International Business &Strategy
Student Number- @00387834.

3/8/2014
UNIVERSITY OF SALFORD.

TABLE OF CONTENTS PAGES 1. Introduction -------------- 2 2. Body of Report ------------- 4 3. Recommendation ------------- 9 4. References ------------ 10

INTRODUCTION Pearce and Robinson (1991) have defined strategic management as “the set of decisions and actions that result in the formulation and implementation of plans designs to achieve a company’s objective. Ghana is the potential market identified because the Government is committed to implementing policies that reduce the general cost of doing business in Ghana and to promote investor confidence in the country. With a stable multi-party government that is committed to market liberalization, Ghana has been ranked as one of the most attractive locations for doing business in Africa, other factors are 100% foreign ownership is permitted, competitive labor force, Quota free access to USA and other European Union Markets, A sound macroeconomic Environment, On-going privatization in key economic sectors, On-going infrastructure development, high degree of personal safety and warm and friendly people, Fast developing financial infrastructure and immediate access to all markets of Economic community of West Africa(ECOWAS). (2012 KPMG Report). Tesco is a British multinational grocery shop and general merchandise retailer headquartered in Chestnut Hertfordshire England, United Kingdom. It has stores in 12 countries across Asia, Europe and North America and is the grocery market leader in the UK (where it has a market share of around 30%), Malaysia, the republic of Ireland and Thailand. The company was founded in 1919 by Jack Cohen as a group of market stalls.

BODY OF REPORT
A BRIEF HISTORY OF GHANA: The identified potential target market for Tesco’s future international expansion is Ghana in West Africa, located on the west coast of Africa. Modern Ghana takes its name from the ancient kingdom of Ghana which was situated some 800 km, (500 miles) to the north of present-day Accra, Ghana lies on Latitude 5 degrees, 36 minutes north and Longitude 0 degrees, 10 minutes east. To the west of Ghana lies Côte d’Ivoire, to the east Togo, to the north Burkina Faso and to the south is the Gulf of Guinea. The Greenwich Meridian passes through Tema near Accra making Ghana geographically the closest to the center of the world, that is, the notional point of intersection between the equator and longitude zero degree (0 degree) which is located in the Atlantic Ocean at about 614km from Accra. (2012 KPMG Report). Ghana gained independence in 1957, 6th march from the British Government. With a population of 25,199,609 (CIA world fact book), stands out as having political stability and a vibrant democracy for almost two decades.
The system of Government is parliamentary democracy with separation of powers among the Executive, the Legislature and the Judiciary guaranteed under the constitution. The press enjoys a great deal of freedom which has nurtured it into one of the most vibrant in Africa. The 1992 constitution provides checks and balances which limit the powers of each of the Legislature, the Executive and the Judiciary. The Government is elected by universal suffrage. Ghana has 10 Administrative regions and 169 district assemblies. Ghana is considered a beacon of hope for black Africa as it continues to champion the course of good governance as well as pursuing sound economic management. Ghana is a member of the South Atlantic Peace Cooperation zone, The Commonwealth of Nations, the Economic Community of West African States, the African Union, and an Associate Member of La Francophonie.
THE MACRO-ENVIRONMENTAL CHARACTERISTICS: Ghana’s macroeconomic performance has been positive in recent times. This level of performance has been stimulated by the prevalence of relative peace coupled with private sector competitiveness; human resource development; good governance and civic responsibility. The sound macro-economic management along with high prices for gold and cocoa helped sustain GDP growth in 2008 and 2009. Late in 2010, Ghana was upgraded to a lower middle income economy status. With vast reserves of natural resources, Ghana has twice the per capita output of the poorer countries in West Africa and is one of the world’s top gold and cocoa producers. Other exports such as petroleum oil, timber, electricity, diamond, bauxite, manganese and individual remittances are major sources of foreign exchange earnings. World Bank projections indicate that Ghana, which began exporting oil in 2011, will have the fastest growth rate on the continent estimated at 13.4% in 2011 and 0.4% in 2012 (World Bank Global Economic prospects 2011). For 2010, GDP growth was 4.1%, and the economy continues on its path of recovery, mainly backed by government’s expenditure in infrastructure and FDIs. The Government Statistician put provisional per capita GDP for 2010 at GH¢1,872.07 ($1,318.36) compared with GH¢1,069.89 ($753) under the old series, moving the country into the lower middle income bracket. The new series places Ghana as the third largest in ranking of GDP per person in the ECOWAS sub-region behind Cape Verde and Nigeria, and 21st in Africa. (2012 KPMG Report). According to the ICTAD Report of 2013, Ghana is one of the top ten fastest growing economy in world and the fastest growing economy in the Africa. The economy is seeing significant progress which is underlined by the relative political stability and macroeconomic reforms. The improvement in the economy has brought about an influx of foreign investments of various forms as well as a gradual increase in middle-class professionals. The economy has been strengthen by a quarter century of relatively sound management, a competitive business management and sustained reduction in poverty levels. Ghana embarked on a currency re-denomination exercise from Cedi (C) to the new currency, the Ghana Cedi (GHC) in July 2007. The transfer is 1 Ghana Cedi for every 10,000 Cedi’s. Value added tax is a consumption tax administered in Ghana. The tax regime which started in1998 had a single rate but since September 2007 entered into a multiple rate regime. Government expenditures are 24 percent of gross domestic output, and public debt remains over 55 percent of the size of the economy. Over the 20-year history of the Index, Ghana’s economic freedom has advanced by nearly 9 points. With improvements in seven of the 10 areas measured, Ghana’s overall economic freedom has been undermined only by declines in freedom from corruption and monetary freedom. In the area of market openness that measures trade freedom, investment freedom, and financial freedom, Ghana has made particularly notable progress. Categorized as a “mostly unfree” economy for much of its history in the Index, Ghana has achieved “moderately free” status in four of the past five years. (Heritage foundation 2014). Agriculture has been an important sector of the economy, employing about 50% of the labor force and contributing around 43% of GDP in 2007. Cocoa is the major export crop, followed by timber and non-traditional products such as horticulture, fish/seafoods and pine apples. Most of the cocoa crop is exported as beans, although there are some cocoa-processing plants, and more are under construction. The Ghanaian economy revolves around services, which accounts for approximately 50% of the GDP and employs majority of Ghanaians. The economy continues to rely heavily on agriculture which accounts for 30.2% of GDP and provides employment for 56% of the work force mainly small landholders. (2012 KPMG Report). In Energy sector, Hydroelectricity is the primary source of Ghana’s power. It is generated at the Akosombo and Kpong power plants. The Electricity Company of Ghana (ECG) is responsible for electricity distribution. Electricity generation is one of the key factors in achieving the development of the Ghanaian national economy, with aggressive and rapid industrialization. In telecommunication, the Ghana national communication Authority report for December 2013 indicates that there are 28,026,482 subscriber bases nationwide. There are six current operational service providers which include MTN (Scancom), Tigo (Millicom) Airtel (Bharti Airtel), Vodafone, Espresso and Globacom.The mast media is among the most liberal in Africa as there are 143 FM radio stations and 10 television broadcast stations. There are also cable TV channels.

