Case Study Royal Ahold

Since the establishment in 1887, by 2003, the Netherlands’ Royal Ahold was the second-largest food retailer in the world with its business operation in 27 countries and turnover of more than US$89 billion.
The case highlights Ahold’s strategies in both global and the U.S. market and, a comparison with the approaches of other two largest retailers i.e. Walmart and Carrefour.

Q1: What are the advantages & disadvantages of the growth strategies pursued by Royal Ahold, Carrefour, & Walmart?

Royal Ahold’s multi-local, multi-format and multi-channel strategies to localize its brand names, products, services and store formats to ensure its “local” presence throughout the world is distinctive to the other two i.e. Walmart and Carrefour.

In contrast

 Maintaining local infrastructure avoids excessive investment, saving in marketing expenses and A&P costs.
 Failure of a local brand will not affect the parent company, low reputational risks.  Substantial investment required for M&A.
 Low brand awareness.
 Challenges in managing multi-brand.
 Cultural differences between both parent and host company.

b. Growth strategies pursued by Walmart and Carrefour:-
Advantages Disadvantages
 Organic growth strengthens their global business strategies.
 Customers confident with their “global” presence, brand awareness and loyalty.
 Standardize operations and culture encourage transparency and fairness.
 Operate in large scale provides customers with better quality and comparably priced products.  Longer ROI period and higher risks of failure for newly set-up.
 High marketing expenses and A&P costs to attract and building-up customer base.
 Challenges in establishing relationship with new local suppliers.
 Failure of any store may affect the whole chain throughout the world.

Q2: Should Royal Ahold use its name on all of its stores, as Walmart & Carrefour do? Why or why not?

Royal Ahold should not use its name on all of its stores

out-of-sudden, a local customer’s favourite local brand turn into a foreign brand.
• It is risky and no guarantee of success yet, it require to switch from a successful model.

Q3: What are the advantages & disadvantages of Walmart’s & Carrefour’s more centralized decision making compared with Royal Ahold’s decentralized decision making?

a. Walmart’s and Carrefour’s centralized approaches:-
Advantages Disadvantages
 Identical and standardized organisation to ease business and operational control.
 Work towards in achieving the same goal throughout the world.
 Common policies and practices made coordination within the organisation easier.
 Fast decision-making with strong leadership.  Demotivating employees due to lack of authority.
 Bureaucratic, unnecessary layers in the organisation’s hierarchy.
 Slow response and non-flexible to adapt to the changing markets.
 Obstacle to open communication and customer service