- No single buyer purchases a large portion of the industry’s total output.
- Thanks to its massive buying power, Carrefour could guarantee low prices while permanently offering about 50,000 items in stock. (p. C 74)
- Carrefour advertises new promotions and discounts every day, reminding customers that they will be refunded if they find the same product cheaper elsewhere. (p. C 76)
- Taking local constraints into account, Carrefour has added new services in developing markets, such as free shuttle services for customers and play areas for children, as well as home delivery. (p. C 76)
- [T]he Asian crisis did not affect the company; on the contrary, Carrefour benefited, thanks to its low price policy and emerged even stronger from the crisis with a higher market share than expected. (p. C 77)
- Fortunately, Taiwan was relatively spared by the Asian crisis and consumption levels continued to increase. (p. C 78)
- These [cultural centers] offered women and children weekly courses in English, dance, cooking, drawing, and other subjects. (p. C 79)
- As an example, the “pork quality line” covered the entire cycle from breeding selection and reproduction to stocking the shelves. (p. C 79)
- In order to offer a larger section of the population its first opportunity to purchase durable household goods, Carrefour organized two “free credit” campaigns in 2002[.] (p. C 79)
- Monthly theme promotions were introduced (French Week, Wine Fair, Japanese Week, Bicycle Week, etc). (p. C 79)
- [Consumption and purchasing power in the continental Chinese market] are steadily increasing. (p. C 80)
- For religious reasons it could not sell fresh pork, but focused on beef and lamb. (p. C 81)
- They make it their daily routine to visit a nearby supermarket where other friends congregate, rather than to drive to a hypermarket to stock up on groceries for a week. (p. C 82)
- Carrefour was planning to sell its eight stores in Japan due to “difficulties in acquiring real estate for new stores and the lack of touch with Japanese consumers’ tastes.” (p. C 83)
- Neither high nor low. Although buyers purchase a significant portion of the retail industry’s output, no single buyer purchases enough to have a major impact on the industry as a whole. However, a lack of understanding of buying habits and tastes in different countries can increase buyers’ power on a regional basis. Special promotions and services serve to decrease buyer power.
- THREAT OF PRODUCT SUBSTITUTES
- Although primarily known as a hypermarket pioneer, Carrefour also operated supermarkets, hard discounts and other formats, such as convenience stores. (p. C 73)
- For years its claim to fame was to offer a massive array of quality goods in one place, at reasonable prices rather than bargain-basement value. (p. C 74)
- In order to fight back against the hard-discounters, Carrefour expanded its own hard discount chain, ED. (p. C 75)
- Even though Asian customers still tended to shop daily at wet markets or “mom & pop” stores, buying patterns were slowly changing and a certain degree of Westernization of local tastes was apparent in most countries. (pp. C 77-78)
- The fresh product concept was redesigned in order to reproduce the atmosphere and merchandising style found in street markets, while emphasizing hygienic conditions. (p. C 79)
- China’s retail scene differs substantially from one store type to another as well as geographically. (p. C 81)
- They make it their daily routine to visit a nearby supermarket where other friends congregate, rather than to drive to a hypermarket to stock up on groceries for a week. (p. C 82)
- Threat of product substitutes can be high or low depending on the region or country in which operations take place. Generally speaking, the threat of product substitutes is low because services and promotions increase switching costs, and retailers may tailor their operations to the local needs of customers. In Japan, however, the threat of product substitutes is high due to cultural routines.
- INTENSITY OF RIVALRY AMONG COMPETITORS
- NUMEROUS OR EQUALLY BALANCED COMPETITORS
-
Exhibit 3 Level of Internationalization of Global Retailers in 2003 (p. C 74)
- Other retailers have since joined GNX including Metro (Germany), Sainsbury’s (U.K.), Kroger (U.S.) and Coles Myer (Australia). (p. C 76)
- International players such as Makro, Metro, Tesco, and Wal-Mart had shown a big appetite for the region. (p. C 77)
- The President Group is a dominant figure on the Taiwanese business landscape, ranking number two in size. (p. C 78)
- Since the liberalization of the Korean retail market in 1996, local and foreign retailers, such as Carrefour, Makro, Costco, Wal-Mart, and Metro, had struggled to stake out their territory. (p. C 78)
- In 2003 Carrefour was the number three food retailer in Malaysia but was facing increasing competition from strong local and foreign retailers, such as Tesco. (p. C 79)
- However, local competition remained strong and professional (NTUC) and local suppliers resisted Carrefour’s methods. (p. C 79)
- But in 1999 it experienced fierce competition and had to modify its activity. (p. C 80)
- Convenience stores and supermarkets are dominated by domestic chains such as Lianhua, whereas hypermarkets are in the firm hands of big international players. (p. C 81)
- As an area lacking big shopping centers and supermarkets, Zhongguancun is attracting foreign retailers such as PriceSmart, one of Carrefour’s major rivals. (p. C 81)
- In 2004 the Bailian Group, which controlled Lianhua Supermarket Holdings, announced plans to merge with Hualian into China’s largest retailer, the Brilliance Group, with the aim of creating a local giant with assets of US$721.4 million. (p. C 82)
- Japan was left with five major general merchandise store chains, namely Ito-Yokado, Aeon (parent company of Jusco), Caiei, Uny, and Seiyu, of which Wal-Mart was the largest shareholder in 2002. (p. C 82)
- High. There are a tremendous number of large and medium sized firms which are competing on local, regional, national, and international bases for a share of each market. This tends to increase rivalry among competitors.
-
“China represents a huge market and now it has acquired its WTO membership.” (p. C 73)
-
Carrefour was generally successful when it entered new markets that had seen dramatic changes in consumer buying habits, coupled with high growth in per capita GNP, suburbanization, greater participation of women in the labor force, and a large increase in the ownership of cars and refrigerators. (p. C 74)
- Such speculation highlighted that Carrefour was vulnerable to a takeover, or at least to increased competition from international competitors like Wal-Mart and Tesco that were posting stronger domestic growth. (p. C 74)
- Even though Asian customers still tended to shop daily at wet markets or “mom & pop” stores, buying patterns were slowly changing and a certain degree of Westernization of local tastes was apparent in most countries. (pp. C 77-78)
- Moreover, impulse buying was on the rise and replacing necessity purchasing. (p. C 78)
- Fortunately, Taiwan was relatively spared by the Asian crisis and consumption levels continued to increase. (p. C 78)
- Before the Asia crisis Malaysia had experienced one of the strongest growth rates of all the Asian nations. (p. C 79)
- Singapore was not overly affected by the Asian crisis, posting a rise of more than 2 percent in GDP in 1999. (p. C 79)
- Its hypermarket in Suntec City registered significant sales growth, and a second store was opened in Plaza Singapura in December 2003. (p. C 79)
- The continental Chinese market is quite different from those of Taiwan and Hong Kong because urbanization, consumption and purchasing power are steadily increasing. (p. C 80)
- In 2004 China announced that it would honor its pledges to open the booming retail sector to foreign players such as Wal-Mart and Carrefour, abolishing joint-venture requirements before the end of the year. (p. C 81)
- Despite the spectacular bankruptcies of local players such as Mycal in 2002, Japan’s retail sector has remained overcrowded and competition quite fierce. (p. C 82)
- The growth of this industry serves to lessen rivalry among competitors. This is not the case in Japan, however, where a saturated market serves to increase rivalry among competitors.
