ppt
ERIC WANG
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Carrefour’s Strategy in Asian Market MGT 490-72 Strategic Management Instructor: Margaret Takeda, Ph.D.
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OUTLINE:
Background
Generic Strategy
PESTEL
5 Forces
Resources & Capabilities
Opportunities & Strengths
Value Chain
Strategic Actions
References
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GENERAL INFORMATION:
Name: Carrefour SA
SIC code: 5411 Grocery stores, 5311 Department stores, 5399 Miscellaneous general merchandise stores
Industry name: Retail
Region of operations: Global
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COMPANY MISSION & VISION:
Company Mission: “Doing our job well.”
Company Vision: “To become the benchmark in modern retailing in each of our markets. We aim to offer our customers the best price and the best merchandise, in every store, in every country.”
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CARREFOUR’S HISTORY:
The Carrefour supermarket company is set up by the Fournier, Badin and Defforey families in 1959.
In 1960, Carrefour opens its first supermarket in Annecy, Haute-Savoie.
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CARREFOUR’S ACTIVITIES:
Key figures (data for 2017)
Our analysis focuses on East and Southeast Asia
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GENERIC STRATEGY: LOW-COST PROVIDER
A broad product offering with everyday low prices. Carrefour’s product offer is based on a number of unchanging principles:
a broad selection;
the lowest prices;
the highest quality.
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PESTEL
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PESTEL POLITICAL FACTORS:
Foreign investors must pay attention to new regulations in emerging Asia. Since the US exited the trade pact, many believed the TPP would be left for dead. However, recent discussions among the remaining 11 countries show signs of life, and the TPP-11 movement seems to be gaining momentum.
The future of some trade agreements also hangs in the balance. A proposed agreement between Vietnam and the EU was recently jeopardized following questions of human rights violations by the Southeast Asian country. The US may withdraw from a free trade agreement with South Korea on calls by the Trump administration to renegotiate the pact.
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PESTEL ECONOMIC FACTORS:
Continuous economic development in the region. The economies of Asian countries will be steadily growing in coming 5 years. They growth rate is from 1% till 7% depending on the country.
Consumer-driven economy by rising middle class. The middle class in Southeast Asia is expected to double to 400 million in 2020. In China, the middle class is estimated to grow 25% to hit 1 billion in 2020, representing about 70% of the urban population in the country and becoming a major powerhouse for domestic consumption growth.
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PESTEL SOCIAL FACTORS:
Constant population growth in the region. The current population of South-Eastern Asia is about 653 million with yearly growth rate 1.06% based on the latest United Nations estimates. 49.2 % of the population is urban.
Most of people in the region prefer to consume eco-friendly and sustainable products. This means that retailers need to find innovative ways to improve their products to turn sustainability to a unique selling proposition.
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PESTEL TECHNOLOGICAL FACTORS:
M-commerce is getting more popular among online shoppers. Many retailers have launched mobile-enabled websites and mobile apps with location-based and other interactive functions. Some retailers have partnered with payment service providers to provide their customers with electronic payment services and mobile wallets.
Social media increasingly becomes a key marketing and selling tool. The social media boom has supported the growth of social commerce in Asia. Social commerce currently takes up a third of all online shopping transactions the Southeast Asian region.
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PESTEL ENVIRONMENTAL FACTORS:
TPP-11 continues to promote sustainable development. The level of enforcement of domestic environmental laws varies, and some of TPP’s lower-income members may require support to strengthen the scientific and regulatory agencies.
>>>Trade corporations, operating in the region, can provide such support sharing their knowledge and experience and get loyalty from the government.
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PESTEL LEGAL FACTORS:
Low tariffs or lack of them in the region for local businesses. The ASEAN Free Trade Area (AFTA) allows to increase ASEAN’s competitive edge as a production base and attract more foreign direct investments (FDI). It is a good opportunity for multinational retailers to enter the market.
Policies specific to foreign investors. Property, labor, competition, and FDI laws and policies are different among countries. They control and may restrict businesses as well as retail industry in the region. In some cases, cooperation with local retailer will be more appropriate.
