Motorola

1. Executive Summary This report will elaborate about the strategy management of Carrefour operating in China. With the data collected, an in-depth understanding of the overall current situation of Carrefour will be analyzed. Key issues will be highlighted to evaluate the criteria for the strategies as it will lead Carrefour to more specific direction in strategic vision and focus on their objectives. A set of implementation plan will be established to create stronger competitive edge are recommended. Following which will be contingency and control plan to sustain and assess the strategy. Lastly, the future of Carrefour and recommendations for it will be presented to end off the report. 2.1. The Research Background The objective of this report is to obtain a better understanding of the current situation of Carrefour in China, in order to recommend the appropriate strategies and implementations that Carrefour should undertake, and it is supported by credible online and books. 2.2. The Sources and Methods of Data Collection Researches are done mainly through internet, journals, and past analysis that are done by business developer and etc, from sources such as the World Wide Web and publications. Analysis is also done on past reports published by Carrefour and its direct competitors. 2.3. The Report Organization This report has been arranged beginning with an introduction to the operational environment of Carrefour, followed by the main discussion section covering the key factors of strategy management. The report is then ended with a conclusion. 2. Overview Analysis As organization operates in both internal and external environment concurrently, environment analysis will helps to determine the competitive advantages, opportunities and threats prevailing therein. 3.4. Internal Environment a) Sustain Competitive advantages * Valuable capabilities allow the firm to exploit opportunities or neutralise threats in its external environment (Ireland, Hoskisson & Hitt 2009, p. 82). As Carrefour is a global major exporter of Chinese products, it able to enjoy more bargaining power against suppliers. Thus, driving effective cost management, with a wide source of products. * Rare capability allows Carrefour to stay ahead of its competitors in China’s retail market. Carrefour is a successful house name in providing low prices; quality products; one-stop shopping; freshness, and free parking services in retail industry. However, these factors could easily be imitated by other firms. Lianhua supermarket is a good example by introducing hypermarket services. This action increases the intensity of rivalry among the competitors, which includes foreign brand like Wal-Mart entering into the market. * Costly to imitate capability - As a part of global strategy, Carrefour had decentralized its operations as one of the important successful factor in international markets (Carrefour’s Strategies in China). In China, they had employed 95 percent of local Chinese managers and invest heavily in training to drive for continuous success. The managers were given empowerment in the operation of the stores and customizing according to local needs respectively. This allows Carrefour to penetrate different cities of China to search new opportunity. Carrefour also chose to engage with the local vendors when sourcing for its goods. This helped Carrefour build up guan xi with the locals since it first enter China in 1995, outshining Wal-Mart, the then leader in China retail market (Walmart and Carrefour in China: Whose strategy is better'). * Non-substitutable capability- Carrefour had created lifestyles that “Shopping as a form of leisure was an increasing phenomenon: a visit to the French Hypermarket had turned into Sunday outing.” (Ireland, Hoskisson & Hitt 2009, p. 78 of case study). Successful models will always followed by suitors where they tend to ‘cut n copy’ the best business practices, concept and models to compete against the pre-successor, but experience which is of intangible factors will increase opportunity costs of those who tried to imitate. b) Social responsibility – Carrefour had actively participated in public welfare projects and contribution to local communities, while cooperating closely with local authorities (Society and Product Responsibility). This presence will definitely helps it positive imaging in China business environment. In addition, Carrefour had showed strong support in initiating ‘Green’ environment in all its stores. 3.5. External Environment The external environment greatly affects companies’ growth and profit, and it is not within the control of the company. Carrefour is currently the leading retailer in China’s retailing industry; however, continuous searching for business opportunities and identifying threats are required in order to sustain its competitive advantage and profitability. The diagram below shows the external factors affecting Carrefour, which in turns affect the industry environment of the company. * Women in the workforce * Workforce diversity * Attitudes about the quality of work life * Income distribution * Concerns about environment * Shifts in work and career * Shifts in preference regarding product & service characteristics * Population size * Age structure * Geographic distribution * Ethnic mix * Income distribution Economic Industry Environment Threat of New Entrants Power of Supplier Power of Buyers Product