The ternary bottom line:Does Carrefour make valuefor all its stakeholders?GlossaryAbstract ………………………………………………………………………… . 2Chapter 2 –Research Aims…………………………………………… … .
6Chapter 3 – Literature Review …………………………………………… … … 7Chapter 4 – Findingss …………… ..
. ……………………………………… ..
8Chapter 5 –Analysis……………..…………….…………………………….
…22Chapter 6 – Conclusions ………………………………………………..…….. 30Chapter 7 – Recommendations ……………………………………………….
. 33Appendixs ………………………………………………………………… … … 36Bibliography …………………………………………………………………… .
37AbstractionThe extremely competitory nature of the nutrient retailing market in Europe and a contrary of economic conditions has put Gallic elephantine Carrefour on the ropes. Inroads by rivals has eroded market portion and net incomes and has left the company more vulnerable than it has of all time been. The inquiry as to whether Carrefour is making value for its stakeholders therefore comes under fire as a consequence of the aforementioned. This scrutiny will seek to reply this question.1962 marked a turning point in retailing history when the Gallic company Carrefour introduced the hypermarket format in Sainte-Genevi merely outside of Paris ( Jones, 2006 ) . The construct represent an mercantile establishment that is a combination of a supermarket with a full line price reduction shop to ensue in a retail installation that is mammoth in footings of size every bit good as the figure and types of merchandises it offers under one roof ( Axapata Retail, 2005 ) . The construct represents both of these operations in a infinite that ranges between 200,000 to 3000,000 square pess which was successful in Europe as a consequence of the comparatively little shop model in most urban centres and rural countries whereby shopping entailed sing several little shops, unlike the United States which embraced shopping promenades in these scenes ( Faculty.Inverhills, 2004 ) .
The success of the hypermarket construct in France created the fright that smaller shops would be forced to shut and the state enacted a series of Torahs which made the edifice of these types of mercantile establishments more hard every bit good as curtailing the economic purchase these ironss could use on providers, nevertheless these retail merchants still managed to go on their growing as a consequence of loopholes that existed in the statute law ( Wikipedia, 2006 ) . The underpinnings of said jurisprudence, termed ‘Loi Galland’ , have become under fire late to hold amendments shuting the agencies via which hypermarket retail merchants have been besieging it ( Wikipedia, 2006 ) .As the 2nd largest retail merchant in the universe after Wal-Mart, and as the largest retail merchant in Europe, Carrefour is an international operation with 10,778 mercantile establishments in 21 states ( Carrefour, 2006 ) :Table 1 – Carrefour Stores in Europe( Carrefour, 2006 )
|State||FirstShop||Numberof Shops||Hypermarkets||Supermarkets||HardDiscount houses||Conv.Shops||Cash& A ;Carry|
Table 2 – Carrefour Stores in Asia( Carrefour, 2006 )
|State||FirstShop||Numberof Shops||Hypermarkets||Supermarkets||HardDiscount houses|
|Dutch east indies||1998||18||18||–||–|
Table 3 – Carrefour Stores in South America( Carrefour, 2006 )
|State||FirstShop||Numberof Shops||Hypermarkets||Supermarkets||HardDiscount houses|
Carrefour’s stakeholders include its ( Carrefour, 2002 ) :
- Service Providers,
- The authoritiess, local governments and communities in the states and locales it operates,
- Banks, and
- Fiscal Markets
All of the preceding are of import and indispensable facets of the company’s operations and a portion of the ‘triple underside line’ , which represents a spectrum of standards every bit good as values that reflects a measuring of a company’s organizational every bit good as social success ( Norman et al, 2005 ) :
In some quarters, ‘triple underside line’ is correspondent to ‘Corporate Social Responsibility ( CSR ) which calls for companies to use ‘triple underside line’ in their coverage. In accounting this subject by and large calls for an enlargement of the mode in which the company studies take into history fiscal every bit good as environmental and societal public presentation. Elkington ( 1998, p. 43 ) is credited with the development of this phrase, ternary underside line, when he asked if the retention of corporations to this axiom constituted advancement in using a phrase credited to Polish poet Stanislaw Jerzy Lec “Is it come on if a cannibal uses a fork? ” ( quotationsbook.
com, 2006 ) . Elkington ( 1998, p. 44 ) provinces that “… concern people are waking up to the fact that cardinal markets are on the brink of rapid alteration driven by new environmental criterions and related client requirements” .