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5 FORCES
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5 Forces DEGREE OF RIVALRY is Strong:
High competition for the consumer. Consumers face negligible switching costs, meaning retailers fight increased pressure to secure consumer's custom and loyalty by attempting to cut prices.
Similarity of players. Rivalry is also increased by the close similarity of players, although they may attempt to differentiate through products and price.
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5 Forces BUYER POWER is Moderate:
Independence of buyers. A number of retailers operate incentive schemes for frequent shoppers, which can help secure customer retention.
Limited level of product differentiation. There are a number of factors that affect a consumer’s choice. Price and convenience are two central concerns.
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5 Forces SUPPLIER POWER is Moderate:
Importance of a steady supply, quality, and best price. Large retailers often maintain relationships with a wide range of suppliers, which ensures stability and helps to offset the dangers of local sourcing problems or price fluctuations.
There are almost no substitute inputs. Suppliers who are able to differentiate their product can get some power over retailers, if their product be popular with the end consumer.
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5 Forces NEW ENTRANTS is Moderate:
Rapid growth of the retail market. In a number of countries in the region it has been a rapid growth of the retail market (in Asia-Pacific with 13.3% annually according to MarketLine data).
Low entry and exit costs for new entrants. Potential entrants may be encouraged by the relatively low entry and exit costs. Switching costs for end consumers are minimal in the retail industry, with consumers often heavily influenced by price.
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5 Forces THREAT OF SUBSTITUTES is Weak:
No significant substitutes to food retail. The alternative to food retail is food service provided by fast food companies and sit-down restaurants.
Alternatives as agriculture for personal needs. A more direct substitute is found in subsistence agriculture, in which individuals or families farm food to provide for their own personal needs.
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5 Forces SUMMARY:
Degree of rivalry Strong
Buyer power Moderate
Supplier power Moderate
New entrants Moderate
Substitutes Weak
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RESOURCES & CAPABILITIES
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RESOURCES & CAPABILITIES:
| R1 Wide variety of stores and international presence. Carrefour operates nearly 12,000 stores in more than 30 countries. | C1 Carrefour can meet increasing demand in Asia because it has various types of stores, wide presence, and variety of mechanisms for consumers to get the goods. |
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RESOURCES & CAPABILITIES:
| R2 Strategic business cooperation with Tencent. This cooperation includes key areas such as: smart retail, mobile payment, in-store experience and data analysis. | C2 Such powerful cooperation gives Carrefour a competitive advantage and makes its business develop faster in China and other emerging markets in Asia. |
| VRIN |
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RESOURCES & CAPABILITIES:
| R3 Food and non-food e-commerce sites and social media. 12.4 million fans, followers and subscribers on Carrefour social media. | C3 Ability to develop a full array of mobile solutions to facilitate the shopping process, while broadening and deepening its social media presence to interact directly with customers. |
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OPPORTUNITIES & STRENGTHS
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Competitive Advantage
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Competitive Advantage 1:
| O1 | S1 |
| Consumer-driven economy by rising middle class | R1 Wide variety of stores and international presence. Carrefour operates nearly 12,000 stores in more than 30 countries. C1 Carrefour can meet increasing demand in Asia because it has various types of stores, wide presence, and variety of mechanisms for consumers to get the goods. |
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Competitive Advantage 2:
| O2 | S2 |
| M-commerce is getting more popular among online shoppers | R2 Strategic business cooperation with Tencent. This cooperation includes key areas such as: smart retail, mobile payment, in-store experience and data analysis. C2 Such strong cooperation gives Carrefour a competitive advantage and makes its business develop faster in China and other emerging markets in Asia. |
| VRIN |
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Competitive Advantage 3:
| O3 | S3 |
| Social media increasingly becomes a key marketing and selling tool | R3 Food and non-food e-commerce sites and social media. 12.4 million fans, followers and subscribers on Carrefour social media. C3 Ability to develop a full array of mobile solutions to facilitate the shopping process, while broadening and deepening its social media presence to interact directly with customers. |
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VALUE CHAIN
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VALUE CHAIN MAP:
O1 O2/O3
S1 S2/S3
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STRATEGIC ACTIONS
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Strategic Actions SA1:
Acquire Dmart, a chain of hypermarkets and supermarkets in India, which has 154 stores spread across 11 of 29 states.
