International Corporate Finance: Value Creation with Currency Derivatives in Global Capital Markets, + Website

CASE STUDY 19.1

Carrefour's Indian Entry Strategy

This case study accompanies Chapter 19 of International Corporate Finance.

It is the last and a very big frontier. Brazil is done, China is done. India is the last Shangri-la of retail. Where will Tesco and Walmart get their growth?

Sunil B. Mittal, chairman and managing director, Bharti Enterprises Ltd.

Albert Montgolfier is the deputy head of Carrefour's strategic planning department. He has been charged with a review of Carrefour's options with respect to the Indian market and would submit his preliminary recommendations to Carrefour's board meeting next April (2007). India had been on Carrefour's radar for some time now, and, as late as 2004, Carrefour had been close to entering the Indian market through franchising but decided to defer any strategic move. Bharti Enterprises' recent announcement, in late November 2006, of a large-scale joint venture with Walmart¹ changed the competitive landscape in a major way, and Albert knew that Carrefour could not defer and temporize forever, as time was of essence. For “big box” retailers—the likes of Walmart, Ahold, Tesco, or Carrefour—India was the last uncharted frontier. Indeed, with more than 1.1 billion people, half of them 25 years old or younger, an economy growing at an annual rate of 8 to 10 percent, and no major retail chain to speak of, India represented in 2006 a US$250 billion market potential, widely expected to double within 10 years. Retail was estimated to contribute ...