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Porter and Ketels, Because of a large private sector and low regulations, the infrastructure is in a weak condition. The railway systems as well as the highways have to be improved. Nevertheless, the related and supported industries in retailing are working under very good conditions.
The supply chain management is one of the most efficient in the world. IGD, The domestic agriculture is also high standard and is supported by a high demand for local goods in the retail market. Because of its history, the country has also a high demand for international grocery. Low trade barriers and regulation by the government are supporting the market entry of companies. As a result, the purchasing power of the people in the UK is one of the highest in the world. Euromonitor, The company friendly politic and the high purchasing power are leading towards a high competition in almost every market.
The buyers are looking for good quality products in connection with low prices or promotions. Tesco is the leading company in grocery retailing in the UK.
Euromonitor, This company belongs to Wal-Mart, the largest retailer in the world, which is another global competitor for Carrefour. International retailers have to focus on private labels, which is very important in the UK. In addition, consumers are highly interested in products they already know. The channel has developed out of the supermarkets, selling wide ranges of food and non-food products.
There is a development of increasing the size of the stores with the help of non-food products which will lead to a merger of the hypermarket and supermarket segment. Euromonitor, The channel of discounters is the fastest growing segment. Because of the long recovery from financial and economic crisis, more consumers are price-aware. So, the discount segment is not jet important as in other Western European markets. The companies can be characterized as large enterprises where high level managers focussing on profit versus small family based companies.
The total quality approach can be seen in almost every industry and company. Porter and Ketels, The two external factors government and chances can influence the elements of the diamond. It was already mentioned that the low government restriction already pushed the purchasing power and the competition inside the retailing industry. But there also influences which can have a negative impact such as the long recovery from the financial and economic crises. Euromonitor, Chances in the future can be the Olympic Games in The large sport event can provide high investments in the country and infrastructure.
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Request a new password via email. Brief Synopsis of the Issue Carrefour as the leading retailer in Europe should enter the market in the United Kingdom. Carrefour, It is difficult to enter the market in the United Kingdom UK and the primary goal of becoming the preferred retailer is maybe not reachable in mid-term. Carrefour, The competitive advantage of nations model from Michael Porter will show factors which can support the decision making process. Hill, illustration not visible in this excerpt Figure 1: The company is able to share information with its various branches and offices through the internet, the telephone, video conferencing and satellite phones.
Therefore for Carrefour to be established in the UAE market, they need to take those factors into consideration. They will need to look at their present external environment as elements that may prevent the UAE market from accepting them.
They also need to make use of the information pertaining to the UAE market in order to produce the best business strategy Root Micro-environment Competition In the UAE market, there are several retail stores that will give Carrefour a fair competition. They therefore need to analyse their competitors in order to come up with a strategy that will give them a competitive edge Hitt Currently, the UAE economy has shown such robust growth that the hypermarket has opened its 88th Hypermarket in Baniyas.
The hypermarket sells groceries, food, drinks and domestic products. They also have a wide range of brands like the IKON products which encompasses hi-tech gadgets and home appliances. Another brand is the Lulu products which are comprised of food and non-food products that have been manufactured by international companies.
The Fathima Group, which began in the70s in Abu Dhabi, has a wide range of services and products. It makes use of several distribution channels like retail outlets, hypermarket, supermarket, wholesale and distribution centres, cold stores and restaurants. They sell a wide range of products like holidays and tours, construction, perfumes and cosmetics, technological and electronic equipment, bakery. This gives them the resources for expansion and shows they have a good market share.
There are many models that are used in the internationalisation process; one of these is the process models. This means that Carrefour must take into consideration the cost of market research, policies and laws, product design and strategies, location, advertisement and setting up to be incurred Autio et al. The costs of setting up the retail business and running it in the UAE are vital for it has a direct effect on the profit that will be made. They will consider the managerial costs that entail the travel, salaries, start up costs to rent the offices and premises.
Entry strategy for Carrefour for entry into the UK market - Andre Schroeder - Seminar Paper - Business economics - Marketing, Corporate Communication, CRM. Seminar paper from the year in the subject Business economics - Marketing , Corporate Communication, CRM, Market Research, Social.
