International Marketing Romeo Joson: Module 3 A2 Introduction Every market treats products differently when they are being introduced. Market penetration is thus an important factor that a firm has to consider when globalizing. This paper has specific focus on Tesco and its venture into the American market. Tesco is a United Kingdom firm that was initiated in 1919. The company has since growth to have over 2500 stores across the world. The largest share of Tesco’s market is in Europe and Asia. The company has grown in revenue as well as in market capitalization. As a retail for households, Tesco is the third largest company in the world. In market capitalization, the company is second in its category. The company is listed in the London Stock exchange and part of FTSE 100 Index. Measured among all categories, Tesco is ranked 28th in market capitalization among the London Stock Exchange listed companies. This is a good ranking considering the expanse of the United Kingdom market and the competition globally, the ranking is a prove on the success of the management at Tesco. Preliminary International Marketing Report You will be creating an international marketing report for an international brand/product. You will serve as a consultant to an international company breaking into the US market. Research and analyse at least two (2) current articles on an international brands’ effort to penetrate the U.S. market. Case summary Tesco declared its intentions to enter the American market in 2006 and started its first stores in 2007. Between 2008 and 2012, the company opened 200 chain stores in three western states. In 2014, the company sold the outlets in America to Ronald Burble’s Yucaipa Companies. The cost of disposing the branches was 1.2 billion dollars. However, the company retained the pen name fresh and Esay that was used in America for other products in UK. Identify the relevant and applicable concepts and theories presented in the articles, compare, and contrast these concepts and theories to those from the text and other sources into your analysis. Ryu, J. S., & Simpson, J. J. (2011). Retail internationalization: Lessons from" Big Three" global retailers' failure cases. Journal of Business & Retail Management Research, 6(1). The above article identifies the challenges that have led to failure of some multinational companies’ failure in certain international markets. The article uses the case study of Wal-Mart, Carrefour, and Tesco to analyse the organizational needs, penetration methods and the importance of market perception in ensuring that a company’s brand is established in a new market. The authors identify three main causes of globalization failure in some countries by the case study organizations; (1) Adapting to host culture and market; (2) Attaining competitive advantages in the new market; and (3) Achieving global mind set and strategy While each of the three identified areas is important, the main ch.

1. International Marketing
Romeo Joson:
Module 3 A2
Introduction
Every market treats products differently when they are
being introduced. Market penetration is thus an important factor
that a firm has to consider when globalizing. This paper has
specific focus on Tesco and its venture into the American
market. Tesco is a United Kingdom firm that was initiated in
1919. The company has since growth to have over 2500 stores
across the world. The largest share of Tesco’s market is in
Europe and Asia.
The company has grown in revenue as well as in market
capitalization. As a retail for households, Tesco is the third
largest company in the world. In market capitalization, the
company is second in its category. The company is listed in the
London Stock exchange and part of FTSE 100 Index. Measured
among all categories, Tesco is ranked 28th in market

2. capitalization among the London Stock Exchange listed
companies. This is a good ranking considering the expanse of
the United Kingdom market and the competition globally, the
ranking is a prove on the success of the management at Tesco.
Preliminary International Marketing Report You will be
creating an international marketing report for an international
brand/product. You will serve as a consultant to an international
company breaking into the US market. Research and analyse at
least two (2) current articles on an international brands’ effort
to penetrate the U.S. market.
Case summary
Tesco declared its intentions to enter the American market
in 2006 and started its first stores in 2007. Between 2008 and
2012, the company opened 200 chain stores in three western
states. In 2014, the company sold the outlets in America to
Ronald Burble’s Yucaipa Companies. The cost of disposing the
branches was 1.2 billion dollars. However, the company
retained the pen name fresh and Esay that was used in America
for other products in UK.
Identify the relevant and applicable concepts and theories
presented in the articles, compare, and contrast these concepts
and theories to those from the text and other sources into your
analysis.
Ryu, J. S., & Simpson, J. J. (2011). Retail internationalization:
Lessons from" Big Three" global retailers' failure cases.
Journal of Business & Retail Management Research, 6(1).
The above article identifies the challenges that have led to
failure of some multinational companies’ failure in certain
international markets. The article uses the case study of Wal-
Mart, Carrefour, and Tesco to analyse the organizational needs,
penetration methods and the importance of market perception in
ensuring that a company’s brand is established in a new market.
The authors identify three main causes of globalization failure
in some countries by the case study organizations;
(1) Adapting to host culture and market;
(2) Attaining competitive advantages in the new market; and