Substitutes Intensity of Rivalry Competitor Environment Demographic Political / Legal Socio-cultural Global Technological * Personal saving rate * Business saving rates * Gross domestic product * Inflation rates * Interest rates * Trade deficits or surpluses * Budget deficits or surpluses * Antitrust laws * Taxation laws * Deregulation philosophies * Labor training laws * Educational philosophies & policies * Important political events * Critical global markets * Newly industrialized countries * Different cultural & institution attributes * Product innovations * Applications of knowledge * Focus of private & government-supported R&D expenditures * Different cultural & institution attributes * New communication technologies * Figure 1: External Environment of Carrefour. Diagram illustration from (Ireland, Hoskisson & Hitt 2009, p. 35) a. Demographic segment * China is the 2nd largest population in the world. The massive population had created huge retail opportunities as well as tough competitions. * Global issue of aging population globally. * The income distribution is widely different in China sorely depending on the area of development (Wong 2008). The people in big city like Shanghai and Beijing will have strong spending power compare to those in less developing areas. In addition, lacking in credit card and low ownership of cars in these less developing areas also poised a challenge for large retailers with full scale services and wide range of products offering. * Adapting to localization rather than standardization allows Carrefour to provide different area of services and products according to the local needs and restriction which they had been practicing throughout. Thus, in depth understanding of culture and consumer behavior for different area is essential. Example, Carrefour outlets in China sells exotic consumption product due to the food preference of the Chinese (Child 2006). b. Economic Segment * High inflation rate had decreases consumer spending and pushes dramatic increases in pricing of consumer products (Bezlova 2007). Inflation not only changes consumer behaviour in sourcing for low cost products but also increases operating cost. * The global economic crisis had slowed down China’s economic continuous growth, but China is not as affected as other developed nations (What economic crisis' 2009). Increase in unemployment and high interest rate had forces less consumer spending and increase in saving respectively. However, a crisis in one business brought blooming to another, for example the sign of business growth in hardcore discount store in current situation enable Carrefour to provide another source earning and offering to the consumer with their other product line, the DIA store. Companies with strong financial background also spend to enter and expand to take advantage of the lower business cost. * Rising food, fuel and operation cost globally will pose as future challenges to all businesses. * Increase purchasing power in 2nd and 3rd tier cities of China. c. Socio-cultural * Environmental (green) issues increasing in importance, in view of global and personal context, Carrefour and its major competitors had taken steps to show their supports (Tesco, Carrefour and Wal-Mart go green in China 2009). * Sociological changes affect labor practices and the nature of product demanded by increasingly diverse consumers, such as organic food. * People bring about higher focus on quality of life. They prefer much better and higher quality products and services although the economic is slowing down. * Emphasis on face also affects them in going for better perceived products and stores. * Consumers shopping expectation had moving towards one-stop shopping for convenience and wide selection. * Increase of workforce diversity and more women joining the workforce will helps in creating more challenges and opportunities in terms of business growth strategy. * Culture emphasize of guan xi in doing businesses in China is very important to establish rapport. d. Global * A WTO committee which open up free trade market in China, which increases business opportunities and attract foreign investment. * China is no longer position as a factory; it is now a fast growing business market which every trade is eyeing for. Thus, the competitor advantages for Carrefour will be challenged as more competitors coming into this huge market. However, it could set as a leader in the market being established in China at an earlier stage. e. Technology * New emergence and advances in technology had changed China’s business and living environment. It not only pushes the standard of living but also shorten the connectivity within city to city and increases global exposure through technology. * Internet shopping had become a trend in China’s retail market especially sourcing and delivery of consumer products. * Low operation cost has attracted huge investment in manufacturing Hi-Tech products. In addition, Central government had planned to develop a 2nd Silicon Valley look-alike to drive technology growth (Zero2IPO Hosts 2nd Annual China Venture Capital Forum in Silicon Valley 2007). Thus, increase in technological talents pool will able to provide more services and expertise to the new market e.g. outsourcing services will be the next growing industry. f. Political * The opening of trade barriers was often being blames by China’s press that foreign retail operations had causes jobs reduction and smothering local retails industry. Carrefour hired 95 percent of the worker from China to rectify this problem and also to help China to decrease their unemployment rate. As discussed by Gehlen (2005, case study p.56-59). * Government policies and laws will affect where and how firms may choose to compete, especially where the organizations also have to obey the regulations of the province it is in. * High political risk, for example, the boycott campaign of Carrefour in China due to the violence act of Olympic torch relay suffered in France during year 2008 (Fitszimmons 2008). 