They will have to consider the training costs of their new staff which will be hired from the UAE market in order to meet Carrefour standards. It is vital that the staff employ personnel from the domestic market rather than exclusively from France in order to reduce the cost. The company is advised to rent rather than acquire property to reduce the initial operating cost. Carrefour will also need to get experiential knowledge about their potential customers and their market through the market segment, positioning and targeting.
From this they will learn that currently the demographic population of UAE is increasing therefore providing a flourishing retail market. Carrefour needs institutional knowledge from the local laws, governments and culture policies that impact the setting up of business Autio et al. It was noted in the SLEPT section that the UAE economic, policy, legal and political environments are encouraging investors and therefore they will receive little resistance.
Carrefour has the advantage of having ventured into other international markets; therefore many nationals in the UAE are familiar with the brands Cunningham In addition, the company has seen several years of improved profits that can be used in the expansion process. Therefore, their entry time is now when they have the resources and finances. Following this analysis, it is noted that there are many entry modes that they can use Root Among these, those that the retailer can use are joint ventures and strategic alliances. Under the strategic alliances option, Carrefour can make use of marketing agreements, distribution alliances, and research and development arrangements and shared manufacturing Root For the case of Carrefour, this report will recommend the use of joint ventures to enter this market.
This is because this will offer it a chance to minimise the risks during the entry and start up period Robinson This is because the joint venture partner chosen must be experienced enough to offer the company growth and improved operations within the region. One of the retailers Carrefour can use in the joint venture is Majid Al Futtaim, which is a conglomerate with many years of experience in the UAE market.
This will require Carrefour to acclimatise its market to the UAE market through adapting their foods to the sociocultural norms of the market. The target would be to also promote the non-food items to increase the profit margins. This is because organisations and businesses are advised to take advantage of such alliances as they venture into an international market since they offer many advantages. This section will make use of concepts that have been proposed by several literatures and will be applied to the case of Carrefour. Product Strategies The products offered by Carrefour Hypermarket are groceries, manufactured foods and drinks, clothing, shoes, home appliances, kitchen ware, bakery, restaurant food, plastic goods, garden equipment and any household item.
Within the UAE market, the largest retail market is the Dubai market because of the many expatriates and foreign workers. These will offer the hypermarket the target consumers for their western style products that already have experienced with their products and the store in general. However, they will also need to tailor their products to meet the needs of the increasingly Arab population. This means that the store will have to make their products reflect the tastes and preference of their Arab nationals. Their merchandise has to meet the Arab culture where they should not sell halal food that is lacked in pork.
Their butcher should also be acceptable for their meat products to be halal. This also implies that their kitchen and restaurants should also be halal. They also need to adapt to the seasonal times of the culture, like the yearly summer vacations to escape the heat as such seasons turn to very low sales with almost near closures.
They also need to recognise the existence of the Islamic religious and cultural holidays and festivals like Eid, Ramadan that will give them big sales. These periods offer the retail business increased demand for goods and services therefore they need to factor in a need for increased supply and workforce during the peak seasons. This is done not to disappoint their customers who are out to celebrate during their religious feasts. The retail store should also consider their working hours and days of the week to reflect the Islamic time.
In this, the working week is from Sunday to Thursday with Friday being the religious day and Saturday being a weekend. The retailer should also be aware of the effects the banking and insurance systems in the market operate. With a diverse market they should also make accommodations for foreign credit cards and currencies. They need to take into consideration the diversity of the UAE market in terms of all the nationalities and cultures in the region. Pricing Pricing can offer the retailer a good promotional tool. They can make use of the discount prices to attract customers.
They have a strong brand name therefore they do not need to worry that their brands will be diluted. They need to remember that the food market in the UAE is very competitive therefore their pricing should reflect quality, standard as well as affordability. Place The strategy for this business would be to use cultural business of shopping malls.
The concept is that the UAE market prefers the shopping mall concept therefore Carrefour should go with the shopping mall theme in which cinemas, food courts, entertainment units, and all amenities which are found less than one roof. This is different from the convectional Carrefour theme of freestanding warehouse building.
