Carrefour’s Misadventure in Russia
Mishal Al Dhafiri
Australian College of Kuwait
Introduction
When retailers set up in a new market it takes time for them to be established in an emerging market. This can be due to competition , bureaucracy and other factors such as corruption (Maxwell, 2013). Carrefour is classed as the second largest retailer in the global arena and it faced a number of challenges to set up in the Russian market. The fact that Carrefour entered the market late was not in their favour in particular when they wanted to acquire the Seventh continent in order to establish a market presence, this in fact failed though, (Laurent & Paxton, 2009). There are a number of reasons behind this failure such …show more content…
(2010). 2010 Copyright by IBS Center for Management Research, adapted with permission.
Conclusion
Carrefour’s late entry did not help and therefore they could not set in good locations. The store in Filion Shopping mall was not a string location and was not known for customers. The location was a low income location (Indu, 2010). Economic Downturn
The global financial crisis had a negative impact on the Russian retail market. People lost their jobs and customers did not want to spend money.
• In 2009, sales reduced by 9.8 percent in comparison to August 2008 sales of the previous year (Indu, 2010).
2. According to Jamie-Vazquez, analyst at JP Morgan Chase & Company in London, “Stores in emerging markets are the only ones doing well and offering good growth prospects, so selling them makes no sense other than making short-term financial gain.” Do you agree with this statement? Take a stand and justify it. …show more content…
Threat of new entrants
5. Threat of substitute products.
Figure 1: Five Forces that Shape Competition
Note: Adapted from The five competitive forces that shape strategy. Harvard Business Review. By Porter, M. (2008). 2013 Copyright by Harvard Business School Publishing. Adapted with permission.
Competition among Existing Competitors
Companies that are already established are already ahead of Carrefour as they have their loyal customers, they are located in a prime location and fully comprehend the market itself.
Bargaining Power of Customers
The customers will have this power when they are faced with a high variety of products to choose from. This is evident when the customer is not happy and therefore goes elsewhere. The organisation in order to retain its customer base must offer an edge with its product quality and pricing strategies.
Bargaining Power of Suppliers
This bargaining power has a huge impact on the profit. This is true in the retail arena as prices are based in the price they receive from the retailer. A new company will always have an impact on competition and increase it. Some competitors will offer cheaper prices to be established and well known in the market.
Threat of Substitute
Mishal Al Dhafiri
Australian College of Kuwait
Introduction
When retailers set up in a new market it takes time for them to be established in an emerging market. This can be due to competition , bureaucracy and other factors such as corruption (Maxwell, 2013). Carrefour is classed as the second largest retailer in the global arena and it faced a number of challenges to set up in the Russian market. The fact that Carrefour entered the market late was not in their favour in particular when they wanted to acquire the Seventh continent in order to establish a market presence, this in fact failed though, (Laurent & Paxton, 2009). There are a number of reasons behind this failure such …show more content…
(2010). 2010 Copyright by IBS Center for Management Research, adapted with permission.
Conclusion
Carrefour’s late entry did not help and therefore they could not set in good locations. The store in Filion Shopping mall was not a string location and was not known for customers. The location was a low income location (Indu, 2010). Economic Downturn
The global financial crisis had a negative impact on the Russian retail market. People lost their jobs and customers did not want to spend money.
• In 2009, sales reduced by 9.8 percent in comparison to August 2008 sales of the previous year (Indu, 2010).
2. According to Jamie-Vazquez, analyst at JP Morgan Chase & Company in London, “Stores in emerging markets are the only ones doing well and offering good growth prospects, so selling them makes no sense other than making short-term financial gain.” Do you agree with this statement? Take a stand and justify it. …show more content…
Threat of new entrants
5. Threat of substitute products.
Figure 1: Five Forces that Shape Competition
Note: Adapted from The five competitive forces that shape strategy. Harvard Business Review. By Porter, M. (2008). 2013 Copyright by Harvard Business School Publishing. Adapted with permission.
Competition among Existing Competitors
Companies that are already established are already ahead of Carrefour as they have their loyal customers, they are located in a prime location and fully comprehend the market itself.
Bargaining Power of Customers
The customers will have this power when they are faced with a high variety of products to choose from. This is evident when the customer is not happy and therefore goes elsewhere. The organisation in order to retain its customer base must offer an edge with its product quality and pricing strategies.
Bargaining Power of Suppliers
This bargaining power has a huge impact on the profit. This is true in the retail arena as prices are based in the price they receive from the retailer. A new company will always have an impact on competition and increase it. Some competitors will offer cheaper prices to be established and well known in the market.
Threat of Substitute