Strategic Management

Master's Programme: Group Assignment Cover Sheet

5513734, 5586581, 5540024, 5555931,
Student Numbers:
5587045

Module Code: IB9JA0

Module Title: Strategic Management

Submission Deadline: 8th December 2023

Date Submitted: 7th December 2023

Word Count: 2469

Number of Pages: 14
Using the concepts and frameworks learned in
the module, analyse the firm's competitive
environment, its resources and capabilities,
Question Attempted: and its competitive and corporate strategies.
(question number/title, or description of assignment) Based on your analysis of the company, what
are the main strategic challenges it is facing
and what recommendations would you give to
the Chief Executive?
Have you used Artificial Intelligence (AI) in
No
any part of this assignment?
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Strategic Management

Table of content
I. Introduction 3

II. External Analysis of Carrefour 3

1. PESTLE Analysis
2. Five Forces Analysis (Competitive Analysis)

III. Internal Analysis of Carrefour 5

1. Resources
a) Tangible resources
b) Intangible resources
2.Capabilits of Carrefour
a) Marketing Strategy
b) Product/Brand development

IV. Analysis of Carrefour's Corporate Strategy 7

1. Building a sustainable competitive advantage: VRIO Model
2. Porter’s Five Forces (1985) - threats and diversification
3. Vertical Integration

V. Analysis of Carrefour's Competitive Strategy - Porter's Generic Analysis

(1985) 8
1. Cost Leadership
2. Product Differentiation

VI. Strategic Recommendation for Carrefour in the future 10

1. Integrated Marketing Communications (IMC)
2. Big Data and Marketing Mix Modelling Analytics
3. Corporate Social Responsibility

VII. Conclusion 11

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I. Introduction

Carrefour, a Multinational Corporation headquartered in France, was established in 1959 and

is operating globally in the retail industry. Its strong presence in Europe and Latin America has
positioned Carrefour to become the seventh largest retailer globally (National Retail Federation,
2023). Given the current digital transformation in the industry with emphasis on creating an
omnichannel experience for customers, this study aims to find ways in which Carrefour can
create a seamless customer experience digitally. Consequently, Carrefour must prioritize
understanding and addressing the differences in the markets— including cultural variations,
consumer behaviors, and economic levels. The following analysis will be divided into five
parts: (1) an examination of the external business environment and competitors in the market,
an assessment of Carrefour's resources and capabilities, (2) an exploration of the factors
contributing to Carrefour's success, (3) an evaluation of Carrefour's corporate strategies using
Porter's five forces analysis and vertical integration, (4) a comparative analysis of Carrefour's
competitiveness against its rivals, and finally, (5) a set of recommended strategies —presented
in five stages.

II. External Business Environment and Competitive Analysis of Carrefour

1. External Business Environment

Carrefour’s main demographic is in France and Europe (Figure 1), and through PESTLE
analysis ((Table 1), the most important factors it needs to focus on are political and
technological. A stable political environment is of utmost importance, as the business needs to
be consistent to reduce risks of failure. However, increasing number of protests in France
(Reuters, 2023), are affecting Carrefour’s operations due to attack on stores, creating
unexpected repair expenditures. To avoid the potential loss of infrastructure, Carrefour should
invest in better security.

Table 1: PESTLE Analysis of Carrefour

Political 1. Stability of Politics in Different Regions: For instance,

Political crisis between Russia and Ukraine challenges
energy price and security of supply (Findley, 2012)

Technological 1. Mobile App and Online Stores: improving level of

convenience to enhance customer experience (Srivastava
and Kaul, 2014)
2. Supply Chain Management: Importing global raw
materials/supply chain to improve end-to-end processes
(Santhi and Muthuswamy, 2022)

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Figure 1: Number of Carrefour stores worldwide in 2021 by country

(Statista, 2021)

To enhance customer experiences, Carrefour needs to focus on technological advancements.

In June of 2023, Carrefour launched Hopla, a chatbot based on ChatGPT, that assists customers
in providing product recommendations and purchase procedures on its website. For its
sustainable endeavours, Hopla also suggests how to reuse products and food constraints. The
robot will act as an online replacement for staff in retail stores- enhancing customer experiences.

