Foreign Investments in the United States

Company Background

Groupe Auchan SA is a privately held company headquartered in Croix, Lille Metropole, France that specializes in discount stores and supermarkets. They are much like we in the United States would envision a Wal-Mart or Meijer type of store. According to their company website they employee approximately 260,000 employees in 9 countries globally. Their revenue is approximately 44 Billion Euro or just north of 61 Billion Dollars, placing them firmly in Fortune Magazine's Fortune 500.

Auchan does not currently have a presence in the United States, but this was not always the case. In the late 80's they opened two supermarkets in the US, one in the Houston area and one in the Chicago area. It also tried to expand its market share in the Houston area by opening another store in the early 2000's which was met by failure for multiple reasons including but not limited to competition, location, and innovation.

With a successful global footprint the question that Auchan executives must ask themselves is should they be interested in trying to reenter the United States retail superstore market? With an increasing demand for one stop shopping for the busy US consumers, could Auchan's hypermarket design strategy fit with the needs of the US consumers? In the following report I look to answer these questions with sound logic and reasoning and will offer recommendations on whether or not Auchan should look to reenter the US market.

Interest in Opening Operation in the United States Market

According to the United Nations Statistics Division (UNSD) the United States is the largest consumer nation in the world so it would only make sense that a retail business such as Auchan would look to expand their business to capture some of this market share. Although they have tried and failed to enter the United States consumer market in the past from a growth perspective they would be considered myopic if they did not at least entertain the notion of trying to learn from what made them unsuccessful in the past and try to redeploy into the market.

Although Auchan failed in its first endeavor into the United States they still may not know what it takes to be successful in this market. With that being said what they do now know is what does not make them successful, in other words they may not have found the one way to execute correctly, but they did find one way not to execute correctly. If they understand and look at it as a resource they may be more successful the second time around if they look at their roll out from a macro perspective.

Now with that understood, with the United States being the number one consumer market in the world other organizations are going to recognize this as well and are going to look to capitalize on that. With this come intense competitions that can be notoriously cut throat in the retail sector. They would be going heads up directly with organizations such as Wal-Mart that have the logistical infrastructure to out execute any new comers in the market. With that said, Auchan has its own infrastructure that although not successful in the United States has proven successful in other parts of the world including France, Spain, Italy, and parts of Asia.

Cultural Issues

When an organization wants to go global they must consider all of the issues that come with that. We have many different cultures within the United States that can create challenges for consumers that are trying to meet national needs. Anyone that has traveled north to south or vice versa can attest to this, we have different wants from foods to entertainment and everything in between a business that wants to be in both needs to be transformational. Compound this issue exponentially when trying to take a business