3.6. SWOT Analysis  Strengths | Weaknesses | * Market Leader in China. * Brand recognition * Effective cost management. * Aggressive marketing and adaptable business model to suit local preferences. * Focus on competitive prices. * Loyal customer. * Strong responding in social community work. * Wide range product line offering, i.e. Hyper mart, hardcore discount stores etc. * Strong financial backing | * Stagnancy in offering. * Declining profitability. * Working along thin margin. * Losing its competitive advantage. | Opportunities | Threats | * Projected strong economic growth performance in Asia especially China * Huge business market. Massive population, maximum purchasing power and increase consumption * Continuous development in suburban area. Increase in living standard * An entry in WTO had open up free trade market; abolish main trade barriers, such as import taxes and more business opportunity | * Economic downturn, slow recovery * Increases in competitors * Similar products and service offering reduces the market share. * High political risk. Government changes rules and regulations. * Strong presence of local voices, e.g. recent year’s Shanghai-based major retailer started to defy foreign competition. * Products offering are restricted in different area. * Consumers can share their sentiment or displeasure through Internet that causes negative feedbacks. | Table 1: SWOT Analysis 3.7. Implications of Assessment a) Carrefour has the potential to strengthen their branding by creating another level of shopping experience since they managed to changed the consumer shopping lifestyle in visiting their hypermarket as a Sunday outing. b) Being the biggest user of local products, continuous in search for better quality products offering with low costing is essential, riding on its resources and technology in China, in order to drive the differences ahead of competitors and increases market share. c) Increase of new stores in 2nd and 3rd tier cities of China which is a huge business opportunity. 3. Competitive Analysis 4.8. Current Situation in China * Carrefour is one of the pioneer foreign retailers to step into China, therefore making its brand name more prominent than others, through understanding the needs of the consumers it has manage to capture the market. * Remains stronger than its competitor in terms of revenue per outlet and is continuing to lead the Chinese modern grocery market with its innovative ideas. * Strong vendor rapport in China. * Able to procure product locally which secure consumers with its product freshness which is an important feature to the locals. * Able to create lifestyle shopping experience, on top its price and quality competitiveness. 4.9. Issues to be Addressed 4.10.1. Direct Competitors Environment Issues | Competitors Move | Anticipation by Carrefour | Knowing the competitors | * More local store opening by local brands like Lianhua * More foreign brands like Wal-mart, Telso & Metro etc. | * Localization in operation * Opening up more stores in developing cities and suburb * Strengthening competitive advantage. | Competitors and their strategies | * Wal-Mart acquisition of Trust-Mart and continues to have low operating cost with sustainable operations resulting in higher profit. * Tesco holds 90% of Hymall and rename the stores to its brand name so as to expand influence of the current brand | * Carrefour has formed strategic alliance with China Unicom to further enhance on value added services such as 3G personal services, invoice printing and a new mobile phone number for consumers. * Obtaining authorization and partnership with Marvel Comics should bring next level of business * Continue to be an organic brand, and employing local staffs | Strength and weakness pursue by competitors | * Aligning with the government who has taken the role towards the environment * To have a low price and have variety of merchandise to offer customers. * Many local players like Lianhua will be on upper-hand in offering cheap products and services | * Renovating some of its outlets to operate with energy saving environment as well as environmentally friendly. * Carrefour has to maintain its competitive advantage of the ability to keep its price low by accommodating to the consumer of the private brand and having 95% of its products manufactured in China. | Table 2: Direct Competitors Environment 4.10.2. Indirect Competitors Environment Issues | Competitors’ Move | Anticipation by Carrefour | Knowing the competitors | * Convenience stores that sell variety of products with 24 hrs operation. * Neighborhood stores which are nearer to the consumers. * Shopping centers that sell variety of items in one location | * Providing better customer service such as providing shuttle service and allocating bicycle lots for