- STORAGE COSTS AND FIXED COSTS
- It built a reputation as the retailer that offered the most variety and freshness at low prices. (p. C 74)
- Carrefour could guarantee low prices while permanently offering about 50,000 items in stock. (p. C 74)
- In 2003 Carrefour’s hypermarkets had a 13.9 percent share of the “fast-moving consumer goods” category in its French home market (which included food as well as household goods and health and beauty products)[.] (p. C 75)
- Carrefour tries to establish as many stores as possible in major urban areas in order to achieve economies of scale. (pp. C 75-76)
- Carrefour has built big global procurement centers coordinated through Shanghai and Hong Kong. (p. C 76)
- [Carrefour] operated 10,378 stores in 29 countries and employed more than 410,000 people. (p. C 73)
- Instead of buying the sites, Carrefour rented space to operate hypermarkets in Kaohsiung and Taipei on a much smaller scale[.] (p. C 78)
- Subsequently, Carrefour increased the size of its new stores. (p. C 78)
- In 2004 it planned to open a hypermarket in Kepong, Kuala Lumpur, on three stories with 46,450 [square meters] of floorspace. (p. C 79)
- Located in an area dubbed Beijing’s Silicon Valley, the outlet has floorspace of 11,600 [square meters], much bigger than any other Carrefour store in the country. (p. C 81)
- Ito-Yokado, Japan’s largest supermarket chain, had no plans to copy Carrefour or to open hypermarkets because land costs remained too high. (p. C 82)
- High fixed costs for massive storefronts, including land and facilities, combined with high storage costs for perishable goods, serve to increase rivalry among competitors.
- Competitive rivalry is likely to be high when it is important for several of the competitors to perform well in the market. (p. T 54)
- But the Asian crisis forced these local retailers to freeze their expansion plans, and some even had to file for bankruptcy. (p. C 78)
- However, local competition remained strong and professional (NTUC) and local suppliers resisted Carrefour’s methods. (p. C 79)
- As a result, Royal Ahold, which operated 46 stores until 2002, withdrew from China and eventually divested all its activities in the Asian region. (p. C 81)
- In recent years Shaghai-based major retailers have started to defy foreign competition. In 2004 the Bailian Group, which controlled Lianhua Supermarket Holdings, announced plans to merge with Hualian into China’s largest retailer, the Brilliance Group, with the aim of creating a local giant with assets of US$721.4 million. (pp. C 81-82)
- It is important for several competitors to perform well in local, regional, national, and international markets. Where the scope of operations of different firms match, and when they operate in the same region, the strategic stakes will be high. In this case, the rivalry among competitors will intensify.
- In the United Arab Emirates (UAE), the joint venture company between Majid al Futtaim and Carrefour was the most dynamic and fast-moving hypermarket chain[.] (p. C 74)
- In order to increase its profitability, in 2000 Carrefour created the GNX online supply platform with Oracle and Sears, whereby suppliers and retailers can exchange information via the Internet and optimize the flow of merchandise, thus reducing their administrative costs. (p. C 76)
- Carrefour also works actively with local governments and nonprofit organizations to protect the environment. (p. C 76)
- When first moving into Asia, Carrefour opted for joint ventures and partnerships to make up for its lack of knowledge of the Asian market. (p. C 77)
- The retailer entered a partnership with a local food and retailing conglomerate, the President Group, which held 40 percent of the shares. (p. C 78)
- Carrefour introduced a new feature with the creation of cultural centers in two stores in partnership with Korea’s leading newspaper. (p. C 78)
- Its relationship with Lianhua, one of the two major local retailers, helped Carrefour to establish its leadership in China. (p. C 80)
- An “export service” was established in Shanghai, and 10 liaison offices were set up with the objective of doubling export volumes by 2005. (p. C 81)
- Carrefour also sought to participate in public welfare projects and to contribute to local communities, while cooperating closely with local authorities. (p. C 81)
- In 2004 China announced that it would honor its pledges to open the booming retail sector to foreign players such as Wal-Mart and Carrefour, abolishing joint-venture requirements before the end of the year. (p. C 81)
- Government regulations and strategic interrelationships, along with some specialized assets, cause there to be high barriers to exit in this industry.
INTERNAL ENVIRONMENT
Carrefour has seen consistent growth in revenues and net income since 1993. Also, net profit margin has experienced consistent growth from 1999-2003, after experiencing a sharp fall from 1998-1999.
- In 2003 Carrefour was the second-largest mass retailer in the world with net sales totaling €70.5 billion (US$84 billion) and net profits of €1.6 billion. (p. C 73)
- Later on it worked with financial and industrial partners only when national regulations made it necessary, as in China, Thailand, Malaysia, and Indonesia. (p. C 77)
- [Indonesia] was still facing major problems of financial sector fragility and private sector debt. (p. C 79)
- Carrefour, which wholly owned many of its stores, was subsequently ordered to sell its excess shares (above the regulatory 65 percent limit) and in 2002 signed a deal to sell stakes to local partners. (p. C 81)
- Carrefour is one of the world’s major exporters of Chinese products. (p. C 81)
- ABILITY TO GENERATE INTERNAL FUNDS
- During the 1980s and 1990s, Carrefour continued its international expansion through a combination of organic growth and acquisitions[.] (p. C 74)
- Carrefour focused intensely on integration and repairing weak domestic sales and by the end of the year it had successfully repositioned itself to continue its international expansion at its historically fast pace. (p. C 74)
- Because Carrefour operates on tiny margins […], the slightest improvement in these translates into significant growth for the bottom line. (p. C 76)
- One important factor in cost management is its sourcing strategy. (p. C 76)
- The centralization of its IT systems and administrative procedures achieves further savings. (p. C 76)
- Carrefour, which wholly owned many of its stores, was subsequently ordered to sell its excess shares (above the regulatory 65 percent limit) and in 2002 signed a deal to sell stakes to local partners. (p. C 81)
- Carrefour has only just started making profits in all its stores[.] (p. C 82)
- Thus its three stores were showing major losses and Carrefour had to review its ambitious plans to expand to 13 stores by 2003. (p. C 82)
- FORMAL REPORTING STRUCTURE, PLANNING, CONTROLLING AND COORDINATING SYSTEMS
- From 2000 to 2003 Carrefour wrestled with integrating Promodes’ businesses into it existing operations. (p. C 74)
- Before entering a new international market, local conditions are analyzed against a set of socio-economic criteria. (p. C 75)
- However, Carrefour does not believe only in extensive market research[.] (p. C 75)
- Once the feasibility study is conclusive, Carrefour focuses on selecting the format best suited to the particular market and adapting that format to local needs. (p. C 75)
- Carrefour tries to establish as many stores as possible in major urban areas in order to achieve economies of scale. (pp. C 75-76)
- One important factor in cost management is its sourcing strategy. (p. C 76)
- The centralization of its IT systems and administrative procedures achieves further savings. (p. C 76)
- In order to increase its profitability, in 2000 Carrefour created the GNX online supply platform with Oracle and Sears, whereby suppliers and retailers can exchange information via the Internet and optimize the flow of merchandise, thus reducing their administrative costs. (p. C 76)
- When opening a new market, Carrefour operates a dual system for employing expatriates and local executives. (p. C 76)
- As early as 1969 Carrefour was the first mass retailer to measure performance on the return on invested capital instead of the classic concept of gross profit margin used in traditional trade. (p. C 76)
- The pressure for sales and profit is put on department heads, as each store is a profit center. (p. C 76)
- In Asia, department heads are much more autonomous than in France and are also in charge of recruiting employees and negotiating salaries. (p. C 76)
- In China, Carrefour employs 95 percent of local Chinese managers and invests heavily in their training. (p. C 76)
- When first moving into Asia, Carrefour opted for joint ventures and partnerships to make up for its lack of knowledge of the Asian market. (p. C 77)
- The retailer entered a partnership with a local food and retailing conglomerate, the President Group, which held 40 percent of the shares. (p. C 78)
- All stores consistently had pilot departments to introduce new product ranges. (p. C 78)
- Rather than sharing their knowledge with their staff, local managers had the tendency to withhold information. (p. C 78)
- Restructuring and modernization of existing stores started in 2001. (p. C 78)
- Foreign ownership laws in Thailand allowed foreign companies—except American companies—to hold no more than 49 percent of the shares. (p. C 79)
