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This assignment will focus on Poland in Eastern Europe, Thailand and Malaysia of the Far East.The assignment will undertake a PESTEL analysis of Tesco expansion overseas

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Introduction

Tesco first launched their international expansion in 1994. After 11 years their sales have grown to contributing 20%(�7 billion) of the total turnover has been from overseas sales. The success of Tesco expansion overseas has mainly been down to the strategy of seeking out new markets in an early growth stage. These markets have few and week competitors and lots of potential. Tesco expansion overseas has mainly been in Eastern Europe and the Far East. Tesco has set up in thirteen countries abroad so far, some of these include; Czech Republic, Malaysia, Poland, Republic of Ireland, Thailand and Turkey. This assignment will focus on Poland in Eastern Europe, Thailand and Malaysia of the Far East. The assignment will undertake a PESTEL analysis of Tesco expansion overseas. Involving political, economical, social, technological, environmental and legal issues that effect Tesco. There are many political factors that effect businesses. The main factors are legislation, government agencies and incentives put forward by the governments in order to attract investors. Investment incentives in Poland are very favourable for large companies such as Tesco. Polish government offers these incentives mainly to companies that invest more than �10 million. Some of these incentives that the Polish government offer Tesco are, employment grants, training grants and grants for infrastructure development. ...read more.

Middle

Businesses need to take into account that different countries will have different attitudes. In Poland where the population is mainly of Roman Catholic belief, leftwing political parties have accused Tesco of undermining the traditional Polish values of home, family and church. These views have mainly come from the poorer rural population who are suspicious of foreign investors. Mobility of the population is also important. If the countries population is less mobile, then the retail outlets of goods must be near to the most densely populated area. In Thailand Tesco has started to focus more on smaller convince stores that will be situated closely to the customer. The technological environment is very important for businesses as it can increase efficiency and decrease costs. Technological advancement is import for many governments as it encourages development and new opportunities. The Thai government have praised Tesco for the use technology in environmental issues. Tesco Lotus has achieved increased energy efficiency through technological advancement in chillers plant operation and air conditioning unit. Tesco has created a more efficient operation that lowers energy consumption and emissions into the atmosphere. Other technological factors include discovery and development of new technology. This may help companies with efficiency and may help businesses to enter new markets. Tesco had already launched its .com operation in the UK and had become rather successful. ...read more.

Conclusion

Tesco product safety remains heavily on their chilled items, such as meat and dairy. To combat any area of salmonella poisoning they have created a system called the cold chain. This allows a product to be out of a refrigerated environment for no more than twenty minutes. If Tesco were found to be a course of an outbreak then there would be large consequences. Employment law is another issue that affects Tesco. In different countries there are different laws. Tesco will have to adhere to laws such as rate of pay and employee conditions. Tesco Lotus has just failed to win a court case involving paying their workers over time on bank holidays. Tesco were seen to be outside the employee law and therefore were ordered to pay their workers a total of 35 million baht to a total of 8500 employees. There has also been inquest in the allegations of Tesco suppliers of forcing suppliers to sell their produce below cost. Tesco has also been accused of charging suppliers fees in order to sell their products. The Thai government have stated that these unethical business strategies are not welcome. In my view the most important factors are those of the political and technological. Political problems plague companies looking to expand aboard as they have a large control of what companies can and cannot do. Technological factors are also extremely important as technological advancement can mean efficiency and being able to sustain any competition. ...read more.

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