Read the case study and answer the below question about TESCO Asia's retailing was through small-scale, family outlets. Tesco changed that in both Thailand and South Korea. It went to Taiwan in 2000 acquiring a store from Makro cash and carry and exited in 2005 in an asset swap with Carrefour. Operational costs and growth were cited as reasons for the exit. Tesco Malaysia a joint venture (JV) between Tesco and Sime Darby Berhad started in 2002 and operated over 70+ stores with revenue of 0.8 billion (excl. VAT, incl. fuel) in Malaysia. TESCO's journey into Asia began with ambitious market entry strategies across countries such as South Korea, Thailand, and Malaysia. Despite initial successes, the company faced mounting challenges, including difficulties adapting to local consumer preferences, competition from established local players, and operational complexities. Asia Exits Between 2005 and 2020, Tesco gradually reduced the number of foreign markets in its portfolio. They entered only three new markets in the same period but exited ten foreign markets. In 2020 itself, Tesco exited three markets. Terry Leahy, the supermarkets chief executive (1996-2010) championed international expansion. Leahys exit opened the door to reduced international activities and focus on ROI, a few markets in Eastern Europe, and India. The retailer has completely withdrawn from Eastern and South-eastern Asia by exiting Taiwan (2005), Japan (2012), China (2014), South Korea (2015), Malaysia (2020), and Thailand (2020). It initially retained a 20% equity stake in its business in China but eventually sold this minority interest to its partner, the state-run China Resources Holdings, in 2020 (Reuters, 2020). Tesco strategically divested operations in its foreign market portfolio that were poorly performing (a driver in 6 cases), lacked the necessary scale to be competitive (in 4 cases), and were under pressure from increasing local competition (in 4 cases), allowing it to focus on core markets (in 4 cases) or to invest in a turnaround strategy at the corporate level (in 5 cases). Tesco's five exits between 2012 and 2016 took place as Tesco focused on Group turnaround. After a shock profit warning, the CEO (2011-14), Philip Clark developed a turnaround plan, including a clear focus on foreign markets in which Tesco saw the potential to be either the market leader or in second place (The Guardian, 2011). It exited from both the Seyiu business in Japan (2012) and the Fresh & Easy business in the USA (2013). Clark's turnaround plan, however, proved unsuccessful. Instead, the retailer suffered the most significant losses in its nearly 100-year history, heavy market share losses in the UK, mainly due to discounters Aldi and Lidl, and an accounting scandal, followed by a seven-billionpound write-down (The New York Times, 2015). The new CEO, Dave Lewis in 2014 continued Tesco's turnaround attempt. Daves main goals were, amongst others, to heavily reduce debt to obtain a better credit rating and thus be able to refurbish the UK business without asking shareholders for a raise of capital (Reuters, 2015);The New York Times, 2015). The reduction of Tesco's debt was mainly accomplished through the sale of international operations; the retailer exited from China (2014), South Korea (2015), and Turkey (2016). The sale of Tesco's success story, Home Plus, in South Korea alone generated nearly 4 billion pounds to reduce debt (BBC, 2015). Mr Lewis commented on the exit: This sale realises material value for shareholders and allows us to make significant progress on our strategic priority of protecting and strengthening our balance sheet. Dave Lewis, CEO of Tesco (Tesco Plc, n.d.) After a few years, Tesco again exited three international operations, Malaysia, Thailand and Poland, in 2020. The reason given was International Portfolio Refocus. In 2020, Tesco agreed to sell its retail business in Thailand and Malaysia at a value of 8.76 billion to Thailands CP Group entities due to inbound interest and strategic review. The Tesco board conducted a due strategic review, the conclusion emerged that the disposal of Thailand and Malaysia retail business was in the best interest of the shareholders. This was despite an increase in sales (+6.7% in Asia in 2020 at actual exchange rates) (Tesco, 2020). In Malaysia, TESCO increased their market share following favourable legislation changes. There was a strong increase in profitability in Asia, with growth of 33.5% at actual exchange rates and 24.8% at constant exchange rate (Tesco, 2020). The Tesco Board intends to return 5.0 billion to shareholders via a special dividend with associated share consolidation (Tesco, 2020b). The disposal was expected to reduce indebtedness through a 2.5 billion pension contribution, and the deal was expected to cut down the funding deficit. With this 'TESCO' store brand ended its reigninAsiaTesco'sIndiaoperationsmainlycontributetothecompany's y, , g y pounds to reduce debt (BBC, 2015). Mr Lewis commented on the exit: This sale realises material value for shareholders and allows us to make significant progress on our strategic priority of protecting and strengthening our balance sheet. Dave Lewis, CEO of Tesco (Tesco Plc, n.d.) After a few years, Tesco again exited three international operations, Malaysia, Thailand and Poland, in 2020. The reason given was International Portfolio Refocus. In 2020, Tesco agreed to sell its retail business in Thailand and Malaysia at a value of 8.76 billion to Thailands CP Group entities due to inbound interest and strategic review. The Tesco board conducted a due strategic review, the conclusion emerged that the disposal of Thailand and Malaysia retail business was in the best interest of the shareholders. This was despite an increase in sales (+6.7% in Asia in 2020 at actual exchange rates) (Tesco, 2020). In Malaysia, TESCO increased their market share following favourable legislation changes. There was a strong increase in profitability in Asia, with growth of 33.5% at actual exchange rates and 24.8% at constant exchange rate (Tesco, 2020). The Tesco Board intends to return 5.0 billion to shareholders via a