Carrefour SA is a France-based company that is engaged in retail distribution. It was founded in 1959 and opened its first supermarkets and hypermarkets in
France in the 1960s. During the following two decades Carrefour expanded in Europe (UK, Italy) and widened its service range (consumer magazine, payment card, insurance policies). The 1990s were characterized by the establishment of markets all over the world (Italy, Greece, Mexico, Asian countries).
Carrefour is the world's second-largest retailer and the largest in Europe. Currently, the company operates four main grocery store formats: hypermarkets, supermarkets & hard discount, cash & carry and convenience stores. Carrefour hypermarkets and supermarkets have huge sales areas and offer a
wide range of food and non-food products sold at competitive prices. Hard discount stores offer food products at low prices in small stores. Cash and carry food service stores provide wholesale and retail self-service for businesses. Finally, convenience stores offer a range of food products and additional services such as home delivery, dry cleaning, ticket distribution, stamps, newspapers and more.
[...] Focus on competitive prices Carrefour reduces the operation cost by occupying land cheaply. In the hypermarkets segment, over three quarters of the company's stores offer the lowest or the second lowest prices versus their local competitors. The same is true for the company's supermarkets and discount stores. b. Weaknesses The CEO behaviour and the management team The markets are waiting for him to resign since he took many wrong decisions. Scission of DIA: The CEO, Lars Olofsson decided to remove DIA (the Spanish hard discount branch of Carrefour) from the group. [...]
[...] The factors, which are taken into account, are: Current and anticipated demand; Customer preferences; Age of merchandise; Seasonal and fashion trends; Carrefour applies the LIFO method too for its inventory valuation as it is well suited to rapid inventory turnaround and it doesn't make an important difference from the FIFO. So they valued their inventory at their cost price or NPV, choosing the lower. Let's analyze the advantages and disadvantages of the LIFO and FIFO methods then let's see what other option would be interesting for the inventory valuations. [...]
[...] As a result of this competition, Carrefour is forced to not only reduce its costs, but also to enter growing markets so as to compensate for the decrease of sales in its domestic market. Labour costs The increasing costs of labour represents a further risk. This is particularly significant in France and Western Europe in general, but also labour is becoming more and more expensive in Asia and Southern America. This risk can be reduced through an optimization of the labour force and automation of processes. [...]
[...] Carrefour also implemented a tool of "Self-diagnosis sustainable development" for suppliers of private label founded in 2006 and gradually expanded to the international. Commit to the social conditions of our products The suppliers of own brand products signed a Social Charter and a Partnership with the FIDH has been implemented since1998 to ensure the social conditions its supply chain. In addition, third parties for Carrefour have conducted more than 3,000 social audits since 2000 and 80% of food own-brand are provided by local suppliers. [...]
[...] Thus, the aim of 2011 is to maintain the path of stores opening in Asia, a huge perspective for Carrefour growth. Despite these projects, Carrefour is facing a murky period. Indeed, after its disappointing performance in the 2011 first quarter, the firm has revised downwards its prospects to announce a probable loss for the current year. The latter is principally due to market shares loss in France because of prices not enough competitive and one-off charges very high. II. Operating performance a. [...]
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