International management
Prof. Shawn Khosravi
International Management
October 29, 2013
Carrefour’s misadventure in Russia
Carrefour is a French retail company. It is one of the biggest hypermarket chains around the world. It is the second largest retail group after Wal-Mart. Carrefour decided to enter the Russian market but they decided to retract in October 2009, four months after opening there. They believed there was insufficient growth in Russia and had limited acquisition opportunities there. Analysts believe they got out too quickly and that their exit from the Russian market was done too quickly.
There were several factors that led to Carrefour exit from Russia. The first was the absence of sufficient organic-growth prospects and acquisition opportunities in the short and medium term. The second and third were the failure to acquire the seventh continent and shareholder’s pressure, fourth Russia’s bureaucracy, corruption, and complicated legislative framework, the global economic crisis among others led Carrefour away from their market.
The analyst in the case says that it makes no sense selling unless they are making short-term financial gain. I agree with the analyst because I believe Carrefour had no valid reason for exiting the market. Carrefour has been showing little commitment to countries that have short-term difficulties and problems. Instead of pulling out Carrefour should have paused their expansion process and could have waited to evaluate the possibilities the future will offer. Other retail stores have done well in Russia and they also have the fastest growing consumer economy. I believe it was not wise for them to leave.
Porter’s five forces provide a vital analysis for corporate planning in term of statistics and dynamics of an industry. The five forces are: 1. Threat of new entrants. 2. Bargaining power of suppliers. 3. Bargaining power of costumers. 4. Threat of substitute products or services. 5. Rivalry among existing competitors in the
International Management
October 29, 2013
Carrefour’s misadventure in Russia
Carrefour is a French retail company. It is one of the biggest hypermarket chains around the world. It is the second largest retail group after Wal-Mart. Carrefour decided to enter the Russian market but they decided to retract in October 2009, four months after opening there. They believed there was insufficient growth in Russia and had limited acquisition opportunities there. Analysts believe they got out too quickly and that their exit from the Russian market was done too quickly.
There were several factors that led to Carrefour exit from Russia. The first was the absence of sufficient organic-growth prospects and acquisition opportunities in the short and medium term. The second and third were the failure to acquire the seventh continent and shareholder’s pressure, fourth Russia’s bureaucracy, corruption, and complicated legislative framework, the global economic crisis among others led Carrefour away from their market.
The analyst in the case says that it makes no sense selling unless they are making short-term financial gain. I agree with the analyst because I believe Carrefour had no valid reason for exiting the market. Carrefour has been showing little commitment to countries that have short-term difficulties and problems. Instead of pulling out Carrefour should have paused their expansion process and could have waited to evaluate the possibilities the future will offer. Other retail stores have done well in Russia and they also have the fastest growing consumer economy. I believe it was not wise for them to leave.
Porter’s five forces provide a vital analysis for corporate planning in term of statistics and dynamics of an industry. The five forces are: 1. Threat of new entrants. 2. Bargaining power of suppliers. 3. Bargaining power of costumers. 4. Threat of substitute products or services. 5. Rivalry among existing competitors in the