He adds ( Elkington, 1998, p. 44 ) as a consequence of the predating “… new underside lines are being drawn alongside the old profit-and-loss statements.”The purpose of the research is to dig deep beneath the retailing surface to bring out the advantages in Carrefour’s operations every bit good as its failings.
The retailing sector besides holds considerable information and penetrations as to the tendencies, pique and salient points in the market, as do rivals. This information is both historical every bit good as modern-day and besides calls for the use of proved theory and analysis techniques to measure and compare the market and competitory state of affairs to supply a clear focal point on what is right, and what is non so right in Carrefour’s operations to deduce a possible hole. The research purpose is to find if the company is making value for all its stakeholders under the ternary bottom line variable, therefore the scrutiny must take into history the ( Norman, et Al, 2005 ) :
facets in order to find the reply.
Chapter 2 –Research AimsThe foundational premiss every bit good as statement for the societal duty of corporations is that the Earth’s resources are limited and at hazard and that the delicate balance that is the ecosystem requires our understanding and attending to the fact that rampant usage and devastation of the natural balance of nature through deforestation, fossil fuels, depletion of H2O tabular arraies and planetary heating carry with them the existent potency for a ruinous clime or nature dislocation ( Waring, 1977 ) . Her positions of oil spills, wars, and other economic procedures originating out of the construct of GDP, Gross Domestic Product, as a agency to mensurate economic public presentation without taking into history the full scorecard that includes the effects of resource depletion continually gained in credence to the point where we now have Corporate Social Responsibility as a step. The Kyoto Protocol represents an understanding under the U.N. Framework Convention on Climate Change is an branch of the apprehension of the preceding, and seeks to stabilise the nursery consequence through the decrease of C dioxide and related nursery gases to stem the planetary heating tendency ( UNFCCC, 2006 ) .With the predating as an apprehension of the changed corporate and societal clime of the new age, this scrutiny shall seek to analyze the ‘triple underside line’ in comparing if Carrefour creates value for all of its stakeholders.Chapter 3 – Literature ReviewThe use of Michael Porter’s ‘Five Forces Model’ ( QuickMBA.com, 2004 ) along with a PESTLE Analysis ( Renewal.
ed.com, 2004 ) , Industry Life Cycle Analysis and Resource Audit summarized and condensed the wealth of informations, facts and information found in the modern-day research that was utilized to supply the foundation for understanding the operations of the industry sector, rivals and Carrefour.The organization’s schemes, competitory environment, industry sector, and internal factors were researched and analyzed utilizing modern-day beginnings to compare the foregoing from a figure of differing angles and attacks in order to guarantee the information base rested on a factual foundation from which to pull decisions. Jones’ ( 2006 ) “How France is cooking for a hypermarket free-for-all” provided background every bit good as relevant present twenty-four hours information which combined with industry beginnings such as Axapta Retail ( 2005 ) , Carrefour, Business Week ( 2004 ) , PriceWaterHouseCoopers ( 2000 ) and Ernest & A ; Young ( 2005 ) gave penetrations on the company’s market and operational facets. Norman et Al ( 2005 ) account of ternary bottom line in concurrence with Eklington ( 1998 ) explored that issue and provided the contextual underpinnings whereby informations from Market Research ( 2004 ) , McCracken’s ( 1986 ) “Culture and Consumption: A Theoretical History of the Structure and Movement of the Cultural Meaning of Consumer Goods” , and Bole et Al ( 1991 ) “Organic Foods in the UK – Niche or Mainstream Opportunity? ” could be evaluated in footings of capable relevancy. The preceding besides included research gleaned from statistical informations as supplied by Food & A ; Drink Europe.com ( 2004 ) , NutraIngredients.
