Tesco's Fresh & Easy: Learning from the U.S. Exit
(9 pages of text)
In mid-April 2013, the chief executive officer of Tesco PLC, the world’s third largest global retailer headquartered in London, United Kingdom, must explain to shareholders his decision to close down the operations of the fully owned subsidiary, Fresh & Easy Neighborhoods Market Inc., in the United States. Following a December 2012 strategic review that reported that the subsidiary was not delivering acceptable returns, operations have already been discontinued and a buyer is being sought. Although the focus on fresh food to ameliorate the health care costs of obesity in the United States was a driver for establishing the subsidiary, the effects of the 2008 recession discouraged consumers from paying the higher costs of fresh food. Is exiting the United States the right decision for Tesco? How should the process of exit be managed? Are there any takeaways from the U.S. operations that Tesco can apply elsewhere in its global strategy?
- To analyze the contextual and organizational factors that determine whether a large multinational enterprise (MNE) should exit an important host country given poor performance in the early years of establishment in that country.
- To assess the implementation of exit from a host country from a process perspective, identifying the stages involved.
- To explore how an MNE can apply learning from a difficult operating environment in one host country to its broader global strategy.
United States, Large, 2013
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