Carrefour Case
Identification of Symptoms
Already established branded competitors in major cities
Failed acquisition with Seventh Continent
Not in ideal locations
Limited market growth due to antitrust laws (25% market share cap)
Expensive warehouse rental space
Bureaucracy and political barriers to entry
Difficult and confusing government regulation
Problem Statement
1. Carrefour failed in creating brand recognition and familiarity within Russia.
2. Carrefour did not allow ample time to gain the expected market share in Russia.
3. Carrefour’s first three store locations in Russia were not in ideal areas.
Problem Analysis
To establish a loyal following of customers and increase market share, Carrefour needed to develop brand recognition within Russia in a very short time. Since the brand was relatively unknown throughout the country and only had three stores by the time it exited, consumers did not have time to understand what Carrefour offered, why Carrefour was different and even recognize the company’s logo. If Carrefour would have been successful in acquiring Seventh Continent, this brand recognition could have been much easier to develop since Seventh Continent already had an established relationship with the local population. In addition, Seventh Continent could have provided Carrefour with the knowledge of domestic business relations (e.g., local vendors and suppliers, local laws, customer preferences), knowledge that would only come from a company who is already successful in that market.
Another problem was Carrefour’s decision to pull out of the Russian market within four months of entering, not allowing ample time to gain market share. From a business perspective, a short-term goal is something that can be measured within 12 months, but Carrefour made the decision to exit Russia after only one quarter of results. This could have been justified if Carrefour did not spend three years performing extensive research on the Russian market and how to be the most
Already established branded competitors in major cities
Failed acquisition with Seventh Continent
Not in ideal locations
Limited market growth due to antitrust laws (25% market share cap)
Expensive warehouse rental space
Bureaucracy and political barriers to entry
Difficult and confusing government regulation
Problem Statement
1. Carrefour failed in creating brand recognition and familiarity within Russia.
2. Carrefour did not allow ample time to gain the expected market share in Russia.
3. Carrefour’s first three store locations in Russia were not in ideal areas.
Problem Analysis
To establish a loyal following of customers and increase market share, Carrefour needed to develop brand recognition within Russia in a very short time. Since the brand was relatively unknown throughout the country and only had three stores by the time it exited, consumers did not have time to understand what Carrefour offered, why Carrefour was different and even recognize the company’s logo. If Carrefour would have been successful in acquiring Seventh Continent, this brand recognition could have been much easier to develop since Seventh Continent already had an established relationship with the local population. In addition, Seventh Continent could have provided Carrefour with the knowledge of domestic business relations (e.g., local vendors and suppliers, local laws, customer preferences), knowledge that would only come from a company who is already successful in that market.
Another problem was Carrefour’s decision to pull out of the Russian market within four months of entering, not allowing ample time to gain market share. From a business perspective, a short-term goal is something that can be measured within 12 months, but Carrefour made the decision to exit Russia after only one quarter of results. This could have been justified if Carrefour did not spend three years performing extensive research on the Russian market and how to be the most
Cited: Buzzell, Robert, Bradley Gale and Ralph Sultan. "Market Share-A Key to Profitability". Harvard Business Review. Jan. 1975. Web. 7 Mar. 2015. Deresky, Helen. International Management: Managing across Borders and Cultures : Text and Cases. 7th ed. Upper Saddle River, N.J.: Prentice Hall, 2011. Print. Omair, Muhammad. "Carrefour Misadventure in Russia." Strategic Management (2011). Print. "Long-Term and Short-Term Goals". Minnesota State Colleges and Universities. 2015. Web. 7 Mar. 2015. "Retail Chains ' Race for Russia." Knowledge@Wharton. University of Pennsylvania. Web. 17 Mar. 2015. <http://knowledge.wharton.upenn.edu/article/retail-chains-race-for-russia/>.