Carrefour Failure

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2. Situation analysis Situation analysis consists of external analysis and internal analysis. PESTLE is an efficient model to analyze a target market. But only several factors have the connection with this case that Carrefour’s failure in Russia. Some internal changes also influenced company’s resources and capability or had negative impacts on its strategy in the foreign market. 2.1 External environment analysis (PESTLE) Political According to the official Corruption Perceptions Index (CPI) which scores from 0 (perceived to be highly corrupt) to 10 (perceived to have low levels of corruption). In 2009, the corruption level score of Russia was 2.2 and ranked at No.146 (Transparency, 2009). This data demonstrates that Russia had a high level of corruption and had a high political risk. The high degree of corruption level would increase the hidden costs of operation and makes Russian market an expensive and tight foreign market. For example, Carrefour tried to get a license to sell alcoholic beverages in its first store. The license cost was very high and closed to 15% of the revenue of store. The high political risk arises out of incomplete institutional and legislative structure in Russia. Because of the existence of rigid monetary exchange policies and importing rules in Russia. This discourages foreign retailers to enter the Russian market. Also, the legal system is unreliable. You can directly bride the judges and prosecutors to fabricate the evidence. The Bureaucracy

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