Carrefour-Which Way To Go?
An Assignment
In
MANAGEMENT PROCESS
BBA
Submitted by
Group- VII
1. Aldin Mullakkara R-20-02
[Link] Fernandes R-20-10
[Link] Furtado R-20-13
[Link] Ghelot R-20-24
[Link] Rodrigues R-20-26
[Link] Andrade R-20-27
Department of BBA
Rosary College of Commerce & Arts
2020-2021
1. How should Mr. Durant assess the opportunities in
various countries around the world?
THE COMPANY SHOULD ASSESS THE MARKET .
The company should make detailed and objective evaluation of the potential
of the business. They should make a comprehensive analysis of environment
forces, market trends, entry barriers, competition, risks, opportunities and
the company's resources and constraints.
THE COMPANY SHOULD UNDERSTAND DIFFERENT
CULTURES IN VARIOUS COUNTRIES
The company should assess the cultural factors affecting business including
belief systems and practices, customs, traditions and behaviors of all people
in given country, fashion trends and market activities influencing actions and
decisions and take advantage of this to further improve customer
satisfaction.
IDENTIFY THE PRODUCTS DEMAND.
The company should identify the number of people seeking their product,
how much they're willing to pay for it, and how much of the product is
available to consumers, both from your company and your competitors
perspective.
POSITIONING THE RETAIL OUTLETS.
The retail outlets should be positioned in locations with high customer
traffic. They should seek areas with less competition. The retail outlets
should be visible and it should be compatible with it's surroundings. It is also
important to plan consumer conveniences like enough parking space for
customers and easy movement of pedestrians to the store while keeping in
mind the safety of the customers.
2. Identify the strengths, weaknesses, opportunities and
threats of Carrefour.
STRENGHTS:
Distribution and Reach- Carrefour has a large number of outlets in almost
every state, supported by a strong distribution network that makes sure that
its products are available easily to a large number of customers in a timely
manner.
Cost Structure- Carrefour’s low cost structure helps it produce at a low cost
and sell its products at a low price, making it affordable for its customers.
WEAKNESS:
Problems competing with competitors –Carrefour has problems competing
with their competitors like Wal-Mart and Tesco as they do not have a proper
plan to counter their competition to gain a higher market demand.
Lost image –The company made a mistake in it’s pricing policy which
started with the merger with Promodès and lost it's low cost image.
OPPORTUNITIES:
Recruiting more skilled workers - Skilled workers have the skills and
expertise to deliver a job well done and keep your customers satisfied
recruiting skilled workers helps in saving your business money. Improves
profitability and promotes stronger Growth.
Trying small stores - Trying small stores helps the company reach their
products to a variety of consumer groups. One line of goods can be sold in
specialty stores and smaller stores can be easily spread out in evenly in a city
to improve the reach of their products.
THREATS:
Competition from English firms – Carrefour faces tough competition from
big English firms like Wal-mart and Tesco. There was a speculation of
takeover by these companies. Carrefour had plans to expand it’s market to
India but found in late 2006 that Wal-Mart will do so as well.
Competition from discounters – Carrefour faces competition from Aldi
and Lidle, two successful discounters. These are large firms that sell their
goods or services at less than the usual price. They are a threat to Carrefour
as they these firms sell at a lower price which attracts more customers.
3. Should Carrefour adopt Wal-Mart's strategy of "low
prices everyday"? What should be the advantage or
disadvantage of such a strategy?
-No Carrefour should not follow Wal-Mart blindly.
ADVANTAGES
Direct Sourcing:
Instead of buying from middlemen, Carrefour could sources products
directly from the manufacturers. This can also help Carrefour eliminate
unnecessary costs and since it buys in bulk, it can press them to cut down
costs.
High Sales Volume:
Keeping prices low also means thinner profit margins. So, what makes up
for the lost margin? The sheer high sales volume could help overcome all the
other weaknesses. The sales volume could get so high that even at lower
margins, the company’s profit level would be significantly high. The same
would not be possible if Walmart chased higher profit margins.
Demand forecasting
Low prices everyday could help Carrefour reduce demand fluctuations that
would normally occur during sales promotions. Demand
Forecasting becomes much easier.
