Global Business Environment - Case Study: Carrefour

Topics: Emerging markets, Retailing, Economics Pages: 15 (5527 words) Published: March 9, 2013
I.Globalization and Retailing market4
Market overview4
Forces driving competition5
Buyer power5
Supplier power5
New entrants6
Threats of substitutes6
Degree of rivalry6
II.Carrefour SWOT7
III.External business environment: Key challenges and implications10 Political and legal10
Economic and Financial11
Social, cultural, and Environmental11


For businesses, globalization is a great opportunity to stretch further and thus reach another level. Hamilton and Webster (2009) state that “globalization generates opportunities for business to enter new markets, take advantage of differences in the costs and quality of labour and other resources, gain economies of scale and get access to raw materials”. Business globalization, or in other words international business, refers to the increased of mobility of services, goods, capital and technology throughout the world. The goods and services created in one location can now be found throughout the world. According to Harrison (2010) globalization is characterized by several aspects: the development of international trades and the creation of the global marketplace lead to the increase over time of international trade and service. Then, production and investment flows are globally organized. Thus, costs are lower and specialist advantages are in different geographical location. Thanks to the technological development, people around the world are more connected and migration is a major feature of the globalization. This later offers them the possibility of moving across national borders. With this migration and the speed with which communication has improved, communication and cultural flows are important. Although globalization can be a real opportunities for companies, it could be also a threat for their development if managers in charge of this expansion have not gathered and analysed all the information they need about the marketplace they are considering. Indeed, they have to be sure they target areas where there is a market opportunity. They also need to be aware of several factors like laws, culture, society habits and other ones that might conflict the business. Over the past 40 years, the Carrefour Group has grown to become the second world’s largest and the Europe’s largest retailer of groceries and consumer goods. During these years, Carrefour expanded internationally. A pioneer in countries such as Brazil (1975) and China (1995), Carrefour operates more than 9,500 stores, which are present in 32 countries across 3 geographic zones: Latin America, Europe and Asia, through 4 main formats: hypermarket, supermarket, cash and carry and convenience stores. ( However, Carrefour’s situation is not as good as we can think. Since few years, Carrefour has been hit by falling profit and drooping sales caused by the uncertain economic environment and strategic missteps. Net profits fell by 14% last year and net sales rose only by 1% to 81.3bn euros. In the first nine months of the year, Carrefour's total like-for-like sales were down 0.2% (Latin America is the only region to report an increase in like-for-like sales of 8.6%). (Carrefour’s press release, 2012). In recent years, Carrefour has abandoned several countries including Japan, Mexico, Russia and Thailand. These decisions are “in line with Carrefour’s new strategy of focusing on geographies and countries in which it holds or aims to develop a leading position”. (Carrefour’s press release, 2012) Mr Plassat took over in May with a brief “to reverse years of underperformance in Carrefour's European markets” (Vidalon, D. 2012). “He wants it to pull out of noncore markets, cut costs at home in France and give store managers more autonomy.” (Masildlover, N. 2012). Thus, he has started to refocus on core markets, notably in Europe, Brazil and...
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