com ( 2003 ) , International Retailing ( 2003 ) and Table informations from Organic-Europe ( 2005 ) .The research beginnings represented a wide expression at all aspects of the company’s operations and aided in the correlativity of recommendations every bit good as decisions that provided a clear analysis of the jobs confronting a retail merchant in a extremely prized and competitory market that is mature and seeking enlargement as the following unit of ammunition of growing.Chapter 4 – – Findingss4.1 The Supermarket Retail IndustryAn scrutiny of the retail industry, in malice of Carrefour’s innovation of the hypermarket, today begins with Wal-Mart. Its impact on the world’s retail merchants as a consequence of its size and fiscal clout can be measured by the fact that its gross revenues exceed the combined sums of the world’s 2nd through 4th largest retail merchants ( PriceWaterhouseCoopers, 2000 ) . And this still holds true today ( Ernest & A ; Young, 2005 ) :Table 4 – Largest Retailers in the WorldRanked by Gross saless( Ernest & A ; Young, 2005 )
|2005Rank||Company||Gross saless USD( in 1000000s )||HeadquartersState|
|1||Wal-Mart||$ 285,222||United States|
|3||Home Depot||73,094||United States|
|5||Royal Ahold NV||64,615||Nederlands|
|6||Tesco PLC||62,284||United Kingdom|
|7||Kroger Co.||56,434||United States|
|8||Sears Holdings Corp.||55,800||United States|
|10||Costco Wholesale Corp.||48,107||United States|
|11||ITM Enterprises SA||47,218||France|
|12||Target Corp.||45,682||United States|
The laterality every bit good as menace of Wal-Mart has influenced other planetary retail merchants to happen ways in which to turn in order to be able to defy an awaited progress by Wal-Mart into its market ( s ) . On of the specialnesss of the European market is that it is hard for Carrefour to turn within their its market as a consequence of regulative hurdlings restricting big shop growing. As a consequence the company had to look to planetary markets to spread out, a fact borne out by merely two of the U.S.
based retail merchants holding an international stance as opposed to the top European companies ( PriceWaterhouseCoopers, 2000 ) . The importance of including Wal-Mart in a treatment of European based hypermarkets and full price reduction retail operations is a consequence of the impact this retail merchant has had therefore far in the market. Wal-Mart’s entry into Germany, although it started off on the incorrect pes, is still strong and its acquisition of ASDA in the United Kingdom has shown that its new scheme of ‘buying into’ new markets through the return over of established operations, mercantile establishments, client base, forces and lines of providers. This has put the European retail merchants on notice.The extremely competitory nature of the European every bit good as planetary retailing landscape which can non be either forgotten or discounted as growing schemes create low borders, and troubles in opening new mercantile establishments.
The fast manner to rapid growing, provinces Dr. Ira Kalish, Los Angeles Director of PriceWaterhouseCoopers’ Global Retail Intelligence Unit is via “Rapid entry and enlargement into new countries…” , which Kalish adds “… is frequently best complete via strategic acquisition” ( PriceWaterhouseCoopers, 2000 ) . Carrefour’s top rivals in the European market represent ( BBC News, 2001 ) :
- Metro Group
- Schwartz Group ( Lidl )
and the extremely competitory clime is marked in Europe by acquisitions every bit good as foreign enlargement as they jockey for place ( MeatNews.com, 2006 ) . The ‘hard discounters’ are doing the biggest gross revenues additions in the European market, lead by ASDA/Wal-Mart, Aldi and Lidl, a subordinate of the Schwartz Group. ASDA/Wal-Mart has continued to beef up its United Kingdom market place through the acquisition of William Morrison/Safeway, and Aldi, which stands for Albrecht-Discount ( Wikipedia, 2006 ) , and its acquisition of Edeka, which was the largest nutrient retail merchant in Germany and whose ain scheme for growing was via acquisition ( MarketResearch.com, 2004 ) .
