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 .
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.
Carrefour operates as a multinational grocery and food wholesale firm. The paper focuses on evaluating its expansion endeavours in the foreign market of United Kingdom. Evaluation would be carried out based on the analysis of the micro and micro business environment of United Kingdom through the use of strategic analytical tools like PESTLE Analysis and also Porter Five Forces Analysis. Evaluation would also be carried out regarding the impact of the merger and acquisition policies on the retail and wholesale grocery and food stores and also the manner in which Kurt Lewin’s Change Model would be incorporated by Carrefour based on its endeavour to make an effective entry in the UK market.
Analysis of Macro Environment
The government of United Kingdom encourages the consumers associated with the retail and wholesale sectors through the generation of increased flow of money in the economy. Increased availability of financial support and resources in the British economy is observed to potentially increase the level of purchasing activity of the consumers in the grocery and food retail market. The increase in the level of purchasing activity of the consumers for food and grocery retail products in turn also enhances the revenue and profitability potential of the grocery and food retail firms in the region (Retail Economics , 2015).
The periods ranging from 2013 to 2014 reflect a decrease in the level of factor productivity by around 3.1 percent owing to the increase in the level of labour inputs by around 2.3 percent. For, the stores relating to the wholesale sector the like increase in the level of inputs accounts for the decline in the level of productivity for wholesale stores by around 1.6 percent evaluated during 2014 (Department for Environment Food and Rural Affairs , 2016). The same is reflected in the following illustrations.
(Department for Environment Food and Rural Affairs , 2016)
(Department for Environment Food and Rural Affairs , 2016)
Consumers based in United Kingdom related to the food and grocery retail market are observed to desire the purchasing of grocery and food products from retail and wholesale outlets having large and attractive outlets. Similarly, the consumers are reflect increased interests for purchasing grocery and food products based on the use of the virtual platform like Smartphones, laptops, tablets and other gadgets. Thus, grocery and food retailers and wholesalers are required to have an effective combination of both brick-and-mortar and online stores for enticing the needs of customers (Wood & McCarthy, 2013).
The retail and wholesale firms operating in the food and grocery retail sector based in United Kingdom are observed to depend on the incorporation of effective technological tools like Point-of-Sales (POS) scanners that helps in scanning of RFID (Radio Frequency Identification) bar codes thereby helping in the storing of potential information about stock movement from both along the stores and warehouses and also the understanding of consumer purchase interests. The incorporation of potential ERP (Enterprise Resource Planning) software and also integrating the same with the POS terminals rightly helps the grocery and food retail and wholesale stores for management of inventories and also in making of automated replenishments. Likewise, the development and incorporation of the multichannel marketing and retailing technology also helped the grocery and food retail stores in effectively penetrating along the larger consumer market and in encouraging the consumers to gain the advantage of seamless shopping (Bevis, 2014).
Regulatory bodies based in United Kingdom increasingly monitor the trading and licensing of organic food products by the food and grocery retail and wholesale firms. The regulatory bodies focus on the conducting of audits of the quality and standard of food and grocery products before certifying them as organic. The regulatory and monitoring standards for organic foods are increasingly governed by the European Union (GOV.UK, 2013).
Companies operating in the retail and wholesale grocery and food sector are required to operate in an environmental conscious fashion. The companies are required to potentially focus on the reducing the amount of food wastage and also on the development of Carbon Footprint programs in that the same would help in reducing the emission levels relating to its transport, operations and supply chain operations. Further, the food and grocery retail and wholesale retail and wholesale stores are also required to make increased use of recycled materials associated with carry bags and other office and store stationeries to meet the objectives of sustainability (Agriculture and Agri-Food Canada, 2011).
The emergence and development of internet based applications is observed to potentially arm the consumers in that the same are effectively used by grocery and food retail companies for developing multichannel retailing and marketing platforms to generate real time information to the consumers about product launches, product and service offers and other types of essential information regarding price structures and product quality and standards. The use of the above information is made by consumers for taking effective decisions regarding product purchases from the food and grocery retail stores either online or through making visits to brick-and-mortar stores (OECD, 2013).