3. (3) Achieving global mind set and strategy
While each of the three identified areas is important, the main
challenge that Tesco had in entering the American market was
achievement of global mind-set and strategy.
Lowe, M., George, G., & Alexy, O. (2012). Organizational
identity and capability development in internationalization:
transference, splicing and enhanced imitation in Tesco’s
US market entry. Journal of Economic Geography, lbs016.
Lowe, George and Alexy specifically examine the failures that
Tesco made on market entry in the American market. The
authors identify the strongholds that Tesco had and why these
strongholds were not enough to stabilize the global strategy that
had been created with high hopes. As the title suggest, the
authors draw a line between the identity of a company and its
ability to globalize. Judging by the preliminary analysis of
Tesco in the introduction (previous sections), it would be
expected that Tesco would have had a smooth sail in
establishing itself in America. However, there were some bottle
necks that the management either ignored, were not aware of or
were not able to overcome leading to failure of the American
project.
Research current International marketing topics and issues
In the development of the American market that started in
2001 and ended in 2013, there are some international marketing
topics that Tesco should have keenly observed;
· Market needs: the market needs are sometimes not the same as
the population’s perceived needs. The Fresh and easy band that
Tesco had used to penetrate to the American market mainly
promoted Groceries. While health experts for the ageing
American population hugely advocate for the product, the
demand does not reciprocate the campaign. This is a factor that
was overlooked by the marketing team at Tesco.
· Market differentiation:each market has its structures,
communication channels, common bond and the impact by
political class. As noted in the introduction part, Tesco has
established markets at the European and Asian markets. For

4. success in the American market, there was a need for the
management to conduct a survey aimed at seeking at salient
features that define the market.
Identify the relevant and applicable concepts and theories for
your client.
The entry and exit of Tesco in the American market is a
good ground to base a contract between the world-systems
theory and globalization. World systems theory addresses the
need to approach nations as a unit as opposed to different units.
The theory explains how its possible to develop a concept that
is applicable across different cultures, races and economies. The
theory can be captured well in the analysis that is given by Ryu,
& Simpson in their article Lessons from" Big Three" global
retailers' failure cases. The authors explain the failure of large
multinationals not because they lack good leadership but
because most of their policies are global as opposed to being
local in nature.
The image below is a summary of the world systems theory
The above image assumes the natural movement of goods and
services in the production cycle. Urban manufacturing is a key
component of the theory that identifies the factors that create
dependent variables. For example, the theory assumes that all
the countries will adopt the digital transmissions technology by
2015. Using this assumption, an electronic company may
manufacture goods and open a store in a developing company
anticipating high sales. However, the efficiency of the
production cycle above is dependent on a variety of factors
most of which may not be captured in the figure above.
Two concepts are developed by Lowe, George and Alexy;
interdependence of the marketing and globalization tools and
leadership development. The concept of interdependence is
based on the insatiability of any tool in delivering the objective
of an organization. In this case, the revenue collection level of
Tesco at the former markets was a historical financial
stronghold depended upon in entering the global market.

5. However, this was not enough to satisfy the needs of the
market. Leadership development concept defines the need for
leaders to have new ideas for new projects as well for the
existing ones. The authors explain how the market entry
strategy by Tesco was an imitation of other companies and this
did not guarantee automatic success to Tesco.
Market segmentation
Market segmentation refers to identification of a certain
population as a consumer for certain products. As noted
previously in the paper, the management at Tesco had identified
the American market for consumption of the Fresh and Esay
brand which wqas largely groceries product line. The image
below analyses the correctness of the market segmentation done
by Tesco.
From the above image, the lowest 20% in income are the most
consumers of groceries (assuming that groceries are more used
at homes than restaurants) while this number bends downwards
as income, level rises. This means that the bargain power of the
buyers is high and the expected sales low. A comparative survey
of the electronics market shows that the demands for electronics
increase with increase in income. If the management at Tesco
had identified America for the electronics product-line, the
company would have a lower bargain power by customers and
high expected revenue.
Target markets
The target market was spread across three western States:
Arizona, California and Nevada. This was one of the areas that
the company had done enough research on. The income level of
population at the three states is almost evenly spread between
low-income earners and high-income earners. This meant that
the projected revenue for the target market was high in the three
states.
Cultural issues and barriers
One of the cultural issues between America and United
Kingdom is the issue of colonization. Being the leading