COMPETITIVE ADVANTAGE 1
| O1 | S1 |
| Consumer-driven economy by rising middle class | R1 Wide variety of stores and international presence. Carrefour operates nearly 12,000 stores in more than 30 countries. C1 Carrefour can meet increasing demand in Asia because it has various types of stores, wide presence, and variety of mechanisms for consumers to get the goods. |
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Strategic Actions SA2:
Create innovative mobile app and other innovative ways of e-commerce oriented toward Chinese consumer via Carrefour-Tencent strategic alliance.
COMPETITIVE ADVANTAGE 2
| O2 | S2 |
| M-commerce is getting more popular among online shoppers | R2 Strategic business cooperation with Tencent. This cooperation includes key areas such as: smart retail, mobile payment, in-store experience and data analysis. C2 Such strong cooperation gives Carrefour a competitive advantage and makes its business develop faster in China and other emerging markets in Asia. |
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Strategic Actions SA3:
Create a strategic alliance in South Korea with Kakao Talk, a South Korean-based mobile messaging app, to be closer to Korean consumer.
COMPETITIVE ADVANTAGE 3
| O3 | S3 |
| Social media increasingly becomes a key marketing and selling tool | R3 Food and non-food e-commerce sites and social media. 12.4 million fans, followers and subscribers on Carrefour social media. C3 Ability to develop a full array of mobile solutions to facilitate the shopping process, while broadening and deepening its social media presence to interact directly with customers. |
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Extra Credit Section (5%):
Strategic Objectives
Financial Objectives
Impact on 5 Forces
VRIN?
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Strategic Actions SA1, SO1+FO1, KPI1 / Impact on 5F:
SA1: Acquire Dmart, a chain of hypermarkets and supermarkets in India, which has 154 stores spread across 11 of 29 states.
SO1: Increase market share to 15% of food and grocery supermarkets in India.
FO1: Increase in annual revenues of the Group.
An additional 1.5% increase in total annual revenues of the Group.
Impact on 5F: Decrease in power of rivals.
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Strategic Actions SA2, SO2+FO2, KPI2 / Impact on 5F:
SA2: Create innovative mobile app and other innovative ways of e-commerce oriented toward Chinese consumer via Carrefour-Tencent strategic alliance.
SO2: Having broader and deeper technological capabilities in terms of e-commerce and m-commerce than rivals in China.
FO2: Increase in online sales in China.
A 35% increase in net sales in China.
Impact on 5F: Decrease in power of rivals.
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Strategic Actions SA3, SO3+FO3, KPI3 / Impact on 5F:
SA3: Create a strategic alliance in South Korea with Kakao Talk, a South Korean-based mobile messaging app, to increase market share in South Korea.
SO3: Having broader and deeper technological capabilities in terms of social media commerce than rivals.
FO3: Increase in operating profit margin to generate net profit in South Korea instead of past losses.
A 25% increase in operating profit margin in South Korea.
Impact on 5F: Decrease in power of rivals.
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References:
ASEAN (2018). The ASEAN Free Trade Area (AFTA). (Available Online). Retrieved from: http://asean.org/asean-economic-community/asean-free-trade-area-afta-council/
Carrefour S.A. (2016). Annual Activity and Responsible Commitment Report. (Available Online). Retrieved from: http://www.carrefour.com/sites/default/files/carrefour_-_2016_annual_activity_and_responsible_commitment_report.pdf
CFRA (2018). Stock Report, 25-January-2018, Ticker: CA FP, Carrefour.
Fung Business Intelligence (2017). Asia Retail: 9 Key Trends and Developments. (Available Online). Retrieved from: https://www.fbicgroup.com/sites/default/files/AsiaRetail_9KeyTrends.pdf
Market Line (2016). Food Retail in Asia-Pacific.
Market Line (2016). Online Retail in Asia-Pacific.
Mergent, Inc. (2018). Carrefour S.A.
S&P Global Market Intelligence (2018). Carrefour SA ENXTPA CA Public Company Profile.
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Thank you! Questions?
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