Expansion of Tesco activities to Kenya in Joint Venture with Nakumatt Super market
Introduction
Strategic marketing and operational management planning are important for the multinational corporate firms to expand their business and secure sustainable development (Bryson, 2018). The report aims at identifying the operational management and market entry strategies of the organisation Tesco Plc after analysing the current market structure and external environment in the host country. In this regard, the home country of the organisation is the UK where the organisation tries to expand their business to Kenya through the joint venture with Nakumatt Super market.
Products and services of the brand:
Tesco Plc. is reputed British multinational retail merchandise operating in the global retail industry which is the third largest retailer as per the profitability volume of the company. The company tries to expand their business through more than 6553 stores with efficient employees of approximately 476000 (Tesco Plc., 2018a). The organisation runs their business operational activities through super markets, hyper markets and discount stores where it is successful in retaining more customers towards the organisational products.
Through Porter’s value chain model, it is possible to demonstrate the resources and competencies of the brand in order to understand the potential of the firm in successful international expansion. Under the primary activities, there are inbound and outbound logistics management, servicing, sales and marketing and operations. The company is concerned in managing quality control, maintaining raw material, improving supply chain, order handling, managing delivery time and improving invoice process for maintaining inbound and outbound logistics (Tesco Plc., 2018e).
Sales analysis, market research and promotional activities are useful for managing sales and marketing as well as the company is successful in managing quality of the production, packaging and manufacturing which helps top maintaining operational efficiency. Apart from that, the services such as warranty, after sales service are helpful for improving customer service and retain them for long run. The support activities of the company are infrastructure, procurement, technology and human resource. Product processing and technological advancement with efficient Information Technology infrastructure are beneficial for the company to conduct more research and development and improve efficiency of the company in long run. In addition to these, training at workplace and incentives structure are useful for retaining experienced staff members as well as supply management and funding are also advantageous for managing procurement.
Business structure:
Effective business hierarchy is beneficial for the organisation Tesco to manage the operational efficiency and run the organisational activities sustainably.
The marketing department is effective to analyse the external environment and develop appropriate promotional activities for securing sustainable competitive advantage in the international places. The operations team is also efficient to manage the production and distribution of the organisational products. The human resource managers try to manage recruitment of experienced staff as well as satisfying all the employees for retaining them in long run. Moreover, the finance department is effective to manage the financial transaction as well as investment for more research and development.
Degree of internationalisation:
The strategy of internationalisation is effective for the company Tesco to expand their business across Kenya where the management team can analyse the retail market in Kenya as well as develop effective strategies for successful expansion of the brand.
Tesco has high degree of internationalisation as the company is already operating in different international retail market place. Through gathering market knowledge as well as building market communication, the company is successful in expanding their business across the international markets.
Competitive advantage and market share:
The company has high competitive advantage due to their quality products and efficient services through which the brand can strengthen their customer’s base and satisfy all the customers successfully.
The company is successful in gaining high market share in the recent years where the company try to utilise their human resource for delivering high quality service. As per the figure above, it has been seen that the company is growing and market share of the organisation is high as compared to other competitive brands like Asda, Sainsbury’s, Morrison’s, Waitrose, Lidl and The Cooperative. High market share and growth in the market further influence the company to enter into new international; place for running the business strategically (BBC News, 2016). Efficient resource and capabilities of the employees and other higher level staff members further provides an opportunity to the brand to grow faster and secure sustainable development buy satisfying the customers through delivering high quality services as per their needs and preferences.
Foreign country experience:
The company Tesco has the experience in operating in the foreign countries as the brand is efficient in expanding their business operational activities across Asia and Europe. The company is the market leader in the retail industry of the UK (BBC News, 2016). Apart from that, the company is also effective in operating in Ireland, Thailand and Hungary. International expansion and operational efficiency of the company improves the experience of the managers and other high level executives in the workplace to enter into new market like Kenya and gain competitive advantage in near future. Financial strength and firm infrastructure as well s technological advancement provides an opportunity to Tesco to improve production procedure by ensuring maintaining the quality of products and services. This in turn helps the brand to target more customers across the international market for successful expansion o the brand.