Marketing costs
Advertising is less expensive as stores do not need to individually promote
each sale item and advertise sale events. For example, it was noted that in
1994, Since Wal-Mart used the "Low prices everyday" strategy, they would
only need to purchase advertisements in a newspaper on a monthly basis
while competitors would advertise every week of the year.
Staffing efforts
Stores save the time and effort in having to individually mark down items
during sale events.
It will gain some limited gain in the market entry.
It will increase the sales of the firm which will result in high revenue
It will build up the reputation of the company by attracting large number of
customers.
DISADVANTAGES
Carrefour may not be able to match the supply chain strength of wal-mart.
Reduced Profit Margins
If you cannot get low-enough prices from vendors, you may have to sell
products at a price that does not leave you enough profit. You have to
constantly monitor the volume of sales of greatly reduced products to see if
you are getting your original investment back on those products.
Perception of Poor Quality
Once you establish a reputation for having everyday low prices, you may
find that customers suspect the quality of your products. You may find it
difficult to introduce higher-priced and higher-quality lines of products,
because customers who want higher quality may not believe you can offer
exceptional goods.
Inability to Have Sales
Once you advertise everyday low prices, you cannot put products on sale.
You claim that you already offer the lowest prices, so offering a discount
during a sale would indicate that your prices are higher than they need to
be the rest of the time. This can present problems if you want to move
items that do not sell well. Though you may be willing to sell products
below cost to clear out inventory, your customers may mistakenly think
that you have room to lower prices on other items.
Even though there are quite a few advantages, Carrefour should not adopt
Wal-Mart "Low prices everyday" strategy and develop their own
personalised strategy which would suit their business best.
4. How could Carrefour differentiate itself from Wal-
Mart?
Carrefour could differentiate itself from Wal-Mart By selling products or
services of good or high quality as compared to Wal-Mart
Secondly they could also sell or offer products according to the need of the
customer keeping in mind or having a moderate to high price range, unlike
Wal-Mart which would sell products of affordable and low price range.
5. Identify cultures in selected countries that need to be
considered in order to be successful?
JAPAN
Japan is widely known for its traditional arts as well as its contemporary
pop culture. -one must understand the buying behaviors and decision
making of the individuals.
For Carrefour to become a global firm, ideally the company should be
taking gains of R&D, production, marketing, and financial advantages in
its cost and reputation that are not available purely to domestic
competitors.
As the 3rd largest economy in the world, Japan represents a strategic
interest for EU companies. The country has the second highest spending
worldwide on R&D, and its companies remain amongst the most
valuable and technologically advanced in the world along with
However, targeting Japan may be challenging. Not only do you need to
know about the basic business etiquette. You will also have to be
acquainted with Japanese communication and presentation styles. In this
sense, distances between Europe and Japan can appear to be actual in
terms of management thinking, consumer behaviour, and of business
cultures generally. Using the Japanese business culture, its basic values
and thinking patterns can help Carrefour stand out from the crowd and
get noticed in Japan.
Japan raises capital, obtains material and components and manufactures
and markets its good wherever it can do the best job to access
opportunities around the world.
As a form of the Japanese culture they make pleasant business partners
as they favor sending seasonal greeting cards and keeping
correspondence over time to maintain these relationships. However,
their focus on long-term loyalty and trust can forfeit short-term
immediate profit which often frustrates Westerners.
CHINA
China has one of the most collectivist cultures in the world. However,
economic growth and increased financial independence is giving rise to
more individualistic attitudes.
If Carrefour wants to develop a successful business in China, they
should be aware that the Chinese are often risk averse. Strict procedures
exist for the decision-making process. Decisions are made by all the
relevant people after several meetings and subordinates are not expected
to express their opinion. Decision-makers will consider problems,
alternatives and solutions on a long-term social perspective, as a result
of which the process may be perceived as slow-moving this process in
turn helps their business become more organised and well planned
which can be a sign of success.
Chinese people often seek long-term relationships and create relations
rather than negotiate contracts. Negligence to cultivate a personal basis
of a business relationship might provoke a failure to meet business
objectives. It includes formal meetings as well as home visits, invitations
to sport events, long dinners and drinks.
In China, the most effective way to develop your relationship is to
include an intermediary in the process. Your business associate must be
a trusted business associate of your potential partner. The intermediary
will help you to be accepted quicker obtaining proper information and
avoiding a misstep on local customs can help Carrefour go a long way.
