5/30/13

Management strategy in carrefour - Term Papers - Business

Search 210,000 Essays

full version Management strategy in carrefour Essay

Search

Management strategy in carrefour

Category: Business Autor: adriana.cris 11 May 2010 Words: 2578 | Pages: 11 1. Introduction Retailing is one of the largest industries in the world. If we analyze its activities we see that retailers are more connected with the consumer than the producer. Retailing is also an industry that is continuously changing. At first retailers began with chains that developed into regionally groups and after that they became nationally and internationally. Nowadays many retails have a very large number of employees, a massive turnover and they developed their stores networks after the customers' needs. Retailing remains one of the most profitable activities in an economy based in consuming. That's why the retail chains are in a continuous expansion. This can be observed from the growth of the number of stores: from 234 units in 2007 to 326 units in 2008. In the world, in 2009, in the top of the retailers, there could have been found: Wal-Mart, Carrefour, Auchan, IKEA, Best Buy, Home Depot, etc. In Romania the top is comprised by: Metro, Carrefour, Selgros, Cora, Billa, Auchan, Real, etc. This project is concentrated on the activities and strategies of Carrefour. 2. Carrefour in the world Carrefour is one of the biggest retailers in the world, occupying the second place, after Wall-Mart. It can be found in 30 countries, and it has a number of approximately 456.000 employees. Carrefour started in France in 1959, and today it has divisions and subsidiaries in Europe, South America, Africa and Asia. The group has four types of stores: hypermarkets, supermarkets, discount stores and neighborhood stores. Carrefour has a total of 15000 stores that are operated in its one name or in franchising. In every country in which Carrefour has stores, the group gets involved in the local economic development. In general they are interested in the human relationship, that's why they concentrate in the way the recruitment and training of personnel. In all the countries that they operate they occupy the ninth place in the top of employers. They also try to help the local suppliers, so almost 85% of their products are from local sources. 3. Carrefour in Romania The first Carrefour store, appeared in Romania in 2001, in Bucharest. In 2006, in the seven stores that they have, they sold products in a total value of 608.9 million Euros. In December 2007 the group has had ten hypermarkets in Romania, five in Bucharest and the rest in Ploiesti, Brasov, Braila, Iasi, Cluj-Napoca, and Pitesti. In 2007 Carrefour bought the supermarket chain Artima, for 55 million Euros, to consolidate its place on the market. Today the group operates in Romania a chain of 22 Carrefour hypermarkets and 21 Carrefour Express supermarkets. 4. Products and Services 4.1. Products Carrefour sells a diverse range of products like: electronics, clothes, books, toys, home appliance, furniture, tableware, sports equipment, cosmetics, food, drinks, etc. The group sells international brands in its stores but also its own brands: No.1, Tex, Bluesky and Carrefour brand. These brands have a value of 60 million Euros. The last brand that was launched is Carrefour, and in the stores entered in 2009. Carrefour has chosen this moment to launch its own product range because now is a positive economic environment for cheaper products and the number of hypermarkets and supermarkets is sufficient to support product distribution. For the first phase the retailer is selling a range of 1200 products, followed in the next two years to reach to 3500 to 4000 products. Carrefour brand products represent approximately 6% of sales retailer now. Of the 1,200 products, 800 are food products that are manufactured almost entirely in Romania. Among food producers selected we can find European Drinks, Orkla Foods Romania, and Danone. The selling price of products manufactured under private label Carrefour will be on average 20% lower than the other products sold by the French retailer in Romania. 4.2. Services Regarding services, Carrefour offers financial services, also traveling services, photo services, fast food, and in Bucharest there is also a Carrefour gas station. In the financial area the group offers a Carrefour card and also they give credits for personal needs, and credits for home goods, insurance, and they also have a service for sending money to people you know in the country or abroad. These services are made in partnership with BRD Group Societe Generale. The card is called Carrefour MasterCard, and it can be used as a credit card. The owner of this card can take a credit of a maximum amount of 20,000 lei, with a monthly interest of 2%. The card combines the convenience of a credit card with the co-branded card. Its owners can borrow money from the card and receive payment facilities and discounts on purchases made inside the Carrefour supermarket. The card can be used in Romania or abroad in the atm disposals to. Also the group offers credits for personal needs and for home goods. The maximum amount is of 100,000 lei for personal needs. For home goods the sum is between 500 and 30,000 lei on a period of 5 years. These services are made also in partnership with BRD. Carrefour provides also a service for transferring money abroad or in the country. This service is made in partnership with MoneyGram. Regarding the traveling services in the retailer there can be found an agency called Carrefour Voiaj. This is includes abroad but also internal traveling services. For the country they have covered all the important places in Romania, like Delta Dunarii, the seaside, the mountain resorts, and also the spas. For abroad they provide traveling services in Greece, Turkey, Spain, Italy, France, Bulgaria, Austria, Great Britain, Germany, Czech, Hungary. But this part of Carrefour group seems to have problems. In august 2008 one of the customers complained with the services provided in a trip to Antalya, Turkey. In a letter addressed to Carrefour the customer complaints with the differences between the packages presented at the agency and what he got at the destination. It appears that even though the hotel where he stayed had 5 stars, it had smells of toxic substances and had old furniture, when he left Romania the flight had such a long delay that he lost one day of his trip, also the guide that he paid for never showed up, the rooms where not looking for a 5 stars level, and there were differences from the pictures, but the most important fact was that he was evicted from the hotel much sooner that he had to and also he had to go to the airport with other transport than the one he payed first because the hotel refused to transport. The response from Carrefour was that they are sorry and that they will try to remediate the situation. But it seems that the customer remained with the apologies. 4.3. BCG Growth-Share Matrix With the help of BCG Growth-Share Matrix we can observe if Carrefour's units can be classified into the four categories, that is stars, question marks, cash cows, and

