NGUYEN THANH CONG - ANTHONY
03911820
ASSIGNMENT #2:
CARREFOUR’S ENTRY DUBAI
12-13. What are the reasons behind Carrefour choosing joint venture as a method of entry?
While gaining access to an emerging market such as the UAE in 1995, Carrefour decided to enter into a joint venture with Majid Al Futtaim after the evaluation of laws and market conditions. One of the major reasons for this kind of agreement was that in order to enjoy exclusive presence in the region and be protected from contract termination, the foreign companies needed to have a joint venture with nationals or commercial entities owned solely by UAE Emiratis. Carrefour saw the qualifying condition as a plus point since it would entail sharing the liability of ownership between the parties involved. In addition, the UAE is characterized by a strong food culture with religious and cultural restriction; thus, if it operated as a joint undertaking with a local sponsor, it would be easier to obtain food health certificates like the halal slaughter certificate and to import food. Furthermore, Carrefour would be subject to the same barriers as the sponsors, or none at all, on most inventories, including some items such as cigarettes.
12-14. Why do you think Carrefour chose UAE as a stepping stone to expand into the Middle East?
The UAE has been noted to have a strong …show more content…
MAF offered Carrefour profitable locations such as high-traffic malls and properties which they already owned. Furthermore, this would limit direct competition no hypermarket would be able to open shop at the same mall. Carrefour wanted to expand throughout the Middle East and since MAF operated the region, it could facilitate the expansion under the same relationship. Most importantly, MAF had previous experience with foreign retailers and business enterprises, and was the candidate most likely to be able to handle Carrefour’s
03911820
ASSIGNMENT #2:
CARREFOUR’S ENTRY DUBAI
12-13. What are the reasons behind Carrefour choosing joint venture as a method of entry?
While gaining access to an emerging market such as the UAE in 1995, Carrefour decided to enter into a joint venture with Majid Al Futtaim after the evaluation of laws and market conditions. One of the major reasons for this kind of agreement was that in order to enjoy exclusive presence in the region and be protected from contract termination, the foreign companies needed to have a joint venture with nationals or commercial entities owned solely by UAE Emiratis. Carrefour saw the qualifying condition as a plus point since it would entail sharing the liability of ownership between the parties involved. In addition, the UAE is characterized by a strong food culture with religious and cultural restriction; thus, if it operated as a joint undertaking with a local sponsor, it would be easier to obtain food health certificates like the halal slaughter certificate and to import food. Furthermore, Carrefour would be subject to the same barriers as the sponsors, or none at all, on most inventories, including some items such as cigarettes.
12-14. Why do you think Carrefour chose UAE as a stepping stone to expand into the Middle East?
The UAE has been noted to have a strong …show more content…
MAF offered Carrefour profitable locations such as high-traffic malls and properties which they already owned. Furthermore, this would limit direct competition no hypermarket would be able to open shop at the same mall. Carrefour wanted to expand throughout the Middle East and since MAF operated the region, it could facilitate the expansion under the same relationship. Most importantly, MAF had previous experience with foreign retailers and business enterprises, and was the candidate most likely to be able to handle Carrefour’s