the convenience of the customers | Competitors and their most likely strategies | * Selling a local brand product and merge with local manufacturer and improve on product quality. | * Carrefour need to continuous sustain the relationship with it local suppliers. * Continuous searching of cheap raw materials from regional area | Table 3: Indirect Competitors Environment 4.10.3. Inter-organization Environment Issues | Anticipation by Carrefour | Strong financial status | * This will provide Carrefour with the necessary financial support for its strategies. | Volatile external environment such as protestors and demonstrators | * Even though Carrefour is well accepted in China, as an establish retailer it has to be sensitive on moves or decision made that could affect the surroundings as any movement made by the organization would easily caught attention and cause reaction of the public. | Responding negative issues | * Management had to align internally and clarify any doubts from public e.g. the case of the financial support to Dalai Lama. | Response to surrounding | * Moving from standardization to localization by understanding the cultural differences. | Table 4: Inter-organization environment 4.10. Analyzing Competitive Positioning To analyze the competitive strength and position of Carrefour, considerations are done through Porter's five forces. Existing competitive rivalry * The existence of Wal-Mart and Tesco as a major competitor in the market and other foreign retailers such as Lotus and Metro. * Competing with local supermarkets such as Lianhua, Wu Mart and new emergence in the market. Bargaining power of buyers * Consumers have more bargaining power as there are a number of supermarkets and other indirect competitors that offer a competitive price as well as variety of products. Threat of new market entrants * The encouragement from the local government to foreign market to enter China. * Attractiveness of the China market Power of suppliers * Low bargaining power as Carrefour is able to dictate to suppliers on the pricing, due to its bulk purchase. * Quality from suppliers need to be considered, due to the recent issues on the food poisoning. Threat of substitute (including technology change) * Consumer could switch to competitors that offer better service or high quality products, through the ulitisation of technology advancement. * Retailers that provide on-line shopping with delivery advantage without having ‘physical’ appearance in the market. Figure 2: Porter’s 5 Forces 4.11. Implications of Assessment * Carrefour could maintain its brand reputation with quality products by working closely with their local suppliers and offering low prices to the consumers. * Continue to be innovative in providing better services to the customers so that they have a good shopping experience at Carrefour. * Create awareness of the sensitivity of the surrounding environment in terms of the local practice and norms that could lead to unnecessary disruption to the daily operation. * Always to be on the move to be able to anticipate in changes to keep up with the environment. 4.12. Strategic Group Analysis Company | Cost effective | Value added services | Variety of Product range | Product quality | Wal-mart | √ | √ | √ | √ | Tesco | √ | √ | √ | √ | Carrefour | √ | √ | √ | √ | Wu-mart | √ | X | √ | √ | Convenient stores | X | X | X | √ | Figure 3: Strategic Analysis over Carrefour and its direct competitors 4.13. Implications of Assessment * Carrefour is facing a very competitive environment. Competitors are providing similar concept and strategically. * Diversifying target consumer. Current target consumers are middle and low income. Carrefour could diverse on higher income consumers’ needs and products accompanied with a good customer service. * With the high similarities in Carrefour and its direct competitors, it is important for it to establish a differentiated value through better customer experience to sustain in the market. * Carrefour is to cut cost in areas such as leveraging cost price of products by opening up more stores. With bigger purchase made, Carrefour has higher bargaining power than its suppliers, and could ask for better rates for its products. * Carrefour could create more house brand products, using its network and resources in China. These house brands products will not only help Carrefour to offer a better pricing products in its China operation, but it could also be outsourced to Carrefour outlets in other regions, especially those in Asia. * Carrefour could change all its lightings and fitting to recycled and environmental friendly ones, which emits less pollution and more cost efficient. 4. Marketing Objectives 5.14. Short Term Objectives * Continuous searching for new business opportunity in developing and suburb area. * Strong promotion of in house brand product to drive required sales and profits. * There will be a series of events and advertisement to enhance and remind consumers of the shopping experience at Carrefour, in accordance to a lifestyle theme which imprint an image of prestige and belonging to Carrefour. * Carrefour has to emphasize on its affordable yet quality of good, through advertising and trial periods. * Staff recruitment and training campaign which excite staffs to feel prestigious working at Carrefour. 