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Tesco's Strategies in South Korea
Entry and Expansion Strategies
In the early 1990s, consumers' demand for a modern shopping experience in South
Korea was increasing owing to rapid economic growth and increasing disposable
incomes. The government had adopted protectionist policies and the retail sector
was not open for foreign direct investment.
The retail sector was dominated by mom-and-pop stores , which accounted for
about 80% of the total retail sales in the country at that time. By 1996, the
regulations governing the retail industry had been eased, but South Korea still
did not have a conducive business environment to operate in, especially where
foreign retailers were concerned (Refer to Exhibit IV for a note on retail
industry in South Korea).
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In the aftermath of the East Asian Financial Crisis , the
South Korean government eased regulations pertaining to FDI in order to attract
foreign direct investment (FDI) into the country...
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Looking Ahead
Initially, Tesco did not have any hypermarkets in the UK and it expanded
its international operations by opening hypermarkets abroad. This proved
to be an advantage, as Tesco did not try to replicate its standard
practices in the UK in other countries and instead started afresh
according to the local needs and demands. When Tesco began opening
hypermarkets in the UK, its international experience was very useful.
Tesco's lessons in localization helped it serve its customers better.
For example, in Britain, where there was a high concentration of
immigrants, Tesco's stores offered specific products to cater to their
needs... |
Exhibits
Exhibit I: Tesco's Turnover & Operating Profit (1995-2006) Exhibit II: The Tesco Way Exhibit III: Tesco - International Operations Exhibit IV: Retail Industry in South Korea
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