CASE STUDY: CARREFOUR

Case Study: Carrefour

Case Study: Carrefour

Answer 1

Carrefour; a French retail giant, is known to be the world's second largest retailer on the basis of its revenues and over 14,000 stores worldwide. However in Europe, it is considered as the largest retailer excluding Italy where it is considered as the second largest. Carrefour has shut down its retailing outlets in some of the Eastern Europe countries so that it can focus more on expansion in developed as well as emerging economies, mainly on the growing economies pertaining to Asia. This decision of international expansion was reached in an era when transportation systems have substantially improved and are further improving, which is an important factor behind the drive for the large retailers to expand abroad. This strategy is developed to effectively cope with the saturated markets in economies where Carrefour is operating.

It is in response to this international expansion of their strategic plan that they moved to open three hypermarkets in North America. Carrefour opened three stores in United States in the state of Pennsylvania but it had to subsequently close it in response to the local competition. And it is in response to their expansion plan, that in 1990's, Carrefour became the first ever Western hypermarket to expand in Asia and subsequently in 2001, it achieved the status of third largest retailer in China. This shows that although Carrefour entered successfully in Asia registering substantial returns, it failed to do so and gain significant market share in North America subsequently opting to terminate its operations. This is largely due to the local competition that Carrefour failed to effectively tackle.

The loophole exists in the fact that retailers are not aligning themselves to the trends and nature of the retailing industry. Retail industry is not excessively global unlike other industries; it denotes international business nature which is not necessarily the central factor behind globalization. Retailers are surely expanding beyond their home country but not beyond their home region, at least not at once. This is where Carrefour went wrong. International business differs greatly from globalization; globalization is most likely to cover all the regions whereas international business does not. Out of the 49 Retail multinational enterprises (MNEs), only one is global and two are bi-regional. Other comprise of domestic and regional.

Carrefour designed their strategy in relation to globalization when they needed to formulate their strategy in strategy involving the regional solution. Carrefour skipped the important step in expanding through to the North American markets. It is operating in around 36 countries and it was reported by Deloitte's Global Powers of Retailing as among the four retailers that saw declining sales in the year 2009, despite of it occupying number one slot in Europe and operating in 36 countries.

Wal-Mart is the largest and leading retailer in the retailing industry and across the world, originating from the US. Thus it is the local retailer of the US and North America and for Carrefour to compete with the North American retailers effectively, ...