5.15. Long Term Objectives * Continuous committed to build sustainable and improve relationship with suppliers and partners, thus driving low cost management effectively * Optimization in logistics. * Establish a social responsibility image * Reduces carbon emission footprint throughout the supply chain store. * Promote sustainable consumption. * Committed in local committee work. * Uphold competitive advantages. * Increase market share by at least 25% on top of the current market share in China by 2015, and increase marketing and research expenditures by 15%. 5. Formulation of Strategies 6.16. Competitive Positioning Figure 4: Competitive Positioning Strategic analysis chart 6.17.4. Implications of Assessment 1) The future competitive position of Carrefour will be slightly increasing their pricing while moving towards the category of lifestyle hypermarket as the consumer behaviour is changing and shopping in a hypermarket is now a lifestyle. Carrefour should have position itself not only intensifying and strengthening its position as a quality for price but also differentiated into value added service and offering distinctive retailing shopping experience on consumer market. The following reasons are shown below: * Consumers’ innovation aspect of new store concepts and the product positioning is wherein new products range to be launch to meet customers’ satisfaction, current needs and wants. * Its diversity into other new business ventures catering in market such as those with higher earnings, and increases the number of stores in suburbs area of China. 2) Carrefour could come out with integrated and innovation way of becoming affordable and innovative lifestyle hypermarket by redesigning its organization, enhance synergies between sales and purchasing of product, and create new relationships between head offices and stores. 3) The main issue is essentially to attain sustained product integration and achieve competitive advantage. Hence, Carrefour should propose to * Enhance the positive image and establish strong brand values * Focus on innovation and improvements * Be required to always up the ante on product benefits * Enhance the food safety and product assurance * Integrated and coordinated action to fulfill customer’s necessitate to exploit core competencies and gain competitive advantages. * Drive the convergence of innovation penetration into new target markets with the variety of new localised and imported goods to cater for the wider segment. 6.17.5. Competitors’ Likely Responses With the approaches that Carrefour will be taking, rival firms will likely to respond. Firms | Likely Responses | Tesco , Auchan | * Likely to imitate our new strategy. * Improve product quality to gain competitive advantages * Most likely to differentiate itself by customizing products cater to customer needs and target a wider market range. * Will change into lifestyle hypermarket to target shopping consumers. | Walmart, Makro, LianHua | * Start a price war as the prices on products are competitive * More promotions will be advertised. * Opening up more stores | PriceSmart | * Unlikely to response because of low market share * Target only a small market segment | Table 5: Competitors Likely Responses 6.17. Target Market and Segmentation The proposed methods of segmentation will be linked of marketing strategy such as creating innovative product or product diversification. In addition, the targeting market will be the regular consumers who shop at Carrefour frequently. Accordingly, the market segmentation will help Carrefour’s benefits: * Distinguish the various consumer behaviour and market trend * Understand the lifestyle of individual market * Selective marketing campaign for each market segment * Bring greater emphasis on customers’ need to meet our proposed strategy 6.18.6. Proposed Approach International Strategy Carrefour’s international strategy best approaches a transnational strategy which consists of combination strategy on localization and globalization. Figure 5: Approaches to Carrefour’s Transnational Strategy. Obtained from Hill & Jones (1998 p. 98) Localisation Localisation strategy is critical for the success of transnational retailing in Carrefour of China. The products are sourced locally which are fit for local tastes and 99% of employees are local so that they know the customers’ preference well. Carrefour could further strengthen the localisation strategy to sustain competitive advantage: * Help to grow among other foreign competitors by implementing ‘Very-Chinese’ qualities in its products, services, merchandising, prices and ambience. * New private label ranges redefining category structure and margin growth * Consumption is a socio-cultural process as much as it is an economic interaction; retailers need to be responsive to local cultural tastes, norms, preferences and consumer behaviors. * As consumer behavior is changing and there are signs of cultural assimilation, Carrefour has to adapt its strategies due to the unique characteristics of each market. Globalisation When a company conducts global expansion, it is surely to be involved into the process of communication with local customers. It is therefore necessary for Carrefour to understand differences in cultural perceptions and values, the differences in needs within a society, and to make proper adjustments to their strategies according to the varied response of customers. * The global chain groups are putting more value on China's high-level suppliers, which allows a growing