Enrique Villarreal Tesco PLC The Strategy For India
Enrique Villarreal
International Marketing
Harvard Case: TESCO PLC: Strategy for India
a) How should Tesco sustain the advantage of being the first global multi-brand retailer to be allowed to invest in India?
India is an untapped economy that contains huge potential for foreign direct investment. India’s retail industry is predicted to be worth $1.3 trillion in 2020. Up until the early 90s, India was a closed market that barred away any attempts for globalizing an international presence.
Beginning in 1991, the Indian government took its initial step to open up and allow up to 51% of FDI in certain sectors. Over the next decade several reforms were passed by the government allowing for more foreign direct investment (Exhibit 3). In 2012 the government allowed for 51% FDI in Multi-Brand Retail, creating the opportunity that Tesco had been waiting for. From Exhibit 1 we can see that Tesco PLC was not the first global retailer to enter India, but they were the first grocery and multi-brand company.
In 2014 the year of Tesco’s entry into the market, India had a population forecast of 1,274 (million). With a projected analysis of continued growth for personal disposable income of 46% by 2016 and an increasing GDP (Exhibit 2), the market was built for a global economic powerhouse. Tesco had a first mover advantage in the multi-brand venture for retail. The joint venture created between Trent Hypermarkets and Tesco is a starting point towards working to its advantage. Tesco could create barriers to entry and imitation against completion. By partnering with organizations that would benefit from complementary offerings would help in utilizing their customer base influence and lower competition for Tesco. Tesco needs to place a high importance on customer satisfaction and interests, as well as be flexible to their needs. The market may throw different obstacles at the company and Tesco needs to maintain its course if they look towards succeeding in the Indian market. As
International Marketing
Harvard Case: TESCO PLC: Strategy for India
a) How should Tesco sustain the advantage of being the first global multi-brand retailer to be allowed to invest in India?
India is an untapped economy that contains huge potential for foreign direct investment. India’s retail industry is predicted to be worth $1.3 trillion in 2020. Up until the early 90s, India was a closed market that barred away any attempts for globalizing an international presence.
Beginning in 1991, the Indian government took its initial step to open up and allow up to 51% of FDI in certain sectors. Over the next decade several reforms were passed by the government allowing for more foreign direct investment (Exhibit 3). In 2012 the government allowed for 51% FDI in Multi-Brand Retail, creating the opportunity that Tesco had been waiting for. From Exhibit 1 we can see that Tesco PLC was not the first global retailer to enter India, but they were the first grocery and multi-brand company.
In 2014 the year of Tesco’s entry into the market, India had a population forecast of 1,274 (million). With a projected analysis of continued growth for personal disposable income of 46% by 2016 and an increasing GDP (Exhibit 2), the market was built for a global economic powerhouse. Tesco had a first mover advantage in the multi-brand venture for retail. The joint venture created between Trent Hypermarkets and Tesco is a starting point towards working to its advantage. Tesco could create barriers to entry and imitation against completion. By partnering with organizations that would benefit from complementary offerings would help in utilizing their customer base influence and lower competition for Tesco. Tesco needs to place a high importance on customer satisfaction and interests, as well as be flexible to their needs. The market may throw different obstacles at the company and Tesco needs to maintain its course if they look towards succeeding in the Indian market. As