Many retailers have tried and failed to establish themselves outside their home markets. Likewise, some retailers have gone astray trying to exploit Internet shopping. As a result, Tesco, the United Kingdom’s biggest grocer, has attracted considerable attention because of its ambitious overseas strategy and its successful on-line home delivery service.

Relying on sales of nonfood items and on international sales—particularly in emerging markets—for an important part of the company’s future expansion, Tesco has delivered one of the fastest organic growth rates of any major retailer in the world. Its nonfood business rose by 18 percent in 2000–01, and its international business, which began with a launch in Hungary in 1994, now accounts for more than 40 percent of the group’s floor space.

Tesco also happens to be the undisputed world leader in Internet grocery sales (www.tesco.com). Its on-line home delivery service is now profitable, Tesco says, and it has struck a deal in the United States with Safeway, which will use Tesco’s system for a home-shopping service. Underpinning Tesco’s success is excellent management and an obsession with operational efficiency and productivity gains, which the company uses to keep prices low or to improve service rather than to...