Carrefour in Russia What Went Wrong
Introduction
The first part of this assignment based around the case study of Carrefour in Russia is to analyse the macro environment in Russia at the time of the case. Opportunities and challenges associated with that environment will also be considered. The best way to understand the macro environment in Russia is to carry out a PEST analysis. PEST stands for the political, economic, social and technological environments. This type of analysis can be considered an external appraisal of the business. The aim of this framework is to supply a reasonable overview of the different macro-environmental factors that affect a business’s strategy.
Political
To begin with I will consider the political environment in Russia which affects Carrefour's decision making. This also involves legal issues regarding Carrefour in Russia. The political and legal systems in Russia are very different to those of central, mainland Europe with corruption being a big problem. In order to obtain a presence in Russia, Carrefour wanted to have an association with a local partner. To do this it planned to acquire local grocery chain Seventh Continent. However, an offer which was made was rejected by the shareholders of Seventh Continent. Although there were opportunities for high growth potential, there were also several obstacles which international retail companies had to face in the Russian retailing industry. These involved a complicated legislative framework, bureaucracy and corruption. This made it more expensive and difficult to set up operations in Russia. The operations of several companies in Russia were hampered due to these factors. For example, IKEA ran into legal issues while setting up operations there. An example which directly affected Carrefour was the bureaucratic hassles it faced in its first store in Moscow in which it couldn’t get a licence to sell alcohol. This lost Carrefour a lot of revenue. There was also legislation in Russia that aimed at increasing the
The first part of this assignment based around the case study of Carrefour in Russia is to analyse the macro environment in Russia at the time of the case. Opportunities and challenges associated with that environment will also be considered. The best way to understand the macro environment in Russia is to carry out a PEST analysis. PEST stands for the political, economic, social and technological environments. This type of analysis can be considered an external appraisal of the business. The aim of this framework is to supply a reasonable overview of the different macro-environmental factors that affect a business’s strategy.
Political
To begin with I will consider the political environment in Russia which affects Carrefour's decision making. This also involves legal issues regarding Carrefour in Russia. The political and legal systems in Russia are very different to those of central, mainland Europe with corruption being a big problem. In order to obtain a presence in Russia, Carrefour wanted to have an association with a local partner. To do this it planned to acquire local grocery chain Seventh Continent. However, an offer which was made was rejected by the shareholders of Seventh Continent. Although there were opportunities for high growth potential, there were also several obstacles which international retail companies had to face in the Russian retailing industry. These involved a complicated legislative framework, bureaucracy and corruption. This made it more expensive and difficult to set up operations in Russia. The operations of several companies in Russia were hampered due to these factors. For example, IKEA ran into legal issues while setting up operations there. An example which directly affected Carrefour was the bureaucratic hassles it faced in its first store in Moscow in which it couldn’t get a licence to sell alcohol. This lost Carrefour a lot of revenue. There was also legislation in Russia that aimed at increasing the