Financially, Carrefour has been able to maintain increasing revenues through sales. Figure 2
demonstrates its sales worldwide from 2018-2022 it is obvious that the pandemic affected the
sales, however it recovered in 2022, generating over 81 billion euros, a 15.5% increase from
2021, (Ozbun, 2023).

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Figure 2: Carrefour’s net sales (in million euros) worldwide from 2018 to 2022 by
region

(Statista, 2023)

2. Competitive Analysis

Through Porter’s five forces, the bargaining power of supplier is moderate for Carrefour.
However, in retailing industry, suppliers have the upper hand, which means Carrefour still
needs a stable supplier base. In China, Walmart entered the market relatively early and built its
supplier network. On the other hand, Tesco failed in cooperating with the large suppliers and
had to quit the market in 2020 (Reuters, 2020).

Ultimately, Carrefour is facing large competition because e-commerce retailers made use of
first mover advantage. However, a strong focus on developing brand loyalty and a cutting edge
program can help differentiate itself from its competitors.

III. Analysis of Carrefour's Resources and Capabilities

1. Resources
Carrefour has great advantages in both tangible and intangible resources. In terms of tangible
resources, it has a stable cash flow and strong profitability (81,385 million euro for net sales in
2022) (Carrefour, 2022), allowing them to improve their operations. On the physical side,
(Carrefour, 2023) there are four different types of stores. In addition to the most basic
supermarkets, they have also branched out to convenience stores, hyperstores and even set up
Cash & Carry format. In recent years, they have also developed e-commerce for online
shopping.

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Carrefour also has good customer relationships. They have more than 104 million customers
globally every year (Carrefour, 2023) with loyal membership card customers, which also
allows them to earn 11 million euro in daily revenue (Carrefour, 2023). Amongst all resources,
Carrefour's supply chain relationship also plays an important role. When it enters a new market,
it tends to work with the local industry. For example, 73% of the food products that sold in
carrefour are from local suppliers.

As for the intangible resources, Carrefour creates outstanding organizational culture, and is
diligently paying attention to gender equality, as 42.5% of its managers are women (Carrefour,
2022). As for its reputation, (Ranking the brands, 2023). Carrefour is 39th place in “The Most
Valuable European Brands”, and 7th place in “Top 50 Global Retailers”.

Despite this, they are unable to apply their capabilities to all markets. For example, Carrefour
is gradually losing control in the Asian market, and the reasons indicate that they are unable to
comprehend the Asian market trends. They withdrew from Japan and China and sold their
operating rights in Taiwan (Businesstimes.com.sg, 2023). In the end, they could only refocus
on operating primarily in the European market.

2. Capabilities
Carrefour’s loyalty program, “MyClub” (Isa, 2023), is one of their key marketing strategies.
“MyClub” offers members to redeem their points for discounts either in-store or during online
shopping, and Carrefour even issues a brand credit card to offer cashback benefit. “MyClub”
also provides personalized promotions and discounts based on the customer’s past shopping
history.

Resource Appraisal Framework for Carrefour

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IV. Analysis of Carrefour's Corporate Strategy

Carrefour holds a competitive advantage in the retail industry with its global presence and
private label products. However, with digital transformation taking place, where retailers like
Amazon and Alibaba are leading, it is imperative for Carrefour’s corporate strategy to focus
on expanding their business sustainably, while withstanding all disruptions and ensuring
profitable revenues.

According to their 2026 roadmap (Carrefour Press Release, 2023), it aims to build a cutting-
edge group, while pledging to strengthen inclusion by employing more than 15,000 people with
disabilities. Carrefour’s strategic plan is based on four pillars, which can be analysed via the
VRIO framework (Barney, 1991).

