Analysis of Carrefour's Entry and Exit in Russian Market

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This report examines Carrefour's strategic moves in the Russian market. It analyzes the company's entry and exit strategies, highlighting the challenges faced, such as difficulties in acquiring permits and navigating the complex regulatory environment. The report explores the reasons behind Carrefour's decision to withdraw from the Russian market, including the inability to acquire key assets and the impact of bureaucratic hurdles and corruption. The analysis incorporates insights from academic sources, such as journal articles and books, to provide a comprehensive understanding of the factors influencing Carrefour's strategic decisions in Russia. The report focuses on the implications of cultural distance, market complexities, and the importance of effective market entry strategies.
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Leading and Managing in Culturally Diverse Environments
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Introduction
This paper discusses some of the difficulties encountered by Carrefour after venturing
into the Russian market regardless of the two years’ research conducted on the market
availability. Carrefour is the second biggest retailing organization based in France earning over
108 billion Euros annual income (Gollnhofer, & Turkina, 2015, pp.41). By 2008 it had
penetrated a lot of regions except of Russia. Due to this, Carrefour started researching on the
available gaps in the Russian retail market that could be easily manipulated. Some of the
strategies used to enter the market are highlighted in this paper as well as the reasons behind the
sudden exit.
Entry and Exit Strategies
The announcement that Carrefour was soon going to exit the Russian market was made
on October 2009. The organization gave reasons such as they were not growing. Also, there were
few opportunities available for the taking (Gollnhofer, & Turkina, 2015, pp.22). Research,
however, showed that the major factor that led to this sudden exit was the fact Carrefour was
unable to acquire the Seventh Continent. Among the organizations entry strategies were the
acquisition of the Seven Continent which would mean fair competition with other retailers such
as Auchan and, X5 Retail Group.
Another reason was the complex nature of the Russian legislative wing which mostly
favored the local investors. Finally, heightened levels of corruption in the retail market as well as
the rules set in place to regulate the institution’s operations (Frynas, & Mellahi, 2015, pp.34). For
example, Carrefour was faced by a complex bureaucratic problem in its effort to acquire a permit
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for the sale of alcoholic drinks in the Russian capital, Moscow. The issue costed the company
approximately 15% of the income earned from the sales carried out in that store.
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Bibliography
Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press,
USA.
Gollnhofer, J.F. and Turkina, E., 2015. Cultural distance and entry modes: implications for
global expansion strategy. Cross cultural management, 22(1), pp.21-41.
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