Carrefour's UK Market Entry: Environmental Analysis and Policy Impact

This report analyzes Carrefour's strategy for entering the UK market. It begins with an introduction to business organizations and policies, focusing on Carrefour's expansion into the UK. Task 1 examines the micro and macro environmental factors, including political, economic, social, technological, environmental, and legal factors (PESTLE analysis), and applies Porter's Five Forces model to assess competitive dynamics. Task 2 explores the impact of UK government policies on mergers and acquisitions, crucial for Carrefour's growth strategies. Task 3 explains how the management can use the Kurt Lewin Change model, focusing on unfreezing, change, and refreezing stages to manage organizational change effectively during the expansion. The report concludes with recommendations for Carrefour's successful market entry and growth in the UK. The report emphasizes the importance of understanding environmental factors and government policies to reduce the risk of failure and leverage opportunities in the UK market. The report is designed to help students understand the complexities of international business expansion and the importance of strategic planning.

Business
Organization
and Policy

TABLE OF CONTENTS
Introduction......................................................................................................................................4
Task 1...............................................................................................................................................4
Describing the micro and macro environmental factors which Carrefour will take to reduce
their risk of failure. .....................................................................................................................4
Task 2...............................................................................................................................................7
Explaining UK government policy on merger and acquisitions affects the growth strategies in
UK ...............................................................................................................................................7
Task 3...............................................................................................................................................8
Explaining how the management can use the Kurt Lewin Change model .................................8
Conclusion.....................................................................................................................................10
Recommendation...........................................................................................................................10
References......................................................................................................................................11
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Illustration Index
Illustration 1: Porter's five force model...........................................................................................6
Illustration 2: Lewin's change management model..........................................................................9
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INTRODUCTION
Business organizations pool their resources to provide goods and services to the public
and joined with a motive to achieve certain goals (Galí, 2015). Business policies are the
instructions which are followed by a company with a motive to manage its activities (Wilson,
2015). Present report is based on Carrefour, a french multinational retailer in France. It is one of
the largest hypermarkets chain in the world (About us, 2016). Furthermore, report lays emphasis
on Britain as a lucrative target market for the cited company in which context micro and macro
environmental factors are examined with a motive to reduce the risk. It also covers the policies
of government on merger and acquisition that affect growth strategies.
TASK 1
Describing the micro and macro environmental factors which Carrefour will take to reduce their
risk of failure.
Carrefour has expanding strategy into foreign markets and now they have set their eyes
on Britain. To enter into the UK market, different micro and macro environmental factors are to
be considered. These factors are:
Macro environmental factor
External environmental factor is important for the company, as it helps in guiding the
firm according to the need of the society (Hjorth and Dawson, 2016). While, starting a new
business in UK, the factors which Carrefour is to be considered in order to reduce the risk are
political, social, economical, technological, environmental and legal factors.
Pestle analysis
Political factor- The important role which plays in expanding or stating a new business is
the political environment of country (Matsushita and et.al, 2015). This factors helps in
determining the level of extent by which the government influence business affairs. While,
expanding a business in Britain, the political factors which is to be judged by the Carrefour are
tax policies, stability of government, trade regulations etc. Corporation tax is a highly
competitive tax system, currently the corporation tax is 20% that is going to affect the new
business (Corporation Tax rates and reliefs. 2016). They have to be aware about the excise
dusty, VAT, corporation tax, income tax etc. to reduce the risk of failure.
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Economic factors-These factors determine the performance of the economy as it directly
impact a company (Bernstein, 2015). Rise or fall in the inflation rate, interest, unemployment
rate, credit accessibility affects the company. As, to start up a business in UK, they have to
consider these effects in order to reduce the risk.
Social factors- The social environment of the market is examined under the social factors
such as demographics, consumer behaviors, purchasing power. (Hjorth and Dawson, 2016). The
key issue in UK market is the aging of the population, while establishing business, Carrefour
have to determine the aging population. Attitudes and belief, as well as the needs and wants of
UK consumers also have been transformed.
Technological factors- Innovation in the technology affects the operations of the industry
(Watts and Jackson, 2015). The factors which cited company have to determined while
expanding a business in UK are new innovations, new technological platforms etc. Many of the
supermarkets in UK introducing online food shopping and delivery, also there is an introduction
of online food shopping. Therefore, Carrefour has to determine the innovation to reduce the risk.
Environmental factor- Carrefour has to determine the level of interest of the consumers
towards the Eco friendly products. In order to reduce the risk, they have to provide the products
with good packaging so to attract the customers of UK.
Legal factor- It covers the rules and regulations given by the government (Mason and
Harrison, 2015). Competition law in UK was establishes by the Office of fair trading had a great
influence on the supermarkets of Britain. The laws like Planning policy, consumers rights these
factors have a great effect markets. Therefore, to reduce the risk, Carrefour have to determine
these laws of UK.
Porter's five force model
Competitive rivalry (High)- The competitive rivalry for Carrefour is high, as there are
many competitors in UK, like Tesco, ASDA, M&S, Waitrose, next plc, Sainsbury etc (About us,
2016). As these companies are surviving from many years and they have huge knowledge of the
market. Tesco is the biggest competitors and holding 28.5% of the market share in UK market.
Therefore, Carrefour have to face much competition while entering in the UK market.
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Threat of new entrants (Moderate)- The UK trade and investment supports retail sector
and also helps the companies who securing more valuable investment in UK. As, for the
Carrefour the threat is moderate because government gives more opportunities to the new
companies to enter in the market and develop healthy competition.
Threat of substitutes (High)- The treat is high as there are many competitors existing in
the UK market and the competition is high. The another threat is that the other competitors are
trading through online.
Buying power of supplier (Low)- The buying power is low for the Carrefour because
there are many suppliers. Due to unfavorable condition, the cited company can switch to another
supplier.
Bargaining power of buyers (High)- High for the Carrefour, as they can switch to
another company, who is offering low prices for the similar products.
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Illustration 1: Porter's five force model
(Source: Porter’s Five Forces Model. 2009 )