- Backed by a dynamic commercial strategy with frequent and original promotional campaigns, Carrefour, No. 5 in food retail, adapted well to the local economic environment. (p. C 79)
- Legal restructuring was performed in collaboration with the Chinese authorities and allowed expansion to resume. (p. C 81)
- Since 2002 a new organization within the group has aimed to expand market outlets for its suppliers and enhance its product offering in its European stores. (p. C 81)
- This approach was a clear departure from Carrefour Japan’s existing policy of localizing its merchandise and the highly successful store would serve as a benchmark for future store openings. (p. C 83)
- SOPHISTICATION AND LOCATION OF FIRM’S PLANT AND EQUIPMENT
- It operated 10,378 stores in 29 countries and employed more than 410,000 people. (p. C 73)
- Although primarily known as a hypermarket pioneer, Carrefour also operated supermarkets, hard discounts and other formats, such as convenience stores[.] (p. C 73)
- Carrefour’s international operations are located in three major geographical zones: Europe and the Middle East, Latin America, and Asia. (p. C 74)
- In order to fight back against the hard-discounters, Carrefour expanded its own hard discount chain, ED. (p. C 75)
- Once the feasibility study is conclusive, Carrefour focuses on selecting the format best suited to the particular market and adapting that format to local needs. (p. C 75)
- Carrefour has opted in many Asian countries for an urban location for its stores due to the population density, and has positioned its hypermarkets in proximity stores rather than suburban stores, offering a limited product range but producing greater volume. (p. C 75)
- Carrefour tries to establish as many stores as possible in major urban areas in order to achieve economies of scale. (pp. C 75-76)
- Carrefour has built big global procurement centers coordinated through Shanghai and Hong Kong. (p. C 76)
- In 2003 Carrefour was present in eight Asian markets, operating 144 hypermarkets and 55 hard discount stores[.] (p. C 76)
- Another advantage of the Taiwanese experience was that it served as a human resource hub for other Asian markets, especially in China. (p. C 78)
- Instead of buying the sites, Carrefour rented space to operate hypermarkets in Kaohsiung and Taipei on a much smaller scale (3,500 [square meters]) in urban centers on two stories instead of the classic one-floor layout. (p. C 78)
- All stores consistently had pilot departments to introduce new product ranges. (p. C 78)
- In certain cases Carrefour chose industrial and commercial parks to develop the hypermarkets. (p. C 78)
- By 2003 Carrefour was operating 31 stores in Taiwan[.] (p. C 78)
- Restructuring and modernization of existing stores started in 2001. (p. C 78)
- Carrefour introduced a new feature with the creation of cultural centers in partnership with Korea’s leading newspaper. (p. C 79)
- The fresh product concept was redesigned in order to reproduce the atmosphere and merchandising style found in street markets, while emphasizing hygienic conditions. (p. C 79)
- In 2003 Carrefour Thailand counted 19 stores with net sales of €392 million. (p. C 79)
- In 2003 Carrefour was Indonesia’s leading foreign hypermarket with 11 stores and net sales of €286 million. (p. C 79)
-
In 2004 it planned to open a hypermarket in Kepong, Kuala Lumpur, on three stories with 46,450m2 of floorspace. (p. C 79)
- Carrefour’s net sales [in Malaysia] represented €226 million in 2003. (p. C 79)
- In 2003 it was ranked the top foreign retailer [in China] with net sales of €1,031 million, operating 40 hypermarkets and 55 hard discount stores in all major cities. (p. C 80)
- An “export service” was established in Shanghai, and 10 liaison offices were set up with the objective of doubling export volumes by 2005. (p. C 81)
- STOCK OF TECHNOLOGY, SUCH AS PATENTS, TRADEMARKS, COPYRIGHTS, AND TRADE SECRETS
- The basics of Carrefour’s concept are (1) one-stop shopping, (2) low prices, (3) self-service, (4) quality products, (5) freshness, and (6) free parking. (p. C 75)
- Before entering a new international market, local conditions are analyzed against a set of socio-economic criteria. (p. C 75)
- In some markets, such as China, Carrefour has launched its own product line in home appliances and spices. (p. C 76)
- One important factor in cost management is its sourcing strategy. (p. C 76)
- In order to increase its profitability, in 2000 Carrefour created the GNX online supply platform with Oracle and Sears, whereby suppliers and retailers can exchange information via the Internet and optimize the flow of merchandise, thus reducing their administrative costs. (p. C 76)
- All stores consistently had pilot departments to introduce new product ranges. (p. C 78)
- Despite such differences, thanks to its adaptive capabilities Carrefour became the largest mass retailer on the island. (p. C 78)
- Carrefour introduced a new feature with the creation of cultural centers in two stores in partnership with Korea’s leading newspaper. (p. C 79)
- In 2002 Carrefour introduced a number of sales innovations that proved successful. (p. C 79)
- Carrefour succeeded in modifying both shopping habits and price expectations among the small population of 4 million Singaporeans. (p. C 79)
- Carrefour’s aim had always been to pioneer urban centers that had been ignored by competitors[.] (p. C 81)
- An “export service” was established in Shanghai, and 10 liaison offices were set up with the objective of doubling export volumes by 2005. (p. C 81)
- Along with demonstrating its professionalism in fresh produce, the company established its first sales space specializing in French household goods at its fully renovated store in Chiba Prefecture. (p. C 82)
- Carrefour developed the hypermarket concept[.] (p. C 74)
- Before entering a new international market, local conditions are analyzed against a set of socio-economic criteria. (p. C 75)
-
When we decided to set up stores in Romania, it was more an instinctive feeling than the results of the market study. (p. C 75)
- In 2002 Carrefour employed about 200 expatriate executives with solid experience of adapting Carrefour’s retailing concept to local contexts. (p. C 76)
- Local managers receive six months’ training in a country of the region where Carrefour is already successfully operating. (p. C 76)
- Thereafter they work hand-in-hand: the expatriates contributing their expertise and experience and the local executives sharing their know-how of the local business environment. (p. C 76)
- In China, Carrefour employs 95 percent of local Chinese managers and invests heavily in their training. (p. C 76)
- […] 1,000 Chinese department heads were trained in retail techniques and business management. (p. C 76)
- This cross-learning was vitally important as it spread the know-how within the company. (p. C 78)
- Corporate culture, training, and company goals, among other factors, were difficult to communicate to all staff members, and promotions were only possible for English-speaking staff. (p. C 78)
- Rather than sharing their knowledge with staff, local managers had the tendency to withhold information. (p. C 78)
- Based on the lessons learned in Taiwan, Carrefour moved into China in 1995 with its first store opening in Shanghai. (p. C 80)
- “Sometimes, we may have problems in understanding Chinese laws and regulations[.]” (p. C 81)
- An “export service” was established in Shanghai, and 10 liaison offices were set up with the objective of doubling export volumes by 2005. (p. C 81)
-
When we decided to set up stores in Romania, it was more an instinctive feeling than the results of the market study. (p. C 75)
- Thereafter they work hand-in-hand: the expatriates contributing their expertise and experience and the local executives sharing their know-how of the local business environment. (p. C 76)
- In Asia, department heads are much more autonomous than in France and are also in charge of recruiting employees and negotiating salaries. (p. C 76)
- Rather than sharing their knowledge with their staff, local managers had the tendency to withhold information. (p. C 78)
- Its relationship with Lianhua, one of the two major local retailers, helped Carrefour to establish its leadership in China. (p. C 80)
- Although primarily known as a hypermarket pioneer, Carrefour also operated supermarkets, hard discounts and other formats, such as convenience stores. (p. C 73)
- Carrefour focused intensely on integration and repairing weak domestic sales and by the end of the year it had successfully repositioned itself to continue its international expansion at its historically fast pace. (p. C 74)
- In order to fight back against the hard-discounters, Carrefour expanded its own hard discount chain, ED. (p. C 75)
- Before entering a new international market, local conditions are analyzed against a set of socio-economic criteria. (p. C 75)
-
When we decided to set up stores in Romania, it was more an instinctive feeling than the results of the market study. (p. C 75)
- Taking local constraints into account, Carrefour has added new services in developing markets, such as free shuttle services for customers and play areas for children, as well as home delivery. (p. C 76)
- One important factor in cost management is its sourcing strategy. (p. C 76)
- Shared processes and systems increase operational efficiency and the introduction of international product ranges complements its locally sensitive strategy. (p. C 76)
- In 2002 Carrefour employed about 200 expatriate executives with solid experience of adapting Carrefour’s retailing concept to local contexts. (p. C 76)
