1. Concepts:
Store Format: this term refers to the communication design within a store and includes Size, shape, layout, typography, and arrangement of information given or sought in an ad, document or, form, whether prepared for display, printing, or storage. (Business Dictionary, 2010). store format is especially important for retailers and the 5th most important are: supermarket, hypermarket, convenience store, high discount stores and cash-and-carry stores.
Store Format: this term refers to the communication design within a store and includes Size, shape, layout, typography, and arrangement of information given or sought in an ad, document or, form, whether prepared for display, printing, or storage. (Business Dictionary, 2010). store format is especially important for retailers and the 5th most important are: supermarket, hypermarket, convenience store, high discount stores and cash-and-carry stores.
G4 strategy: in carrefour's strategy, G4 refers to geographical priorities for growth of the group. The G4 is made up of France, as home market; Italy; Spain and Belgium, as the closest and most mature markets (Carrefour, March, 2009). In this case, ease and Compatibility of operations are critical in internationalization of markets.
2. Question.
What are the most important factors in Carrefour`s strategy?
Carrefour is a french company that, because of its internationalization's strategy, is now the second largest retailer in the world (following Wal-Mart) and the largest in Europe. But, Why does Carrefour choose one or another country? Why is Carrefour format succesful around the world? I'm going to try to resolve these questions.
Carrefour expressed, in its official website that "The Carrefour group has an only ambition: making Carrefour the preferred retailer wherever it operates" and this ambition is support in three strategies: "Client-oriented culture, transformation and innovation" (Carrefour, 2009). However, these global strategies aren't enough in international operations, then, The group defined other important aspects for operating in global markets.
According to Daniels (2004) there are some key factors for evaluation and selection of a country for international operations: Market size, ease and compatibility of operations, Cost and resources availability and economic, politic, monetary and financial risk. Analysis of these factors enables companies to have a perspective of the country and consequently, companies may choose the way of entry in that market. In Carrefour's case, ease and compatibility of operations, especially geographical proximity, was the main point in international expansion: Choice of Belgium, Italy and Spain (with France are G4) as the first markets to entry and the importance of these countries today, becuase of the number of stores, workforce and sales; are clear examples of this. For example, in 2007 Carrefour Spain has 161 Hypermarkets, 87 Supermarkets, 3 Convenience Stores and 2,912 Hard Discount stores where there were 72,282 employees and sales by 14,749 million euros (Carrefour, 2008).
Carrefour expressed, in its official website that "The Carrefour group has an only ambition: making Carrefour the preferred retailer wherever it operates" and this ambition is support in three strategies: "Client-oriented culture, transformation and innovation" (Carrefour, 2009). However, these global strategies aren't enough in international operations, then, The group defined other important aspects for operating in global markets.
According to Daniels (2004) there are some key factors for evaluation and selection of a country for international operations: Market size, ease and compatibility of operations, Cost and resources availability and economic, politic, monetary and financial risk. Analysis of these factors enables companies to have a perspective of the country and consequently, companies may choose the way of entry in that market. In Carrefour's case, ease and compatibility of operations, especially geographical proximity, was the main point in international expansion: Choice of Belgium, Italy and Spain (with France are G4) as the first markets to entry and the importance of these countries today, becuase of the number of stores, workforce and sales; are clear examples of this. For example, in 2007 Carrefour Spain has 161 Hypermarkets, 87 Supermarkets, 3 Convenience Stores and 2,912 Hard Discount stores where there were 72,282 employees and sales by 14,749 million euros (Carrefour, 2008).
However, Carrefour is not concentrated only in these countries. Instead Carrefour is present in many other countries, especially in Europe, South America and China that is the most important growth market. But operations in markets where differences in culture and tastes are very high is more complicated than in closer markets. For this reason, "another factor influencing Carrefour's choice of country has been the ability to find a viable partner familiar with local operating needs its own management learned local operations sufficiently" (Daniels,2004: p. 414). As Jean-Luc Chéreau, CEO of Carrefour China, mentioned in a interview "Legal considerations are not the primary reason we have local partners. We felt that to enter so difficult and complex market- a huge market- we would need a local partner to understand market and move faster" (Child, 2006). this is a very important aspect because it means the opportunity of a more sucessfull acces into local markets and gives Carrefour more trust in operations.
