Metro Cash and Carry

METRO CASH AND CARRY

Business Model and Competitive Advantage

Metro Cash and Carry has continued to expand worldwide on several basic entry modes that have proved successful and allowed them to retain a competitive advantage over rivals. Its greatest strategy has been as a first mover. As a first mover Metro Cash and Carry (MCC) as taken advantage of the ability to preempt rivals and capture demand by establishing a strong brand name. This also has allowed MCC to build sales volume and ride down the experience curve ahead of rivals giving them a cost advantage over later entrants.

While MCC prefers the wholly owned subsidiary and Greenfield approach of building new stores from the ground up they have been flexible in entering new markets in several different forms. In the case of Morocco, Hungry, and Poland it was able to break into those markets with a combination of joint venture and acquisition approach acquiring Makro, a well known and trusted name in their respective regions. China was no different in that a joint venture (JV) was also used to enter the local market. All be it a necessity at the time due to the local foreign direct investment (FDI) requirements of China it proved that being flexible in the approach in order to be first movers in a particular region has paid off.

Customer relations have been a strong suit of MCC as well. This has been mainly due to the fact that 90% of each stores stock is procured locally. Not only are the host countries wholesale buyers getting below average prices on goods purchased but the local economy has greatly benefited. This has been an incredible selling point for market entry and in certain cases an invitation from political leaders has been extended knowing the economic benefits their communities will receive from MCC’s presence.

MCC’s procurement business unit has also been a particularly strong point to the company. Metro Group Buying (MGB) has strategically...