Describe the Micro and Macro environmental factors which Carrefour must take into consideration to reduce their risk of failure if they eventually decide to enter the UK market (700 words).
Explain to the management of Carrefour how UK Government policies on mergers and acquisitions can affect their growth strategies in the UK.
Explain how the management at Carrefour can use the Kurt Lewin Change Model of Unfreeze, Change and Refreeze to prepare their staff for the envisaged UK venture.
The paper focuses on evaluating the feasibility of Carrefour, a multinational French grocery and food wholesaler in the foreign market of United Kingdom. The paper would effectively conduct an analysis of the macro and micro business environment of United Kingdom while also in evaluating the impacts of the merger and acquisition policy of United Kingdom on the business activities of Carrefour. Finally, the use of Kurt Lewin’s Change model is also taken to be incorporated for helping Carrefour strategise its internal environment for generating an effective presence in the UK grocery and food retail sector.
Macro Business Environment
The United Kingdom government focuses on enhancing the buying potential of the consumers based on enhancing the flow of money in the hands of the residents. Increased flow of income in the hands of the general consumers helps them in meeting their purchasing intentions from the different grocery and retail outlets. The same thus helps in building and generating increased flow of consumer traffic to the different retail stores and grocery retail outlets (Retail Economics , 2015). The above discussion reflects a positive influence of the UK government’s actions and decisions regarding increased flow of money in the hands of the UK citizens on the retail sector.
Survey carried out on the parameter of retail productivity of the different retail and wholesale stores and companies operating in the United Kingdom market for the periods ranging from 2013 to 2014 reflects a sharp decline owing to the growth of the level of factor inputs compared to the level of outputs generated during the stated periods. Statistical reports reflect that an increase in the amount of labour inputs by around 2.3 percent during FY’13 potentially reduced the level of productivity for the different retail stores for 3.1 percent. The growth in the level of factor inputs related to the wholesale sector in United Kingdom also accounted for a decline in the level of productivity of the wholesale companies for around 1.6 percent during 2014 (Department for Environment Food and Rural Affairs , 2016). Two graphical illustrations are rendered below for generating clarity to the above discussion.
(Department for Environment Food and Rural Affairs , 2016)
(Department for Environment Food and Rural Affairs , 2016)
Retail and wholesale consumerism in United Kingdom reflects an increased demand for both large scale and attractive store layouts. The retail and wholesale consumers further demand the generation of the right quality of customer service and also the effective and timely availability of potential quality and amount of grocery and retail merchandises. The management of the wholesale and retail firms operating in United Kingdom are thus observed for generating increased focus and investments for increasing the number and size of store layouts in the region. Increasing the number of stores while also enhancing the appearance and size of the store layouts is taken to potentially attract an enhanced flow of consumer traffic in the retail and wholesale stores. Similarly, the retail and wholesale managers are also focusing on generating increased investments for providing needed training to the sales and customer service staffs. The generation of effective training is taken to enhance the potential of the staffs for providing quality customer services and thereby in driving needed customer satisfaction (Wood & McCarthy, 2013). The below graph reflects the number of new grocery outlets opened in United Kingdom along the period ranging from 2002 to 2013.
(Wood & McCarthy, 2013)
The incorporation of information technology based on the use of different gadgets, applications and software and also other types of technology driven processes is observed to potentially contribute in sophisticating the existing retail and wholesale environment in United Kingdom. Development and use of the multichannel framework is observed to significantly help the grocery and food retailers in United Kingdom in effectively penetrating a larger consumer base in the region. Moreover, the use of needed information technology applications like POS (Point-of-Sales) terminals, ERP (Enterprise Resource Programs) and RFID (Radio Frequency Identification) bar codes contributed in increasing the level of agility in the existing supply chain activities of the grocery and food retail stores thereby enabling them in meeting the objectives of customer satisfaction through provision of quality and quantity food offerings in a timely fashion (Bevis, 2014).
Food regulatory bodies like the Organic Control Body (OCB) operating in United Kingdom aptly contribute in monitoring the trading of organic food products along both the retail and wholesale food outlets in the region. Approval for the trading and also labelling and certification of organic food is made based on investigations carried out by OCB based on the standards generated by the European Union (EU) (GOV.UK, 2013). The above aspect helps the food retail and wholesale firms for generating quality food products to the consumers.
Retail and wholesale food and grocery retail organisations operating in United Kingdom are required for generation of Carbon Footprints in that the same helps in regulating and monitoring the emission level of greenhouse gases like Carbon Dioxide and Carbon Monoxide from its supply chain, logistics and transportation based operations. Further, the grocery and food retail and wholesale organisations are also required to monitor the reduction of food wastage and use of recycled papers and packages in conducting the store operations (Agriculture and Agri-Food Canada, 2011).
The development of the multichannel retailing and marketing environment and also the enhanced use of information technology enabled for the United Kingdom based residents have helped the latter in gaining effective information regarding store offers, launch of new merchandise categories and also of diverse price ranges and product assortments. The above aspect increases the buyer power for taking quality decisions regarding purchases (OECD, 2013).
The grocery and food retail and wholesale firms operating in United Kingdom are required to monitor the activities and actions of their supplier firms in that the same helps in gaining food products that aptly meet the food regulations and standards of the European Union (Custance et al., 2012).
Food and grocery retail and wholesale firms based in United Kingdom face potential competition from local shops and retailers that tend to attract large number of consumers based on generation of food and grocery products at reduced prices and also tailor made to meet individual needs (The Guardian , 2014).