Previous item introduces us in the third key factor in international operations of Carrefour that is "Adaptation". This is, The company tries to develop its business in way of the culture, traditions and tastes of each country or region. About it, Nardon and Steers (2006) said that it is very different to Wal-Mart (the leader retailer) because it uses a standard format worldwide, while Carrefour changes its formats according to local tastes.
However, this doesn't mean that one strategy is better than other: Both Carrefour and Wal-Mart are very sucessfull companies and each one has achieved a competitive advantage based in low prices and differentiation. Maybe what is important in a culture, for others it's irrelevant and a company as Carrefour requires a great understanding of cultural variations in order to analyze the cultural risk according to management style and company's expectations.
Finally, adaptation is important because it allows the company to make appropiate decisions about "Store format", the fourth key strategy. Currently, Main Carrefour's formats are: Hypermarkets, supermarkets and convenience stores, besides they have hard discount and cash-and-carry stores. Store format changes from a country to another following consumers' preferences. So, in Colombia Carrefour operates only with Hypermarket format and recently, it opened a cash-and carry store in Bogota with "Atacadao" Brand (Carrefour,march 15, 2010); because the most important competititors have hypermarket formats, but in other countries around the world, convenience stores are increasingly important, especially in big cities: for example, Carrefour had 3165 convenience stores in France and 11 stores in Madrid downtown (carrefour, 2010).
3. Point of view.
I think that Retailer business are a very competitive sector, where differentation in services should be a factor of competitive advantages and uniqueness. So, strategies for selection of a country is a key factor for reaching market share in global commerce.
Previous item introduces us in the third key factor in international operations of Carrefour that is "Adaptation". This is, The company tries to develop its business in way of the culture, traditions and tastes of each country or region. About it, Nardon and Steers (2006) said that it is very different to Wal-Mart (the leader retailer) because it uses a standard format worldwide, while Carrefour changes its formats according to local tastes.
However, this doesn't mean that one strategy is better than other: Both Carrefour and Wal-Mart are very sucessfull companies and each one has achieved a competitive advantage based in low prices and differentiation. Maybe what is important in a culture, for others it's irrelevant and a company as Carrefour requires a great understanding of cultural variations in order to analyze the cultural risk according to management style and company's expectations.
Finally, adaptation is important because it allows the company to make appropiate decisions about "Store format", the fourth key strategy. Currently, Main Carrefour's formats are: Hypermarkets, supermarkets and convenience stores, besides they have hard discount and cash-and-carry stores. Store format changes from a country to another following consumers' preferences. So, in Colombia Carrefour operates only with Hypermarket format and recently, it opened a cash-and carry store in Bogota with "Atacadao" Brand (Carrefour,march 15, 2010); because the most important competititors have hypermarket formats, but in other countries around the world, convenience stores are increasingly important, especially in big cities: for example, Carrefour had 3165 convenience stores in France and 11 stores in Madrid downtown (carrefour, 2010).
3. Point of view.
I think that Retailer business are a very competitive sector, where differentation in services should be a factor of competitive advantages and uniqueness. So, strategies for selection of a country is a key factor for reaching market share in global commerce.
Carrefour has demostrated its sucess in global markets but, as Daniels said in his book "International Business: environments and operations " some changes in its location strategy has influenced Carrefour failures in some markets such as United States and United Kingdom, that are considered two of the most important markets around the world because of their population and economic performance. in my opinion, these failures are the result of a wrong analysis of the market opportunities in an industry, in others words, this is lack of analysis of "5 forces of Porter", because of the market share of retailers, such as Wal-mart in Us and Tesco in UK, and the tastes of people in these countries.
