Case Analysis of Carrefour free essay sample

Carrefour means â€Å"crossroad† in French, the implication of Carrefour is that people could find Carrefour stores very easily and conveniently. Carrefour logo with its blue, red and white colors has a very significant meaning behind it. It is a continuous commitment to their customers. The logo is coming from C of Carrefour and an arrow on both sides, representing customers coming from all directions and meeting at Carrefour. Carrefour is established in France in 1959 by two entrepreneurs, one is the local retailer, Louis Defforey, and the other is the supermarket’s owner Mareel Fournier. The Group has formulated a policy based upon convenience, trust, low price and quality products and services. In the following paragraphs, I assumed that the development of Carrefour could divide into five periods: a. Beginning and Establishing (1959-1963) – Defforey was the owner of Badin-Defforey (retail business). Fournier was the owner of the department store. One day, they decided to collaborate to create a concept of hypermarket in order to expand its business scale. We will write a custom essay sample on Case Analysis of Carrefour or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Carrefour was the first hypermarket that established in France soon after five years. b. Growth (1963-1976) – Due to the collaboration, Carrefour rapidly developed from Convenience Stores, Supermarket, into Hypermarket in five years. The most important factor is that Carrefour decided using decentralization strategy for each branch in order to governance closer to local citizen. c. Own Branding amp; Manufacturing (1976-1991) – Within these periods, Carrefour had a new innovative ideology to develop a concept of private branding. Carrefour buys from manufacturers and named those products themselves. The strategy made pricing more flexible. It brought great revenue for Carrefour. Therefore, in 1985, Carrefour developed their first Own Branding amp; Manufacturing, Harmonie and the innovative ideologies maintain the No. position for them in France. d. Expansion by Acquisition (1991 – continued) – Since 1991, Carrefour did a great job on expanding their hypermarket. Especially, Carrefour acquired Promodes, this decision catapulted Carrefour into the No. 1 position in Europe and also be the second largest retailer in the world. e. Globalization (2000 – continued) – Within these period s, Carrefour continued expanding their hypermarket to all over the world, Brazil, Argentina, the United States, Mexico, Taiwan, Thailand, China and so on. Over the past 50 years, through organization’s culture, strategy, innovative ideology, Carrefour showed that they can stand out in the world is not a coincidence. Contingent Factors: Most of people have a thought about â€Å"France merchandises are always expensive. † At that time, Carrefour did exactly the opposite way; it decided to sell household items in low-end price as their main type of operation. The innovative idea of hypermarket was specific which sell various goods including food, clothing, consumer goods and household appliances. This development impressed the whole France’s retailer industry; however, no one expected that hypermarket became a rapid success, revolutionizing the retail industry in France soon after development. The small and medium-sized retailers were encountered an unprecedented shock from hypermarket. Therefore, French government developed several laws to increase the restriction on operating hypermarket in order to protect traditional retailer. As a result, Carrefour decided to go global as they could sense saturation in the French market. Strategy is something like, an innovative new product; globalization, taking your products around the world; be the low-cost producer. (Jack Welch) In 1969, Carrefour started its first global venture by opening a hypermarket in Belgium. Until now, Carrefour has been operating over 9000 stores in more than 30 countries. The result presented that Carrefour has strong experiences and capabilities in operating on a global level as a high degree of profits are internationally generated. Carrefour’s globalization strategies are joint-venture, alliance, and acquisition. Those strategies allow Carrefour had benefit to enter new areas with related local enterprises. Thus Carrefour could gain new capacity from other and also avoid some entry problems. For example, in China, the government only approved foreign enterprises to open stores by joint-venture. Additionally, Carrefour can use existing channel from local enterprise to reduce expansion time. (Lhermie, C. , 2001) For retailer, price is the most important factor for retailer to succeed. The only way to have better price is through purchasing in a big volume to lower the prices. Therefore, in 1999, Carrefour acquired its competitor in France â€Å"Promodes,† who is also one of the world’s largest operators of retailer industry. Its business territory is not only in France but also