- Local managers receive six months’ training in a country of the region where Carrefour is already successfully operating. (p. C 76)
- In Asia, department heads are much more autonomous than in France and are also in charge of recruiting employees and negotiating salaries. (p. C 76)
- In China, Carrefour employs 95 percent of local Chinese managers and invests heavily in their training. (p. C 76)
- During this period real estate prices skyrocketed, making some adaptation of Carrefour’s policy necessary. (p. C 78)
- This cross-learning was vitally important as it spread the know-how within the company. (p. C 78)
- Managing the supply chain was another major challenge. (p. C 78)
- Communication was another challenge. (p. C 78)
- Despite such differences, thanks to its adaptive capabilities Carrefour became the largest mass retailer on the island. (p. C 78)
- Since entering this mature and sophisticated market in 1997, Carrefour succeeded in modifying both shopping habits and price expectations among the small population of 4 million Singaporeans. (p. C 79)
- Legal restructuring was performed in collaboration with the Chinese authorities and allowed expansion to resume. (p. C 81)
- An “export service” was established in Shanghai, and 10 liaison offices were set up with the objective of doubling export volumes by 2005. (p. C 81)
- Carrefour fell short of its original plan to persuade all of its Japanese suppliers to adopt the Carrefour direct-purchasing system. (p. C 82)
- Although primarily known as a hypermarket pioneer, Carrefour also operated supermarkets, hard discounts and other formats, such as convenience stores. (p. C 73)
- For years its claim to fame was to offer a massive array of quality goods in one place, at reasonable prices rather than bargain-basement value. (p. C 74)
-
Carrefour was generally successful when it entered new markets that had seen dramatic changes in consumer buying habits, coupled with high growth in per capita GNP, suburbanization, greater participation of women in the labor force, and a large increase in the ownership of cars and refrigerators. (p. C 74)
- During the 1980s and 1990s, Carrefour continued its international expansion through a combination of organic growth and acquisitions[.] (p. C 74)
- Before entering a new international market, local conditions are analyzed against a set of socio-economic criteria. (p. C 75)
- However, Carrefour does not believe only in extensive market research. (p. C 75)
- Once the feasibility study is conclusive, Carrefour focuses on selecting the format best suited to the particular market and adapting that format to local needs. (p. C 75)
- Carrefour tries to establish as many stores as possible in major urban areas in order to achieve economies of scale. (pp. C 75-76)
- Carrefour advertises new promotions and discounts every day, reminding customers that they will be refunded if they find the same product cheaper elsewhere. (p. C 76)
- Taking local constraints into account, Carrefour has added new services in developing markets, such as free shuttle services for customers and play areas for children, as well as home delivery. (p. C 76)
- One important factor in cost management is its sourcing strategy. (p. C 76)
- Shared processes and systems increase operational efficiency and the introduction of international product ranges complements its locally sensitive strategy. (p. C 76)
- Carrefour also works actively with local governments and nonprofit organizations to protect the environment. (p. C 76)
- While venturing into new markets, Carrefour’s human resource policy has relied on a small number of expatriates. (p. C 76)
- When opening a new market, Carrefour operates a dual system for employing expatriates and local executives. (p. C 76)
- When first moving into Asia, Carrefour opted for joint ventures and partnerships to make up for its lack of knowledge of the Asian market. Later on it worked with financial or industrial partners only when national regulations made it necessary[.] (p. C 77)
- All stores consistently had pilot departments to introduce new product ranges. (p. C 78)
- In certain cases Carrefour chose industrial and commercial parks to develop the hypermarkets. (p. C 78)
- In order to offer a larger section of the population its first opportunity to purchase durable household goods, Carrefour organized two “free credit” campaigns in 2002[.] (p. C 79)
- Monthly theme promotions were introduced[.] (p. C 79)
- In different provinces it used different partners. (p. C 80)
- Legal restructuring was performed in collaboration with the Chinese authorities and allowed expansion to resume. (p. c 81)
- Carrefour’s aim had always been to pioneer urban centers that had been ignored by competitors, as with Wuhan and Shenyang, where it opened hypermarkets in 1999 despite a 30 percent rate of unemployment. (p. C 81)
- An “export service” was established in Shanghai, and 10 liaison offices were set up with the objective of doubling export volumes by 2005. (p. C 81)
- Carrefour also sought to participate in public welfare projects and to contribute to local communities, while cooperating closely with local authorities. (p. C 81)
- Like other Western megastores, Carrefour had apparently swept into the Japanese market with much fanfare and little sensitivity to Japan’s retail culture. (p. C 82)
- Along with demonstrating its professionalism in fresh produce, the company established its first sales space specializing in French household goods at its fully renovated store in Chiba Prefecture. (p. C 82)
- [A]ll products within its stores were “halhal” in compliance with prevailing food requirements. (p. C 79)
- Along with demonstrating its professionalism in fresh produce, the company established its first sales space specializing in French household goods at its fully renovated store in Chiba Prefecture. (p. C 82)
- Carrefour also sought to participate in public welfare projects and to contribute to local communities, while cooperating closely with local authorities. (p. C 81)
- An “export service” was established in Shanghai, and 10 liaison offices were set up with the objective of doubling export volumes by 2005. (p. C 81)
- Carrefour’s aim had always been to pioneer urban centers that had been ignored by competitors, as with Wuhan and Shenyang, where it opened hypermarkets in 1999 despite a 30 percent rate of unemployment. (p. C 81)
- Monthly theme promotions were introduced[.] (p. C 79)
- In order to offer a larger section of the population its first opportunity to purchase durable household goods, Carrefour organized two “free credit” campaigns in 2002[.] (p. C 79)
- All stores consistently had pilot departments to introduce new product ranges. (p. C 78)
- Taking local constraints into account, Carrefour has added new services in developing markets, such as free shuttle services for customers and play areas for children, as well as home delivery. (p. C 76)
- Although primarily known as a hypermarket pioneer, Carrefour also operated supermarkets, hard discounts and other formats, such as convenience stores. (p. C 73)
- This cross-learning was vitally important as it spread the know-how within the company. (p. C 78)
- Shared processes and systems increase operational efficiency and the introduction of international product ranges complements its locally sensitive strategy. (p. C 76)
- Carrefour developed the hypermarket concept[.] (p. C 74)
- Before entering a new international market, local conditions are analyzed against a set of socio-economic criteria. (p. C 75)
- Shared processes and systems increase operational efficiency and the introduction of international product ranges complements its locally sensitive strategy. (p. C 76)
- In order to increase its profitability, in 2000 Carrefour created the GNX online supply platform with Oracle and Sears, whereby suppliers and retailers can exchange information via the Internet and optimize the flow of merchandise, thus reducing their administrative costs. (p. C 76)
- Along with demonstrating its professionalism in fresh produce, the company established its first sales space specializing in French household goods at its fully renovated store in Chiba Prefecture. (p. C 82)
- An “export service” was established in Shanghai, and 10 liaison offices were set up with the objective of doubling export volumes by 2005. (p. C 81)
- Carrefour’s aim had always been to pioneer urban centers that had been ignored by competitors, as with Wuhan and Shenyang, where it opened hypermarkets in 1999 despite a 30 percent rate of unemployment. (p. C 81)
- Monthly theme promotions were introduced[.] (p. C 79)
- In order to offer a larger section of the population its first opportunity to purchase durable household goods, Carrefour organized two “free credit” campaigns in 2002[.] (p. C 79)
- All stores consistently had pilot departments to introduce new product ranges. (p. C 78)
- Taking local constraints into account, Carrefour has added new services in developing markets, such as free shuttle services for customers and play areas for children, as well as home delivery. (p. C 76)
- Carrefour developed the hypermarket concept[.] (p. C 74)
- REPUTATION WITH CUSTOMERS
- It built a reputation as the retailer that offered the most variety and freshness at low prices. (p. C 74)
- Worldwide, Carrefour requested that its stores make less use of plastic in packaging, thereby gaining a reputation as a model in the retailing industry. (p. C 76)
- “It was as if the Huns had arrived in Taiwan.” (p. C 78)