number of domestic enterprises to get effective market information and management expertise through cooperation. * To encourage the purchase of "made-in-China" products by multinational commercial groups, the Chinese government is striving to promote "close-contact" between domestic manufacturers and overseas chain groups, enhancing its services such as goods testing and quarantine. * Chinese commodities are generally considered to have an edge on the world market in terms of variety, low price and flexibility in adapting to market climate changes. Thus, Carrefour has to promote Chinese goods on international market. This could also benefit Carrefour outlets globally. Regionalisation In addition, Carrefour should also focus on regionalisation to target different segment market. * As there are foreigners staying or working in China, they tend to have different culture of taste and subculture. * Carrefour could open additional stores which sell all the imported goods from other countries to target different market of people which is mainly the foreigners. 6.18.7. Segmentation Variables Demographics | * Income determines the range and price of products desire by the consumers * Getting consumer spending in suburban areas * Increase women in workforce * Aging population * Huge number of population and increase in consumers’ spending power | Geographics | * Different needs in different areas of China. Thus, customization of products in term of quality offering suited for different areas is essential, as it will helps Carrefour in better managing of consumer spending and stay competitive in different area. * Different rules and regulations | Psychographics | * Increase focus on quality of lifestyle * Focus on guan xi and face in culture * Nationalism | Behavioral | * Seek for convenience, on-stop while making purchase * Focus in environmental issues * Look for cheap and quality products | Table 6: Market Segmentation 6.18. BCG 6.19.8. BCG Analysis BCG Analysis is significant for Carrefour as it helps to analyze the product lines and expand the existing product in the challenging market in China. BCG matrix shown below is the relative market shares and growth rates of Carrefour in different tier cities of China. Figure 5: BCG Analysis for Carrefour Sales 6.19.9. Implications of Assessment * Strategy for 1st tier cities is to expand slowly, due to its low market growth rate. * Carrefour should increase the number of stores in 2nd and 3rd tier cities areas as it has great market growth potential. * Carrefour main objective should be continuously expand its overall market share and establish stronger branding by enhancing shopping and service experience. 6.19. Targeting and Positioning 6.20.10. Current Situation * The key issues affecting Carrefour is changing consumers’ spending power and patterns, higher demand for quality lifestyle. * Carrefour brand name is highly recognized in the world by consumers and therefore, it may become the targeted main competitive model by current contestants in the market. * As the world is facing financial crisis, many of the consumers have shrink their pocket and spend wisely therefore, Carrefour maintain the strategy of advertising new promotions and discounts frequently and guaranteed low price everyday. 6.20.11. Positioning Objectives * To strengthen its position in promising markets and abandon those that is losing, and increase its market share by 10% in 2010 (I B 2006). * Customer enjoys shopping in the hypermarket and it has become a kind of lifestyle. Therefore, Carrefour could position as a shopping outlet. * As the world including China are emphasizing on ‘saving our planet’ and Environmental (green) issues, Carrefour could position themselves as an environment caring organization. 6.20.12. Approach to Positioning * The approach recommended for carrefour to have at least 70 more retailing stores in china within 5 years is to apply ‘double the rate of store in promising market and hire more local worker to counter the mindset of the local resident and the press about destroying jobs in china as taking care of important stakeholders are equally important. As discussed by Gehlen (2005, case study p.56-59). * The recommendation for Carrefour to maintain its market position is to build up its position from their competitive advantages and insert extra value to outstand among the tough competitions. * In order for Carrefour to transform themselves as a shopping outlet, Carrefour could enhance a few of their hypermarket into a shopping mall. They could invite external business partner to operate their business in Carrefour shopping mall e.g. Fast food restaurants, Travel agencies, jewellery shops, tuition center, optical shops and etc. Moreover, Carrefour shopping mall could also include cinema complex to maximize the customers’ crowd and satisfy the shopping needs for all the customers. * As for educating the customers to be responsible to the planet, Carrefour could encourage customer to use recycle bags instead of plastic bag and implement charges for every plastic bags given. Money collected will then be donated to ‘Save the planet’ charity. By doing this, Carrefour could project itself as an environment caring organization as well as educate the public. 