Strategic management lecture: strategy design P.4

CASE STUDY – CARREFOUR

Carrefour is Europe’s largest retailer, with its success built on a rapidly expanding chain of hypermarkets.  Alongside this, it has four other shop formats, for meeting various types of demand.  At present, its strategy is based on expanding three of these formats internationally. 

·         How would you describe the Carrefour group’s strategy?  How do the different levels of strategy fit together?

Carrefour has an explicit corporate strategy of rapidly expanding its three main types of store – hypermarkets, supermarkets and hard discounters – internationally.  It aims to build market share in each country in which it works by ‘expanding the type of retailing best suited to the local market and by taking advantage of the way the three formats complement one another’.  The three store formats work together to achieve the corporate strategy.  And at the same time, each works in its market segment with its own business strategy.  This, again, is based on expansion and succeeding in its chosen market segment, by providing low costs, high customer service, availability, and so on.  Within each business, the functions ensure efficient operations for logistics, retailing and all the other associated functions needed to support the business strategy.

·         How do the strategies affect the operations in their stores?

The strategies show what Carrefour wants to do, but these plans have to be implemented and translated into actual operations.  In this case, the strategies call for expansion, made possible by meeting the specific demands of each market, high quality customer service, low prices and high quality products.  The operations within each store must be designed to achieve these.  This involves thousands of separate decisions about operations to define and deliver their ‘product package’.  The operations are responsible for delivering the services and goods that allow Carrefour to achieve its business strategies. 

·         What are Carrefour’s distinctive capabilities and competitive advantages?

The company explicitly mentions its strengths in running different store formats, meeting the specific demands of every market, giving high quality customer service, low prices and high quality products.  These are the obvious capabilities, but they are supported by others, such as efficient logistics, use of finances, procurement, and so on. 

·         How do the strategies compare with those of other retailers?

Despite intense competition in the retail industry in general, and supermarkets in particular, many countries have one company that gains a dominant position.  In the USA it is Wal-Mart, in the UK it is Tesco, in France it is Carrefour.  These leading companies often adopt similar strategies – which are based on the principles of efficient operations, low cost, customer service, expansion, and so on.  Strategies based on these are obviously successful.  In this sense the strategies of Carrefour are similar to those of other major, companies.

However, there are other companies who compete in different ways.  For example, many shops focus on specialised products, local markets, very high quality, convenience, and so on.  As with any industry, a range of strategies is possible and managers have to select the most appropriate.

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