- Carrefour is pronounced Jia Le Fu in Chinese, which means “luck and happiness for the whole family.” (p. C 78)
- Carrefour introduced a new feature with the creation of cultural centers in two stores in partnership with Korea’s leading newspaper. (p. C 79)
- In order to offer a larger section of the population its first opportunity to purchase durable household goods, Carrefour organized two “free credit” campaigns in 2002, which were a resounding success[.] (p. C 79)
- Carrefour also sought to participate in public welfare projects and to contribute to local communities, while cooperating closely with local authorities. (p. C 81)
- Although officially welcomed, the press often blames foreign retail operations for destroying jobs and killing the local retail industry. (p. C 81)
- […] Carrefour’s arrival was portrayed as “a foreign attack on the Japanese retail market.” (p. C 82)
- It built a reputation as the retailer that offered the most variety and freshness at low prices. (p. C 74)
- Carrefour is pronounced Jia Le Fu in Chinese, which means “luck and happiness for the whole family.” (p. C 78)
- Although primarily known as a hypermarket pioneer, Carrefour also operated supermarkets, hard discounts and other formats, such as convenience stores. (p. C 73)
- PERCEPTIONS OF PRODUCT QUALITY AND RELIABILITY
- It built a reputation as the retailer that offered the most variety and freshness at low prices. (p. C 74)
- The basics of Carrefour’s concept are (1) one-stop shopping, (2) low prices, (3) self-service, (4) quality products, (5) freshness, and (6) free parking. (p. C 75)
- In 2002 Carrefour introduced a number of sales innovations that proved successful. (p. C 79)
- Along with demonstrating its professionalism in fresh produce, the company established its first sales space specializing in French household goods at its fully renovated store in Chiba Prefecture. (p. C 82)
- “[…] difficulties in acquiring real estate for new stores and the lack of touch with Japanese consumers’ tastes.” (p. C 83)
- REPUTATION WITH SUPPLIERS
- Thanks to its massive buying power, Carrefour could guarantee low prices while permanently offering about 50,000 items in stock. (p. C 74)
- In China, for instance, more than 95 percent of its merchandise is locally sourced and the remainder is sourced through local importers or the trading office in Hong Kong. (p. C 76)
- Taiwanese suppliers lacked rigor, organization, equipment, and aggressiveness, but they were much more flexible than their Western counterparts. (p. C 78)
- However, local competition remained strong and professional (NTUC) and local suppliers resisted Carrefour’s methods. (p. C 79)
- As in Taiwan, Carrefour had to deal with a different negotiation culture and at first used Taiwanese negotiators for its suppliers in China. (p. C 80)
- Since 2002 a new organization within the group has aimed to expand market outlets for its suppliers and enhance its product offering in its European stores. (p. C 81)
- Instead, local distributors launched lawsuits against Carrefour as the company opted to purchase directly rather than conform to the long-established distribution channels. (p. C 82)
- INTERACTIONS AND RELATIONSHIPS
- In France, due to regulatory constraints, Carrefour merged in 1999 with rival Promodes, the number two in the French market. (p. C 74)
- In the United Arab Emirates (UAE), the joint venture company between Majid al Futtaim and Carrefour was the most dynamic and fast-moving hypermarket chain, with a total of eight stores in 2004. (p. C 74)
- Wal-Mart had coveted the French market for years but its attempts to buy a French subsidiary had been stymied since its abortive courtship of the Auchan and Carrefour chains in 1999. (p. C 74)
- In order to increase its profitability, in 2000 Carrefour created the GNX online supply platform with Oracle and Sears, whereby suppliers and retailers can exchange information via the Internet and optimize the flow of merchandise, thus reducing their administrative costs. (p. C 76)
- Carrefour also works actively with local governments and nonprofit organizations to protect the environment. (p. C 76)
- Thereafter they work hand-in-hand: the expatriates contributing their expertise and experience and the local executives sharing their know-how of the local business environment. (p. C 76)
- When first moving into Asia, Carrefour opted for joint ventures and partnerships to make up for its lack of knowledge of the Asian market. Later on it worked with financial and industrial partners only when national regulations made in necessary, as in China, Thailand, Malaysia, and Indonesia. (p. C 77)
- In addition, in urban areas some kind of “protection” from the local secret societies had to be negotiated. (p. C 78)
- This cross-learning was vitally important as it spread the know-how within the company. (p. C 78)
- However, Carrefour still had to tackle different business approaches, especially to negotiation. (p. C 78)
- Communication was another challenge. (p. C 78)
- The cultural gap was also a source of misunderstanding amongst management. (p. C 78)
- Carrefour introduced a new feature with the creation of cultural centers in two stores in partnership with Korea’s leading newspaper. (p. C 79)
- However, local competition remained strong and professional (NTUC) and local suppliers resisted Carrefour’s methods. (p. C 79)
- As in Taiwan, Carrefour had to deal with a different negotiation culture and at first used Taiwanese negotiators for its suppliers in China. (p. C 80)
- Its relationship with Lianhua, one of the two major local retailers, helped Carrefour to establish its leadership in China. (p. C 80)
- In 2000 Carrefour experienced legal tribulations due to the intricate network of central, provincial, and local authorities that resulted in lengthy negotiation procedures at many different levels. (p. C 81)
- Legal restructuring was performed in collaboration with the Chinese authorities and allowed expansion to resume. (p. C 81)
- Carrefour also sought to participate in public welfare projects and to contribute to local communities, while cooperating closely with local authorities. (p. C 81)
- Instead, local distributors launched lawsuits against Carrefour as the company opted to purchase directly rather than conform to the long-established distribution channels. (p. C 82)
- Thanks to its massive buying power, Carrefour could guarantee low prices while permanently offering about 50,000 items in stock. (p. C 74)
- Carrefour tries to establish as many stores as possible in major urban areas in order to achieve economies of scale. (p. C 76)
- Carrefour has built big global procurement centers coordinated through Shanghai and Hong Kong. (p. C 76)
- Carrefour organized two “free credit” campaigns in 2002, which were a resounding success[.] (p. C 79)
- Carrefour developed the hypermarket concept of bringing nearly all types of consumer goods under one roof in 1959[.] (p. C 74)
- [Carrefour] advertises new promotions and discounts every day, reminding customers that they will be refunded if they find the same product cheaper elsewhere. (p. C 76)
- In some markets, such as China, Carrefour has launched its own product line in home appliances and spices. (p. C 76)
- In order to increase its profitability, in 2000 Carrefour created the GNX online supply platform with Oracle and Sears, whereby suppliers and retailers can exchange information via the Internet and optimize the flow of merchandise, thus reducing their administrative costs. (p. C 76)
- Carrefour also sought to participate in public welfare projects and to contribute to local communities, while cooperating closely with local authorities. (p. C 81)
- As in Taiwan, Carrefour had to deal with a different negotiation culture and at first used Taiwanese negotiators for its suppliers in China. (p. C 80)
- Since 2002 a new organization within the group has aimed to expand market outlets for its suppliers and enhance its product offering in its European stores. (p. C 81)
- [Carrefour] operated 10,378 stores in 29 countries and employed more than 410,000 people. (p. C 73)
- In order to fight back against the hard-discounters, Carrefour expanded its own hard discount chain, ED. (p. C 75)
- Carrefour is one of the world’s major exporters of Chinese products. (p. C 81)
- Taking local constraints into account, Carrefour has added new services in developing markets, such as free shuttle services for customers and play areas for children, as well as home delivery. (p. C 76)
- Although primarily known as a hypermarket pioneer, Carrefour also operated supermarkets, hard discounts and other formats, such as convenience stores. (p. C 73)
- For years its claim to fame was to offer a massive array of quality goods in one place, at reasonable prices rather than bargain-basement value. (p. C 74)
- The fresh product concept was redesigned in order to reproduce the atmosphere and merchandising style found in street markets, while emphasizing hygienic conditions. (p. C 79)
- It built a reputation as the retailer that offered the most variety and freshness at low prices. (p. C 74)
- When first moving into Asia, Carrefour opted for joint ventures and partnerships to make up for its lack of knowledge of the Asian market. (p. C 77)
- Its relationship with Lianhua, one of the two major local retailers, helped Carrefour to establish its leadership in China. (p. C 80)
- An “export service” was established in Shanghai, and 10 liaison offices were set up with the objective of doubling export volumes by 2005. (p. C 81)