6.20.13. General Strategy for Positioning By offering the wide range of products at low prices, Carrefour will not be able to differentiate itself as these factors could be easily imitated. Therefore, Carrefour should strengthen their position as a lifestyle shopping outlet with quality products. Enhancing the shopping experience of the consumers could be communicated and enforced throughout the different levels of employees, as people play a major role. More facilitates and services should also be implemented to cater to the consumers. 6.20. Product – Market Scope Being a preferred Hypermarket in the world, one of strong point that Carrefour has is having a wide range of product, but by having a wide range of product has also increase costs and risk of Carrefour. It is necessary to carry out strategies applicable to each product-market which can be evaluate by the following: * Carrefour strengths and weakness in each product market * Market size and its potential for the various cities. * Competitors position, strengths and strategies. The Product range table below exhibits the product-market matching for Carrefour. 6.21. Product Range Table SEGMENTS | PRODUCT RANGE | SERVICE | Children | Toys, Kids Apparel | * Free Parking (Terms & conditions apply) * Free Delivery (Terms & conditions apply) * Free water cooler points and Seats * Free Internet Kiosk * Catering Service * Bakery Service * Kids playground | Parents | Baby World, Maternal Apparel | | Ladies | Lingerie, Makeup, Ladies Apparel, Accessories, Skin Care | | Men | DIY department, Men Apparel | | General | Grocery, Gourmet, Toiletries | | Health conscious customers | Organic products, Sports | | Pets owner | Pets food and accessories | | Car owners | Car accessories | | Lifestyle | CD and Videos, Books | | Electronic | Electrical Appliances, gadgets | | Table 7: Product Range Table 6.22. Carrefour’s Competitive Advantages * Continuously cutting down costing to increase earnings, for implementing better customer shopping experience. * Cater to different parts of China. * Having good staffs’ morale and thus enhancing shopping experience of customers at Carrefour. Employer can create an environment where every employee is able to feel the passion and sense of ownership in the workplace, it is important to ensure that the employees are happy at work. Clearly communicate the company vision, mission and goals to all the staff and give them the sense of ownership and decision-making freedom would actually help the company to attract and keep the talented and qualified individuals for the job (Banker 2000). 6.23. Industrial Key Success Factors * In strategic analysis of a business, the key success factors are often appear as analytical tools in the initial stage for examining the character of the industry in which the business are in. Key success factors often serves as an important component of a competitive strength assessment in reviewing the relative strength compared to its rivals in the same industry (McCabe 2009). The basic key success factors of retail market are to have a wide range of product with affordable pricing. * Businesses are set to maximize their earnings, it is often done through efficient cost management. * A higher level of key success factors includes creating personalized marketing and service by collecting customer information. The more you understand your customers, the better you can fulfill their needs. It can be start by tracking what kind products and items do customer normally purchased and how frequent does the customer purchase that particular product or item. The value of personalization is to retain customers and sell them more while reducing the inventory and marketing costs. 6.24.14. Evaluation and Justification over Advantages and Success Factors Evaluation | Justification | Lower prices everyday | This factor could be easily overtaken since the operational cost in China is low | Quality of products | Need to mention consistent quality control | Supply Chain | Most industry players source within China, as it is more cost efficient. | Good rapport with supply chain stakeholders | Other local brands could do better | Management | Local management will have a better understanding of the culture in China | Table 8: Evaluation and Justification over advantages and success factors 6. Implementation 7.24. Schedule of key tasks & Resource Allocation 7.25. Budget Plan Table 9: Marketing Financial Budgeting Plan for the year of 2010. Activities | Remarks | Sub-Total (US$) | PRINT MEDIA ADVERTISINGPublic TransportNewspapers Billboard AdvertisingON AIR ADVENTISINGTop 5 radio channelTV Commercial AdvertisingOnline Advertisement (on Google, Yahoo, Youtube, Facebook, and etc)Multimedia ProductionMOBILE ADVERTISINGPRODUCTION COLLATERALSAdvertisement production for NewspapersRadio advertising productionInserts Mailer in Newspaper Banner EVENTSCorporate Social ResponsibilityStaff recruitment and training campaignPRODUCT DEVELOPMENTResearch and development of new productsMarket Analysis & FeedbackLOYALTY AND REWARD SYSTEMAllowance for customer loyalty systemAllowance for staff reward systemMiscellaneous CostsSurvey forms, transports, stationary, etc. | 1 week / month1 full page1 week / monthOnce per weekPrime Air Time 10 days per monthDailyConcept and Casting100 million user target4 Artwork4 recording20 million copies1,000 banners1 event / quarter1 event / quarterTwice a yearOnce every quarter | 10,000,00020,000,00012,000,00015,000,00055,000,00012,000,00030,000,0005,000,0005,000,000500,00010,000,000500,00020,000,0005,000,000100,000,00010,000,00050,000,00020,000,00020,000,000 | Total Estimated Expenditure: | 400,000,000 | 7.26. Contingency Plans * Shall the targeted quarterly sales returns and market shares are not be met in 1st quarter 2010, there will be more events to publicize and advertising implemented. * Allowance for deferment from target is 10%, as major natural disaster or political issues, and the mispredicted recovery of economy crisis might affect Carrefour. * Shall the customer satisfaction level is not met, extra research and observation had to be made to evaluate the actual demand of the customers. 