Grocery and food retailers based in United Kingdom are required to continually interact with the suppliers and local vendors such that the same helps in providing quality food and grocery food products that meet standards set by European Union. Effective interaction and training activities are carried out by the management body of the food and grocery retail firms with the supplier and vendor firms in that the same helps in gaining adequate quality and quantity of grocery and food products for generating customer satisfaction (Custance et al., 2012).
The existence of small and local retailers and shopping companies in the food and grocery retail sector in United Kingdom acts as potential substitutes to the major retail companies like Tesco, Sainsbury, Asda and Morrisons operating in the region. These regional and small retailers focus on helping in the generation of food and grocery products at reduced process to the consumers. Further, these small and local grocery and food retailers also help in generating greater accessibility of the consumers to products of daily need owing to their presence in large numbers along different regions. The same tends to affect the market for the major grocery and food retailers in United Kingdom (The Guardian , 2014).
The grocery and food retail and wholesale market based in United Kingdom reflects existence of increased competition between major retail companies like Tesco, Sainsbury, Morrisons and Asda. The competitive environment in the grocery and food retail sector in the region is further enhanced owing to the action of the discount retailers like Aldi and Lidl that have developed their presence in the stated market. The existence of potential rivalry in the grocery and food retail and wholesale market of United Kingdom is taken to potentially affect the position of Carrefour in the foreign market (The Guardian , 2014).
Foreign companies associated with the grocery and food retail and wholesale sector focus on entering the UK retail and wholesale market based on their partnering with import firms based along the UK market. Direct entry into the UK retail and wholesale market is difficult for the foreign firms (Vasquez, 2016). The same reflects the existence of effective entry barriers thereby creating a challenge for entry of Carrefour in United Kingdom.
The Merger and Acquisition policy of the British government is evaluated to potentially impact the growth and expansion drives of Carrefour in the United Kingdom food and grocery retail and wholesale sector. The merger and acquisition policies of the United Kingdom government potentially discourage the acquisition activities of large retail firms like Tesco, Sainsbury, Morrisons and the like in that the same affects the condition of the local and small retail and grocery units. Restrictions generated on the acquisition activities of the large retail firms would help in providing equal opportunity for the small and local retailers to market their products and services to the consumers. Likewise, the above approach is also taken by the British government for helping in the generation of an alternative opportunity to the UK consumers for availing grocery and food products at reduced prices. The above stand taken by the British government acts like an incentive to the small retailers and also to the regional and local consumers based in United Kingdom but is taken to affect the aggressive acquisition based drives of Carrefour in the foreign markets (Seely, 2012).
The British government also focuses on encouraging the event of mergers among the firms operating in the grocery and food retail market in that the same helps in reducing the price levels for the grocery and food products generated to the consumers. The above policy of the UK Government acts as an effective incentive for the consumers owing to the generation of reduced price structures. On the other hand, the merger and acquisition policy of the British government potentially aimed at reducing price structures affects the profit and revenue margins of the retail and wholesale firms (Hosken et al., 2012).
The Change Model propounded by Kurt Lewin is essentially constituted by three basic elements like Unfreezing, Change and Freezing. In the Unfreezing stage, the change managers are required to reflect on the potential benefits and advantages that the organisation and its staffs would derive from the change process. The same acts as effective motivators that encourage the organisational members for supporting the changes brought about. The Change stage requires the change managers for reflecting on the different changes that are required to be generated along the existing organisational structure and work environment. This stage reflects on the different types of behavioural, structural and organisational changes that are required to be generated for helping the organisation and its members to adapt to the new situation (Cummings & Worley, 2014). The changes are required to be incorporated for helping the organisation and its staff members for acting in a flexible fashion in the new business environment or setting. Finally, the Freezing stage reflects on the different policies and procedures that are required to be generated for effectively enforcing the organisational members to rightly follow the change approach. The generation of new set of rules and policy measures are made by the organisational managers such that the same are required to be potentially followed by the staffs pertaining to various levels for contributing in the meeting of organisational and business objectives as reflected in the Unfreezing stage (Cummings & Worley, 2014).
