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C A S E T E A C H I N G N O T E S
The internationalisation of Tesco  new frontiers
and new problems
Neil Wrigley, Michelle Lowe and Katherine Cudworth
1. Introduction
This case re-examines Tescos internationalisation in the context of harsher economic
conditions using a comparison of its operations in South Korea and the USA to draw out
2. Position of the case
The case considers international strategy within one of the worlds leading multinational
3. Learning objectives
The key learning objective is to examine how a successful multinational can enhance its
international growth potential by investing in emerging markets but ultimately over-stretch its
resources and capabilities in the context of harsher mature markets and economic conditions.
4. Teaching scheme
The case can be used as the basis for plenary discussion, small group work or individual
assignment. With cross reference to publicly available documents (especially press reports and
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5. Questions for discussion
1. Identify the reasons behind Tescos internationalisation strategy.
6. Case analysis
1. Identify the reasons behind Tescos internationalisation strategy.
Internationalisation strategy depends ultimately on both the external environment
(internationalisation drivers) and on organisational capabilities (international and national
sources of advantage). The choice of international strategy in turn shapes the selection of
countries and modes of market entry.
In addition, Tesco identified huge growth potential for modern retailing across Asia
introducing significant innovations such as the worlds first virtual store, which tapped into
Koreas huge use of smartphones.
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2. What were the factors that helped Tesco achieve territorial embeddedness in South Korea?
SamsungTesco secured sustained growth through progressively deepening its connections with
the host economy and society in different ways. One key driver was its partnership with the
Other factors to consider include:
The attractive investment and market entry opportunities that emerged following the Asian
economic crisis of 1997.
3. Why were Tesco confident that they would succeed in a market where so many others had
failed?
Tesco sought to use the proven competencies it had gained by successfully expanding into
4. What factors might be important in assessing Tescos performance in South Korea and in
comparing/contrasting their performance to that in the US?
Factors to consider include:
Several of the elements that were key factors of success in South Korea were absent in the US.
Format flexibility and adaptive responses to market opportunities:
In South Korea, Tesco has been highly flexible and demonstrated considerable agility. This
involved a substantial organic store development programme one of Tescos competitive
Emerging vs mature market conditions:
In the case of entry into mature markets such as the US, Tesco had to overcome not only