TASK 2
Explaining UK government policy on merger and acquisitions affects the growth strategies in
UK
Government policies are the instruction given by the government which are to followed
by an organizations, so to manage their activities in particular busies environment (Greve and
Zhang, 2016.). Government of UK has a great involvement in merger and acquisition hence, it
affects the growth strategies of company. If Carrefour is entering into the market of UK through
merger or acquisition, with the help of the policy, they can expand their company, or increase the
business. European union competition policy of UK also applies to M&A involving UK firms. If
the government of UK supports the merger and acquisition then this will be a profit for the
Carrefour and if they are against these then this will be risk for the company.
The competition policy exists in UK affects decision of growth strategies in respect with
entering in new markets. This can prevent and reduce the abuse of monopoly power. The
competition policy is developed by EU, with a motive to develop high competition in the market,
with an increase in the competition, it also affects the selection of growth. As, the monopolies
are inherently harmful for the firm and the merger between competitive firms will also reduce
competition and firms will prefer to enter in market using mergers and acquisitions. (Chang,
2015). This is because the government carefully scrutinizes the proposed mergers. Therefore, the
government of UK is focusing on reducing the monopolies, with a motive that more and more
companies to enter in their own country and increase the growth.
The Enterprise act 2002 also affect the selection of growth strategies by the mentioned
company. If a company is entering in the UK through merger and acquisitions, the act have a
major reform on the control of M&A in UK. Other than the exceptional cases, it removes the
decision making power of the government (Chang, 2015). Therefore, this act passes the
responsibility to Office of fair trading and the competition commission. The role of the OFT is to
ensure that market is working effectively, it also looks for the unfair and non competitive trading
in the market (McGee, 2015). With the passing of the responsibilities it affects the growth
strategies of the company in UK because it helps in identifing the consumer's interest and put
right trading according to their interest. Competition commission also have a great involvement
for the growth of a company, it assesses whether a merger will reduce competition.
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TASK 3
Explaining how the management can use the Kurt Lewin Change model
The Kurt Lewin Change Model was developed by Psychologist Kurt Lewin in the 1950s.
It assumes that the changes will encounter resistance (Vlient, 2014). Therefore, changes will lead
to failure if it will execute without prior preparation. The three stage process of change explain
the unfreezing, change and refreezing. Success of the Carrefour in UK market can be failed due
to poor communication or lack or resist, company have to encourage the staff and ensure that
they are well aware about the changes. As, Carrefour is going to expanding its business in
Britain, by the help of this model it helps the company to reinforce the new system (About us,
2016).
Unfreezing- There are number of things which Carrefour has to do before change, to
prepare the staff for the envisaged UK venture. At this stage, firstly the company have to realize
the staff to make some changes in the operations as well as in management as they are expanding
their business in UK. Then they will communicate a plan for change with the staff through the
grapevine or office gossip (Wilson, 2015). The next step is to encourage the staff by not only
communicating the plan but also explaining the overall vision of expanding the business in UK.
Then building a coalition to convince the staff about the expansion, which is needed. At last
allows the staff to participate while introducing the new business in the emerging market of UK.
Company can unfreeze the change by giving positive opinion about the expansion to the staff so
that the employees can voice their concerns related the changes (Matsushita and et.al, 2015).
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Changes- It is very important for the Carrefour to make people aware that the change
which is planned should be implemented whiting a short time. The next stage is, implement the
changes on working environment, operations level of staff, culture, structure, on new technology,
or in functional level (Matsushita and et.al, 2015). In above stage, the company communicate
with the staff, now in this stage while introducing in the new market of UK, company have to
aware the staff about the changes. As the UK's company is following EU policy, restricted to
everyone which is a benefit for the company and there is also high competition in the emerging
market of UK which results in high profit. By introducing in UK, they will also increase the
profitability, productivity. As with these changes, staff will get influence for the expansion
(Mason and Harrison, 2015). This changes have a great effect on the Carrefour as well as on the
company's staff while expanding the business.
Refreezing- After implementing the changes(expanding in UK), Carrefour have to
ensure that the staff is not following or revert to their old habits. By interim evaluating or
through regular monitoring, they can stabilize the staff according to the new situation (Greve and
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Illustration 2: Lewin's change management model
(Source: Vlient, 2014)

