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Case Study

Expanding abroad

Win or lose?

David Rees explores the pitfalls of expanding into markets abroad and evaluates how some well-known British retailers have tried to overcome them
Tesco

With 99.5% of the world’s population outside Britain, the biggest scope for expansion lies in international markets rather than domestic ones. But it is essential that expansion is undertaken in the right way. British companies trying to recover from the sharpest recession for 75 years have no surplus money to squander on doomed foreign ventures.

One option is to enter markets that have less intense competition, such as the developing economies in the European Union. For example, with no import barriers and relatively undeveloped retail markets, Hungary, Poland and Malta might be good places to start. Huge investments in infrastructure and rapid economic growth have transformed their business environment and reinvigorated their markets. The downside is that their consumers simply don’t have the purchasing power of their British counterparts. Compared with the UK’s GDP per capita of 29,700 euros in 2008, the Czech Republic’s was 20,400, Poland’s was 16,100 and Hungary’s was just 15,700 (not to mention Bulgaria’s at 9,800). This means that many of the luxury brands that are on sale in the UK are beyond local budgets.

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Social enterprise: profit isn’t always the bottom line

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