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Strategic Management

Extracts from this document...

Introduction

Topic: Task A: Using appropriate analytical tools analyse your chosen country's business environment and explain how any recent changes in this environment have impacted upon the supermarket industry in your chosen country. Task B: Using appropriate analytical tools, explain how your chosen company has responded to any recent changes in its business environment. Evaluate the extent to which your chosen company's response(s) to environmental change have been effective and placed your company in a position for future success. Introduction: This essay aims to initially introduce the reader to the French international hypermarket retailer Carrefour and explain the creation and effects of the global market crisis. This will be achieved by critically evaluating relevant literature, articles and graphs and by explaining the sub-prime crisis' effect on the Greek economy. To achieve this, an appropriate strategic analysis of the Greek business environment will be performed through a Market and P.E.S.T.L.E. analysis. In addition, we will also evaluate the company's strategic capabilities and resources for competitive advantage through various strategic tools, such as Porter's 5 Forces, S.W.O.T. analysis, Porter's Value Chain, as well as Bowman's Strategic Clock analysis. Carrefour is an international company and, among other things, a hypermarket-, supermarket- and convenience store-retailer, with its main headquarters based in France, and with main activities such as retail distribution of household products and provisions. It is also one of the few retailers (including Tesco and WalMart) that have been able to sustain its global network of outlets successfully. Figure 1 below illustrates the countries where Carrefour Group is operating in the supermarket industry. Figure 1: Carrefour Market Segments Directly owned Under franchise (www.wikipedia.org, 2008, online) According to the company's latest annual report (2007) and Figure 1, the firm operates in more than 30 countries under the names of Carrefour, Champion, Dia, and Reflets De France. As we can see from the figure above Carrefour Group operates in most of the South American market, North Africa, Spain, France, Germany, the Balkans, as well as most of the south east and north east of the Asian market. ...read more.

Middle

- Competitor balance - Highly competitive market - Industry growth rates - Differentiation Threat of entry: According to Johnson et al (2006), the threat of entry from a new competitor depends highly upon trade barriers, high tariffs, capital requirement of entry and access to supply and distribution channels. Due to the competitiveness of the market and the resent catastrophes of the environment, capital requirements are really high and expensive. Also since the market is dominated by large firms with imported as well as domestic products and a similar range of services, product or service differentiation could prove really difficult and costly. Threat of substitutes: Due to the economic fluctuations described in Task A, it is reasonable to assume that consumers will base their purchasing needs on price rather than quality. This means that some customers might prefer to buy own branded products from one of the firm's competitors (such as Alfa-Beta Vassilopoulos branded products) since they are cheaper and usually local as well. Another disadvantage that the company faces against its main competitor, Sklavenitis, is that it does not offer delivery services. On the other hand, what separates Carrefour from the other supermarket/hypermarket retailers is the vast variety and range of products. The company supplies its customers with everyday groceries, school and office-related products, fitness accessories, clothing lines, kitchen supplies, furniture as well as home entertainment and music equipment. Buyer Power and Supplier Power: According to Johnson et al (2006) these two forces could be considered as one since they are almost solely responsible for limiting a company's strategic freedom and value network. There can be no certain amount of reasons to explain how customers choose between the 10 main retailers without going through analytical consumer behaviour research on the Greek market. On the other hand, from the information gathered we could argue that mainly customers are driven by the location of the store, prices, quality and special offers available by different retailers. ...read more.

Conclusion

"No Frills" Low price/low product benefit Price-sensitive Carrefour Value 2. Low Price Lower price than competitors for similar products Average customers Carrefour own-brand products 3. Differentiation Increase in own-brand products by 20% thus providing more benefits Majority of customers Improved Own-brand products accompanied with reasonable price 4. Hybrid Products with both higher quality and lower price than those provided by competitors Loyal customers Quality products combined with special discounts through its club card 5. Focused Differentiation Since most of the retailer's products are imported they have a justified higher price Customers preferring high quality products International high quality brands and labels 6. Increased price/standard value Usually in Carrefour Express stores Average customer N/A 7. Increased price/low value N/A N/A N/A 8. Low value/ standard price N/A N/A N/A As we can see Carrefour has been operating under a customer oriented strategy in each sector. In order to reach expectations in each segment the company tries to combine low or reasonable prices, with certain benefits such as discounts through its club card. The company also bases its services around the customer's needs and the environment surrounding as well as the quality of its products. Conclusion: As we can see, Carrefour is a successful international company operating in a highly competitive and highly complex market. The multiple influences that affected the Greek and global market place due to the credit crunch, as well as Greece's complex business environment, and the increasing competition from hard discount retailers are only some the reasons for such complexity. We also evaluated the firm's performance as well as strategic capabilities and sources for gaining competitive advantage. The company has been successful for many years in the Greek market since it has been able to understand and respect the country's culture, business environment as well as consumer behaviour. On the other hand, the company has been facing some difficulties since its recent change in management. Nonetheless, through an effective value chain, strategic planning through Bowman's clock and combining it with its international experience the company is sure to reclaim its ground in the near future. ...read more.

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