The intra European conflicts for increased gross revenues and market portion will besides be fueled by international activities on the portion of Europe’s retail merchants. They are more active on the international phase than their American opposite numbers, with the exclusion of Wal-Mart and the former Safeway acquired in Europe by Wal-Mart which has garnered the repute as ‘Public Enemy No. 1’ inside every bit good as outside the United States as a consequence of community groups, conservationists and rivals ( About.
com, 2004 ) . The deficiency of American nutrient retailer’s international focal point and the fact that they are making market impregnation in their place market means that they will be seeking enlargement in other venues. Europe is expected to be a mark, nevertheless the edification of European nutrient retail merchants in the complex European market is likely to stem any existent inroads from American based nutrient retail merchants who are likely to look to the higher growing markets of China, India, South America and other parts of Asia ( About.
com, 2001 ) .Coincidentally, the aforesaid markets are likely to stand for the new battlefield for European retail merchants every bit good, as a consequence of the limited growing chances in Europe where enlargement through acquisition is the figure one methodological analysis ( About.com, 2001 ) . Carrefour is taking this same path as its 2000 acquisition of Promodes indicates ( BBC News, 2001 ) . Harmonizing to Richard Parks of Retail Intelligence, major amalgamations among European retail merchants is the cardinal growing and enlargement scheme because of Wal-Mart’s main courses, therefore they will hold to believe more in footings of international enlargement to counter Wal-Mart’s fiscal clout and size ( BBC News, 2001 ) .
Parks continued that Retail Intelligence sees two or three major European retail merchants emerging that will so conflict U.S. based nutrient retail merchants internationally ( BBC News, 2001 ) . Therefore, the European nutrient retailing sector is one with decidedly international designs to fuel growing, stableness and self saving in an acquisition hungry market.
4.1.1Social Enterprise AnalysisCorporate Social Responsibility is a term that describes a corporation’s duty to understand the demands of its stakeholders in its concern operations and to be sensitive to the branchings originating from it. The foregoing, stakeholders, represents those that are either influenced by and or those that can act upon the determinations and actions of a company in local and or planetary footings. Corporate Social duty is linked to rules represented by ‘Sustainable Development’ , which proposes that companies are obligated to do determinations that are non merely based upon economic and fiscal factors, but includes the societal every bit good as environmental effects of activities as good ( Wikipedia, 2006 ) . The construct of ‘sustainable development’ represents the apprehension that the procedure of run intoing today’s demands in the development of concern chances, land, metropoliss, communities and other aspects must be considered from the point of view of the impact on future coevalss as good.
The predating recognizes the finite resources of the planet and the demand to restrict every bit good as overcome environmental debasement in consort with economic development and societal equity. Corporate Social duty is in surplus of any charitable operations and or support or contributions of a company. It requires a corporation to take into full history the representative impact its determinations have upon all stakeholders:
- Service Providers,
- The authoritiess, local governments and communities in the states and locales it operates,
- Banks, and
- Fiscal Markets
The principle of corporate societal duty means that the company equilibrate the demands refering all of its stakeholders and the matter-of-fact facets of bring forthing a net income along with the rewarding of stakeholders in an equal mode. The predating sounds and is a complex reconciliation act that proposes that companies are in an implied partnership with the environment every bit good as society at big and therefore the narrow attack of concern involvements for its ain interest is no longer applicable ( Wikipedia, 2006 ) . Carrefour’s providers are between 4,000 to 15,000 depending upon the state in inquiry with the chief issues in this country are ( Carrefour, 2002 ) :
- The traceability of merchandises
- Supplier relationships
- The quality every bit good as safety of the company’s nutrient and non-food lines
- The societal conditions associating to how merchandises are manufactured
Carrefour was listed on the Dow Jones Sustainability Index for the first clip in 2002, with the following remarks from Gabriela Grab, the Sustainability Asset Management’s retailing analyst “… the Group provided grounds in 2002 of greater organisational transparence …” ( Carrefour, 2002 ) which Ms.
