International Business Management Case Study

1. One of the largest retailers in the world, UK-based Tesco Plc. (Tesco), operated in several countries
across the world. Its international strategy was to acquire local companies, turn them into subsidiaries,
and operate them while maintaining the local ethos. At the same time, Tesco brought some of its time-
tested best practices into these countries. One such country where Tesco operated was Turkey, which it
entered in 2003 attracted by the huge growth potential, high purchasing power, and growing young
population that the market presented. Tesco acquired a local store chain, Kipa, in the country and
operated as Tesco Kipa. However, Tesco was not able to perform as per its expectations in the country –
it failed to expand rapidly and its presence stood limited to only certain regions. It also faced huge
competition from other international retailers like Germany-based Metro and France-based Carrefour,
which had a formidable presence in Turkey. The local stores and traditional markets with their strong
and wide presence across the country also provided products and services on a par with the multinational
retailers. Tesco Kipa failed to make profits and the losses started to mount after 2010. The solution lay in
expanding rapidly and gaining a pan-Turkey presence, which called for huge investments. The parent
company, which itself was facing problems in its home market, was not keen on investing more funds in
expanding its Turkish operations. At the same time, Tesco witnessed a change in leadership and the new
CEO, Dave Lewis, wanted to shed some non-core assets, including loss-making international operations.
This made Tesco decide to exit Turkey.
Questions
a. Determine how the environment in emerging economies affects the strategies of global companies
b. Examine the reasons that prompt the retailers to go in for international expansion

2. Infosys was incorporated as Infosys Consultants Private Limited on July 02, 1981 by a group of seven
professionals. From the beginning, Infosys relied heavily on overseas business. One of the founders, Narayana
Murthy (Murthy) stayed in India, while the others went to the US to carry out onsite programming for corporate
clients. One of Infosys' first clients was the US-based sports shoe manufacturer Reebok. Infosys hired its first
set of employees in 1982 from the Indian Institute of Technology, Chennai. These employees were provided
training and were sent abroad for onsite projects. After its revenues started increasing, Infosys started spending
more on training and product development. The company's revenues in 1982 were at Rs 1.2 million. Infosys
entered China in 2004 to cater to its multinational clients operating in the country and to take advantage of the
quality manpower available at competitive costs as compared to India. Infosys also planned to offer software
services to the leading Chinese companies which were growing at a rapid pace. The company aimed to have its
second largest development center in China with Chinese operations accounting for 10% of the total revenues
by 2015. Infosys entered China as a part of its global expansion strategy. The most important reason for entering
China was the soaring salaries of software professionals in India - a result of growing global demand for them.
The gap between the demand and availability of skilled manpower in India was likely to increase further, and
India was estimated to witness a shortage of 250,000 workers in the IT industry by 2009, according to a study
conducted by KPMG and NASSCOM.
Questions
a. Examine the growing importance of China in the global software industry
b. Illustrate political and legal challenges faced by IT companies while operating in India and other
countries.