Nov
11
Over achievers: Carrefour can’t keep up with its own international expansion
Posted by: cyeungs | November 11, 2011 | Leave a Comment
Carrefour is the Walmart of Europe. However, after 3 decades of investment, “Carrefour shares have plunged nearly two-thirds since 2007”. Although both companies market a similar idea: products at low prices, Carrefour has fallen behind to a 5.5% operating margins compared to Walmart’s 7.5%. The reason behind its failure is the rapid international expansion the company tried to take on when it was clearly unprepared. It entered “24 countries between 1994 and 2004” and though it did establish a market in China, Carrefour was forced to sell off operations in 10 other countries.
I think that this problem occurred mainly because of insufficient market research and poor management as the company made decisions. As we touched on in class, businesses (especially ones looking to go international) must be careful to take into account of the different personal, social and cultural factors present in each society. The values and methods that a successful Carrefour branch in France displayed may not be parallel to the people in Japan or Russia. It is also hard to maintain adequate control over employees when they are so far away from headquarters. Carrefour should carefully consider the new market’s culture before trying their luck in expansion again.
