Carrefour UAE (Essay Sample)

Carrefour UAE Name Institution Introduction The United Arabs Emirates (UAE) consists of seven emirates and is one of the easy-going countries in the gulf. The seven emirates include Dubai, Abu Dhabi, Fuijairah, Sharjah, Ras Al Khaimah, Ajman, and Umm Al Qaiwan. Carrefour UAE is the most dynamic and fastest growing hypermarket chain in the region. Despite the challenging economic environment, the company has experienced steady growth in the UAE market and has plans to roll out new stores in different locations across the country. Carrefour entered the UAE market in 1995. The first store was opened in Deira City and is referred to as Majid Al Futtaim retail. PEST analysis makes it possible to identify key success factors of Carrefour in the UAE. PEST analysis is a tool that enables a business to scan the business environment and detect aspects and changes in the environment enabling the business to adapt and make smart choices. Carrefour UAE Carrefour technical and financial capabilities make it possible for the company to expand and grow into any market in the world, including a market with unique challenges, such as the UAE market. The marketing challenge facing the company in the UAE includes local and international companies in the UAE that specialize in the retail of domestic products. The success of Carrefour in the UAE can be attributed to a good understanding of the external factors influencing the business. PEST analysis makes it possible to identify the Political, Economic, Social, and Technological factors in the business environment responsible for the success of Carrefour in the UAE (Carrefour, 2014). Carrefour is affected by diverse political factors. The UAE a monarch with the sovereignty of the country vested in the royal family. The royal family rules the country with the help of a council. The UAE has created a business friendly environment, which includes a free trade zone in Dubai. The free trade zone offers zero corporate taxes and few barriers to entry and operation for Carrefour. The political class in the country places a strong emphasis on transportation. Therefore, the country has the best transportation system in the region, which facilitates the operations of Carrefour. The monarchy enjoys wide acceptance, which reduce the political risk in the country and encourages strong economic growth (Schwab, & Sala-i-Martín, 2013). The economic factors affecting the company in the UAE include the recent global economic crisis that affected companies across the world. Economic factors affect social factors, which influence consumer behavior. The economy has a bearing on the slumps, booms, and fluctuations of the market. The recent global recession affected interest rates worldwide. Credit companies stopped financing companies and those that did charge high interest rates. This increased the cost of production and consequently, the price of domestic products sold by Carrefour. The company was forced to cut back through retrenchments and pay cuts (Schwab, & Sala-i-Martín, 2013). Although the economy is slowly recovering, domestic consumers are not ready to buy more products and services because of the high rate of unemployment. Despite reduced consumer spending and the low demand of goods and services, Carrefour continues to record profits because households prefer to spend their money on basic needs, such as food and clothing. The UAE economy did not suffer extreme recession because it is an oil-based economy. This coupled with an increasing number of women with purchasing power present a flourishing economy for the retail sector (Carrefour, 2014). In the social environment, the company responds to consumer demands, which are shaped by social factors. Currently, consumers in the UAE and across the world are demanding branded, quality goods. Carrefour is responding to these demands by introducing branded, quality goods on their shelves from across the world that offer customers the option of purchasing customized products and services. The consumers in the country are also demanding a one stop shopping experience. Carrefour is responding to this social factor by opening hypermarkets across the country. The hypermarkets are one-stop shops that enable the consumers to refuel, eat, bank, do laundry, visit a doctor, and do grocery shopping at the same location. The hypermarkets are located cross to residential neighborhood because the consumers are demanding quality services and goods near their homes. The company also offers fresh products direct from the farm. This is in response to the increasing public awareness about their health. The products have appropriate labels indicating the number of calories and nutritional value (Schwab, & Sala-i-Martín, 2013). The UAE is experiencing an increase in population; therefore, there is an overall increase in the size of the retail market. The society in the country is encouraging women to get an education and join the workforce. This is improving the economic position of women in the society. Women do domestic shopping in the UAE; this is providing a good target market for Carrefour. The diverse changes in technology are changing how the retail industry markets and interacts with consumers. In response to the technological changes, Carrefour has a website that highlights its products and stores (Carrefour, 2013). The website allows the company to interact with its customers and educate the customers about the different initiative the company is engaged in as part of their social responsibility program. The improvement of communication technology enables different stores in the UAE and across the world to share information in real time. Technology also makes it easier for the company to order goods from suppliers and adhere to operational requirements in the country. Carrefour is successful in the UAE because, during the entry phase, the company recognized the benefits of forming a partnership with an experienced company. The UAE market is fundamentally different from the western market. Unlike the western market that is mostly contemporary, the UAE is predominantly Muslim. The Muslim religion defines every ...