Application of the Change Model to the expansionary endeavours of Carrefour in the food retail and wholesale sector of United Kingdom reflects that in the Unfreezing stage the management body of Carrefour is required to reflect on the potential opportunities that Carrefour would gain based on its expansion endeavours in the United Kingdom market. The aspect of UK consumers reflecting an interest for conducting purchasing activities on the virtual plane and also their interests in gaining quality food products at affordable prices are observed as two potential business opportunities by the Carrefour management that would help them in penetrating a larger consumer market (Schroeder, 2012).
Reflecting, on the Change aspect, the management body of Carrefour is required to evaluate and identify potential facts like interests for long working hours of the UK staffs and managers operating in the retail sector, requirement for the conducting of meetings in a frequent fashion, need for working in a collaborative and team based setting and also of designing effective and formal presentations for communicating to a larger audience. The above highlighted are some of the behavioural and organisational changes that are required to be effectively introduced by the organisational managers of Carrefour for helping in developing an effective presence in the UK market (Nanquette, 2013).
Finally, in the Freezing stage the Carrefour management is required for generation of effective policies and procedures that would help in enforcing team work and collaboration, sharing, communicating through convening of meetings and also the development of effective presentations while also requiring organisational members to work for long working hours. The management body of Carrefour is also required to focus on the development of training activities for training the people to speak based on formal British accent (Nanquette, 2013).
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].
Bevis, M., 2014. The future of the grocery sector in the UK. [Online] Available at: https://www.retailthinktank.co.uk/whitepaper/the-future-of-the-grocery-sector-in-the-uk/ [Accessed 27 March 2016].
Cummings, T.G. & Worley, C.G., 2014. Organization Development and Change. United States : Cengage Learning.
Custance, P., Harness, D. & Lindgreen, A., 2012. Market Orientation: Transforming Food and Agribusiness around the Customer. United Kingdom : Gower Publishing.
Department for Environment Food and Rural Affairs , 2016. Total Factor Productivity of the United Kingdom Food Chain 2014 – provisional estimate. [Online] Available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/495683/foodchainanalysis-productivity-statsnotice-28jan16.pdf [Accessed 27 March 2016].
GOV.UK, 2013. Organic certification and standards. [Online] Available at: https://www.gov.uk/guidance/organic-certification-and-standards [Accessed 27 March 2016].
Hosken, D., Olson, L.M. & Smith, L.K., 2012. Do Retail Mergers Affect Competition? Evidence from Grocery Retailing. Washington DC: FEDERAL TRADE COMMISSION.
Nanquette, L., 2013. Orientalism Versus Occidentalism: Literary and Cultural Imaging Between France and Iran Since the Islamic Revolution. France : I.B.Tauris.
OECD, 2013. Competition Issues in the Food Chain Industry. [Online] Available at: https://www.oecd.org/daf/competition/CompetitionIssuesintheFoodChainIndustry.pdf [Accessed 27 March 2016].
Retail Economics , 2015. Outlook for the retail sector in 2015. [Online] Available at: https://www.retaileconomics.co.uk/insights/outlook-for-the-retail-sector-in-2015.asp [Accessed 27 March 2016].
Schroeder, A., 2012. Entry strategy for Carrefour for entry into the UK market. United Kingdom : GRIN Verlag.
Seely, A., 2012. Supermarkets : competition inquiries into the groceries market. United Kingdom: House of Commons.
The Guardian , 2014. Brutal competition batters supermarkets the world over. [Online] Available at: https://www.theguardian.com/business/2014/oct/05/supermarkets-discounters-europe-us-china-japan [Accessed 27 March 2016].
Vasquez, J., 2016. United Kingdom Retail Foods 2015. United Kingdom: GAIN Report.
Wood, S. & McCarthy, D., 2013. The UK Food Retail “Race for Space” and Market Saturation: A Contemporary Review. [Online] Available at: https://epubs.surrey.ac.uk/797766/1/The%20UK%20Food%20Retail%20Race%20for%20Space.pdf [Accessed 27 March 2016].
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