- From 2000 to 2003 Carrefour wrestled with integrating Promodes’ businesses into it existing operations. (p. C 74)
- Before entering a new international market, local conditions are analyzed against a set of socio-economic criteria. (p. C 75)
- However, Carrefour does not believe only in extensive market research[.] (p. C 75)
- One important factor in cost management is its sourcing strategy. (p. C 76)
- The centralization of its IT systems and administrative procedures achieves further savings. (p. C 76)
- Backed by a dynamic commercial strategy with frequent and original promotional campaigns, Carrefour, No. 5 in food retail, adapted well to the local economic environment. (p. C 79)
- Legal restructuring was performed in collaboration with the Chinese authorities and allowed expansion to resume. (p. C 81)
- Despite such differences, thanks to its adaptive capabilities Carrefour became the largest mass retailer on the island. (p. C 78)
- In 2002 Carrefour introduced a number of sales innovations that proved successful. (p. C 79)
- Carrefour succeeded in modifying both shopping habits and price expectations among the small population of 4 million Singaporeans. (p. C 79)
- Carrefour’s aim had always been to pioneer urban centers that had been ignored by competitors[.] (p. C 81)
-
When we decided to set up stores in Romania, it was more an instinctive feeling than the results of the market study. (p. C 75)
- Thereafter they work hand-in-hand: the expatriates contributing their expertise and experience and the local executives sharing their know-how of the local business environment. (p. C 76)
- Shared processes and systems increase operational efficiency and the introduction of international product ranges complements its locally sensitive strategy. (p. C 76)
- In terms of remuneration it has a reputation for paying employees well: Department heads earn 20 percent more than they would with other supermarkets, and can earn a bonus linked to the results of the department. (p. C 76)
- Thanks to its massive buying power, Carrefour could guarantee low prices while permanently offering about 50,000 items in stock. (p. C 74)
- Carrefour tries to establish as many stores as possible in major urban areas in order to achieve economies of scale. (p. C 76)
- Carrefour has built big global procurement centers coordinated through Shanghai and Hong Kong. (p. C 76)
- Carrefour developed the hypermarket concept of bringing nearly all types of consumer goods under one roof in 1959[.] (p. C 74)
- [Carrefour] advertises new promotions and discounts every day, reminding customers that they will be refunded if they find the same product cheaper elsewhere. (p. C 76)
- In some markets, such as China, Carrefour has launched its own product line in home appliances and spices. (p. C 76)
- In order to increase its profitability, in 2000 Carrefour created the GNX online supply platform with Oracle and Sears, whereby suppliers and retailers can exchange information via the Internet and optimize the flow of merchandise, thus reducing their administrative costs. (p. C 76)
- Since 2002 a new organization within the group has aimed to expand market outlets for its suppliers and enhance its product offering in its European stores. (p. C 81)
- [Carrefour] operated 10,378 stores in 29 countries and employed more than 410,000 people. (p. C 73)
- In order to fight back against the hard-discounters, Carrefour expanded its own hard discount chain, ED. (p. C 75)
- Carrefour is one of the world’s major exporters of Chinese products. (p. C 81)
- Taking local constraints into account, Carrefour has added new services in developing markets, such as free shuttle services for customers and play areas for children, as well as home delivery. (p. C 76)
- Although primarily known as a hypermarket pioneer, Carrefour also operated supermarkets, hard discounts and other formats, such as convenience stores. (p. C 73)
- The fresh product concept was redesigned in order to reproduce the atmosphere and merchandising style found in street markets, while emphasizing hygienic conditions. (p. C 79)
- It built a reputation as the retailer that offered the most variety and freshness at low prices. (p. C 74)
- When first moving into Asia, Carrefour opted for joint ventures and partnerships to make up for its lack of knowledge of the Asian market. (p. C 77)
- An “export service” was established in Shanghai, and 10 liaison offices were set up with the objective of doubling export volumes by 2005. (p. C 81)
- From 2000 to 2003 Carrefour wrestled with integrating Promodes’ businesses into it existing operations. (p. C 74)
- Before entering a new international market, local conditions are analyzed against a set of socio-economic criteria. (p. C 75)
- However, Carrefour does not believe only in extensive market research[.] (p. C 75)
- One important factor in cost management is its sourcing strategy. (p. C 76)
- The centralization of its IT systems and administrative procedures achieves further savings. (p. C 76)
- Backed by a dynamic commercial strategy with frequent and original promotional campaigns, Carrefour, No. 5 in food retail, adapted well to the local economic environment. (p. C 79)
- Legal restructuring was performed in collaboration with the Chinese authorities and allowed expansion to resume. (p. C 81)
- Despite such differences, thanks to its adaptive capabilities Carrefour became the largest mass retailer on the island. (p. C 78)
- In 2002 Carrefour introduced a number of sales innovations that proved successful. (p. C 79)
- Carrefour succeeded in modifying both shopping habits and price expectations among the small population of 4 million Singaporeans. (p. C 79)
-
When we decided to set up stores in Romania, it was more an instinctive feeling than the results of the market study. (p. C 75)
- Thereafter they work hand-in-hand: the expatriates contributing their expertise and experience and the local executives sharing their know-how of the local business environment. (p. C 76)
- Shared processes and systems increase operational efficiency and the introduction of international product ranges complements its locally sensitive strategy. (p. C 76)
- In terms of remuneration it has a reputation for paying employees well: Department heads earn 20 percent more than they would with other supermarkets, and can earn a bonus linked to the results of the department. (p. C 76)
-
CORE COMPETENCIES (valuable, rare, costly to imitate, non-substitutable)
- Carrefour is able to adapt its business model to new regions, cultures, and customer tastes and preferences.
- Taking local constraints into account, Carrefour has added new services in developing markets, such as free shuttle services for customers and play areas for children, as well as home delivery. (p. C 76)
- The fresh product concept was redesigned in order to reproduce the atmosphere and merchandising style found in street markets, while emphasizing hygienic conditions. (p. C 79)
- When first moving into Asia, Carrefour opted for joint ventures and partnerships to make up for its lack of knowledge of the Asian market. (p. C 77)
- Backed by a dynamic commercial strategy with frequent and original promotional campaigns, Carrefour, No. 5 in food retail, adapted well to the local economic environment. (p. C 79)
- Legal restructuring was performed in collaboration with the Chinese authorities and allowed expansion to resume. (p. C 81)
- Despite such differences, thanks to its adaptive capabilities Carrefour became the largest mass retailer on the island. (p. C 78)
- Carrefour is able to spread important knowledge throughout their organization.
- In order to increase its profitability, in 2000 Carrefour created the GNX online supply platform with Oracle and Sears, whereby suppliers and retailers can exchange information via the Internet and optimize the flow of merchandise, thus reducing their administrative costs. (p. C 76)
- When first moving into Asia, Carrefour opted for joint ventures and partnerships to make up for its lack of knowledge of the Asian market. (p. C 77)
- Thereafter they work hand-in-hand: the expatriates contributing their expertise and experience and the local executives sharing their know-how of the local business environment. (p. C 76)
- Carrefour is able to keep its prices lower than its competitors.
- Thanks to its massive buying power, Carrefour could guarantee low prices while permanently offering about 50,000 items in stock. (p. C 74)
- Carrefour tries to establish as many stores as possible in major urban areas in order to achieve economies of scale. (p. C 76)
- [Carrefour] advertises new promotions and discounts every day, reminding customers that they will be refunded if they find the same product cheaper elsewhere. (p. C 76)
- In order to increase its profitability, in 2000 Carrefour created the GNX online supply platform with Oracle and Sears, whereby suppliers and retailers can exchange information via the Internet and optimize the flow of merchandise, thus reducing their administrative costs. (p. C 76)
- One important factor in cost management is its sourcing strategy. (p. C 76)
- The centralization of its IT systems and administrative procedures achieves further savings. (p. C 76)
- Shared processes and systems increase operational efficiency and the introduction of international product ranges complements its locally sensitive strategy. (p. C 76)
- Carrefour is able to acquire top-talent employees by paying its employees more than its competitors.