special dividend with associated share consolidation (Tesco, 2020b). The disposal was expected to reduce indebtedness through a 2.5 billion pension contribution, and the deal was expected to cut down the funding deficit. With this 'TESCO' store brand ended its reign in Asia. Tesco's India operations mainly contribute to the company's technology capabilities. It continues to have a retail presence through a joint venture with the Tata Group, trading as Star Bazaar & Trent. Tesco-branded products remain on shelves in some countries like Pakistan and India. The motive of this exit was more proactive and brought back strategic focus to its portfolio in its most attractive and strong markets in Europe. Today's announcement allows us to focus in the region on our business in Czech Republic, Hungary and Slovakia, where we have stronger market positions with good growth prospects and achieve margins, cashflows and returns which are accretive to the Group. Dave Lewis, CEO of Tesco (Tesco, 2020) Why not Asia? Starting its ambitious journey into the Asian market, TESCO initially explored opportunities in diverse countries like China, South Korea, Thailand, and Malaysia. While these ventures showed promise at the beginning, they later encountered challenges that highlighted the complexities of international market entry and the nuanced approach needed for success. TESCO's presence in Asia revealed a mix of successes and difficulties. Initially successful, the company captured the attention of Asian consumers. However, these achievements were counterbalanced by increasing challenges stemming from cultural differences, intense competition from local giants, and the intricacies of operating in various nations. In hindsight, TESCO's experience in Asia serves as a vivid illustration of the many aspects involved in international expansion. Their journey, with its ups and downs, provides valuable insights into the importance of adapting to local conditions, understanding competition, and being operationally flexible to achieve sustainable success in the complex world of international markets. Tesco faced a number of operational intricacies in its quest to navigate the diverse operational landscapes of Asian countries. According to analysts and industry, competition from e-commerce companies, struggle to adapt to local tastes and to differentiate themselves without local partners were the main reason for the exit. experts. There are also challenges in the Home market after COVID and Brexit. The next-gen the is UK is value conscious. The success of German discount stores Aldi and Lidl, shows that UK is changing and though Tescos Jacks was launched as a discounter, it wasnt successful (Forbes, 2022) The factors that pushed Tesco to exit included: Different regulations and standards: Each country in Asia has its own set of regulations and standards that businesses must comply with. This can be a complex and time-consuming process, especially for businesses that are not familiar with the local market. Difficulties in managing supply chains: Tesco had to manage complex supply chains in order to get products to its stores in Asia. This was a challenge due to the long distances involve andas the different languages and cultures that had to be navigated. Currency fluctuations: The value of currencies in Asia can fluctuate Some of the factors that pushed Tesco to exit could be competition from local retailers, changing consumer preference or economic slowdown. Tesco has faced stiff competition from local retailers in Asia. These retailers are often more familiar with the local market and culture, and they can offer lower prices. Consumer preferences in Asia are changing rapidly. Consumers are demanding more fresh and healthy food, and they are also looking for more convenience. Tesco has had to adapt its products and services to meet these changing demands. The economic slowdown in Asia has also affected Tesco. Consumers have less disposable income, and they are spending less on groceries. Each country in Asia has its own set of regulations and standards that businesses must comply with. This can be a complex and time-consuming process, especially for businesses that are not familiar with the local market. Tesco had to manage complex supply chains in order to get products to its stores in Asia. This was a challenge due to the long distances involve andas the different languages and cultures that had to be navigated. The value of currencies in Asia can fluctuate significantly, which can make it difficult for businesses to plan their finances. Tesco had to factor in currency fluctuations when making pricing decisions and setting budgets. Some countries in Asia are politically unstable, which can create challenges for businesses. For example, Tesco had to suspend operations in Thailand in 2014 due to a military coup. Corruption is a problem in some countries in Asia, which can make it difficult for businesses to operate. Tesco had to take steps to mitigate the risks of corruption, such as conducting due diligence on its partners and suppliers. As a result of these challenges, Tesco has had to scale back its operations in Asia. Tesco can still be a major player in the Asian grocery market, but it faces a number of challenges. The company will need to adapt its business model to meet the changing needs of consumers and the regulatory environment in Asia Question: Re-entry Strategy: TESCO's Potential Return to Malaysia, the objective is to define a re-entry strategy for your chosen market. The points provide guidance into what you should cover (1400 Words)

a. Imagine TESCO is considering a re-entry into the Malaysian market. Design a comprehensive re-entry strategy for TESCO, focusing on a specific country of your choice.

b. TESCO should leverage its past experiences to develop a strategic plan that enhances its chances of sustainable success upon re-entry? Your analysis in Question 1 will form an input here.

c. Provide rationale and practical recommendations for your proposed strategy. Address key aspects such as market assessment, competitive analysis, cultural adaptation, and operational efficiency