Grab indicated was a consequence of the company’s first Sustainability Report. Ms. Grab ( Carrefour, 20002 ) added that the foregoing came from a company in an industry sector “… where trading patterns normally lack clarity.” The appraisal went on to bespeak that the company “… is still below the sector’s norm on economic criteria…” ( Carrefour, 2002 ) , which consist of corporate administration, hazard direction every bit good as supply concatenation direction, and codification of behavior, but added that Carrefour’s “… environmental and societal evaluations outperform those for the sector…” ( Carrefour, 2002 ) in regard to how the company’s providers impact upon the environment every bit good as Carrefour’s “… rigorous demands on working conditions…” ( Carrefour, 2002 ) . The assorted remarks contained in Ms. Grab’s ( Carrefour, 2002 ) statements were included in the company’s ain study therefore bespeaking a looking leaning to be crystalline in its revelations and therefore besides stand foring the purpose of supplying honest informational content.Further grounds of Carrefour’s societal duty is provided by the ODE, which assesses Gallic companies refering the potency for being represented on the FTSE4GoodIndex.
Pierre Naudot, an analyst with ODE stated that “Decent working conditions and a prohibition on kid labors have been ( ODE ) precedences in recent years” ( Carrefour, 2002 ) , and that Carrefour has been in partnership with the INFANS Association “… in oversing suppliers” ( Carrefour, 2002 ) . Naudot ( Carrefour, 2002 ) continued that “… Carrefour merchandises are manufactured in conformity with basic human rights and ILO requirements” . Naudot ( Carrefour, 2002 ) added that in order to “… beef up its sustainable development policy…” that the company needed to add lucidity to its scheme in the environmental country through the use of a model every bit good as criterions and an action program stand foring present enterprises.
Further information stand foring a elucidation on this country found that in 2004 Carrefour had met the stringent criterions established by the FTSE4Good Index ( CSRwire, 2004 ) .4.1.
2 Environmental AnalysisThe duty for guaranting that the highest criterions of nutrient safety are maintained within the European Union is a critical policy country for the EU Commission. Consumer and environmental concerns over the usage of biodegradable every bit good as non-polluting merchandises including air and H2O quality in concurrence with unvarying nutrient criterions and the riddance of pesticides and other growing by merchandises represent wellness related factors that have come to the head. These environmental factors represent:
McCracken ( 1986, p.
71-84 ) indicates that cultural context are variables in the environmental facet in that the mode in which single dietary penchants have been shaped stand for a nexus to their purchasing behaviour every bit good as concerns or deficiency of concerns sing organically grown nutrients poetries nutrients using growing endocrines and other additives and pesticide controls. Increased consumer consciousness in markets means that they influence supplier demands in supplying the types of nutrients grown and processed under the public consciousness civilization. The more consumers demand and seek organically grown nutrients the better the impact upon the environment and such purchasing behaviour forces nutrient providers to run into these demands in the market place. The foregoing besides represents a better use of natural resources in maintaining with the sustainability factor. The differences in nutrient ingestion forms ensuing from societies that consume more organically grown nutrients has a bearing upon the environmental procedures linked to its usage, such as the decrease of pesticide constituents that seep into rivers and H2O tabular arraies every bit good as harvest dusting, endocrine additives and other chemicals that affect the ecosystem.
