GLOBAL FEATURE Successful British Retailer Tesco Enters the U.S.

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GLOBAL
FEATURE
Successful British Retailer
Tesco Enters the U.S.
Market
Tesco announced plans to open a chain of convenience stores on the U.S. West
Coast in 2007, spending an estimated $453 M. The very successful retailer has four
types of stores, including the convenience chain, Tesco Express.
This initiative is being launched even though the U.S. retail grocery market is
experiencing intense competition, and some chains are cutting back or selling out.
Tesco’s decision to enter the U.S. convenience market is bold and risky. Some
authorities consider the action questionable. However, Tesco has a very impressive
success record in Britain. With its Tesco Express, Tesco Metro, Superstore, and Extra
hypermarkets, the giant retailer has dulled Wal-Mart’s drive to dominate the retail
scene.
Tesco has no brand awareness in the U.S. so building brand identity will be
challenging. Yet the retailer has global buying power, powerful information
technology, and strong supply chain capabilities. The stores will offer groceries,
produce, and private-label ready-to-eat meals. Some observers think Tesco is
planning to compete with Wal-Mart in its home market.
Source: Kerry Capell, “Tesco: California Dreaming?” BusinessWeek, February 27, 2006, 38.
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