- In terms of remuneration it has a reputation for paying employees well: Department heads earn 20 percent more than they would with other supermarkets, and can earn a bonus linked to the results of the department. (p. C 76)
- Since Carrefour competes on cost, it is vitally important that Carrefour is able to acquire goods at costs lower than its competitors. Carrefour has developed a system of acquiring goods that drives down costs. This system includes local sourcing, which serves to lower transportation and coordination costs. Carrefour should continue to investigate ways in which it can further reduce procurement costs from suppliers, further enforcing its competitive advantage in this area.
- Carrefour has worked diligently to renovate its stores and warehouses in order to take advantage of new technologies and economies of scale. It has also worked with suppliers to reduce the amount of packaging used in providing goods and services. Because it operates a vast number of warehouses and storefronts, it is in Carrefour’s best interest to maintain their facilities and equipment to ensure that goods can be delivered to customers at the lowest possible cost.
- Carrefour should investigate the benefits of RFID, as well as other emerging technologies, in order to reduce the amount of labor required to stock, track, package, and deliver its products. Benefits of the use of emerging technologies can also come in the form of reduced wear and tear on equipment and facilities, which will reduce the maintenance required for equipment and facilities.
- Carrefour is able to drive down its costs, and thus improve profitability, through coordinating its suppliers, warehouses, and storefronts. Carrefour benefits from having a software system in place to help in these coordination activities. Carrefour should continue to work to build warehouses in areas which provide the most benefit, taking a number of factors into account.
- Carrefour needs to continue investigating areas in which the processes of collecting, storing, and distributing products can be improved. The area of outbound logistics is possibly the most important source of profitability for Carrefour. It is the coordination of these activities that allows Carrefour to provide low prices to its customers.
- This part of the value chain helps Carrefour to push its goods to market. Carrefour has effectively changed the buying habits and expectations of customers in many geographically and culturally diverse populations. Frequent promotions and themes have proven successful, so Carrefour should continue to invest in and develop its marketing and sales force. Acquiring local talent in regions where Carrefour is less knowledgeable about consumer tastes, habits, and preferences, will help Carrefour’s marketing and sales campaigns to continue to be successful.
- Carrefour has been innovative in identifying and providing services which its customers value. Examples include shuttle services, cultural centers, and credit campaigns. These services serve to differentiate Carrefour from its competitors and help to maintain customer loyalty even when Carrefour cannot compete with other firms on price alone. Carrefour should continue to investigate and develop innovative services to further distinguish itself from its competitors.
- The coordination of suppliers’ activities with Carrefour through the use of web-based technologies has helped to improve procurement efficiency. Carrefour has also built procurement centers in strategically relevant areas. By increasing its sales volume, it has been able to procure products at lower costs than many of its competitors. Carrefour should continue to investigate emerging technologies that would enable it to further automate many of its procurement activities.
- Carrefour has seen rapid expansion in recent years and has opted to purchase land and buildings in some cases, while opting to lease land and buildings in other cases. Carrefour should continue to determine, on a case by case basis, whether it is in its best interest to purchase or lease capital. Political instability in some regions may increase risk, but this risk can be reduced through the proper selections of lease and ownership.
- TECHNOLOGICAL DEVELOPMENT
- The bottom line for Carrefour already benefits through the use of certain technological advancements. Since technology is changing at such a rapid pace, it is important for Carrefour to stay on top of developing technologies that may improve their profitability. Carrefour could benefit through the use of technologies that improve logistical functions, as well as human resource management, warehouse and store layouts, market research, and services.
- HUMAN RESOURCE MANAGEMENT
- The success of a firm is highly dependent on its ability to attract and retain talented associates. Carrefour has demonstrated that it can successfully assemble and maintain a highly skilled workforce. Its strategy of using a small number of expatriates in coordination with local talent has proven to be highly valuable. In acquiring human resources, Carrefour should continue to use its current strategy while continually seeking ways in which it can improve its human resource management.
- Carrefour pays its employees as much as twenty percent more than its competitors do. Although this helps to acquire the top talent, it can be detrimental to the bottom line. Carrefour should investigate whether it can pay its associates more than its competitors, but at lower levels, so it can keep high talent employees and achieve cost savings overall.
- Because Carrefour operates globally, the issues that it faces while trying to operate its business are highly diverse. Because of this global diversity, it is in Carrefour’s best interest to localize many of its activities where necessary. This is especially true when it comes to general management, negotiations, planning, and governmental relations. Finance and accounting may benefit more from centralization.
-
A firm as large as Carrefour benefits from keeping many of its activities in-house. However, I would recommend temporarily outsourcing certain activities as needed, while Carrefour becomes more familiar with new and diverse markets. Once Carrefour has achieved the level of knowledge necessary to understand new markets, it should take those activities and place them back into Carrefour’s operations.
- Operates in 29 countries.
- Has net sales of $46.9 billion.
- Foreign sales account for 45% of its total sales.
- Has shown a large appetite for the Asian region.
- Operates in 22 countries.
- Has net sales of $27.2 billion.
- Foreign sales account for 41% of its total sales.
- Emphasizes higher quality rather than lower prices.
- Operates in 12 countries.
- Has net sales of $39.5 billion.
- Foreign sales account for 18% of its total sales.
- Has shown a large appetite for the Asian region.
- Operates in 10 countries.
- Has net sales of $24.7 billion.
- Foreign sales account for 17% of its total sales.
- Aggressive and innovative.
- Operates in 7 countries.
- Has net sales of $40 billion.
- Foreign sales account for 16% of its total sales.
- Operates in 11 countries.
- Has net sales of $205.5 billion.
- Foreign sales account for 16% of its total sales.
- Has shown a large appetite for the Asian region.
- Foreign ownership laws in Thailand favor Wal-Mart.
- Largest shareholder of Seiyu in Japan.
- Operates in 3 countries.
- Has net sales of $17.7 billion.
- Foreign sales account for 1% of its total sales.
- A variety of locally owned stores compete with Carrefour in many countries around the world.
BUSINESS LEVEL STRATEGY
- Customers who wish to purchase all of their domestic goods in one stop, while paying low prices for quality goods. Target customers are not those who seek high levels of quality, or are willing to pay a premium based on brand names.
- NEEDS THAT PRODUCT SATISFIES
- Satisfies the need for consumers to spend less time shopping while acquiring quality goods at low prices.
- Provides low to mid-level quality products for those who are not interested in paying top dollar for high-level quality brands.
- LOW COST OR DIFFERENTIATION
- Low cost. Many of the goods carried in hypermarkets are also carried by competitors. Due to the diversity of the goods carried, it would be difficult to compete based on differentiation.
- Customers who wish to make less frequent visits to stores in order to stock up on household necessities. Depending on the region in question, housewives and mothers who do most of the grocery shopping and take on most household activities for the family.
- NEEDS THAT PRODUCT SATISFIES
- Allows customers to purchase groceries and other important non-durable goods under one roof, effectively eliminating the need to shop several different stores in order to satisfy a given household’s needs.
- LOW COST OR DIFFERENTIATION
- Low cost. Many of the household goods that are carried in one supermarket are also carried in other competing supermarkets. Although there may be a small amount of differentiation regarding the types of goods offered and the brand names carried, ultimately, price is the deciding factor in determining which store to shop.
- Customers who are interested in the highest level of savings. These customers are willing to make the trade-off between price and quantity. These customers can include businesses as well as consumers with large families. Variety is not necessarily an important factor for these customers.
- NEEDS THAT PRODUCT SATISFIES
- Allows customers to save money on items that have a long shelf life and items that are used in large quantities.
- LOW COST OR DIFFERENTIATION
- Low cost. Customers who shop hard discount stores are looking for the highest savings overall, while giving up the ability to purchase smaller quantities or the ability to select from a wide range of goods.
