Carrefour china case free essay sample

In 1995, Carrefour entered China, with its first store opening in Beijing. By June 2006 the company was operating 73 hypermarkets in 29 Chinese cities and it was the number one foreign retailer in China having the fastest growing rate among its competitors [1]. The company planned to open 100 new stores in 2006-07 because the competition had recently stepped up. As competitors try to take the biggest share of pie, all brands of markets are forced to show their difference from the others in order to attract potential customers. Therefore, David Monaco, asset and construction director of Carrefour China, plans to open its first â€Å"Green Store† in Beijing before 2008 Olympic Games [1]. The Green Store was a new concept which indicates application of environmentally friendly processes during building and operating the market. Establishing a green store will not only provide sustainability through waste reduction but also decrease costs of the company. Furthermore, green store will be a good way of advertisement for attracting potential customers during Olympic Games. Monaco believes that it will increase their sales by 30%. However, since green store is a new concept for China, Monaco faced with some problems during effectuating the project [1]. II. PROBLEM DEFINITION Main problem can be defined as the lack of strategy for effectuating the  green store project. There is not a certain task to follow steps and construct green store buildings. Besides the main problem there are some sub-problems which slow down the application of green store project. These problems can be defined as follows: People: Building a hypermarket is challenging but operating a retail system is even more difficult. Chinese people do not take care of the equipment and this causes reduction of lifetime of equipment and cause additional maintenance cost for the company. Decision of store managers: Although a corporate guideline set the overall store design, the store managers often use their own ideas and creative ambitions and this cause lack of standard among markets. As there are different standards among Carrefour markets, Monaco have difficulties in preparing a task for determining what is â€Å"green† really mean to Carrefour Company. Furthermore, the internal com petitions among store managers make them to recover any additional costs. Unfortunately, the store managers’ perceptions often do not match reality, most items that are cut by investment adjustments are crucial for operations. Wrong decisions of managers cause additional operation costs. Since the effects of these wrong decisions can be observed in the long term managers often ignore the problem. Lack of international companies: Especially during 1990’s this was an important problem for Carrefour. As most international companies did not enter China market Carrefour were having difficulties about finding trusted suppliers and also suppliers that provide what Carrefour expects. Working with local, unfamiliar suppliers causes delayed openings and escalated costs. Climate of China / Frequent power shortages: The hot and humid summers and the cold and dry winters were wearing hard on the equipment. In addition, frequent power shortages cause frequent equipment breakdowns and thus less lifetime. III.CRITERIA A. Sustainability Our criterion is sustainability, which means able to continue over a period of time. We have root and series problems so we need to find sustainable solutions, which are better than cheap temporary, because the sustainable ones provides saving money and time in a long term. B. Cost Effectiveness Our last and inevitable criterion is cost effectiveness, which means the  price paid to acquire, produce, accomplish or maintain anything. We can find all kinds of solutions but if we have limited financial sources or the solution is extremely expensive than its wealth, we cannot implement the solution. Also, the companies’ the main aim is profit so the criterion of cost effectiveness is inevitable in the business life. C. Advertisement Chance Advertising chance is the vital performance measure for the company because Olympic Games are so popular in the world. Millions of people join the organization and the popularity of Carrefour must be raise. Therefore, Carrefour suffers the scales in the company’s favor. IV. METHODOLOGY In the methodology part, in the light of the criteria we will suggest proposed solution and their evaluations. Firstly, the applicable solution for the firm is limited 2 years until Olympic Games to increase its own prestige, so firm should find applicable and effective solution in a limited time. If Carrefour gets the chance of applying green markets before its competitors, it will increase its own prestige. Namely, Chinese government can recognize the firm as a green retailer. This perception positively affects the reputation of firm. As a result, the first applier of green markets and increasing government recognition make a significant contribution to the reputation of firm. According to information given, Carrefour can open new green stores but we need to consider cost and time limitations. Another solution is that Carrefour can change its current store according to green strategy so it will be more sense able solution. Finally, Carrefour cannot do anything but it is the worst case for it because it will not get any reputation. V. ANALYSIS OF THE PROBLEM The target of the project can be defined as finishing the build of â€Å"Green Store† before 2008 Olympic Games. Monaco is in the