SUPERMARKET o TARGET CUSTOMER Customers who wish to make less frequent visits to stores in order to stock up on household necessities.

. Depending on the region in question, housewives and mothers who do most of the grocery shopping and take on most household activities for the family. o NEEDS THAT PRODUCT SATISFIES Allows customers to purchase groceries and other important nondurable goods under one roof, effectively eliminating the need to shop several different stores in order to satisfy a given households needs. o LOW COST OR DIFFERENTIATION Low cost. Many of the household goods that are carried in one supermarket are also carried in other competing supermarkets. Although there may be a small amount of differentiation regarding the types of goods offered and the brand names carried, ultimately, price is the deciding factor in determining which store to shop.

HARD DISCOUNTS o TARGET CUSTOMER Customers who are interested in the highest level of savings. These customers are willing to make the trade-off between price and quantity. These customers can include businesses as well as consumers with large families. Variety is not necessarily an important factor for these customers.

NEEDS THAT PRODUCT SATISFIES Allows customers to save money on items that have a long shelf life and items that are used in large quantities.

LOW COST OR DIFFERENTIATION Low cost. Customers who shop hard discount stores are looking for the highest savings overall, while giving up the ability to purchase smaller quantities or the ability to select from a wide range of goods.

FREE SHUTTLE SERVICES o TARGET CUSTOMER Customers who live in areas with poor or underdeveloped infrastructure and have little access to personal transportation. Handicapped customers who are unable to transport themselves. o NEEDS THAT PRODUCT SATISFIES Allows customers without transportation to take advantage of cost savings from large stores that otherwise would be outside their reach. o LOW COST OR DIFFERENTIATION Differentiation. Providing free shuttle services only increases costs to the company. These shuttle services are not generally offered by most retailers.

CHILD PLAY AREAS o TARGET CUSTOMER

Stay-at-home mothers, fathers, and other care providers who cannot afford to leave their children at home or elsewhere while doing their shopping.

NEEDS THAT PRODUCT SATISFIES Allows customers to shop without the stress associated with shopping with ones own children. Allows customers greater flexibility in choosing when and where they can shop, given the constraints of their childcare duties.

LOW COST OR DIFFERENTIATION Differentiation. Child play areas, offered as a free service, only help to increase costs to the firm. These services are intended to set Carrefour apart from its competitors in order to gain a greater market share.

HOME DELIVERY o TARGET CUSTOMER Busy professionals and people who are not mobile enough to perform shopping duties at a storefront. o NEEDS THAT PRODUCT SATISFIES Allows busy professionals to order goods remotely so that they can focus more on work. Also, allows handicapped and elderly people access to a wide variety of products that may not be available in their area of mobility. o LOW COST OR DIFFERENTIATION Differentiation. Like other services, home delivery only adds to the costs of operation for Carrefour. However, home delivery

capabilities set Carrefour apart from competitors who do not offer similar services. CULTURAL CENTER o TARGET CUSTOMER o Women and children.

NEEDS THAT PRODUCT SATISFIES Allows women and children to further their education every time they venture out to purchase goods for the household.

LOW COST OR DIFFERENTIATION Differentiation. Offering a variety of classes in English, dance, cooking, and drawing, among other subjects, helps to set Carrefour apart from its competitors. It certainly does not help to lower costs for the firm.

FREE CREDIT o TARGET CUSTOMER Customers who do not have enough disposable income to purchase durable household goods outright. o NEEDS THAT PRODUCT SATISFIES Allows customers access to durable household goods, such as refrigerators, that they would otherwise have to do without. o LOW COST OR DIFFERENTIATION Differentiation. Money is not free. Offering goods to customers on credit without charging interest only adds costs to the bottom line.

It does serve to set Carrefour apart from competitors who are not offering similar services. THEMED CORNER o TARGET CUSTOMER Adventurous consumers who are looking to broaden their horizons by purchasing exotic goods from other countries. o NEEDS THAT PRODUCT SATISFIES Gives customers a sense of cultural growth and awareness, while satisfying their need to try new things. o LOW COST OR DIFFERENTIATION Differentiation. Themed corners are intended to introduce consumers to new products that they have not been exposed to before. These products are generally very specialized and are generally not carried by competitors.

