Carrefour Company Analysis - Assignment Example

Carrefour Company AnalysisIntroductionCompanies increasingly invent new business models–or strategies–for selling as the market competition intensifies, and both consumers and investors become more demanding. Businesses typically focus on either cost leadership or product differentiation or niche market strategy to gain the completive market position. Hybrid strategies involve a combination of the above strategies and are increasing in popularity in the modern business world. This study examines the business environment and strategies adopted by Carrefour which is the Europe’s largest and the worlds’ second-largest company in retailing.

Cost leadership strategy focuses on supply side of an enterprise and comprises of an integrated set of actions taken to produce goods or services with features that are acceptable to customers at the lowest possible cost in the market. Product differentiation alternatively creates a perception in customers’ minds that specific brands are unique and have superior qualities with respect to the image, reputation, reliability, designs and quality compared to the similar other products in the market (Baroto et al., 2012). Niche markets are the narrow market segments having specific demands that are isolated due to geographic location or socio-economic factors.

The objective of the current study is to analyze the business environment and hybrid business strategies of Carrefour. Business Environment and Strategy of CarrefourThe principal risk factors in the retail industry are categorized as follows; 1) business environment: Political and social environment, Economic environment and market volatility, Environment, pressure and regulatory changes, Changes in the sector and the competitive Environment, Natural disasters and climate change, Terrorism and crime 2) strategy and governance: Strategy definition, adjustment and implementation, Compliance and fair practices, Corporate responsibility, Environment, Disputes/Litigation 3) operations: Relevance and performance of economic and business models, Operational and financial control of growth and expansion, Partnerships and franchising, Control of the supply chain, Product quality, compliance and safety, Safety of people and property, Human resource management, Continuity, integrity and confidentiality of information systems and Control and valuation of assets and 4) financial: Market risk, Liquidity risk, Interest-rate risk, Foreign-exchange risk, Equity risk, Quality of financial management, budgets and reporting and Credit risk.

Specific business strategies have been articulated and designed to remain the long term profitability of the company while successfully managing these risk factors (Carrefour, 2012, pp. 116-123). The proceeding section describes how Carrefour’s adopts Cost Leadership, Differentiation and Niche strategies to gain competitive advantage in the market.Multi-Format and Multi-Channel StoresStudies show that the companies operating in competitive industries would not be able to survive unless they adopt at least two corporate strategies including cost strategy and differentiation strategy (Baroto et al., 2012). Carrefour’s business strategy include product differentiation, cost minimizing as well as niche market strategies.

Carrefour stores operate in a range of different formats and channels namely, hypermarkets, supermarkets, convenience stores, cash and carry stores for professionals and hypercash stores which are specifically designed to address the requirements of different consumer segments. Some of the formats are designed by vertically integrating the stages in the value chain example, Hypercash stores combines the benefits of Cash and carry stores (wholesale) and convenience of hypermarkets (retail). Creating specific investment between stages of the value chain helps firms to internally exploit their pool of knowledge and capacities, and to guarantee quality of inputs and services employed.

There by the market competitiveness is also increased. High level of vertical integration is not recommended to the firms operating in industries where high demand fluctuations occur (Díez-Vial, 2007). The low market demand elasticity in the retail industry is favorable for Carrefour to adopt vertical integration process. Carrefour has also designed stores focusing specific, narrow market segments example, Montagne stores for the shoppers in ski resorts. ConclusionsCarrefour operates in world retailing industry.

Its product range include local products, everyday products, non-food items and commercial services that are ranging from financing solutions to leisure activities, or from health and beauty care products to petroleum made available through retail stores and online. The hybrid business model consists of cost leadership, product differentiation and niche type market strategies have been innovatively designed to gain the advantage from strengths and weaknesses in the organization and opportunities and threats in the external environment.

ReferencesBaroto M. B., Abdullah B. M. M. and Wan H.L. (2012). Hybrid Strategy: A New Strategy for Competitive Advantage. International Journal of Business and Management,7(20), 120-133Carrefour. (2012). 2012 Registration Document, Annual Financial Report. Emile Zola: CarrefourDíez-Vial, I. (2007). Explaining Vertical Integration Strategies: Market Power, Transactional Attributes and Capabilities. Journal of Management Studies, 44(6), 1017-1040.