The cost of nutrient in general besides has an environmental bearing in that lower income households will be given to devour nutrients that are non of an organically adult nature due to the higher monetary value. As the entire ingestion form of the lower and in-between income groups constitutes a higher per centum of the market this inhibits a greater usage of organically grown nutrients which impacts or keeps its monetary value higher under the supply and demand theory. Therefore, nutrient processors and providers will necessitate to take the first stairss to do organic nutrients more plentiful, hence assisting to drive down costs which will hold the consequence of increasing ingestion doing the organic nutrients to stand for an increasing per centum of merchandises sold, and holding a more positive environmental impact. Since the lower and in-between income section of the market consumes more nutrient, a factor of higher demographic Numberss, and the preceding means that a displacement in nutrient retail merchant accent will assist to drive the aforesaid. Organic nutrients are defined as “… the merchandise of a agriculture system which avoids the usage of semisynthetic fertilisers, pesticides, growing regulators and farm animal provender additives.” ( Boyle et al, 1991 ) .
Boyle et Al ( 1991 ) continues that “Instead, the system replies on harvest rotary motion, animate being and works manures, some manus weeding and biological plague control” .Sullivan and Frost ( Ministry for the Environment, 2004 ) Report Number 3365 on “The European Market for Organic Vegetables” estimated that the organic nutrient market in Europe would turn from $ 200 million in 1996 to $ 510 million in 2003. Interest by consumers in organic nutrients among the moderate and upper degree in-between income brackets is on the addition with Germany taking the European Union in ingestion as represented by the fact that 18 % of the overall volume in the vegetable and fruit section of the market is organic ( Wright, 2003 ) . Denmark’s market for organic veggies and fruits bases at 16 % , followed by the United Kingdom at 14 % ( Wright, 2003 ) . The UK represents one of Europe’s fastest turning markets with projected ingestion estimated to increase to 15.1 % , and France’s projections indicate an addition to 15.9 % ( Wright, 2003 ) . Growth in the United Kingdom has been a consequence of the high grade of consumer involvement and demand which supermarket concatenation Safeway reported that organic nutrient represented 2 % of the fruit and vegetable purchases in their mercantile establishments, nevertheless they represented 80 % of the calls they received therefore motivating them to increase their offerings in response to market demand ( Wright, 2003 ) .
UK market demand has seen Tesco cut down the monetary values on its organic fruit and vegetable merchandises so that they match the monetary values of conventional fruits and veggies and the selling move was evidenced by a 500 % addition in organic gross revenues.Table 5 – Organic Agricultural Land and Farms in the E.U. 2004( Organic-Europe, 2005 )
|State||OrganicHectares||% organiccountry||OrganicFarms||% organicfarms|
|13.53 %||19’826||11.30 %|
|6.16 %||836||2.20 %|
|Suomi||162’024.00||7.31 %||4’887||6.00 %|
|1.80 %||11’059||1.71 %|
|4.52 %||16’603||4.10 %|
|Hungary||128’690.02||2.19 %||1’583||4.10 %|
|Italy||954’361.00||6.22 %||36’639||1.70 %|
|Luxembourg-ville||3’158.03||2.49 %||66||2.24 %|
|Poland||82’730.00||0.49 %||3’760||0.20 %|
|Slovak Republic||53’901.00||2.41 %||117||1.56 %|
|Slovenija||23’032.00||4.55 %||1’590||2.04 %|
|Spain||733’182.37||2.87 %||16’013||1.40 %|
|Sverige||222’044.00||7.31 %||3’138||3.90 %|
|United kingdom||690’270.00||4.39 %||4’010||1.70 %|
|Sums||5’773’335.37||3.37 %||139’971||1.54 %|
Table 6 – Year Organic Land Conversion in the European Union 1985 – 1990( UK Statistics, 2001 )
|EU 15 % alteration||12 %||16 %||23 %||37 %||41 %|
Table 6 – Year Organic Land Conversion in the European Union 1991 – 1996( UK Statistics, 2001 )
|Irish republic||3823||5101||5460||5390||12634||20496 & lt ;