The grocery and food retail sector based in United Kingdom is observed to have become largely competitive owing to the existence of larger retail firms like Tesco, Sainsbury and Morrisons. Further, the entry of discount retailers like Aldi and Lidl are observed to enhance the level of competitiveness in the market (The Guardian , 2014).
The existence of reduced entry barriers relating to the United Kingdom retail sector encourages foreign firms for generating an entry into the market based on developing effective partnerships with local and regional import firms. The same helps foreign food and grocery retail and wholesale firms for gaining potential entry in the region (Vasquez, 2016).
The United Kingdom government’s policy on mergers and acquisition is observed to be a protectionist measure generated for protecting the plight of the local and regional small grocery and food retail firms from the expansion policy based on acquisition practices of bigger retail firms in that the major retailers majorly focus on acquiring small and unorganised retail outlets and companies for gaining large scale penetration in the region. The above protectionist measure of the UK Government is also expected for largely deterring the expansion programs of Carrefour in United Kingdom in that Carrefour’s expansion programs are largely dependent on acquisition activities. The Office of Fair Trade (OFT) relating to the United Kingdom government largely governs and monitors the merger and acquisition policy of the big retail firms in that the same helps in generating equal opportunity for the small and local retailers in attracting potential consumers and thereby in gaining needed potential for competing with the large scale grocery and food retail firms operating in the region (Seely, 2012).
Further, the merger and acquisition policy of the United Kingdom government also focuses on governing the pricing decisions of the food and grocery retail firms such that food and grocery products are generated to the consumers at reduced prices. The UK Government herein encourages the growth of mergers in the region such that the individual grocery and retail firms lose their potential for charging increased prices from the consumers. The above initiative undertaken by the United Kingdom government potentially acts as an effective incentive for the United Kingdom consumers. From the viewpoint of the grocery and food retail and wholesale firms the above decision of the United Kingdom government is observed to affect their profit and revenue margins owing to the requirement of generating food and grocery products at affordable prices (Hosken et al., 2012).
Kurt Lewin’s Model of organisational change is essentially constituted by three different stages viz. Unfreezing, Changing and Freezing. In the Unfreezing stage, the business institutions focus on encouraging the introduction of changes in the existing business and organisational policies based on reflecting to the internal people the consequences, advantages and benefits that would incur owing to the generation of needed changes. The second stage, Changes reflect on the different types of structural, behavioural and organisational changes that are required to be introduced for helping the business organisation to meet the enhanced business and organisational objectives. Finally, the Freezing stage reflects on the generation of new policies and procedures such that the same helps in enforcing of new guidelines and regulations that would be needed for aptly meeting the institutional and business related objectives (Cummings & Worley, 2014).
Reflecting on the case of Carrefour’s expansion endeavour to United Kingdom, the Unfreezing stage is addressed based on reflecting on the potential advantages that can be gained by Carrefour based on its expansion to United Kingdom. The demand of the UK consumers regarding the gaining of quality food products at affordable prices and also their intentions of marketing based on the virtual environment is observed to generate increased opportunities for Carrefour in United Kingdom (Schroeder, 2012).
Reflecting on the Change stage, the management of Carrefour is required to continually train its staffs to communicate based on formal British English. Further, the management and staffs of Carrefour is also required to understand the significance for undertaking of meetings in a frequent fashion and also for working for longer hours as required to be conducted by the United Kingdom based retail and wholesale firms. Carrefour’s management is also required to encourage the development of effective presentations both for introducing new policies and rules and also for communicating the same to staffs at different levels (Nanquette, 2013).
Finally, the aspect of Refreezing is required to be met by Carrefour’s management based on generation of rules and policies encouraging people to work based on a team environment and setting. The management is required to potentially encourage the development of collaborative relationships in that the same helps in meeting business and organisational objectives in a shared fashion (Nanquette, 2013).
Conclusions
The analysis conducted reflects potential opportunities and challenges that would be incurred by Carrefour based on its expansion endeavours in the United Kingdom food and grocery retail market. Carrefour is analysed to gain advantages of potential opportunities regarding the existence of increased demand of British consumers for conducting purchases on the virtual platform and also for gaining of quality products at affordable prices. Similarly, the political and economic paradigm of the UK market is also analysed to be conducive for Carrefour’s international operations in the region. However, the existence of stringent regulatory structures regarding mergers and acquisitions is observed to affect the expansion drives of Carrefour in the UK food and grocery retail market. The use of the Kurt Lewin change model is also incorporated to reflect on the necessary changes that are required to be carried out by Carrefour for developing an effective presence in United Kingdom.
References
Agriculture and Agri-Food Canada, 2011. The United Kingdom – A Sophisticated Retail Sector. [Online] Available at: https://www.agr.gc.ca/eng/industry-markets-and-trade/statistics-and-market-information/by-region/europe/market-intelligence/the-united-kingdom-a-sophisticated-retail-sector/?id=1410083148597 [Accessed 27 March 2016].
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GOV.UK, 2013. Organic certification and standards. [Online] Available at: https://www.gov.uk/guidance/organic-certification-and-standards [Accessed 27 March 2016].
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Nanquette, L., 2013. Orientalism Versus Occidentalism: Literary and Cultural Imaging Between France and Iran Since the Islamic Revolution. France : I.B.Tauris.
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Schroeder, A., 2012. Entry strategy for Carrefour for entry into the UK market. United Kingdom : GRIN Verlag.
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