Discussion Question—pg. 549-551
Case 7 Ahold: The Biggest Supermarket Retailer You Have Never Heard Of
1. What are the advantages and disadvantages of the growth strategies pursued by Ahold, Carrefour, and Wal-Mart?
Global Expansion (1970’s—Spain, Portugal, United States; 1990’s—Central
Europe, Latin America, Asia)
Pro: High penetration in U.S. market.
Con: Low penetration in its mother continent.
The profit margin for Ahold’s U.S. division is 5.7 percent, while the
margin for the European division is only 3.9 percent of sales.
Pro: High international experience. 34 years since the first
acquisition in the United Sates, Bi Lo.
Pro: “No other European retailer has been as successful in
entering the U.S. market as Ahold.”
Pro: E-commerce. Peapod—one of the first Internet grocers.
Pro: Product expansion. (Grocery store in 1887 to liquor and cosmetic
store in 1970’s)
Acquired many consumer brands.
1977—formerly owned Bi Lo, a South Carolina— based grocery
store chain operating about 450 stores,
Stop & Shop with 320 stores;
1999—U.S. Foodservices, America’s second-largest supplier of
ready-made meals, prepared foods, and ingredients
to restaurants, hotels, and other institutions;
2000—acquired majority stake in Peapod
Pro: Continuous Growth.
Con: Holds too many brand names. Leads to customer confusion
(Stop & Shop; Giant-Landover; Giant-Carlisle; Martin’s; Peapod;
Wal-Mart & Carrefour
• Global Branding.
✓ Only use one brand name. Avoids confusion. Creates loyalty. • Large discount department store. Attracts more patrons.
• Low penetration in E.U.
← Lack of international experience.
2. Should Ahold use its name on all of its stores like Wal-Mart and Carrefour? Why or why not?
Yes, Ahold should use its own name in all its stores.
• It improves brand awareness of customers.
✓ Brand recall
✓ Brand recognition
• It creates corporate identity.
• Evoke loyalty.
• Increase market share.
• It helps in developing own private label brand. • It helps in penetrating a market.
• Establish corporate consistency.
3. What are the advantages and disadvantages of Wal-Mart’s and Carrefour’s more centralized decision making compared with Ahold’s decentralized decision making?
Ahold’s Decentralized Decision Making
|Advantages |Disadvantages | |Allows organizations to take advantage of division of labor by |Lower-level managers may have objectives that are different | |sharing decision-making across the organization. |from the objectives of the entire organization. For example, | |Empowers employees and allows them to improve their performance by|some managers may be more interested in increasing the sizes | |being able to act to improve deficient or inefficient areas |of their departments than in increasing the profits of the | |immediately without approval from the top of the organization. |company. | |Allows the managers of business areas to actually use their first |There may be a lack of coordination among autonomous | |hand knowledge and experience to improve their areas. |managers. | |Top management is relieved of much day-to-day problem solving and |It may be more difficult to effectively spread innovative | |is left free to concentrate on strategy, on higher level decision |ideas. Someone in one part of the organization may have a | |making, and coordinating...
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