essaysforstudent.com/essay/Management-strategy-carrefour/82802.html

1/3

5/30/13

Management strategy in carrefour - Term Papers - Business

dogs, based on combinations of market growth and market share relative to the largest competitor. For Carrefour Romania we can have the next matrix: Stars: - Some type of computers or mobile phones; - Electronics. Question Marks: - Cosmetics; - Home appliance. Cash Cows: - Food; - Soft drinks. Dogs: - Books; - Furniture; - Some sport equipment. We can find in Carrefour the stars in the section of electronics. There you can find laptops like HP, products from Microsoft, Sony LCD's. The question marks in the hypermarket can be considered home appliances like the fridge, washing machine, kitchen robots, and also the cosmetics. Cash cows are the products that give the most profit and do not need too many investments. In Carrefour these products are represented by the food and by the drinks, because in this period of crisis in general people buy only products that they really need. If we study a little more we can see that this cash cows are also the products under Carrefour brand. The dogs have a low market share and do not have the potential to bring in much cash. Here the books are a good example, because in generally we prefer to buy or see a movie instead of reading a book. Also the group sells sport equipment, and Romanian people are not so sportive. In generally the equipment for fitness can be considered dogs. 5. Competition In the world the group has big competitors like Wall-Mart, Auchan, Home-Depot or IKEA. In Romania the retailing market is a very attractive one, even though the competition is high. In 2007 dozens of supermarkets have been opened in the country. According to Eurostat, the sales in retailing from Romania were 12 times bigger than of the European Union average, in 2007. The turnover in this market rose with 20% from the previous year. On the hypermarket market the biggest direct competitors are represented by Cora, Auchan and Real. Now Cora is present in association or franchising with 81 hypermarkets in France, Romania, Hungary, Belgium, and Luxembourg. The turnover of Cora realized is of 4,8 billion Euros. In Romania we can find Cora in the form of hypermarkets with the same name, and also hard-discount stores under the name of Profi. This is an important competitor because it is oriented towards customers with low budgets, so the prices are low. Real is a hypermarket, part of Metro Group, that entered in Romania in 2006. Today the chain has 15 hypermarkets. For this retailer the food segment represents 75% from sales. Also they have a big interest in selling these types of products that have good quality and that are fresh. Other direct competitors mostly in the food industry are Selgros, Billa, Penny Market, Kaufland, Plus, and also from Brasov another competitor is Hard-Discount. Also for the clothes and home appliance they have competitors like the malls in Bucharest and from other cities in the country and Domo, Altex, Media Galaxy.

