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The economic transition that Asian countries made in the past four decades are a surprise to the global economy. For instance, China is ranked the second most attractive location for foreign direct investment (FDI), while India was ranked fifth in the 2013 FDI report. The observed escalating growth in Asia is brought by the political stability major part the region has experienced in the past four decades.
The stability has led to the continuous upgrading of its institutions and the enactment of macroeconomics stable policies (Worm 22). Most Asian governments have recently created a harmonious community with developed rural areas, healthcare, security, and education. Asia is also gradually changing from an authoritarian Communist regime towards a democratic one (OECD 236). Moreover, the current population in both Asian giants like China and India can provide for both foreign and local industries a stable quality labor force for about a century. There is a constant rise in the middle class in both China and India and it will increase spending on household goods, education, and healthcare services (OECD).
Trading in Asia
Trading in Asia has an equal number of challenges and opportunities. For example, Chinese economic strategies have at times conflicted with rules, norms, and institutional arrangements in the global economic order (Freeman, Lardy, and Mitchell 17). Its role in the global trade system is passive and sometimes disruptive. Presently China is experiencing a domestic backlash over the government’s cooperation with foreign countries and international institutions.
The Chinese anti-globalization phenomenon explains to some extent the Chinese attitude toward the world economy (Freeman, Lardy, and Mitchell 17). One of the major challenges the emerging Asian giants face is the financial market volatility, brought by the predictability of tapering of the US quantitative easing (QE). Emerging economies like India that run large current account deficits are prone to capital outflows risks. In fact, India and Indonesia were the major cause of financial instability in the third quarter of 2013 (OED 25).
Carrefour Business Level Strategy
Carrefour’s business-level strategy depends on the three core values of freshness, variety, and low prices. Its prices are not only to give it a competitive advantage but also provide essential means for its survival. Carrefour promotes its products on a daily basis, with the catching line of refunding its customers if they would find cheaper prices elsewhere. The business has moved a notch high in providing shuttle services and playing fields for its customers. This strategy of treating their customers has made them ahead of their competitors (Hitt, Ireland, and Hoskisson 78). Carrefour respects the choice of its customers and provides them with a freedom of choice among the variety of commodities offered in its hypermarket.
Carrefour Global Level Strategy
In its entry in Asia, Carrefour relied on a small number of expatriates, with a wide knowledge of the local markets. Carrefour also applied a multiple store format as a part of Asian market entry. The company began by establishing the required infrastructures in its hypermarket beachheads. This strategy was to assist it to have joint ventures to help the company gain knowledge in the international markets (Spulber 238).
The company then used its partners’ infrastructures to set up hard discount stores and supermarkets. This strategy led to Carrefour cost economies, through a share in procurement, logistic, marketing, and other general activities. In China, Carrefour divided its activities into 4 regional markets to assist in addressing the differences in customer tastes and preferences (Spulber 238). The timing was another strategy is used. Carrefour entered the international markets, especially the Asian market before its competitors. Carrefour usually located their retail shops or chose sites situated at the center of large catchment areas.
This is different from its competitors’ choice of downtown sites. Carrefour reduces the cost of production by a third. Carrefour also reduces its price through its large economic scale. Its strategy of increasing the number of stores makes it surpass its competitors in the profit accrued.
Hitt, Michael, Duane Ireland and Robert E. Hoskisson. Strategic Management: Competitiveness and Globalization, Concepts. Mason: Cengage Learning, 2008. Print.
Freeman, Charles, Nicholas Lardy and Derek J Mitchell. China’s Rise: Challenges and Opportunities, Danvers: Peterson Institute, 2009. Print.
OECD. Economic Outlook for Southeast Asia, China and India 2014 Beyond the Middle-Income Trap: Beyond the Middle-Income Trap, Paris: OECD, 2013. Print.
Spulber. Global Competitive Strategy, New York: Cambridge University Press, 2007. Print.
Worm, Verner. China: Business Opportunities in a Globalizing Economy, Portland: Copenhagen Business School Press, 2008. Print.