Principle & Practice of Management
PRACTICE OF MANAGEMENT International Case : Carrefour — Which Way to Go? How should Mr. Durant assess the opportunities in various countries around the world? Mr. Durant, the new CEO since 2005, embarked on the new strategy by offering 15percent new products in its hypermarkets and 10 percent in its supermarkets. Moreover, he wants to employ more staff, extend the operating hours in certain hypermarkets, cutting prices, trying small stores, and pushing down decision making. Mr. Durant aims to stay only in countries where Carrefour is among the top retailers. 2.
Should Carrefour adopt Wal-Mart’s strategy of “low prices everyday”? What would be the advantage or disadvantage of such a strategy? Yes certainly they have to adopt the strategy of low pricing every day, In France, where Carrefour is well established, the company made the big mistake in its pricing policy. Itprobably started with the 1999 merger with Promodes, the French discount chain. Carrefour confused the French clientele by losing its low-cost image. The new strategy which they want to implement discounts and cutting prices, trying small stores certainly will help Carrefour to keep their competition in all over the world. . How could Carrefour differentiate itself from Wal-Mart? Wal-Mart is more than just the world’s largest retailer. It is an economic force, a cultural phenomenon and a lightning rod for controversy. It all started with a simple philosophy from founder Sam Walton: Offer shoppers lower prices than they get anywhere else. That basic strategy has shaped Wal-Mart’s culture and driven the company’s growth. Now that Wal-Mart is so huge, it has unprecedented power to shape labour markets globally and change the way entire industries operate.
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In this article, you will learn the key reasons that Wal-Mart has been able to keep its prices low — cutting-edge technology, a frugal corporate culture and a push to make suppliers sell merchandise at cheaper and cheaper prices. We’ll also take a look at the scope of Wal-Mart’s impact on the economy and the controversies surrounding Wal-Mart, as well as the future of the company. With 12 million loyalty card-holders in France, but also 7. 5 million in Spain, for example, Carrefour group stores have an excellent base from which to forge closer relationships with customers.
Asa multi-format retailer, Carrefour can offer solutions addressing a wide variety of shopping habits. In2009, the Carrefour group is enhancing its knowledge of customers, with the aim of serving them better and improving its brand image. In stores, the Carrefour brand will be conveyed in a way that is closer to the customer and more emotionally involving. By being more competitive, the brand will again become a tool for winning customers, enhancing customer loyalty and distinguishing Carrefour from the pack. In towns and villages, as convergence accelerates, the Carrefour brand will provide its best stores to more customers.
In this way, Carrefour will make customers want to come, and keep coming, to its stores, regardless of the format or product offering. By focusing on retailing, Carrefour will become customers’ preferred retailer. 4. Identify cultures in selected countries that need to be considered in order to be successful? Carrefour operates in 29 countries around the world. World population is rising, geographic distribution of populations is shifting, world population is aging rapidly, and ethnic mixes in developed countries are changing rapidly, and average household incomes are increasing.
The demographic environment presents both opportunities and threats for Carrefour. Increases in population size and household incomes help to expand the market in which Carrefour operates. However, changes in the geographic distribution of populations, due to technological advances in communications, may cause difficulties for Carrefour in determining profitable locations for new storefront SOCIO-CULTURAL 1. New markets had seen dramatic changes in consumer buying habits, coupled with high growth in per capita GNP, 2. uburbanization, greater participation of women in the labour force, and a large increase in the ownership of cars and refrigerators. 3. The continued growth of suburban communities abroad is another major socioculturaltrend. 4. Asian customers still tended to shop daily at wet markets or “mom & pop”stores. 5. Moreover, impulse buying was on the rise and replacing necessity purchasing. 6. Shopping as a form of leisure was an increasing phenomenon. Carrefour has positioned itself as an international leader in the retail industry. Case study:2 1) The reengineering efforts of P&G focused on the business process system.
