Submitted by: Submitted by bittersweet24
Views: 548
Words: 330
Pages: 2
Category: Business and Industry
Date Submitted: 01/20/2012 05:37 PM
Case Context
Charts
Problem Statement
Given the current government restrictions on the hypermarket industry, what are the strategies that Carrefour should employ in order to finance the growth of both wholly owned stores and affiliates while preparing for further expansion?
Assumptions:
1. The point of view of the management of Carrefour was used.
2. Time frame: 1971
3. Revenues come from sale of merchandise only
AOC
EXTERNAL
-current competition
- government policies
-pressure groups
INTERNAL
-joint ventures and franchises
- core competencies
a. convenience
b. cost leadership (price)
ACA
Equity Financing
Liability Financing
1. Conservative Strategy (long term borrowings to finance both short term and long term operations)
Pros: less risky
Cons:
2. Aggressive Strategy (short term borrowings to finance both short and long term assets)
3. Matching Strategy (long term borrowings to finance long term assets and short term borrowings to finance short term and seasonal assets)
ANALYSIS
S:
* Established hypermarket
* First mover advantage
* Convenience and price
* Strategically located
W:
* Lower net profit margin compared to other traditional outlet
* Low liquidity
* Takes longer time to take for joint ventures and franchises to achieve the same growth as wholly owned stores
O:
* Opportunity to grow and expand
T:
* Government restrictions
* Current rivalry/competition (inside and outside France)
* Pressure groups (independent shopkeepers)
* Near saturation point (selling area)
BCG matrix: star cash cow
Wholly Owned
G* vs actual growth: actual growth>g*, needs financing
How?
1. increase m – vertical analysis, increase prices but less than that of competitors |
2. decrease d – connected to the first |
3. increase A by increasing L |
4. decrease E or constant |
5. increase S – increase prices but less than competitors |
EFR
Pros...