Corporate Valuable Rare Imitable Organization

Strategy

Reinforcing Yes No Yes Yes

Attractiveness Carrefour Competitors Can be imitated The brand is
and Brand can leverage have succeeded because of lucrative positioned based
Identity its with the same offers and loyalty on its consumer
economies marketing programs behaviour
of scale strategy
Organizational Yes Yes Yes Yes
Changes & The The hierarchical The hierarchical It creates a more
Emphasis on company is management style - more staff on diverse and
Diversity investing in style delivers ground, less in the inclusive
training its distinct vision headquarters is also organisation
workforce and guidance to being followed by
the organization conventional retail
stores

Creating an Yes No Yes Yes

omnichannel Leveraging No, there is a Competitors are also It enables
presence customer significant using customer data worldwide
data to increase in to provide an growth
create competition from impeccable digital
seamless companies that experience
online focus solely on
journeys e-commerce

Transitioning to Yes No Yes Yes

better food Organic Close rivals such With increased Helping
quality & farming and as Walmart, and health Carrefour to
organic farming better Tesco possess consciousness, attract and retain
sourcing has adaptable supply competitors are also customers
a positive chains and have shifting towards
effect on its a degree of better food quality
sustainabilit overlap in their
y goals supplier
networks

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To establish themselves as key retail players in the industry worldwide and to meet its 2026
goals, it needs to examine its competitive environment to assess the threats and opportunities
to diversify itself. Fortunately for Carrefour, the threat to new entrants (Porter, 1979) is a
weak force in the industry, as the product differentiation is high amongst the retailers.
Competitors like Tesco and Aldi have their own private label products. Due to this, Carrefour
should invest heavily in their marketing initiatives to attract new customers and provide
incentives for customer retention and brand loyalty. As for opportunities to leverage, using
customer data and digitization holds immense importance, as it can transform the retail
landscape while making Carrefour the lead player in providing impeccable customer journeys.

Additionally, there is a limited level of vertical integration present at Carrefour as the

business continues to procure its livestock through a competitive tendering process. Due to the
increasing market competitiveness, it is not recommended for organizations operating in
industries with high demand fluctuations to have a substantial level of vertical integration
(Díez-Vial, 2007). On the other hand, the retail industry's low market demand elasticity
conveys a favourable opportunity for Carrefour to maximize its vertical integration strategy
which offers cost advantages by leveraging synergies and ultimately leads to enhanced
bargaining leverage and independence from suppliers (Monsur and Yoshi, 2012).

V. Analysis of Carrefour's Competitive Strategy

Source of Competitive advantage (Porter, 1985)

Carrefour's competitive strategy is focused on cost leadership which implements low pricing
tactics with price aggressiveness (Tan, 2017) to get a competitive advantage over other retail
competitors (Pulaj et al, 2015). Cost leadership can be attained by capitalizing on economies
of size and scope, optimizing manufacturing efficiency, and reducing input expenses to
prioritize stringent cost control (Jerab and Mabrouk, 2023). Under this strategy, Carrefour
concentrates on optimizing its supply chain through effective lean management practices to
minimize any unnecessary processes throughout production or the retail process. Organizations

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make additional attempts in the procurement process to acquire products at the most
economical price, to provide customers competitive pricing.

This strategy is particularly effective in scenarios in which it is challenging to establish a

competitive edge through product differentiation (Anwar, 2016). Furthermore, according to
Covin, Slevin, and Heeley (2000) this tactic is effective when the expense of transitioning from
an organization's products to competitors' products is negligible. Simultaneously, Carrefour
acknowledges that its clients, particularly during periods of economic decline, have minimal
barriers to relocating and are relatively responsive to price fluctuations (Carrefour, 2020).
Hence, the corporation endeavours at maintaining the prices of its hypermarkets at economical
levels.

Conversely, Carrefour has been facing a risk in the dynamic market with a decrease in its
market share of 7.5% (Kantar, 2023) in the retail sector by being unable to properly tackle this
problem with its cost leadership approach. Following the Covid-19 pandemic, consumer online
purchasing habits have surged. As a result, online retail competitors like Alibaba have
significantly strengthened their competitive advantage over Carrefour by offering discounted
rates in the non-food sector and effectively managing costs, all while reaching a large customer
base. Carrefour must adjust its strategic approach to align with the essential variables of
innovation, personnel, and cost reductions, since they have a significant role in determining the
effectiveness of the selected strategy.