Zhang, 2016). Carrefour have to make changes in the employees' habit according to the current
situation and make sure that the staff will understand the situation and not turning back. This can
be done by guiding, or by giving proper training to the staff.
CONCLUSION
The aforementioned report concludes that the environmental factors is helpful in
considering while entering in the new market. It assists that the analysis of micro and macro
environmental factors is important for the expanding of new company because it helps in
reducing the risk of failure. Furthermore, the policies of UK government such as EU policy,
OFT, competition policy etc on merger and acquisitions have a great effect on the growth of the
company. It also said that, Kurt Lewin Change model helps the company in reinforce the new
system.
RECOMMENDATION
The report explained that Carrefour is expanding its business in Britain, hence the
company is recommended to consider external and internal environment of UK. By using Pestle
and porter analysis, cited business can analysis the risk of failure and can reduce those risks.
Carrefour can also expand its business in UK by entering through merger and acquisition which
may increase the growth of the company. Furthermore, Kurt Lewin Change model will help the
management in implementing the change in the UK market. It helps in encouraging the staff by
giving guidance/importance about the changes while starting new business in the UK.
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References
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Wilson, J. H., 2015. American Business and Foreign Policy: 1920--1933. University Press of
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Online
Carrefour. About us. 2016. [Online]. Available through: <http://www.carrefour.com/>.
[Accessed on 11th April 2016].
Corporation Tax rates and reliefs. 2016 [Online]. Available through:
<https://www.gov.uk/corporation-tax-rates/rates>. [Accessed on 10th April 2016].
Porter’s Five Forces Model. 2009. [Online]. Available through:
<http://www.notesdesk.com/notes/strategy/porters-five-forces-model-porters-model/>.
[Accessed on 11th April 2016]
Vlient, V. V., 2014. Lewin’s change management model. [Online]. Available through:
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