A Study on the Visibility of Tesco Entering the Argentinian Market

The Feasibility of Tesco Entering the Argentine Market

1.0 Introduction:

Tesco Plc is a giant British retailing corporation, well-known for creating values to costumers. The company was established in 1919 by Jack Cohen and in recent years has taken a strategy of growth and has extended its operation to 14 countries including China, Hungary, Japan, South Korea, UK, USA, Thailand and others (Tesco plc, 2009). It has also diversified its business and gone to non food, financial services and telecom. In this report we will try to look at the feasibility of Tesco extending its market to Argentina. The report will focus on factors relating to the economy and its prospect, the political stability, the record of FDI in recent years, the size of the food and beverage retail market its segments and competitors and the labor market.

1.1 Procedure:

In preparation for this report information was gathered from reliable official sources such as Reuters, Central Intelligence Agency and others, that appear in the referencing list. At the beginning each member of the group researched the company and the country broadly. After the allocation of tasks, as it appears in the Appendix, everyone focused on his part and researched it further. Generally, the group, when researching for information, looked at both the sides of each finding, the advantages and the disadvantages. By this we managed to come with a balanced picture that ended by our recommendation of the company to enter the Argentine market.

1.2.Findings:

1.2.0 The Economy and its future prospect:

After the economic crisis of 1990-2002, which was a result of the 25 years of changes in the political playground, the Argentine economy recovered rapidly due to the economic policies introduced and the new government. It witnessed a great expansion for the period 2003-2008, with an accumulated growth of 8.5% per year. However, in 2008, the growth rate itself was 6.8% down 1.9% from the rate of 2007(Prosper Ar, 2008). The latest economic crisis have had an impact on the economy . According to the World Fact book, in 2009, the growth rate was 0.5% according to the government official records. Other sources , however, estimated the rate to be -2.5%, which is a recession . Despite the last financial crisis , the country is ranked 24 among the world and 3 among the Latin American economies , in terms of GDP(PPP), with an amount of 558 billion dollars.

The country also ranked 82 among the world and 2 among Latin economies, in terms of GDP per capita (PPP), with an amount 13,800 US dollars per capita for 2009. However, according to an article released in the MercoPress, the Atlantic News Agency, in May 5th 2010, Argentina replaced Chile in terms Of GDP per capita (PPP) and became