StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Tesco's Interest in Indonesia - Unusual Way of Doing Things - Case Study Example

Cite this document
Summary
The study "Tesco’s Interest in Indonesia - Unusual Way of Doing Things" argues that the business rules and laws in Indonesia could affect Tesco’s ways of business, this giant in the business industry must be detached from its nature of buying off small shops and having a dominant position. …
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER98.4% of users find it useful
Tescos Interest in Indonesia - Unusual Way of Doing Things
Read Text Preview

Extract of sample "Tesco's Interest in Indonesia - Unusual Way of Doing Things"

?Running head: Tesco in Indonesia Insert Insert Grade Insert 19th. Oct. Outline: Introduction Historical background of Tesco Business culture & social preference of Indonesia Tesco operations in Indonesia & government requirements Conclusion Tesco in Indonesia Introduction Indonesia is a country located in southeastern Asia between the Indian Ocean and the pacific. Its capital city is Jakarta, with a population of close to 242,000,000. It consists of different ethnic groups namely, Sudanese, Madurese, & Javanese among others. The common religions vary from Protestants, Catholics, Hindus, and Muslims, with the official language of Indonesia being Bahasa Indonesia (kwitessential Para. 1). Due to their nature of co-operation and the willingness to share, competition is not very common, as it is viewed as a practice that benefits oneself. Nevertheless, business is evident in Indonesia with competitive industries from within and foreign; however, the government of Indonesia is very keen on how businesses operate such that, laws that ensure fair competition have been put in place. For instance, Law number 5 prohibits monopolistic practices and unfair business competition. The objectives of Indonesia competitive law include safeguarding the interests of the public by improving the economic efficiency. Secondly, it is geared towards creating a conducive business climate by ensuring fair business competition. Thirdly, the law prevents monopolistic practices, which may lead to unfair business practices, and finally, it ensures effectiveness and efficiency in business operations. In addition, Indonesia gives room from foreign businesses to operate in their country, as long as they abide to the rules and regulations governing business practices (Act number 5, p1). Historical background of Tesco Tesco started its operations in 1919, when its owner Jack Cohen started selling groceries in a stall, which was located in London, with only a ?1 on the first day. In 1924, Tesco become a brand after acquiring tea shipment and in 1930, Mr. Cohen built a warehouse in North London declaring Tesco a private company. Over the years, it bought rival shops, and by the 60s, the supermarket was already selling a variety of products. Tesco entered Guinness book of records as the largest store in Europe, and in the 70’s, Tesco had opened a petrol station, which was an independent retailer. In the 90’s, Tesco had already completed several takeovers, while in 1996, it introduced a 24-hour store (The telegraph Para. 10). Today, Tesco has grown to a giant supermarket, and it is visible globally. Its diversification is evident in the United States, Indonesia, Latin America, china, Scotland, china, Norway, Middle East and Mexico. In addition, Tesco is committed to corporate social responsibility such as charities for schools and communities. The company has incorporated technology and it encourages online shopping. In addition, the supermarket offers a range of products to meet the customer’s needs. Business culture and social preferences of Indonesia To operate successfully in Indonesia, a corporate requires understanding the business culture and laws governing businesses this country. Therefore, establishing of relationships is necessary; however, it takes time. Loyalty and trustworthiness are a necessity in maintaining a relationship, especially with the government officials. In this country, men are considered mature if they are over the age of 40 years; therefore, a foreign country may consider sending older executives rather than the young ones, especially in negotiations (Doing Business in Indonesia, p112). In addition, businesses in Indonesia are required to develop their surrounding community; therefore, corporate social responsibility is encouraged. Firms are encouraged to recruit carefully for their positions, as unsatisfactory performance is not regarded enough reason to lay off an employee. Dismissal for misconduct is effective only after three warnings. Developing strong relationships with government officials guarantees a firm with licenses, permits and relevant information pertaining to business operations (doing business in Indonesia, p115). Foreign businesses are encouraged to operate in Indonesia; joint ventures with Indonesia firms are also preferred by many foreign companies. Setting up a foreign business requires the submission of a business plan, which takes about ten days to approve, and a small fee. When the approval is made, the investor is required to apply for licenses from the local authorities. Understanding Indonesian culture and applying it to the business operations is necessary and beneficial especially to a foreign business. Tesco operations in Indonesia & government requirements After the withdrawal from Japan, Tesco has been finding ways to operate in Indonesia. Tesco made a move to sell its 129 stores in Japan with an aim to enter in Indonesia. Nevertheless, Indonesia has rules that govern businesses, such as law number 4 of 1999, which indicates that unfair business competition and monopolistic practices are prohibited. Tesco, over the years, has been active in taking over rival businesses, a practice viewed by many businesses as unfair. Therefore, for Tesco to operate effectively in Indonesia, it