As per the cultural aspect of the UK, there is modern culture and the employees try to work alone. Lack of cooperation and team work is seen in the workplace where all the employees are concerned about their own job responsibility. Professional meeting is the main source of communication where the employees can express their thoughts (Business culture, 2014).
This gap is the outcome of the differences created in the proper understanding regarding the expectations of the customers between the service providers and managers.
Analysis and recommendations
The customer’s demand for the retail products is increasing year to year due to positive economic growth. The high growth in GDP as well as purchasing power of the customers further enhances the demand for the retail products in the country. In Africa, the top countries where the retail sales are high are such as Nigeria, Egypt, Kenya and Morocco.
High demand of the consumers and e-commerce facilities are helpful for Tesco and Nakumatt to grow faster and retain more local buyers for their quality products and services.
Every gap is different and requires different approaches. Priorities can be set differently. This model can help in the identification of the gaps, root causes and the appropriate solutions for overcoming the gaps. This provides the decision-makers an overview of the entire organization across distinct functions such as accounting, operations and information technology. The managers and the leaders can determine the departments that need resources urgently. These resources can be allocated efficiently, and the budgets can be designed properly. These give rise to stakeholder satisfaction. The motivation of the employees is enhanced, and these have positive impacts on the life cycle of a project. Risks and losses are reduced considerably because of the GAP model. It also helps in studying the differences in the standard that is being set and the ones that is delivered. Other significant gaps that could be identified are service design gap, management understanding gap, service delivery gap, communication gap and service quality gap.
Cultural implication and operational management:
In order to manage cultural differences, the company Tesco needs to develop effective planning so that the joint venture with Nakumatt will be a successful strategy for entering into the Kenyan retail industry. In this regard, it is necessary for the company Tesco to provide cultural training to their staff so that they can understand the culture in Kenya and acknowledge their values which is necessary for cooperating with the local Kenyan employees. Providing incentives to the employees as well as high cooperation as well as open communication will also be effective for the management team to manage their employees and resolve the cross cultural diversity. Managing transparency and accountability in the workplace as well as encouraging the employees to develop effective team are other strategic planning through which it is possible to manage operational efficiency and lead the employees towards achieving success.
Strategies for market expansion:
In order to expand the business through the joint venture with Nakumatt, Tesco needs to maintain the quality of their food products also that it is possible to target the customers. The customers are willing to spend healthy life and in this regard, the company needs to focus on social media marketing with effective tag line related to health life and fresh food products of the company. Along with the online marketing strategy, launching the products with the help of the official website of Nakumatt is another effective tactics for launching the products successfully in Kenya.
Reference List
- BBC News, 2016. Tesco sees first market share rise since 2011. [online] Available at: http://www.bbc.com/news/business-37682262 [Accessed on 14 March 2018]
- Bryson, J.M., 2018. Strategic planning for public and nonprofit organizations: A guide to strengthening and sustaining organizational achievement. New Jersey: John Wiley & Sons.
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- Commisceo Global, 2017. Kenya Guide: A Look at Kenyan Language, Culture, Customs and Etiquette. [online] Available at: https://www.commisceo-global.com/country-guides/kenya-guide [Accessed on 14 March 2018]
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- Statista, 2018. Market share of grocery stores in Great Britain from January 2015 to March 2017. [online] Available at: https://www.statista.com/statistics/280208/grocery-market-share-in-the-united-kingdom-uk/ [Accessed on 14 March 2018]
- Tesco Plc., 2018a. About Us. [online] Available at: https://www.tescoplc.com/about-us/ [Accessed on 14 March 2018]
- Tesco Plc., 2018c. How we do business. [online] Available at: https://www.tescoplc.com/about-us/how-we-do-business/ [Accessed on 14 March 2018]
- Tesco Plc., 2018d. Our business. [online] Available at: https://www.tescoplc.com/about-us/our-businesses/ [Accessed on 14 March 2018]
- Tesco Plc., 2018e. Core purpose and values. [online] Available at: https://www.tescoplc.com/about-us/core-purpose-and-values/ [Accessed on 14 March 2018]