ANALYSIS OF THE EXTERNAL AND INTERNAL ENVIRONMEMT OF TESCO: Tesco is one of the largest food retailers in the world, operating around 2,318 stores in 12 countries and have employed over 530,000 people and serves tens of millions of customers every week. (tescoplc.com). The UK is the company’s biggest market where is operates under four banners of Extra, Superstore, Metro and Express. The business deals nearly 40,000 nourishment products, encompassing apparel and other non-food lines. The company’s own-label products (50 per hundred of sales) are at three grades, worth, usual and finest.it provides online services through its subsidiary, Tesco.com. As well as convenience make many shops have gas station, evolving one of British’s largest independent gasoline retailers. Other retailing services suggested include Tesco individual finance. Tesco external environment has a strong effect on the functions of the organization .PESTEL Analysis and Generic strategies developed by Porter will be used in analyzing the external and internal environment of Tesco.PESTEL Analysis, J.L.Fowle (1993), analyses the vibrant and erratic environment in which company operate by classifying the forces that have the most influence on its performance, influence company has to achieve strategically success. However these forces become interrelated at some times. Since Tesco’s vision is to expand globally, PESTEL forces are the best fit. Political decision has always been at watch by companies like Tesco. Its performance is highly influenced by the political and legislative conditions of these countries, including the European Union (EU). Operating in a globalized natural environment with stores around the globe (Tesco now operates in six nations in Europe in addition to the UK; the Republic of Ireland, Hungary, Czech Republic, Slovakia, Turkey and Poland. It also functions in Asia: in South Korea, Thailand, Malaysia, Japan and Taiwan).(tesco.com). Economic factors are a matter of concern for Tesco since they impact directly on the buying behavior of customers because they are expected to influence demand, charges, charges and profits. One of the most influential factors on the finances is high job loss grades, which declines the effective demand for many goods, adversely influencing the demand needed to make such goods. Social/Cultural factors: Customers are becoming more aware of health issues, their attitude toward food are constantly changing Tesco has adopted by providing an increased supply of organic foods. Technology is a foremost macro-environment variable which has influenced the development of numerous of the Tesco products. The new technologies benefit both customers and the business. The launch of the efficient buyer answer (ECR) start supplied the shift that is now a clear-cut in the administration of food provide chain (Data monitor Report, 2003). Tesco stores utilize the following technologies: Wireless devices, intelligent scale, Electronic shelf labelling, Self-check-out machine, Radio Frequency Identification (RFID). And the adoption of electrical devices issue of Sale (EPoS), electrical devices Funds move schemes (EFTPoS) and electrical devices scanners. Environmental safety and climate changes are always key agenda for Tesco since 2000 (tesco.com). Greener living scheme of Tesco advise its customers how to reduce food waste and all other environment issues which will reduce carbon footprint. Reusing and recycling bags and other product are always encouraged by Tesco. Legislative actions influence the company to a great extent. Changes in income tax percentage or sale tax charged to customers would bring in change in the buying behavior of customer in retail industry as whole. The Generic Strategies developed by Porter help Tesco to acknowledge sustainable competitive advantage, the strategy of cost leadership is where Tesco strives to have the lowest cost and offer its product and services to a broad market at the lowest price. This strategy is based on Tesco's ability to control their operating costs so that they are able to price their products competitively and be able to generate high profit margin therefore having a significant competitive advantage. Then strategy of differentiation is where Tesco tries to offer services and products with unique features that customer’s value.
THE KEY STRATEGIS ISSUES (OPPORTUNIES AND THREATS) TESCO FACES IN EXPANDING INTO GHANA; According to the KPMG Report 2012, the domestic market in Ghana is relatively small but is growing. The free trade among the ECOWAS member countries creates an opportunity for an expanded market for players in the sub-region. The government, sponsored by the World Bank is also striving to make Ghana the gateway to West Africa by positioning the country as a hub for import, export storage, assembly, distribution, and manufacturing, transshipment of goods, services and passengers. Tesco focus is usually on hypermarkets, so SWOT analysis will be used in analyzing this. Tesco’s strength lies in the fact that they are ranked 3rd largest grocery Retail Company in the world. Datamonitor (2010) shows £ 54billion turnover recorded, which 14.9% more than 2008 is. This would be the result of strategic choice of customization of product as market demands. In last decade company’s efficiency in performance growing. Tesco’s strategy aims deliver products and services at affordable price, suits to customers’ needs and maintain quality standards. Last year’s online sale was up by 50%. (Tesco, 2010).its brand is a strong platform upon which to build further business lines and growth. Tesco possess a very powerful brand and combining it with its consumable product range creates significant economic advantage. The successful launched online shopping which is now active in all their European market is a huge plus and advantage (Tesco annual report 2013) .this will go a long if adopted in the Ghana market. It will be the first of its kind. Tesco weakness is that it is not focusing on specializing on one area, they trying to enter many different markets which could have a negative effect. Also there is high dependence on UK and Europe markets. There are significant opportunities in Ghana for Tesco plc. The majority of the Ghana’s working population is mostly middle class income earners, these set of people tend to prefer good but affordable quality goods Tesco should adopt the strategy clock of using hybrid strategy as it has always offered lower price for its product and services. In fact it has special ‘value line’ for Food and NON-food SBUs which offers good at very cheap price. Its expansion in UK and different country itself suggests that it has enhanced benefits to customers together with low price whilst achieving sufficient margins for reinvestment to maintain and develop bases of differentiations. Tesco has managed well in Sustaining Competitive advantage. Big opportunities are on the internet online shopping which will be a welcome development in Ghana. The threats lies in the stiff competition that it will face with the leading grocery stores in Ghana namely Shoprite the largest African food retailer headquartered in South Africa. And Malcom and Indian owned food retailer.
MODE OF ENTRY INTO THE GHANAIAN MARKET: Speed of entry: Markets are changing rapidly and so is taste and preference. To be successful in any foreign market, this strategy of merger and acquisitions with local companies will speed up the development. Share value of Tesco is high and if they acquire Strategic Leaders from Ghana market with lower share price due to the depreciation of the Ghana cedi. This would double the speed of Market as well as product development and reduce the time for capturing huge market. Tesco should apply strategy of acquisitions and Merger for rapid growth.
RECOMMENDATION:
My recommendation is that Tesco should use the technology push innovations, this means Tesco can use information technology and systems it processes to develop the market and establish brand name. This would be little bit expensive as special budget for research and development should be made. And they should adopt decentralized strategy in country like Ghana. The decentralize strategy will allow local managers scattered across the Ten regions of Ghana to make their own purchase and supply decision. This strategy will ensure acquiring of market share in less time, and this strategy also stands in line with Tesco’s corporate responsibility and VALUES