6. Organizational structure Under the authority of the Chief Executive, Carrefour's management is now organized as follows: - An Executive Board that, together with the CEO, elaborates the Group's strategy, operational goals and yearly plan, and oversees execution. -An Executive Committee, which contributes to the definition and implementation of the strategic and operational plan and ensures the roll out of projects. The Executive Committee guarantees the teams' alignment and the dissemination of management and leadership principles. 7. Organizational Culture To understand the organizational culture it's important to know the values of the group. These are presented in the mission, vision and objectives of Carrefour. The mission of the group is to make Carrefour a business that is recognized and loved for helping its customers and consumers enjoy a better quality of life, each and every day. Also the company has three important values: a. Commitment: they believe that they are committed professionally and also committed as members of community. "We constantly strive to exceed everyone's expectations by providing better value and finding new solutions for a better quality of life". b. Carrying: They care for their customers and also for their employees. "We are receptive to their needs, each and every day. We welcome them to our stores and meet their needs with kindness, warmth and attention to detail". c. Positive thinking: They want to rise to every challenge with energy, enthusiasm, and with fresh ideas. "We help brighten the lives of our customers and our consumers. For them, for our employees, for the planet, we want the best, both today and tomorrow." Their vision of the group it's explained in the next lines: a. To get to know their customers better in order to serve them better; b. To increase agility, execution quality and competitiveness; c. They believe in innovation, this is known from the fact that they invented the hypermarket concept. Their objectives are to make the store experience exciting again, to win or regain the hearts of all customers. Today, customers visit various types of stores, and so the Carrefour group is making its formats more complementary and introducing innovative new store concepts. Also to maintain the position they have fixed the next objective: to become one of the first three leaders on each market. 8. Marketing Strategies: In this section the strategies are regarding the price and promotion. This part of the marketing mix is very important in selling. It's important for the group to have good prices and strong promotion to face the competitors. 8.1. Promotion To advertise their products, Carrefour uses catalogs that clients can find in the stores or that are distributed by mail. The biggest amount of money goes in mass-media advertising. In 2008 they have spent 1.2 million Euro, and they are situated after Real who has spent 4.9 million, and before Cora who has spent 100,000 Euros. The principal type of promotion is the radio. The investments that Carrefour made in radio publicity in the first 3 months of 2008 raised to 937,000 Euros. In the TV advertising the competition was also between Real and Carrefour. For the publicity space they payed together a sum of 3.6 million Euros. Also Carrefour it is preoccupied with making their own customers. That's why they have introduced loyalty cards; they have special promotion like: if you buy 3 products that are the same and you pay half the price; also they organized special games with prizes. 8.2. Price In the case of retailing it is impossible to say that there can be found only one type of price for the products. The company sells all kind of products, like food and drinks, clothes, home appliance, furniture, mobile phones, books, chemical products and also they come with a range of services. Every type specified has different types of prices. In general this retailer applies prices that are small to medium. For the products that are under Carrefour brand the prices are relatively small, and also they frequently apply discounts. Also the type of price for these brands is a penetration price. But the prices in the group defer from product to product. We can find also promotional prices,

essaysforstudent.com/essay/Management-strategy-carrefour/82802.html

2/3

5/30/13

Management strategy in carrefour - Term Papers - Business

usually the strategy is to buy 3 products and pay for half. This type of prices is applied to food but also to some cosmetics and clothes. Comparing with competitors prices they do not have the smallest prices. This can be demonstrated in the next table where you can see the sales made by the hypermarkets in 2008: Name of company Profit/sqm lei Sales/sqm lei Cora 1,858.9 37,672.6 Metro 1,465.9 35,797.6 Selgros 845.7 18,599.1 Billa 786.9 24,680.6 Carrefour 481.1 24,678 Penny Market 449.1 19,010.9 Kaufland 62.9 13,144 Auchan -377.2 15,655.1 Plus -980 14,104

9. Carrefour's strategies One of the strategies used by Carrefour to enter in the market of supermarkets was to buy Artima Company. The price payed for this acquisition was 55 million Euros. In this way they have consolidate their position on the market. The total number of Artima stores is 21.The firm has realized a turnover of 95 million euro in 2007 before it was both. Carrefour changed the name of the Artima stores with its own name. In this way the group could easily cover a bigger geographical area, with smaller costs. Another strategy of the group is to sell products or services in partnership. This is the case discussed about the Carrefour Mastercard, a card made in partnership with BRD Group Societe Generale, in this case we talk about one of the services provided by Carrefour. Also if we talk about products, the group made a partnership with BitDefender to sell their products with license. This helped BitDefender to increase sales with 10%. We can say that Carrefour uses also outsourcing. For example for the fast food products made in their own kitchen they use products from the shelves, that will expire in a few days, so they use products made by someone else.

essaysforstudent.com/essay/Management-strategy-carrefour/82802.html

3/3