Do you think other processes, such as the human system, or other managerial policies need to be considered in a process redesign? The reengineering efforts also required restructuring of the organization. P&G had been known for its brand management for more than 50 years. But in the late 1980s and early1990s, the brand management approach pioneered by the company in the 1930srequired rethinking and restructuring. In a drive to improve efficiency and coordination, several brands were combined with authority and responsibility given to category managers. Such a manager would determine overall pricing and product policies.
Moreover, the category managers had the authority to withdraw weak brands, thus avoiding conflict between similar brands. They were also held responsible for the profit of the product category they were managing. The switch to category management required not only new skills but also a new attitude. 2) What do you think was the reaction of the brand managers, who may have worked under the old system for many years, when the category management structure was installed? The category managers had the authority to withdraw weak brands, thus avoiding conflict between similar brands.
They were also held responsible for the profit of the product category they were managing. The switch to category management required not only new skills but also a new attitude. 3) As a consultant, would you have recommended a top-down or a bottom-up approach, or both, to process redesign and organizational change? A top-down approach (also known as stepwise design) is essentially the breaking down of a system to gain insight into its compositional sub-systems. In a top-down approach an overview of the system is formulated, specifying but not detailing any first-level subsystems.
Each subsystem is then refined in yet greater detail, sometimes in many additional subsystem levels, until the entire specification is reduced to base elements. A top-down model is often specified with the assistance of “black boxes”, these make it easier to manipulate. However, black boxes may fail to elucidate elementary mechanisms or be de-tailed enough to realistically validate the model. A bottom-up approach is the piecing together of systems to give rise to grander systems, thus making the original systems sub-systems of the emergent system.
Bottom-up processing is a type of processing based on incoming data from the environment to form apperception. Information enters the eyes in one direction (input), and is then turned into an image by the brain that can be interpreted and recognized as a perception (output). In a bottom-up approach the individual base elements of the system are first specified in great detail. These elements are then linked together to form larger sub-systems, which then in turn are linked, sometimes in many levels, until a complete top-level system is formed.
This strategy often resembles a “seed” model, whereby the beginnings are small but eventually grow in complexity and completeness. However, “organic strategies” may result in a tangle of elements and subsystems, developed in isolation and subject to local optimization as opposed to meeting a global purpose. As a Consultant I recommended a top-down approach. A multi-billion dollar corporation like Procter and Gamble Corporation, which carries 300brands and growing really has a strong grasp in re-engineering. Procter and Gamble Corporation’s chief technology officer, G.
Gil Cloyd, explains how a company which carries multiple brands has to contend with the “classic innovator’s dilemma in most innovationsfail, but companies that don’t innovate die. His solution, innovating innovation… “(Teresko, 2004). Cloyd has helped a company like Procter and Gamble grow to $5. 1 billion by the fiscal year of 2004. According to Cloyd’s scorecard, he was able to raise the volume by 17%, the organic volume by 10%, sales are at $51. 4 billion up by 19%, with organic sales up 8%, earnings are at $6. 5 billion up 25% and share earnings up 25%. Procter and Gamble also has a free cash flow of $7. billion or 113% of earnings,dividends up 13% annually with a total shareholder return of 24%. Cloyd states: “The challenge we face is the competitive need for a very rapid pace of innovation. In the consumer products world, we estimate that the required pace of innovation has double in the last three years. Digital Technology is very important in helping us to learn faster”. Case Study: 3 1) What is your assessment of Daimler-Benz’s operations in many different fields? Unsatisfactory: AEG Aerospace Debis Satisfactory: Marcedes-Benz 2) Should the various groups operate autonomously?
What kinds of activities should be centralized? If they don’t work autonomously, only the financing activities should be centralized. However, if they are let to continue operations, looses will keep piling. Therefore, in our opinion, except automotive business all other should be shut down. 3) Daimler-Benz is best known for its Mercedes-Benz cars. Why do you think Daimler bought AEG in the first place and why did it venture into the Aerospace and Inter Services businesses? Daimler-Benz diversified based on below observations: 1. Spreading of risk 2. Smoothen returns