should bear in mind that unfair competition is prohibited, as well as monopoly. Over the years, Tesco has enjoyed the monopolistic power in its operations, and takeovers, which are considered by the small business as unfair practices. According to BBC news, in 2006, Tesco was accused of having a near monopoly in the city of Inverness, where at that particular time it had three stores and was planning for another. This appeared to be a dominant position, as these stores had contributed to the close down of 20 small shops. Tesco has also been accused of abusing its monopoly power, thus contributing to major problems in the society, and it holds anti-competitive position by the continuous nature of buying off small shops. Surprisingly, as we have noted above, Indonesian laws prohibit monopolistic nature and unfair competition, a law that is not common in many countries. Therefore, Tesco has to abandon its monopolistic nature and unfair business operations, as the Indonesia business culture encourages a healthy business environment, with unhealthy competition being out of question. For effective business operations in this country, Tesco is required to abide by the laws of business, as failure to which may lead to criminal penalties. Unlike most countries, Indonesia is determined to create a conducive business environment, and be in the forefront in protecting and creating fair business competition, according to law number 5. Due to its democratic nature, Indonesia can be the easiest place to operate in, as the business environment is well governed. Tesco must also consider the age of its executives, as Indonesian culture encourages older men of 40years and above to deal with negotiations and decision-making. The older executive is required to have married and attained a university education. However, the foreign companies tend to send the young and brightest personnel to negotiate with an Indonesian company, hence being interpreted as an insult by the Indonesians. Tesco has been attacked in the past for being a manipulative monopoly; in 2009, Tesco was granted victory by the competition appeal tribunal over its battle against plans to introduce a competition test. This competition test was designed to boost competition in the giant grocery market; however, the tribunal agreed with Tesco that the test could have serious effects on consumers (London evening standard Para 1). Indonesia’s policies pertaining to business include policies on trade and industry that are associated with tariffs and non-tariffs on imported products. Some government policies ensure that a person is granted a business license, therefore restricting entry of other business people in a particular industry in order to ensure such an industry grows without competition that may hinder possible development (Maarif, p11). Nevertheless, the implementation of competition law is associated with several problems, such as the absence of a regulation that can represent this law. Therefore, the competition problems arising in the Indonesia market is due to the high level of market concentration and government intervention, which is uncontrolled and is applied inconsistently. Such protection and exclusive concessions has yielded to emergence of new conglomerates, instead of developing a competitive business industry (Maarif, p12). Conclusion Tesco has emerged as a giant in the business industry; however, claims of unfair business practices and monopolistic nature have been directed to the company. Tesco’s interest in Indonesia means a different way of doing things; first, the Indonesian business culture prohibits unfair competition and monopoly. Therefore, Tesco must be detached from its nature of buying off small shops and having a dominant position. The rules and laws of business in Indonesia could however affect Tesco’s ways of business, and major changes have to be made for the company to be effective and secure in Indonesia. Nevertheless, Indonesia is seen as a major economic force that is emerging and favorable for business. However, the laws governing business should be regulated, to ensure consistence and control. Work Cited Act Number 5 of 1999. Commentary by the government of Indonesia on the competition law of Indonesia. N.d. 22 October 2011. http://r0.unctad.org/en/subsites/cpolicy/Laws/indonesia.pdf BBC News. Tesco accused of 'near monopoly’. 2006. 22 October 2011. http://news.bbc.co.uk/2/hi/uk_news/scotland/4618972.stm Doing business in Indonesia. Chapter 6. N.d. 22 October 2011. http://www.dfat.gov.au/publications/indonesia/Ind_chp6.pdf Kwintessential. Indonesia - Language, Culture, Customs and Business Etiquette. 2011. 22 October 2011. http://www.kwintessential.co.uk/resources/global-etiquette/indonesia.html London evening standard. Tesco accused of 'Manipulative Monopoly. 2009. 22 October 2011. http://www.thisislondon.co.uk/standard/article-23658062-tesco-accused-of-manipulative-monopoly.do Maarif, Syamsul. Competition law and policy in Indonesia. 2001. 22 October 2011. http://www.jftc.go.jp/eacpf/02/indonesia_r.pdf The telegraph. A history of Tesco: The rise of Britain's biggest supermarket. 2011. 22 October 2011. http://www.telegraph.co.uk/finance/markets/2788089/A-history-of-Tesco-The-rise-of-Britains-biggest-supermarket.html. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Tesco in Indonesia Essay Example | Topics and Well Written Essays - 1500 words”, n.d.)
Tesco in Indonesia Essay Example | Topics and Well Written Essays - 1500 words. Retrieved from https://studentshare.org/business/1434027-tesco-in-indonesia
(Tesco in Indonesia Essay Example | Topics and Well Written Essays - 1500 Words)
Tesco in Indonesia Essay Example | Topics and Well Written Essays - 1500 Words. https://studentshare.org/business/1434027-tesco-in-indonesia.
“Tesco in Indonesia Essay Example | Topics and Well Written Essays - 1500 Words”, n.d. https://studentshare.org/business/1434027-tesco-in-indonesia.
  • Cited: 0 times