6. economy, the American population may decide to show off to
their colonizers that they are self-sufficient. Due to this, it is
easier to enter into the United Kingdom market for an American
company than it is for a United Kingdomcompany to enter the
American market.
Competition
The market structure in America does not support
groceries that stand on their own. Thus, the competition that
Tesco had in its management of Fresh and Easy products came
from supermarkets. The supermarkets competing with Tesco had
relative advantage in that most of them offered other household
goods. This meant that the customer would make more sales for
different commodities at the supermarkets as opposed to what
the customer would get at Tesco’s Fresh and Easy outlets.
Legal issues, and ethical issues.
Dave Lewis took over the management at Tesco in 2014
and one of his first goals was to close 43 existing branches
including company's head office in Cheshunt and stopping 49
proposed branches from being opened. This would lead to over
2000 employees who would become redundant. The obligation
that the company had with these workers was not based on the
decisions made after but prior to the recruitment. Thus, the
company had a legally abiding role of meeting the obligations
that it had with employees.
Analyze relevant components of trade agreements between your
company's home country and the U.S.
Transatlantic Trade and Investment Partnershipcomprises of a
variety of trade agreements between the United Kingdom and
the United States. The proposed agreement will regulate trade
between the members of the European Union and the United
States. This would help in reducing barriers for members of
these countries. When it comes to law, the agreement will create
freer markets where the governments will have minimal subsidy
forproduction.
Analyze U.S. culture and provide data on laws, trade issues,
economic issues and other relevant background information.

7. The United States operates in a devolved model of
government. Thus, development of trade ventures may lead to
communication and regulation by both the federal government
and the state and other local government. A company wishing to
invest in America would thus require advice for both
international relationships and local trading requirements.
State the rationale for the selection strategy for entering U.S.
market
Entering the American market by opening locations at
Arizona, California and Nevada was informed by the presence
of the target market in the three states. In addition, the company
had used the most common method of globalization: acquisition.
While acquisition is viable in different times, it is more prudent
to use acquisition for a product that is fast moving. In a such a
case, the investor would be more able to pay back investment
and make more profits.
Analyse the positioning of your company's product in the U.S.
Closure of Tesco’s Fresh and Easy outlets may become a
stumbling block in case the company decides to re-enter the
American market albeit with a different product-line. The fact
that the company was unable to use their economies of scale and
vast international experience was a position that portrays the
management negatively among the American citizens. Re-
entering the market however would be easy in the future should
the company develop a globalization program in other nations in
America first. For example, entering U.S.A would be easy if it
is done through the Canadian market.
The other product line that the company is popular with is
electronics. The figure below shows how the current players in
the electronic industry share the market
From the above figure, the four largest electronics companies
globally share 88% of the market amongst themselves. The four
companies are Samsung, Apple, HTC and LG. this means that
the effect of the new entrant on the market of the dominant
companies is minimal.

8. Compare and contrast branding strategies for the U.S. market
and make a recommendation for your client.
Banding in the United States highly appreciates the issues
that bind the Americans as a people and a nation. Due to this,
most companies use courses that are perceived to be of
community purposes to market themselves. This is crucial in
making the customer to own the product and to feel indebted to
the company. One of the companies that have been consistent
and efficient in this area is McDonalds. The company uses
courses like baking competitions to bring the customers closer
to the company.
There are different courses that Tesco would have used to
brand itself. One of the courses is healthy eating among the
millennium generation. However, this would not be an advisable
course as it would portray the company pointing a finger
towards the americans that they are not healthy eaters.
However, courses like support for intercultural integration
would be welcome to the company. The company may for
example create events where families from different racial
descent prepare food together using the same groceries but with
different traditional menus. This would help in appreciating one
another and also increasing the perception of the customer about
the products of the organization.
Develop a conclusion and make a summary of recommendations.
Include graphics where appropriate.
The case study of Tesco is unique since most multinational
corporations rarely fail in an entire market. The factors that
have been identified in this paper show that just like the
medium and small enterprises, multinational corporations are
also not immune of economic, leadership and change
challenges. The entry and exit of Tesco in the American market
however has lessons that would be good in globalization. First,
it is paramount for management to conduct specific survey for
the target market, which the management should not assume the
impact created by perception of the population and that
management of each region should not be used to measure to be

9. affected by the failure in another branch/ region.
References
Lowe, M., George, G., & Alexy, O. (2012). Organizational
identity and capability development in internationalization:
transference, splicing and enhanced imitation in Tesco’s
US market entry. Journal of Economic Geography, lbs016.
Ryu, J. S., & Simpson, J. J. (2011). Retail internationalization:
Lessons from" Big Three" global retailers' failure cases.
Journal of Business & Retail Management Research, 6(1).