TESCO implement a clear cost leadership strategy, as market leaders they benefit heavily from economies of scale. The introduction of their own brand allowed the company to cut their costs and increase their profit margins. Tosco's current strategy is very much one of growth. Depend on the feature aimed at the high street consumer TESCO offering different categories shop and services-
In ‘'Tesco's Extra'' stores here are over 15,000 of their own brand products. Customer can buy any product in cheaper price. "Tesco Extra" stores, selling not just food, like other supermarkets but material products such as kitchen accessories, entertainment items such as televisions and VCR players and CDs, magazines and cleaning products.
"Tesco Metro" was introduced. This was a feature aimed at the high street consumer while offering the benefits of a large supermarket.
"Tesco Express" in essence a petrol station with a small Tesco store onsite. This offered customers convince products i.e. bread, milk and essential grocery items.
Tesco Direct - The recent interim results show how Tesco's non-food products have made good progress. Tesco's Direct will offer the vast range to anyone with computer access.
Telecommunications - Tesco launched an ISP service back in 1998, but have invested more heavily in this field since 2003. Tesco's mobile is in an association with O2 and their ADSL package with NTL. Their most recent example of differentiation is the “Tesco Internet Phone”, which is an innovative product making use of the voice over IP capabilities.
Personal Finance - Tesco Personal Finance displays to the extent the corporation is diversifying, now moving outside the retail sector. It is marketed in store and offers all the normal functions of a bank as well as insurance.
If we look at the ASDA‘s main strategy is bit same as TESCO-is the ability to keep costs low and pass that on to customers in lower prices. All the ASDA stores have largely accommodated similar with ‘'TESCO EXTRA'', have the ASDA Direct, George for clothing, Groceries and Financial services. But ASDA don't have the store like Tesco metro or Tesco Expess where Tesco's current strategy is very much one of growth.
Further, domestic rivalry and the search for competitive advantages within a nation can help provide organisations with bases for achieving such advantage on a more global basis. UK's retail industry such Sainsbury's, Marks & Spencer, Morrisons, Waitrose and so on are the good example of this.
4. Demand Conditions:
Demand conditions influence the shaping of particular factor conditions. They have impact on the pace and direction of innovation and product development. According to Porter, home demand is determined by three major characteristics: their mixture (the mix of customers needs and wants), their scope and growth rate, and the mechanisms that transmit domestic preferences to foreign markets.
Porter states that a country can achieve national advantages in an industry or market segment, if home demand provides clearer and earlier signals of demand trends to domestic suppliers than to foreign competitors.
The huge demand and high quality desires in retail industry in UK in resulted TESCO and ASDA to produce high quality products.