Learning objective of the Case Study There are two case series. The case series discusses the applicability of the hypermarkets and supermarkets business models in Asian contexts. Case (A) illustrates the industry evolution, the economic model and the globalization trends of mass retailing and describes the key characteristics of various Asian markets with a particular emphasis on China and Japan. The (B) case presents some of the major international players in this industry: Wal- Mart, Carrefour, Tesco, Metro, Makro, Dairy Farm, Ito- Yokado and Aeon.
Transcript
Learning objective of the Case Study
There are two case series. The case series discusses the applicability of the hypermarkets and supermarkets business models in Asian contexts.
Case (A) illustrates the industry evolution, the economic model and the globalization trends of mass retailing and describes the key characteristics of various Asian markets with a particular emphasis on China and Japan.
The (B) case presents some of the major international
players in this industry: Wal- Mart, Carrefour, Tesco, Metro, Makro, Dairy Farm, Ito-Yokado and Aeon.
Continue . . .
This case study aims to:
1. Perform an industry analysis in a regional (Asian) context;
2. Identify the issues associated with the globalization of services;
3. Discuss the applicability of the hypermarket business model in Asia; and
4. Analyze how competitive advantages can be built internationally with a particular focus on Asia (especially China and Japan). *Abstract reprinted with the permission of Insead.*
Sam Walton opened the first store in 1962 in Rogers, Arkansas.
Within 5 years there were 25 Wal-mart stores earning a total revenue of $12.6 million in sales.
In 1972 Wal-mart was listed in the NYSE.
In 1991, Wal-Mart became an international company when it opened a Sam's Club near Mexico City. Just two years later, Wal-Mart International was created.
In 2005 Wal-mart incorporated sustainability in it’s business under their CEO H Lee Scott Jr.
Presently 7,800 stores and club locations in 15 markets employ more than 2 million associates, serving more than 176 million customers a year
ABOUT CARREFOUR
The first Carrefour store opened on 3 June 1957, in suburban Annecy near a crossroads (carrefour in French). The group was created by Marcel Fournier Denis Defforey and Jacques Defforey and grew into a chain from this first sales outlet
In 1999 it merged with Promodès, known as Continent, one of its major competitors in the French market.
The first hypermarket was opened on 15 June 1963 in Sainte-Geneviève-des-Bois, near Paris in France
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In 1989, Carrefour became the first international retailer to establish a presence in Asia when it entered Taiwan through a joint venture with Uni President Enterprises Corporation.
In 2007, expansion accelerated outside France, particularly in Asia, with the building of 36 new hypermarkets, including 22 in China - where the Group broke its record for store openings
in a one-year period.
ABOUT TESCO
Tesco’s is a United Kingdom based international supermarket chain. It is the largest British retailer both by global sales and by domestic market share. Established in 1924.
Tesco is the third-largest retailer in the world next to Wal-Mart, Carrefour and is operating around 2,440 stores and employing over 4,00,000 people
Tesco’s market share of UK retailing is 12.5%.
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Tesco has moved into areas such as clothes, consumer electronics, consumer financial services, internet services, consumer telecoms and gas stations.
Tesco now controls over 30% of the grocery market in U.K.
As of March 2008, Tesco have a store in every postcode of the UK.
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ABOUT METRO
METRO Cash & Carry is a leading international company in self-service wholesale and operates more than 600 outlets in 29 countries. With over 100,000 employees worldwide, the company achieved sales of € 31.7 billion in 2007.
By generating almost 50 percent of the total sales, METRO Cash & Carry is the top-selling sales brand of the METRO Group.
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Assortment and service of METRO Cash & Carry’s unique business-to-business model are targeted only towards professional customers such as hotels and restaurants as well as small and mid-sized retailers or institutions.
The company offers these special groups a high level of assortment competency both in food and nonfood as well as attractive wholesale prices. An efficient and internationally conferrable concept ensures success in entering new markets.
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SWOT ANTALYSIS OF WAL-MART
Strength: Cost Advantage. Low Price and Customer Oriented. Focused strategy. Strong Supply Chain Management. People are key to success.