in Spain, Italy, Brazil, etc. Carrefour assumed that acquisition is necessary strategy to do. Through acquisition strategy, Carrefour became the second biggest retailer in the world. Carrefour’s philosophy for international market is using decentralization. When Carrefour gets into a new market, it focused on the integration of local culture and environment. In order to increase adapting speed, Carrefour only sends one senior management to the locality and implemented decentralization strategy to give managers have power to make decisions which means the store managers had full operating freedom. It allowed each store has ability to adapt local culture and respond problems as soon as possible. Once Carrefour figured out the way to manage in that country, they retracted decentralization strategy and changed back to centralization strategy as they did in France. However, the decentralization strategy was recognized as a key success factor for Carrefour. In addition, Carrefour employed a large number of local staff to achieve their other strategy â€Å"localization†. Local staffs have better idea of what kind of food locals liked and what kind of tools locals preferred. They also have common sense about how to order different merchandise due to the need of local traditional festival. For example, Chinese needs moon cake for moon festival. (Mingshin University,2009). Carrefour has their own standard operation procedure for siting their hypermarket. They preferred to operate in city where market development potential and urbanization trend are highly evaluated. However, over recent year, retailer industry was saturated in city. Carrefour changed their siting standard gradually; they preferred to operate at suburban areas due to the cheap rent cost. Therefore, Carrefour would be able to build hypermarket bigger than before which means it allowed Carrefour provide diverse range of products to their customers. Also, Carrefour achieved their idealism â€Å"consumers needed could be found under one roof, displayed on self-service shelves that allowed customers to compare products and prices. † After rapidly expansion, Carrefour found out that they wasted too much time and human resource on coping complex information with their bunch of suppliers. Therefore, Carrefour decided to enhance their information system in order to solve the problems. Based on the area of Taiwan, Carrefour involved several information systems as following: * Point of Sale System (POS): POS system helps Carrefour to know exactly how many items have been sold and how many are needed in the store in view of supplying efficiently and effectively the store without any delay in the systems. Also, these databases could be useful for analysis on consumer preference and so on. * Vender Management Inventory (VMI) – VMI is one of the most widely discussed partnering initiatives for improving supply chain efficiency. ( ,2003) After Carrefour used the system with their main supplier â€Å"Nestle†, the modifying order rate is decrease from 60% to less than 10% and also decrease the days of inventory down to the average, 25 days. (Mingshin University,2009). The issue of cost is the most important part for retailer. Due to the highly competitive environment for retailer industry, low-cost strategy is the principal manner to get customers’ attention. In the following, I would like to present why Carrefour could keep their sale prices lower than other retailer: * Global Purchasing system – Each store would purchase centrally through Carrefour’s central purchasing only when the advantages of mass purchasing outweighed the advantages of local buying. Those suppliers would also like to offer the lower price to Carrefour in order to be Carrefour’s supplier. Purchasing Locally – Carrefour preferred to purchase some part of products from local. Due to the consumer preference, customers would like to use the product they like and it could be sustainable for long time. Therefore, it seems purchasing locally had better vision than import. In addition, Carrefour would save a bunch of traffic expense. * Own Branding amp; Manufacturing – Carrefour buys from a manufacturer and puts its own name on the product. The strategy made pricing more flexible. Therefore, Carrefour could make the sale price of their own branding manufacturing 10% 25% lower than other brand. It brought great revenue for Carrefour. Social Responsibility: Carrefour is passionate about its business naturally becomes involved in the life of the local community. Therefore, Carrefour is devoted to areas of environmental protection and social participation in the fulfillment of its corporate social responsibility. In 1963, Carrefour was the first banner to open a hypermarket in France. (Carrefour. com) Based upon the event in Taiwan, Carrefour founded the â€Å"Carrefour Cultural and Educational Foundation† in 1996. In modern society, most of people are apathy to everything, they only care about themselves. In order to change the phenomenon, Carrefour