In addition, Carrefour's differentiation strategy canters around offering multiple arrays of

item encompassing both private label and distinctive product with premium price to enhance
customer loyalty towards the brand. To sustain a competitive edge, the company has been
increasing its online offerings to cultivate shopping experience with a devoted customer base
(Carrefour, 2021).

Both tactics are effectively utilized to gain a competitive advantage. The two strategies are
contradictory in their execution approach. However, the product differentiation strategy in
variable plays a crucial function in enhancing the competitiveness of Carrefour in the current
stage.

VI. Strategic recommendations for future

1. Applying different Integrated Marketing Communications (IMC) to enhance

online retail shopping experience.

By collaborating with credible influencers from diverse backgrounds, Carrefour

could effectively target a certain customer demographic. In addition, establishing a social
media presence aimed at enhancing brand visibility and customer engagement would greatly
assist Carrefour in amplifying a powerful brand message (Doktoralina et al., 2020) and
attracting a significant number of followers who are transitioning from competing brands to
Carrefour. By utilizing hashtags to promote a healthy diet combining with inviting fitness
influencers, Carrefour would be able to bring certain consumers to its e-commerce platform,

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ultimately leading to omnichannel sales. With the advent of digital marketing, pop-up stores
have become a means to enhance consumer engagement and foster customer loyalty (Storefront,
2018). Additionally, the number of people visiting these temporary locations can be a indicator
to measure Carrefour's success.

2. Using Big Data and Marketing Mix Modelling Analytics to categorize products
according to different dietary habits.

Carrefour should develop a set of food indicator tags on products to assist customers in
identifying items that align with their specific dietary requirements. Physical storefronts require
thoughtful spatial design and layout, while online platforms necessitate a user-friendly
interface with clear categorization. Using the examination of consumers' purchasing histories
and big data analytics, Carrefour can collect important insights into current trends and
especially to forecast future client preferences. Carrefour can also generate profits by
understanding diverse dietary preferences and effectively segmenting their products.

3. Cultivating corporate social responsibility.

To sustain its competitiveness in CSR, Carrefour should motivate consumers to join their
activities for sustainability including providing recyclable packaging for online orders. In
addition, for its long-term development, continuing focus on gender equality could prove in
creating a diverse organization.

Figure 3: Carrefour Dow Jones Sustainability World Index (DJSI)

(Carrefour, 2021a)

VII. Conclusion
To summarize, Carrefour is performing under fluctuating situations in its home market,
however its financial performance is still growing through improved customer experiences and
use of technology. Carrefour has a plethora of positive factors, one of them is having a good

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relationship with their suppliers. This ultimately aids a better supply chain and logistics within
the organization. In addition, Carrefour has enough warehouse for inventory, sufficient
cashflow, own stable customer base, and a powerful economy of scale. At the same time, it can
be seen from the resource appraisal framework that Carrefour has performed well in the
European market. This data is enough to suffice that the organization has enough resources to
develop cutting edge solutions and surpass their competitors.

However, during the process of global expansion, Carrefour was unable to properly utilize
resources and its own advantages, resulting in not performing well in the Asian market. It also
made some organizational changes in the past year – with more emphasis on staff in the stores
and cost cutting in the headquarters. This helped them invest more in product innovations.
Apart from corporate strategies, Carrefour is also committed to sustainability and positioning
themselves as an ethically sourced and sustainable brand. To measure the outcomes of their
initiatives, they have set up a CSR and Food Transition Index, which they crossed with a score
of 109% in 2022 (Carrefour, 2022). For the future, it could improve customers’ experiences
through satisfying all their demands through segmentation and high-quality post-purchase
services. Finally, leveraging omnichannel could improve convenience for consumers, forming
brand loyalty and achieving long-term development.

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Figure 1
Statista. (2021). Number of Carrefour stores worldwide in 2021, by country. Carrefour.
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Figure 2
Statista. (2023). Carrefour’s net sales worldwide from 2018 to 2022, by region (in million
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