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British grocery retailer Tesco isnât accustomed to failure, but after spending five years and about $1.61 billion, Tesco managers began preparing to sell or close the companyâs 199 Fresh & Easy markets and get out of the United States for good. Fresh & Easy was a novel format for Americansâstores that were larger than convenience stores but smaller than supermarkets and that focused on selling fresh foods. As it turned out, Americans found the format neither fresh nor easy. Managers imported British favorites instead of adapting to American tastes, and each store carried the same selection of prepackaged meals and other products, no matter its location. There was no deli section where food could be made to order. Prepackaged sandwiches are commonplace to the British, but to American shoppers they seemed like something from a vending machine. The timing didnât help either. Fresh & Easy opened in the United States just before the recession devastated many of the areas in California, Arizona, and Nevada where it located its earliest stores. The chain never turned a profit.
Case Question
Based on this caselet and the concepts learned in this topic, which kind of international strategy do you think Tesco was applying in America? Tesco has now decided to open its stores in India. As a manager at Tesco, how will you do things differently this time to save the company from being a failure in India?

Respuesta :

anthougo

Answer:

1. Tesco was applying a standardization strategy in America. It treated the US domestic market as if it were the same as the British domestic market. It failed to recognize that American shoppers' tastes are different. Again, it preferred to deal with prepackaged food, an offering that is not very agreeable to the American shoppers. It also failed to domesticate the sources of its supply of grocery, preferring to import from Britain. Tesco should have purchased the grocery from the local market to make them fresh and agreeable to the local taste.  

2. I will advise that the stores that are opened in India should not be patterned on the failed American strategy. Tesco should deploy a multidomestic international strategy by customizing its products, stores, and processes to the Indian market. The aim is to meet the taste of Indian shoppers. Tesco must understand that Indians prefer cooking their meals.As a result, the company must not delve into prepackaged food, but concentrate on selling Indian grocery and spices.

Explanation:  

Companies employ a standardization strategy by treating the whole world as one market with little meaningful variation with the assumption of meeting people’s needs with one product. This strategy is best for some standardized products like equipment.  Here, there is high global integration of markets with low local responsiveness.

On the other hand, multidomestic strategy is employed by companies to customize products or processes to the specific conditions in each country and to meet local customer tastes. For grocery shops that require the products to be fresh, a multidomestic strategy would be preferred. This strategy employs high local responsiveness with high global integration.

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