Carrefour's Exit from South Korea
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Case Details:
Case Code : BSTR241 Case Length : 19 Pages Period : 1995-2006 Organization : Carrefour Pub Date : 2006 Teaching Note :Not Available Countries : South Korea Industry : Retailing
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"The withdrawal of Carrefour from South Korea is mainly
explained by a strategic decision by headquarters, especially because of the
difficulty in acquiring a leading position in the near future."1
- Philippe Broianigo, CEO, Carrefour Korea, 2006.
"They (Carrefour and Wal-Mart) have struggled to find the
economies of scale and to compete with groups like E-Mart, and they've struggled
just as much with the back-of-house business as much as the front-of-house."2
- Morgan Parker, President, Taubman Asia3,
2006.
"Wal-Mart and Carrefour were not aggressive enough in
expanding their networks in South Korea, once they lost the race, they could
never catch up."4
- Koo Chang Gun, Retail Analyst, Korea Investment and
Securities5, 2006.
Carrefour Bids Adieu to South Korea
On April 28, 2006, France based Carrefour SA (Carrefour), the second largest
retailer in the world, sold its 32 hypermarkets in South Korea to E.Land
Corporation6 (E.Land) for 1.75 trillion
Won7. The sale marked the exit of
Carrefour from the South Korean organized retail market.
At the time of exit, Carrefour was the fourth largest retailer in the country.
Carrefour had entered South Korea in the year 1996. The company had invested
more than 1.5 trillion Won in the country till mid-2006, making Carrefour's
foreign direct investment (FDI) the single largest in the Korean market. (Refer
Exhibit I for the details of other leading retailers in South Korea).
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According to Carrefour's top management, the exit from South
Korea was a part of the company's plans to focus only on those markets where
Carrefour was among the three leading retail chains.
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As a part of the plan, Carrefour exited several
markets including Japan, Mexico, Czech Republic and Slovakia and began
concentrating on the markets where it had a strong position including
Brazil, Poland, Turkey and China.
On withdrawing from South Korea,
Carrefour announced, "The divestment of Carrefour Korea is part of a
wider effort to withdraw from insufficiently profitable or non-core
activities."8
In September 2006, E.Land signed a formal agreement to acquire
Carrefour's South Korean operations for 1.48 trillion Won, a price lower
than the initially agreed price. |
Carrefour's Exit from South Korea
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