CHECK THESE SAMPLES OF Tesco's Interest in Indonesia - Unusual Way of Doing Things

Discrimination Against Chinese Indonesian

Chinese Indonesians have been discriminated against in indonesia, and this should not happen.... Phillip Shenon, author of The Gazette, states that “The success of the Chinese is widely envied - and resented - in indonesia, an archipelago of 180 million people and the fourth most populous nation on earth.... In fact, Chinese Indonesians have become the target of crime in indonesia, because many native Indonesians have envied their success in financial, education, etc....
3 Pages (750 words) Research Paper

May riots in indonesia

Name English 15 March 2013 May Riots in indonesia Introduction The riots that occurred in May 1998 in indonesia made the world focus its attention on the happenings; destruction and exploitation that took place in the nation.... Other violent movements had been conducted as early as in 1965 among others minor cases worth mentioning, to the 1998 May riots, which was the peak of destruction that undermined the country's reputation; however, all these incidences demonstrated the specific history of anti-Chinese sentiment and oppression in indonesia....
5 Pages (1250 words) Research Paper

Japanese Economy Evaluation of Opportunities for Foreign Investors

But at the turn of the century, things have started to look-up.... Japan is now leading the way in a new Asian business paradigm.... The Asia Pacific countries include China, indonesia, Malaysia, Myanmar, The Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam and Japan.... The 'Big Five' economies in the region are Korea, Taiwan, Hong Kong and Singapore and Japan followed by a second group of Thailand, Malaysia and indonesia....
21 Pages (5250 words) Essay

Indonesia's Investment Attractiveness for Doing Business

hellip; Major trading countries in indonesia include the US, Japan, Singapore, and India and according to Business-in-Asia.... nbsp; Since the government is extending its full support to its Foreign Direct Investment (FDI) arm, investors can expect a more relaxed and positive atmosphere as they put up businesses in indonesia.... nbsp; Bureaucratic red tape is still existent, though, so this is one of the things that we will have to deal with as it can definitely affect our time plan and even our budget....
2 Pages (500 words) Term Paper

Curruption in Indonesia

If left uneradicated or not reduced to manageable level, corruption is expected to tax most the poor and the vulnerable indonesia's greater majority by creating high macro-economic risks.... The report of the Transparency International (2010) compared to past years, can speak to this....
12 Pages (3000 words) Essay

The Deforestation in Indonesia

This paper “The Deforestation in indonesia” delves on the environmental condition including the policies of Indonesia with a specific focus on deforestation.... Forest-related industry in indonesia was further expanded in the decades of 1980s and 1990s by the government.... However, the act of systematically cutting down trees to pave the way for industrial plantations that support the pulp and paper industries or clearing forests to convert them into crop plantation such as palm oil or opening up to mining industries, the simple act elevates to exploitation and deforestation becomes seriously destructive....
9 Pages (2250 words) Research Paper

Cross Cultural Analysis: The Philippine

Much of the Australian exports to Northeast Asia also pass through the Philippine archipelago while the US has an interest in ensuring that its naval vessels can continue to pass through the country's seas (Kwa and Skogan, 2007, p.... Typhoons batter the country from May way until December.... This is a paper on the Philippines and is primarily designed to inform tesco's objective of entering the domestic retail market....
13 Pages (3250 words) Research Paper

Has Indonesia Accepted Corruption As Part Of Its Culture

This paper "Has Indonesia Accepted Corruption As Part Of Its Culture" discusses various governmental, and business perspectives to be able to glean insights into corruption in indonesia and to be able to answer the question of whether Indonesia has come to accept corruption as part of its culture.... hellip; There is no doubt that outsiders, as reflected in media accounts and the academic literature from the west, see corruption being deeply embedded in the way Indonesians do things....
13 Pages (3250 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us