Due to the harsh climates and the culture within the UAE region, Carrefour has to make use of these in order to adapt to the market. Within this community, the climate can be too harsh that the only entertainment is going to the mall to cool off and get entertained. On the other hand, the culture requires that families to socialise a lot. For this reason, malls serves this purpose since it is a place of entertainment for the whole family.
On other hand, the culture presents a theme where the men are working in the upper floors while the women and children are in the lower floors. In addition, during weekends it is common to find large families getting into the malls eating in the restaurant, resting in the hotels, walking or shopping. The Arabs are also cultured to get high quality goods under one roof.
It is for these reasons that Carrefour needs to select a building where they can offer their services and products. They should also take advantage of these malls because they will receive bigger volumes of customers who will walk into their doors. In fact, the Arabs have been able to build spacious malls that can give ample space to stores like Carrefour to operate in. In addition, if they are to get into a joint venture with Majid Al Futtaim, they can take advantage of the large space which the retailer already has.
For this reason they can make use of the Deira City Mall in Dubai. Promotion As promotion is concerned, the best approach will be to get into the joint venture with Majid Al Futtaim which will provide it with the knowledge necessary to market in UAE. Majid Al Futtaim, through its experience, can handle some of their promotions, and coordinate some of the stores and local operations. Promotions can take advantage of the media like print, television, radio, billboards and the internet. The print and billboards are to be set up in strategic places to attract pedestrians and traffic.
The television and radio advertisement should be done at primetime or at family meal times in order to gain the attention of the domestic market. Since the region has one of the highest costs of living, like the costs in Dubai, due to the influx of people and the foreigners, promotional concept can make use of discount prices to attract customers.
Evaluation From the report, it is wise that Carrefour chooses Majid Al Futtaim because it has proven to have the ability to expand and grow within the Middle East. This will also prevent the retailer from competing directly with Majid Al Futtaim in the same region of malls. This is because it will be considered not as foreign and but as part of the Arab culture and life. There is a need for sufficient parking and traffic control around the mall especially during the weekends when the influx of customer is high.
The Dubai Market has been facing challenges, like competition that is continuously increasing. This is seen more in the food market segment that has effectively reduced the profit margins for retailers. Though domestic competitors like Wal-Mart and Costco are absent in the Middle East, there are other European hypermarkets that are strategically entering this market. For example, Union Coop opened a hypermarket in Dubai in Another hypermarket which entered the UAE was Geant.
In addition to this, small and neighbourhood stores are stealing customers, like the Asians who put up and go to these shops. The other challenge is inflation; this is seen from the rapid growth, high liquidity, demand, poor supply, and the declining US dollar. Inflation usually reduces revenues and raises the costs of inventory and employment.
The decline of the dollar against other currencies has the ability to lower revenues when they are repatriated to foreign countries. The other challenge is that the UAE government has implemented very difficult visa regulations that are seen to prevent the influx of persons into the region. In effect, this move changes the labour market. This is because it is becoming increasingly more difficult to attract Asians and Westerners as skilled labour. On the other hand, the country is not completely an island, for this reason it is feared that they will be affected by the politics of Iran and Iraq.
In addition, the concept of terrorism is an every day increasing fear within the Middle East, with wars being fought in Iraq, Afghanistan, and Iran over the same matter.
From a different point of view, the dependence of Dubai on foreign investment and international tourism increases their chance of being affected by world economy. It is for this reason that the world saw the Emirate being vulnerable to the global economic downturns that affected western nations. However, places within the Emirates like Abu Dhabi were not affected by the recession. The recession and the subsequent credit crunch had a negative effect on the oil prices.
These will improve the competitive advantages of Carrefour and it will also give them a market positioning that will drive their sales.
They need to handle the inconveniences to shop at the Carrefour for a shopping experience as customers consider traffic and transportation inconveniences. They need to make sure they have ample facilities and amenities for the customer, like sufficient parking, taxis and management of traffic mostly during the weekends and holidays. They can take advantage of the market segment, positioning, segmentation and targeting.
Moreover, they need to make use of the marketing mix. This is to make sure that customers associate Carrefour with cost effectiveness, affordability and savings in tough economic times.