realization that effectuating this project before Olympic Games will be a chance of advertisement of the company and also it will increase the sales by 30%. However, as mentioned in problem definition part, there are some barriers to achieve this target directly. Eliminating these problems and constructing  green store comprises the scope of the project. The scope of the project can be defined as follows: First of all the aim of the project is to open first Green Store in Beijing before 2008 Olympic games. However, the main problem is that there is no standard for what implies green and sustainable. The first step that Monaco should consider is to determine what green really mean to the company and the country. There is no doubt that Monaco cannot define â€Å"green† concept on his own. He should take some support from China government, institutes related with environmental issues and sustainability. Doing consultations with these bodies can led to compromise on a standard understanding of sustainability. Being the company that has decision maker role about sustainability understanding of the government can provide some advantages. For example, the company can the one step away from its competitors and can be leading actor in the market. That is why in order to define strategies of building green store sustainability understanding should be well defined and then internalized. As a second step the company should define its building deadlines such that the market can be opened before/due Olympic Games. While building the market it is important to take the costs into consideration. The cost of building should be minimized without compromising the quality and sustainability. If cost of building green store is higher than revenue that will be obtained then new alternatives or some setouts can be thought of. Monaco should conduct market research and analyze the disadvantages and advantages of the project. Furthermore, he should take the opportunities into account. As a third step assuming that the project is effectuated advertisement issues become important. If the company effectuates the project but does not have advertisement channels then it will be difficult to attract potential customers and increase the sales by 30%. Monaco should be in the realization that competitors will also try to attract customers and increase their sales. That is why Carrefour should take the support of media and the government. Attempts to show that Carrefour really tends to be sustainable will most probably attract the competent authority and thus the support will be gained. There are three alternative solutions for this case. Firstly they can open a green store in Beijing before the 2008 Olympic game and implement â€Å"green† practices throughout all stores in the future. Or they can not open a green store and rather only implement â€Å"green â€Å"parasites  throughout all stores (includes energy consumption savings). Lastly they do not go green; focus on other issues such as Operational and property ownership issues. However, all alternatives have positive and negative sides. For first alternative positive sides are below: Operational costs in the long run will be less making Carrefour less susceptible to increasing energy costs. This alternative has a strong positive impact on Brand image due to compliance with the green policies.†Ã¢â‚¬  Green washing and media hype will not be applicable anymore. If built before 2008 the Store will attract more customers due to upcoming events. A good start to test green technology for the 1st store and implement it for the rest of the stores. Negative sides: Green initiative will â€Å"freeze† acquisitions of properties for sometime. The cost of being green may outweigh the benefits in the short-term. The fact that the car for mosly works with foreign suppliers and imports green equipment will delay the opening of the first green store. Spare parts will not be available in a timely manner for proper maintenance and repairs. For the second alternative positive sides are below: Carrefour will not be bashed of â€Å"Green washing†. They save money on opening the green store which can be allocated to implement Green initiatives thought all others stores. They can focus on the green Strategy on all off Carrefour China and will reduce risk off being distracted by a single Green store launch. Negative sides: Media may create negative image for backing down from the Green Store construction. The initial green Store would provide itself as a â€Å"test opportunity† and a trailer of what all of Carrefour China will look like in the long term-wasted costs as substantial planning had already gone into the Green Store construction plan. For third alternative positive sides are below: Saves on investment and therefore frees funds that can be used for other  strategic initiative ROI may not be a high enough due to unexpected cost associated with green technology. Green technologies are not without drawbacks, they also bridge repairs and maintenance can be costly. Negative sides: These alternatives may go against perceptions about greener environment. Potential brand image damage will result in less number of sales. Chinese regulations may become very strict and Carrefour will not to be able to comply with them. If green technologies do prove themselves in terms of return of investment, Carrefour loses opportunity to save money. If competitors are go Green first, they made steal market share by improving brand image and reducing costs competitors and it will become challenging to regain market share.