2- Based on the Carrefour case, identify/name and briefly describe the environmental factors and their effects for the company. (50 points) Carrefour, Frances number one hypermarket retailer entered the Japanese market in 2000. It experienced aggressive price competition from existing domestic retailers. Beside the competitive market with strong and well established local retailers, there are also heavy government regulations and strong workers union in the host country. Japan has one of the worlds strongest luxury brand markets. Upon entry to the market, Japanese consumers expected Carrefour would offer luxury French products like wine and cheese, for which there was a demand. Instead, Carrefour followed their internationally successful strategy of working with local suppliers for goods common to the local market. Unfortunately, the market for local products was saturated, thus Carrefour held no advantage over established retailers. Although they attempted to adjust by bringing in French wine and other food products, the initial damage was so great to overcome their failure to achieve enough market share in Japan (Baek, 2004). Carrefour also miscalculated the desire for service and appearance of the Japanese consumers. The retailer sacrificed store appearance for shelved product maximization. Japanese consumers are relatively price insensitive and value a fashionable store atmosphere and location, as well as higher customer service, over lower prices. Japanese consumers tend to be extremely brand conscious, even on every day products and food. They associate low price with cheap quality and prefer retailers who provide entertaining shopping experiences and products that enrich their lives (Aoyama, 2007). Carrefour also operates in India and sells its private label white goods. In the Indian market, the color options of the washing machines include green, blue and white. The setting for delicate fabrics is labeled sari for Indian women to wash their embroidered silk or cotton outer garments. Also as the water is a scarce resource in India, especially in the dry southern states, the washing machines sold at Carrefour have been redesigned. These machines can restart from the point of washing cylce where they had left off when the power or water supply were interrupted. Due to the deteriorating economy in India, Carrefour had to adjust the prices of its washing machines that were too expensive for many Indian consumers. The company had to adapt the prices of some models to meet the local competitors price ranges to be able to sell its offers