Carrefour: Finding Retail Space in All the Right Places - Research Paper Example

While this globalization is certainly advantageous to most world economies, it can also create issues for international organizations that are looking to maximize long-term profitability without wholly sacrificing their natural, financial, and human resources that comprise the viability of any business. Carrefour is faced with said problems, as it is a global outfit seeking to cost-effectively expand its operations to include regions of the world that were more recently considered to be underdeveloped and socioeconomically unstable, making the recapitalization of its business a much more high-risk investment, as pioneering costs are always a critical part of the equation if a business enters its respective market first.

This is counterproductive to one of its goal of achieving expansion at reduced costs. Moreover, the company cannot shop new locations in the United States or Britain, as those markets are mature and completely saturated with hypermarkets and supermarkets. Realistically, this particular move to developing regions could put the company at risk of overleveraging its assets and resources, as it has wholly owned subsidiaries--traditionally gained through acquisitions--that typically operate in a foreign country.

Given that the company owns these subsidiaries outright, it is assuming all risks and costs involved in establishing an operation in these regions where the socioeconomic climate is fragile but progressive. In addition to location selections, the organization is plagued with issues surrounding its relations with the public, as meeting the various region-specific demands of consumers is a difficulty with which it grapples. This type of a disconnect is absolutely detrimental to the financial welfare of the company; however, if aligned with a suitable partner and certain legal and technological firewalls are set in place for security reasons, an organization would be able to revive its relationship with its consumer base and maintain more continuity, in terms of both profit and workflow. II. Discussion Like any entity, the objective of expansion is designed to be pursuant to increased profit margins, yet achieved with low cost.

However, it is confronted with conflicting issues. While it must hold steadfast to its existing markets in which it thrives with growth continuity, the company must also look to establish operations in other countries where economies are on the fast track to development and the markets are still in their infancy stages, thereby creating an early point of entry and beating out any potential competitors. This triggers a quandary, typically, for management because while it is more cost-efficient to maintain status quo and focus strictly on sustaining its existing consumer base, the entity must also build its book of business by expanding its operations and gaining exposure in new or newer markets, which means higher costs to the company.

Carrefour has some additional concerns that may affect its vision for the future. While it’s experiencing significant growth in Belgium, Spain, and Italy, the outfit still does not meet the local needs of the economy in which it is headquartered—France. A company typically cannot sustain itself in foreign markets if it cannot leverage its valued skills and