors which contributes towards effectively overcoming all the uncertainties.
References
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