tries to let people united and to do something for society. That is the spirit of service constantly upheld by the Cultural and Educational Foundation. In addition, the Foundation want to spread the feeling of â€Å"living art; artistic living† to people. Therefore, they sponsored to promote Chinese traditional culture such as Taiwanese Opera, art exhibition by Chinese writing brush, etc. Carrefour hoped that they could be a driving force for cultural advances. They also believed that sweet rewards may be reaped through their hard work and Taiwan’s culture will always move forward and progress with the times. Global warming and climate change are become the most serious issue in the world. In response to the environmental protection and the electricity saving, Carrefour set itself a plan of reducing the CO2 emissions generated by stores in its four main European countries by 40% by 2020(PDF). So far, Carrefour’s plan have resulted in electricity savings of 18. 2% compared to 2004. In Thailand, Carrefour decided to switch off light in every store during purposed period, partly turning off non-essential lights, changing electric appliance into energy fluorescent. Dioxins is a highly toxic and can damage the immune system. In order to protect the earth, Carrefour has made waste reduction and the optimization of recycling of part of its key environmental objectives. Carrefour decided to stop offering free disposable plastic bags in every store. In addition, Carrefour has also raised its customers’ awareness of the importance of sorting and recycling. Carrefour has launched a project named â€Å"Carrefour ECOplanet. Carrefour offers more than 5,300 organic farming products in its hypermarkets in France, with 1,000 of them bearing the Carrefour Bio brand. Among these products, there has nearly 180 food and non-food products are all designed for minimizing the impacts on the environment. All of these products are evidenced by Carrefour’s commitment. Furthermore, Carrefour also set itself a highly ambitious target of zero deforestation by 2020 and it will be a tough decision to achieve. Through these actions, Carrefour completes its mission to offer a better quality of life, every day to those most in need gradually. Culture: A. Company missions * Carrefour is quite picky about the quality of the merchandise in order to provide the best products and offers to satisfy its customers. * Customers needed can always find and at low price in Carrefour. * Carrefour would benefit its partnership; within its several advantages such as OBM products, professional marketing experience, bargaining power. B. Employees * Carrefour assumed that employees are the most important asset for company and believed that employees are an integral part and are needed if company is going to succeed. As a result, Carrefour had employee training and development event in order to enhance employees’ ability. C. Globalization * Carrefour focus on global overall arrangement in order to expand its distribution channel then Carrefour would utilize purchasing in a big volume to lower its sale prices. D. Values (Carrefour. com) * Carrefour is committed. Committed professionals and committed members of the community. We constantly to exceed everyone’s expectations by providing better value and finding new solutions for a better quality of life. * Carrefour is caring. Caring towards its customers. Carrefour is receptive to their needs, each and every day. Welcome them to Carrefour and meet their needs with kindness, warmth and attention to detail. * Carrefour is positive. Carrefour rise to every challenge with energy, enthusiasm, and with fresh ideas. Carrefour help brighten the lives of its customers and its consumers. For them, for its employees, Carrefour wants the best, both today and tomorrow. Generally speaking, Carrefour’s culture is that they would like to do their best effort to satisfy customers. They provide diversity of products and those high quality products are always with low price. Carrefour also treat their employees well, they provide training opportunity for employees. Because they believe employees are the most important asset for company. Ethics amp; Corporate Governance: Carrefour’s responsible commitment is the principle strategy and it relies on two lines: the respect of Human Rights throughout its supply chain and the ethical conduct in its operations. Carrefour helps employees to develop skills at all levels and in all company business. The training plan will support Carrefour become a strong company through their employees, management and highly professional teams. All in all, this document for human rights part stated that Carrefour would like to offer job, training and career opportunities for all segments of population such as young people, seniors, men, women, graduates, the self-taught and those with disabilities. For ethic of business conduct exemplary behavior part, Carrefour wanted each supplier could respect of the Group’s commitments.