REFERENCES * CIA World Fact book- Ghana. CIA world fact book. https://www.cia.gov/library/publications/the-world-factbook/geos/gh.html (Accessed -28th February 2014). * Clark Nancy L. (1994)”Manufacturing” A country study: Ghana. La verle, editor. * Data monitor Report (2003) SWOT Analysis, Tesco Plc. (Accessed -29th February 2014). * Ghana: International Usage and Telecommunications Report, internet world statistics. http://www.nca.org.gh/40/105/Market-Share-Statistics.html. (Accessed – 28th February 2014). * Ghana web –www.ghanaweb.com (Assessed on the 28th February 2014). * The heritage Foundation (2014), The Ghana Economy: https //www.heritage.org/index/country/ghana.(Accessed on 29th February 2014). * KPMG Report 2012: Doing Business in Ghana. http://vivauniversity.files.wordpress.com/2013/11/doing-business-in-ghana-2012.pdf (Accessed 29th February 2014).

* Pearce, John A. &Robinson, Richard B (1991).Strategy management: Formulation, implementation and control 4th Edition. Homewood, IL: Irwin. * Porter. M. (1980). How competitive Forces shape strategy .The Mckinsey Quarterly, spring 1980, pp. 34-50. * Researchomatic, swot and pest Analysis, http:www.researchomatic.com/swot and pest Analysis 55892.html (Accessed 28th February 2014).