- Customers who live in areas with poor or underdeveloped infrastructure and have little access to personal transportation. Handicapped customers who are unable to transport themselves.
- NEEDS THAT PRODUCT SATISFIES
- Allows customers without transportation to take advantage of cost savings from large stores that otherwise would be outside their reach.
- LOW COST OR DIFFERENTIATION
- Differentiation. Providing free shuttle services only increases costs to the company. These shuttle services are not generally offered by most retailers.
- Stay-at-home mothers, fathers, and other care providers who cannot afford to leave their children at home or elsewhere while doing their shopping.
- NEEDS THAT PRODUCT SATISFIES
- Allows customers to shop without the stress associated with shopping with one’s own children. Allows customers greater flexibility in choosing when and where they can shop, given the constraints of their childcare duties.
- LOW COST OR DIFFERENTIATION
- Differentiation. Child play areas, offered as a free service, only help to increase costs to the firm. These services are intended to set Carrefour apart from its competitors in order to gain a greater market share.
- Busy professionals and people who are not mobile enough to perform shopping duties at a storefront.
- NEEDS THAT PRODUCT SATISFIES
- Allows busy professionals to order goods remotely so that they can focus more on work. Also, allows handicapped and elderly people access to a wide variety of products that may not be available in their area of mobility.
- LOW COST OR DIFFERENTIATION
- Differentiation. Like other services, home delivery only adds to the costs of operation for Carrefour. However, home delivery capabilities set Carrefour apart from competitors who do not offer similar services.
- NEEDS THAT PRODUCT SATISFIES
- Allows women and children to further their education every time they venture out to purchase goods for the household.
- LOW COST OR DIFFERENTIATION
- Differentiation. Offering a variety of classes in English, dance, cooking, and drawing, among other subjects, helps to set Carrefour apart from its competitors. It certainly does not help to lower costs for the firm.
- Customers who do not have enough disposable income to purchase durable household goods outright.
- NEEDS THAT PRODUCT SATISFIES
- Allows customers access to durable household goods, such as refrigerators, that they would otherwise have to do without.
- LOW COST OR DIFFERENTIATION
- Differentiation. Money is not free. Offering goods to customers on credit without charging interest only adds costs to the bottom line. It does serve to set Carrefour apart from competitors who are not offering similar services.
- Adventurous consumers who are looking to broaden their horizons by purchasing “exotic” goods from other countries.
- NEEDS THAT PRODUCT SATISFIES
- Gives customers a sense of cultural growth and awareness, while satisfying their need to try new things.
- LOW COST OR DIFFERENTIATION
- Differentiation. Themed corners are intended to introduce consumers to new products that they have not been exposed to before. These products are generally very specialized and are generally not carried by competitors.
CORPORATE LEVEL STRATEGY: RELATED CONSTRAINED
- Carrefour is using a related constrained corporate level strategy because their dominant business, the hypermarket, accounts for 57.6% of their overall sales. Other formats, such as supermarkets, hard discounts, and other stores all share product, technological, and distribution linkages. These other formats generate a significant amount of revenues for Carrefour and will continue to do so as Carrefour continues to expand.
- VALUE CREATING DIVERSIFICATION
- Carrefour is able to share activities such as procurement, logistics, operations, and human resources across several different formats in order to create value. Goods destined for all different formats can be housed in a shared distribution facility. Practices and knowledge associated with human resources can be shared on local and global bases across many different business units. The success of pilot departments in one format can be used to further develop other formats as well. Activities such as those described above, when shared among closely related businesses, can also help to reduce business risk.
- TRANSFERRING CORE COMPETENCIES
- Carrefour has demonstrated a unique ability to adapt its concept to local contexts across the globe. By observing the success or failure of certain initiatives in one business format, Carrefour is able to transfer the knowledge of this success or failure across all business units at little cost to the company. Carrefour is able to spread the knowledge that it contains within its human capital by employing expatriates to work side-by-side with local managers. This arrangement allows for the spread of knowledge within the company both upstream and downstream, thus creating value for the entire firm.
- Carrefour has attempted to gain market power over its competitors by manufacturing and distributing its own line of goods in home appliances and spices. By integrating this production into its existing operations, Carrefour is able to achieve cost savings in operations, by avoiding some market costs, and possibly improve the quality of its products over competitors.
- EFFICIENT INTERNAL CAPITAL MARKET ALLOCATION
- Carrefour has the best information available in the market to use in determining the most profitable and proper allocation of capital amongst its business units. Carrefour has a tremendous amount of capital at its disposal, and should only seek to borrow from creditors when absolutely necessary.
- VALUE NEUTRAL DIVERSIFICATION
- Carrefour has diversified its businesses to include hypermarkets, supermarkets, hard discounts and other formats. Although they have seen good returns in international markets, the returns in their domestic market continue to underperform the domestic markets of their competitors. Because of these low returns in the domestic market, Carrefour has reached out to international markets. They should continue to branch out into new markets and pursue new formats if the domestic market continues to underperform competitors’ domestic markets.
- UNCERTAIN FUTURE CASH FLOWS
- The future cash flows of any business can be uncertain at times. As the retail industry continues to mature, Carrefour will increasingly see a need to continue to diversify. However, many markets across the globe are just beginning to mature, and many remain untapped. Until Carrefour sees the world market reach maturity as a whole, it should not need to diversify for future cash flow reasons.
- There is a high level of synergy among Carrefour’s product offerings. By operating a variety of formats for its retail operations, it achieves synergy in its procurement and distribution channels. A Carrefour convenience store benefits from the buying power generated through the operation of Carrefour’s hypermarkets, and vice versa. However, these high levels of synergy indicate interdependence between business units which can cause Carrefour’s flexibility to deteriorate. This, in turn, increases the risk of corporate failure. Carrefour may want to inhibit the levels of synergy achieved between business units in order to maintain its flexibility. This flexibility has proven invaluable to Carrefour in expanding internationally.
- INTERNATIONAL CORPORATE LEVEL STRATEGY
- In Asian markets, Carrefour has sought to achieve both global efficiency and local responsiveness. They have had to hold costs down due to the growing number of global competitors they face, but they also have had to meet the demands of a highly diverse set of cultures, buying habits, and tastes. Its strategy of cross-training expatriates with local managers helps to increase local responsiveness. Also, many Asian business operations require more autonomy than domestic operations. So, with Carrefour, there seems to be a combination of the multidomestic and global strategies. The use of this transnational strategy may help explain Carrefour’s overwhelming success, in most cases, of opening new business operations in other countries.
- Carrefour has implemented the use of strategic alliances, at first, in entering new unfamiliar markets. Once Carrefour becomes more familiar with a market, it then rapidly expands its operations through the development of new wholly owned subsidiaries. This approach appears to balance the risk involved with greenfield ventures, with the lower returns associated with strategic alliances. Because this approach has proven successful in the past, I would recommend that Carrefour continue this approach in the future.
CONCLUSION
Carrefour has positioned itself as an international leader in the retail industry. Their strategies have proven successful for a number of reasons. First, they have been able to successfully transfer competencies to associates and managers across the globe. Also, they have been able to adapt to local cultures and consumer tastes as necessary. In some cases, they have even managed to change consumer tastes and buying habits. They have succeeded in entering new markets aggressively and gaining a large share of each market. Carrefour has even been able to restructure when legalities made it necessary.
The question remains, then, what should Carrefour do in the future. Carrefour should remain in the retail industry. It should continue those practices that have proven successful and profitable in the past. Also, Carrefour should continue to leverage its knowledge of international markets to continue its rapid expansion across the globe. Carrefour should, however, be wary of threats to its operations, and remain vigilant in exploring new ways to improve its products and services. Carrefour has come this far based on its ability to pioneer new retail concepts and should remember that this pioneering spirit is what will carry it into the future.
References
Gehlen, C., Jones, N., & Lasserre, P. (2005). Carrefour in Asia. INSEAD.
Hitt, Ireland, Hoskisson. (2008). Strategic Management: Competitiveness and Globalization (Concepts and Cases). (8th ed.) Mason, OH: Thomson Higher Education.
