The Market Opportunities Available to Carrefour in a South Africa Assignment

The Market Opportunities Available to Carrefour in a South Africa - Assignment Example This paper provides a detailed outline of the market entry strategies that the Board of Directors should consider for entering the retail business sector in South Africa. It has been recommended that the joint venture would be the safest and most profitable method of market entry. Table of Contents 1 Brief Synopsis of the Issue 4 Recommendation(s) 4 Background 4 Company overview 4 Theories of international trade and investments 5 Analysis of Market Opportunities in South Africa 6 Company Situation Analysis 10 Analysis of various types of market entry strategies 13 Market entry Strategy: Joint venture 15 Reference List 17 Brief Synopsis of the Issue The proposed market entry strategy for Carrefour is joint venture since this is the best option available to the firm for minimizing threat involved in entering the new market and for gaining knowledge of the local market. Recommendation(s) South Africa is a developing country and the national government is making efforts to attract foreig n direct investment Carrefour is a multinational firm with advanced technological know-how Joint venture with a well performing local firm in the same business is the best strategy to enter the South African market Background Recently, Carrefour has made an unsuccessful attempt to enter the Russian market with the aim of establishing a hypermarket in the country. The causes of the failures have been found to be lack of potential demand (particularly for organic food items) and low opportunities for acquisition and growth. This paper presents a case study, which acts as the platform on which the company should build its strategy to enter the South African market. Through this paper, it has been recommended that Carrefour should adopt the strategy of a joint venture for entering the South African retail industry. Company overview Carrefour was founded in France in the year 1960 by two entrepreneurs, one textile retailer and the other a food wholesaler. In 1960, the first store was hig hly successful and it marked the beginning of the company’s successful journey. In 1975, the company made its first venture outside Europe and opened a hypermarket in Brazil. Since then Carrefour has expanded its business across the globe. Presently, the company has 4635 stores in France alone and more than 5200 stores in Europe, Asia, Latin America, Caribbean and North Africa and Middle East (Carrefour, n.d.). However, in 2009, the company faced a setback while trying to establishing a hypermarket in Russia due to lack of demand for its organic food products (Indu, 2011). The company was forced to quit their business in Russia and exited after four months. It is currently considering South Africa as a prospective country for making investments. Theories of international trade and investments In the modern globalized business world, there is wide agreement on the benefits of international trade among the economist, politicians and academic researchers. Investments made in for eign countries are believed to boost up business operations around the world and also lead to economic progress of the host countries. These countries are encouraged to modify the economic policies pertaining to international trade in such as way, that they can promote international trade and investment.