So, i think that market research and focus in strategy are the most important aspects to achieve "adaptation to other countries". Then, if Carrefour seeks to adapt to each market, it must focus in cultural analysis and opportunities and consequently it must to use experience and learning as a tool for sucess.
BIBLIOGRAPHY
Business dictionary (2010). [Online]Available at:
http://www.businessdictionary.com/definition/format.html
Carrefour (2009). Our strategy.[online]. Available at: http://www.carrefour.com/cdc/group/our-strategy/
________ (2010). Our stores. [Online]. available at: http://www.carrefour.com/cdc/group/our-business/our-stores/
_________ (2008). Travel diaries-Spain. [Online]. Available at: http://www.carrefour.com/cdc/group/our-business/travel-diaries/
_________ ( march, 2010). lastest store openings. [Online]. Available at: http://www.carrefour.com/cdc/group/our-business/latest-store-openings/
Child, PN. (2006). Lesson from a global retailer: an interview with the president of Carrefour China. Mckinsey Quaterly. [Online]. Available at: http://zonecours.hec.ca/documents/H2008-P5-1549360.CarrefourChina.pdf
Daniel, JD.(2010).International Business: Environments and operations. Pearson, pag. 704.
Nardon L and Steerts, RM (2006) Managing in the global economy. [Online]. Available at: http://books.google.com/books?id=yRdAcjO7uRsC&pg=PA203&dq=carrefour+strategy&hl=en&ei=tIx6TLTWAoK0lQf52MSvCg&sa=X&oi=book_result&ct=result&resnum=1&ved=0CCUQ6AEwAA#v=onepage&q=carrefour%20strategy&f=false
images:
Carrefour trademark. Getty images (2010). Online: available at: http://www.gettyimages.com/detail/103629348/Bloomberg
Malaysian shopers leave the french supe. Getty images (2010). Online. Available at: http://www.gettyimages.com/detail/102707175/AFP
So, i think that market research and focus in strategy are the most important aspects to achieve "adaptation to other countries". Then, if Carrefour seeks to adapt to each market, it must focus in cultural analysis and opportunities and consequently it must to use experience and learning as a tool for sucess.
BIBLIOGRAPHY
Business dictionary (2010). [Online]Available at:
http://www.businessdictionary.com/definition/format.html
Carrefour (2009). Our strategy.[online]. Available at: http://www.carrefour.com/cdc/group/our-strategy/
________ (2010). Our stores. [Online]. available at: http://www.carrefour.com/cdc/group/our-business/our-stores/
_________ (2008). Travel diaries-Spain. [Online]. Available at: http://www.carrefour.com/cdc/group/our-business/travel-diaries/
_________ ( march, 2010). lastest store openings. [Online]. Available at: http://www.carrefour.com/cdc/group/our-business/latest-store-openings/
Child, PN. (2006). Lesson from a global retailer: an interview with the president of Carrefour China. Mckinsey Quaterly. [Online]. Available at: http://zonecours.hec.ca/documents/H2008-P5-1549360.CarrefourChina.pdf
Daniel, JD.(2010).International Business: Environments and operations. Pearson, pag. 704.
Nardon L and Steerts, RM (2006) Managing in the global economy. [Online]. Available at: http://books.google.com/books?id=yRdAcjO7uRsC&pg=PA203&dq=carrefour+strategy&hl=en&ei=tIx6TLTWAoK0lQf52MSvCg&sa=X&oi=book_result&ct=result&resnum=1&ved=0CCUQ6AEwAA#v=onepage&q=carrefour%20strategy&f=false
images:
Carrefour trademark. Getty images (2010). Online: available at: http://www.gettyimages.com/detail/103629348/Bloomberg
Malaysian shopers leave the french supe. Getty images (2010). Online. Available at: http://www.gettyimages.com/detail/102707175/AFP
No hay comentarios:
Publicar un comentario