Case Analysis - Carrefour S.A.

Case Description2

Problem Explanation & Solutions3

Recommendations5

Net Present Value (NPV) & Internal Rate of Return (IRR)7

References8

Case Analysis - Carrefour S.A.

Case Description

This case analysis is about the largest retailer of Europe that is Carrefour S.A. The growth of Carrefour S. A. has gone much higher outside the country France and included some large acquisitions too. Earlier Carrefour management financed the growth of the company through securities but the investment banks of the company has suggested it to look towards borrowing in terms of pounds that is British pounds so that they can take an advantage of the borrowing opportunity in pound sterling. They are global retailers and are working towards enabling numerous people to purchase their goods along with promoting fair trade and sustainable growth (Schill, 2005).

They started their retail food store in the year 1960 with a single market in France only. Their main idea was to open a retail food outlet where the consumer can find anything they want that is convenient and affordable for them. The consumers in France; accepted willingly the discounted service Carrefour was offering them while shopping. Later in the year 1963, Carrefour expanded its products by launching non food items in their retail stores (download.convertigo.com).

It has been seen that Carrefour has maintained its growth percentage at 50 % per year and has become a giant market famously known as hyper market in the expansion of its consumer goods and assets not only in France but internationally. Talking about the year 1971, Carrefour has built almost 16 hypermarket outlets, out of which five of them are operating as joint ventures and having franchise agreements with seven further stores. They have always followed a low cost strategy while buying lands in cheap areas then in the central town.

The main purpose for conducting this analysis is to highlight and bring forward the effort of how Carrefour financed its growth in the previous years. This will be done by analyzing the company's balance sheet and profit and loss statement. As a source of cash, trade notes were used by the company widely. Apart from this other sources of funds includes; short term liabilities, accounts payable and shareholder's equity. They have acquired more land in the last four years and also many other fixed and current assets. Carrefour had a decentralized management which gave the managers extensive power and strength in term of making a decision and having freedom. This resulted in faster profits for the company. They also had a good empowerment system which gave higher operating expenses but Carrefour's preference was to hire an experienced manager for their store and offering them good salary so that they stay motivated and generate good revenues for the company and the business by maintaining an efficient process at the outlet (Schill, 2005).

Problem Explanation & Solutions

It is observed that the company maintained a net working capital that is negative and is a risky approach that the company is ...