7.27. Targeted Return on Investment * Carrefour planned to increase its revenue in china by more than 11% per year to reach 10 trillion Yuan ($1.2 trillion; £680 billion) by 2010 (I B 2006). * Increase the market share by at least 7% by 2010. * Increase ROI in China by at least 10% in 2010. 7. Controlling 8.28. Planning Assumption * It is assumed that the economy gradually recovered in 2010, and fully recovered by 2012. * There will be no major political and natural disaster that will badly affect the spending pattern and economy. * As research on this report is based on current and past situation, unpredictable issues and changes might arise in future which caused a need to amend the strategies. 8.29. Controlling System Table 10: Control System for 2010 Functions | Strategic Objectives | Strategic Control | Finance / Sales | * Increase ROI by 10% * Increase market share by 7% * Minimize operational expense | * Monthly and quarterly financial statement * Conduct customer satisfaction survey monthly * Patronizing rate of the outlets. | Purchasing / Business Development | * Close monitoring of setting up of outlets * R&D for new house brand product | * Keep track of project schedule of R&D and outlet opening * Keep track of feedback and sales of new products | Community Service | * Engage in community involvement, helping the needy * Reduce global warming | * Feedback from media and public * Monitor energy usage in stores | Human Resource | * Increase staffs morale at work | * Staff satisfaction survey * Monitor staffs attitude and absence from work * Customers’ feedbacks | Marketing / Customer Service | * Strengthening branding of being lifestyle focus | * Customer survey * Feedback from media | 8. Conclusion With the increasing tough competition that Carrefour is facing, it is important for it to strengthen its value in the heart of the consumers to root an affiliation attachment. This will differentiate Carrefour from its consumers, disregarding the usual price war which will be hurtful to the earnings of the company. 9.30. Future of Carrefour Carrefour should continuously collect information from the various stakeholders, to assess the feasibility and successfulness of its strategies. The proper management of the stakeholders will help contribute to company’s success. Carrefour will established a stronger position in the retail market of China. It will not be just a store providing quality goods for an affordable pricing, but also a shopping experience which people will look forward to, with their families. This is irreplaceable, but is a long-term strategy. There are some recommendations as below: 9.31. Recommendations * Opening more outlets in China, especially in suburban areas. The urban areas are perceived to be rather saturated, and the suburban areas are increasingly having a stronger purchasing power. At the same time with the larger purchasing volume, Carrefour will have stronger bargaining power over the suppliers. * Enhancing shopping experience will create a stronger competitive advantage. With tough price war with the major direct competitors, Carrefour has to create a distinguish value. Training programs that focus on the front-line communicative skills with customers and internal employee-management problem solving with customer-focused continuous-improvement objectives should be provided as it will be an essential ingredients for key success factor. Front line staffs have to provide a friendly and relaxing environment for patrons so as to create a exclusive shopping experience at Carrefour. * Continuously working on enhancing rapport around human factors, from the suppliers, staffs to consumers, Carrefour could establish an affiliation which is essential in the China culture. Though it is costly to maintain the staffs’ morale, it is beneficial for long-term customer retention. * Creating a stronger backward integration, Carrefour could make use of its resources and the low operating cost in China to create more house brands products. These products which are of cheaper costing could be sold in Carrefour outlets globally. * Concentric diversification, not only opening up more hypermarket, but also shopping malls, discount stores and convenience stores in assessed areas to cater to different target market. * Be prepared to make any amendment and changes to strategy and implementation plan to sustain in the ever changing operational environment. References Banker, M 2000, Top 7 Critical Business Success Factors 2000. Retrieved September 24, 2009, from http://top7business.com/'id=127 Bezlova, A 2007, ECONOMY-CHINA: Global Warming Fuels Inflation. Retrieved Septemeber 27, 2009, from http://www.ipsnews.net/news.asp'idnews=39144 “Carrefour’s Strategies in China”, ICMR: Center for Management Research. 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