Opening a Tesco Branch in Vietnam

Strategic plan for Tesco -Vietnam branch Current supermarket industry analysis Competition in the supermarket industry is high with the British market being hypercompetitive. In Vietnam, the competition landscape is not stiff with the only significant competitor being Big C. which has its origins in Thailand. Big supermarkets like Wal-Mart present a one stop shopping experience for their customers hence influencing the contemporary industry. The current supermarkets are also seen to get more into the private label trends which emphasizes on both discounted goods and quality as well.

The supermarkets are now focusing more on the specific goods that their clients need as opposed to the previous times when they stored thousands of good that only helped in confusing the client and wasting time for them. The fresh produce section is of late a point that most customers consider when deciding which supermarket to shop from (Peterson H., 2014). Competitor landscape Though the Vietnam market is challenging, having performed well in the South East Asia, Tesco is certain to perform well in Vietnam too.

Tesco entered the South East Asia market late after supermarkets like Carrefour hence they have the competitive advantage over Tesco. Tesco is the largest supermarket stores in Thailand and the second-largest operator of shopping centers hence understands the region more than the competitors. Big C. has 27 stores in Vietnam and is the only competition though Tesco operates bigger than Big C. In neighboring Thailand. Regulatory environment The Vietnamese government encourages foreign direct investment (FDI).

There are lessened restrictions for the FDI to encourage the external investors to come in and invest in Vietnam despite being a communist nation. The government has lifted many restrictions that hitherto barred foreigners from investing in Vietnam as they did in Thailand. Legal environment The justice system is shaping up to be independent in Vietnam hence making the business conditions more attractive. The law treats both foreigners and locals equally and not discriminative (Banco Santander, 2015).

There is support institutions formed to provide support as well as services for business development. Currently there are post-evaluation approaches as opposed to pre-evaluation approaches that created obstacles to new businesses in Vietnam. The challenges are now handled as they arise through the Enterprise Law. Vietnam has recently signed several multilateral and bilateral trade agreements and is a member of bodies such as WTO, APEC and the latest being the Bilateral Trade Agreement with the U.S. (U.S.

BTA) which makes it conducive for Tesco to operate (Central Institute of Economic Management, 2003). Our plan At the moment Tesco runs their supermarkets in 13 regions including the South East Asia. The domestic market has presented numerous challenges from competitors hence the need to expand overseas to create a larger clientele base. Bearing the vast experience that Tesco has in the South East Asia region, the supermarket will venture into Vietnam, introducing the same services that it provides in the surrounding the region under the Tesco brand.

The Tesco brand will be introduced into Vietnam through partnerships with the aim of having independent establishment in the years that follow. The labor force will largely be sourced from the local population with only a few from the U.S. In order to preserve the Tesco culture in the new environment. Hanoi City It is the capital city of Vietnam. Hanoi is largely transformed from being just commercial city to agricultural and industrial city.

It is also the communication center of Vietnam with roads and railways connecting it to other cities. Some of the items manufactured in and around Hanoi are plywood, machine tools, electric generators and motors, matches, textiles and chemicals. The agricultural sector around Hanoi prides itself in having fruits, rice, cereals, vegetables and industrial crops as part of their main crops (Encyclopedia Britannica, 2015). Reasons for choosing this location The Vietnam market is still dominated by the wet markets hence presenting a viable market for Tesco to establish their chains of supermarkets.

The economy of Vietnam stands at 5.3% and has been stable over a good number of years, hence presenting opportunity for business. The population stands at 93 million people, a sizable population for Tesco to target. The populations are densely populated around two major cities, Hanoi and Saigon. The country is small hence Tesco can have subsidiary stores across the country apart from the main supermarket in Hanoi. The market entry cost is low since the land is cheap and the cities are rapidly expanding, an environment that is conducive for business.

Partnership intended Tesco will initially partner with a local store that still operates in only cities and use their experience to venture into some cities. However, the Hanoi main branch will be fully owned by Tesco and will be modelled after the others that we will have partnerships in. The ultimate plan is to have own ventures once the supermarket has taken root. Logistics Having successfully operated in Thailand, Tesco understands the market in the region and the shopping patterns in Thailand and Vietnam are similar.

The logistics will strongly rely on partnership logistics management with selected firms that will be duly evaluated and qualified to ensure consistency and reliability in the supply of various products that will be sourced locally.