Studyguide Essay Example | Topics and Well Written Essays - 1750 words

Studyguide - Essay Example Tesco has maintained lower costs of procurement and production of goods which has enabled it to sell the products at cheaper prices as compared to the other retailers in the market. This has ensured increased competiveness as well as greater sales margins in the business. Tesco Corporation has continued to grow and has expanded the stores of the company into a number of foreign markets. This has made it necessary for the company to have an in-depth understanding of the opportunities presented in the international trading systems. Tesco has successfully attained economies of scale in its production capacities in different foreign countries and as such has become able to lower the costs of production. The company has been an early mover into taking up the principles of comparative advantage by reducing the production and operational costs in the business. In order to maintain lower operating costs, Tesco has implemented a number of comparative advantage theories in their daily operatio ns. The company has used the Ricardo’s comparative advantage theory in the production activities and in the export activities of the goods of Tesco in foreign locations (Kelly 200). Tesco has been extremely selective about the sourcing of the raw materials. The company has made careful selections of local and international suppliers in order to reduce the production costs in the business. The company outsources the production activities of different goods in countries where the production cost of the specific goods are comparatively lower than on other locations. This helps to decrease the production expenses and allows Tesco to sell the final products to the consumers at comparatively lower prices. For example, Tesco focuses on producing rice and other cereals in countries like Japan and clothing goods in countries like China and India where the manufacturing costs of these products are much lower as compared to the home country of Tesco. The