Analysis of Internationalisation Strategy Tesco and Lidl
Question 1:
Globalisation has, in the last few decades, been one of the dominant trends in retailing. Retailers around the globe are striving for higher global market shares. The food retailing industry which has an oligopolistic market, especially, has strong competition although, with a few large firms dominating the market. Among them Tesco and Lidl are one of the major European retailers. Tesco is the UK’s largest retailer with 28.7% market share, which is 11% more than its closest rival, ASDA (Statista.com, 2015), and is the 5th largest retailer in the world (Deloitte, 2015). And Lidl is the main retail chain (accounting for more than 70% of its sales) of Schwarz group, which is the 4th largest retailer in the world (Deloitte, 2015). Both of these firms are based in Europe with Tesco being a British firm and Lidl a German. These firms are similar not only in their revenues and market shares but also in the generic strategy they have adopted. In terms of business operation, both firms follow Porter’s cost leadership strategy. However, Tesco also incorporates the differentiation strategy (Baroto et al., 2012), hence pursuing a hybrid strategy combining the two, while Lidl solely follows the no-frills cost leadership strategy (Geppert et al., 2015). Both these firms have internationalized in different countries around the globe. Lidl has mainly focused its internationalisation in the European markets, while Tesco, in addition to expanding in different eastern European countries, has also started its operations in drastically different markets such as South Korea, China, India and The USA. However, they have followed different strategies in their modes of entry into foreign markets, with different levels of success. The decision to and the outcome of internationalisation for these two firms have depended on different factors like government regulation, availability of the factors of production, their business operation strategy and so on.
One of the main
Globalisation has, in the last few decades, been one of the dominant trends in retailing. Retailers around the globe are striving for higher global market shares. The food retailing industry which has an oligopolistic market, especially, has strong competition although, with a few large firms dominating the market. Among them Tesco and Lidl are one of the major European retailers. Tesco is the UK’s largest retailer with 28.7% market share, which is 11% more than its closest rival, ASDA (Statista.com, 2015), and is the 5th largest retailer in the world (Deloitte, 2015). And Lidl is the main retail chain (accounting for more than 70% of its sales) of Schwarz group, which is the 4th largest retailer in the world (Deloitte, 2015). Both of these firms are based in Europe with Tesco being a British firm and Lidl a German. These firms are similar not only in their revenues and market shares but also in the generic strategy they have adopted. In terms of business operation, both firms follow Porter’s cost leadership strategy. However, Tesco also incorporates the differentiation strategy (Baroto et al., 2012), hence pursuing a hybrid strategy combining the two, while Lidl solely follows the no-frills cost leadership strategy (Geppert et al., 2015). Both these firms have internationalized in different countries around the globe. Lidl has mainly focused its internationalisation in the European markets, while Tesco, in addition to expanding in different eastern European countries, has also started its operations in drastically different markets such as South Korea, China, India and The USA. However, they have followed different strategies in their modes of entry into foreign markets, with different levels of success. The decision to and the outcome of internationalisation for these two firms have depended on different factors like government regulation, availability of the factors of production, their business operation strategy and so on.
One of the main