Weakness: Ignore store decoration Wal-mart sell products across many sectors (such as
clothing, food, or stationary), it may not have the flexibility of some of its more focused competitors.
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Opportunity: Strong Brand Equity. Put efforts on social welfare – better image. New location, or store types. Oversees Markets.
Threats: Other Competitors. Intense price competition.
SWOT ANALYSIS OF CARREFOUR
Strengths Industry Leader Well established vendor relations Cost leadership
Weaknesses Low profit margins High work force requirements In china it do not study the market that’s why
its first attempt was failed
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Opportunities
Early mover advantage Global outreach and brand recognition Recessions leading to high scale of low cost products
Threats Sources of cost reduction may not be unique and
other competitors can copy cost reduction strategies.
METRO SWOT ANALYSIS
Strength1. Expansion to more lucrative (Profitable) markets like China and
Japan.
2. Low decoration cost
3. Strong relationships with suppliers
4. Suitable store location.
Weaknesses 1. Expansion in one direction.
2. Membership card system that might narrow segment.
3. Only confidence on local suppliers.
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CONTINUE..Opportunities
1. Expansion in emerging markets.
2. Fast development of high technology.
3. Favourable conditions to start business.
Threats1. Consumers fluctuating tastes
2. High level of competitors
3. Economic downturn
4. Economic, political and legal risks
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SWOT ANALYSIS OF TESCO
Strengths1.Increasing market share.
2.Tesco online.
3.Brand value.
Weakness1.Dependence upon the UK market.
2.Serial acquisitions
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Opportunities
1.Non-food retail like Health and beauty
2.Further international growth
Threats
1.Overseas returns could fall
2.Wal-Mart / Carrefour challenge
3.International expansion.
PEST ANALYSIS OF MASS RETAILING COMPANIESIN ASIA
Political Influence1. The political instability is the major factor of low
foreign investment in Asia.
2. The ineffective control of every GOVT regarding the price of product. Inflation creates problems because customer demand product at the same low price which in such condition prices changes rapidly.
3. The political factors can be local, national or international. Many governments can be involved. For instance, Tesco might have to deal with Asia politics in regards to its coffee and tea supply.
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ECONOMICAL INFLUENCE
1. The rapid growth inflation rate also the major problem.
2. The devaluation of money.
3. Policies of Central bank can be influenced by existence political party and GOVT.
4.Economic factors have large impacts. Fluctuations in the stock market, or tax increases, can seriously affect the bottom line of a company
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SOCIAL INFLUENCE
1.Sociological factors can vary from the impact of immigration, to changes in fashion.
2. The habit of Asian consumers is to buy the goods from the nearest shop day to day and need basis. They prefer to buy on credit.
3. All societies and cultures of Asia and its market is not as much adapting to change. They do not easily accept the new arrival in any field of the product.
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TECHNOLOGICAL INFLUENCE
New technologies have had a great impact. For instance, online shopping has become a major factor in retailing companies.
Advancement in technological and satellite systems.
For example Wal-Mart invested over half a billion dollors in IT and satellite facilities to connect its worldwide stores to headquarters
PROPOSED STRATEGIES
When entering in Asia the first attempt of the mass retailing company is to study the local market condition and situation through SWOT and PEST Analysis.
Asian countries cultures are different from entire world so it is necessary for retailing companies to adopt the Asian culture (China and Japan).
When retailing companies operate their business in any country of Asia they should recruit their local employees and suppliers of that country.
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International business expansion is not successful in Asia as compare to joint venture and acquisition.
Asian consumers are not willingly embrace the hypermarket and ware house concept, so it is necessary for a company in Asia not to adopt the hyper and warehouse concept because they like wet market and neighborhood stores on credit.
Slow down its expansion plans and concentrate on refitting existing stores.
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CONCLUSION AND FINDINGS
The case study which we have been study were been about the competitors of mass retailing companies, that how would they started their business and expanded and also studied about the withdrawal of these companies from the Asia.
In the case study we have been also studied about the problems which companies were faced in highly experienced. The SWOT and PEST analysis that how would the company used it again each other for its success and survival in Asia
