This 8 page paper examines a case study provided by the student. The case looks at Carrefour between the years of 1965 and 1971 considering how working coital was used and if it could be seen as a constraining factor in the growth if the company.
Name of Research Paper File: TS14_TEcarrwc.rtf
Unformatted Sample Text from the Research Paper:
up with of small shopkeepers. The position of the supermarket was to use the economies of scale with the provision of large stores that sold higher amounts of goods but
at lower prices. They achieved this in several ways, firstly they would build in a cost effective manner. The land on the outskirts of town was cheap, gaining permits to
build was also cheap and when combined the new stores that were build were low on capital compared with the in town stores. From the beginning the company is not
cash rich, indeed in looking at the expenditure there is also an accompanying increase in the share stocks, indicating the need to raise capital outside the company and an unwillingness
to do this with the use of loans that would require interest payments. This all adds together to give a model of low cost development. The indication are the
company needs to ensure that costs are controlled. The resulted n one of the major competitive advantages that the company had. With few other supermarkets to compete with Carrefour was
in a position to operate on a 15% gross profit margin, This was well below other independent shop keepers that were unable to benefit form the economies of scale, and
as a result required process to be higher. This was revolutionary for the consumers, with cheaper process on offer. As a result of the philosophy that sold high levels of
goods cheaply, this meant that higher stock levels were required, meaning that there was a need for a higher feel of working capital. Working capital is the funds that are
tied up in the general day to day operations of a company. This is made up of several elements and represents the companies income that cannot be used due to