CORPORATE LEVEL STRATEGY: RELATED CONSTRAINED Carrefour is using a related constrained corporate level strategy because their dominant business, the hypermarket, accounts for 57.6% of their overall sales. Other formats, such as supermarkets, hard discounts, and other stores all share product, technological, and distribution linkages. These other formats generate a significant amount of revenues for Carrefour and will continue to do so as Carrefour continues to expand. VALUE CREATING DIVERSIFICATION

ECONOMIES OF SCOPE SHARING ACTIVITIES Carrefour is able to share activities such as procurement, logistics, operations, and human resources across several different formats in order to create value. Goods destined for all different formats can be housed in a shared distribution facility. Practices and knowledge associated with human resources can be shared on local and global bases across many different business units. The success of pilot departments in one format can be used to further develop other formats as well. Activities such as those described above, when shared among closely related businesses, can also help to reduce business risk. TRANSFERRING CORE COMPETENCIES Carrefour has demonstrated a unique ability to adapt its concept to local contexts across the globe. By observing the success or failure of certain initiatives in one business format, Carrefour is able to transfer the knowledge of this success or failure across all business units at little cost to the company. Carrefour is able to spread the knowledge that it contains within its human capital by employing expatriates to work side-by-side with local managers. This arrangement allows for the spread of knowledge within the company both upstream and downstream, thus creating value for the entire firm. MARKET POWER VERTICAL INTEGRATION

Carrefour has attempted to gain market power over its competitors by manufacturing and distributing its own line of goods in home appliances and spices. By integrating this production into its existing operations, Carrefour is able to achieve cost savings in operations, by avoiding some market costs, and possibly improve the quality of its products over competitors.

FINANCIAL ECONOMIES EFFICIENT INTERNAL CAPITAL MARKET ALLOCATION o Carrefour has the best information available in the market to use in determining the most profitable and proper allocation of capital amongst its business units. Carrefour has a tremendous amount of capital at its disposal, and should only seek to borrow from creditors when absolutely necessary.

VALUE NEUTRAL DIVERSIFICATION LOW PERFORMANCE o Carrefour has diversified its businesses to include hypermarkets, supermarkets, hard discounts and other formats. Although they have seen good returns in international markets, the returns in their domestic market continue to underperform the domestic markets of their competitors. Because of these low returns in the domestic market, Carrefour has reached out to international markets. They should continue to branch out into new markets and

pursue new formats if the domestic market continues to underperform competitors domestic markets. UNCERTAIN FUTURE CASH FLOWS o The future cash flows of any business can be uncertain at times. As the retail industry continues to mature, Carrefour will increasingly see a need to continue to diversify. However, many markets across the globe are just beginning to mature, and many remain untapped. Until Carrefour sees the world market reach maturity as a whole, it should not need to diversify for future cash flow reasons. SYNERGY o There is a high level of synergy among Carrefours product offerings. By operating a variety of formats for its retail operations, it achieves synergy in its procurement and distribution channels. A Carrefour convenience store benefits from the buying power generated through the operation of Carrefours hypermarkets, and vice versa. However, these high levels of synergy indicate interdependence between business units which can cause Carrefours flexibility to deteriorate. This, in turn, increases the risk of corporate failure. Carrefour may want to inhibit the levels of synergy achieved between business units in order to maintain its flexibility. This flexibility has proven invaluable to Carrefour in expanding internationally. INTERNATIONAL CORPORATE LEVEL STRATEGY

TRANSNATIONAL STRATEGY In Asian markets, Carrefour has sought to achieve both global efficiency and local responsiveness. They have had to hold costs down due to the growing number of global competitors they face, but they also have had to meet the demands of a highly diverse set of cultures, buying habits, and tastes. Its strategy of cross-training expatriates with local managers helps to increase local responsiveness. Also, many Asian business operations require more autonomy than domestic operations. So, with Carrefour, there seems to be a combination of the multidomestic and global strategies. The use of this transnational strategy may help explain Carrefours overwhelming success, in most cases, of opening new business operations in other countries.

ENTRY MODE Carrefour has implemented the use of strategic alliances, at first, in entering new unfamiliar markets. Once Carrefour becomes more familiar with a market, it then rapidly expands its operations through the development of new wholly owned subsidiaries. This approach appears to balance the risk involved with greenfield ventures, with the lower returns associated with strategic alliances. Because this approach has proven successful in the past, I would recommend that Carrefour continue this approach in the future.

CONCLUSION Carrefour has positioned itself as an international leader in the retail industry. Their strategies have proven successful for a number of reasons.

First, they have been able to successfully transfer competencies to associates and managers across the globe. Also, they have been able to adapt to local cultures and consumer tastes as necessary. In some cases, they have even managed to change consumer tastes and buying habits. They have succeeded in entering new markets aggressively and gaining a large share of each market. Carrefour has even been able to restructure when legalities made it necessary. The question remains, then, what should Carrefour do in the future. Carrefour should remain in the retail industry. It should continue those practices that have proven successful and profitable in the past. Also, Carrefour should continue to leverage its knowledge of international markets to continue its rapid expansion across the globe. Carrefour should, however, be wary of threats to its operations, and remain vigilant in exploring new ways to improve its products and services. Carrefour has come this far based on its ability to pioneer new retail concepts and should remember that this pioneering spirit is what will carry it into the future.

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