CASE on Metro Cash and Carry

Ahmer Javed

4291-Fms-Mba-F09

Zohaib Shakoor

4250-Fms-Mba-F09

Waqas Tahir

4279-Fms-Mba-F09

Syed Nayyar Sajjad

4253-Fms-Mba-F09

Irfan Afzal

2069-Fms-bba-F07

December 15

Entrepreneursh ip

A case study on Metro(cash & carry) Sajjad Ashraf Basra

3537-Fms

201 0 Mr. Hafiz Ghufran

Metro (Cash and Carry)

Company History METRO Cash & Carry is a leading international company in selfservice wholesale and operates more than 600 outlets in 29 countries. With over 100,000 employees worldwide, the company achieved sales of € 31.7 billion in 2007. By generating almost 50 percent of the total sales, METRO Cash & Carry is the top-selling sales brand of the METRO Group. Assortment and service of METRO Cash & Carry’s unique business-to-business model are targeted only towards professional customers such as hotels and restaurants as well as small and midsized retailers or institutions. The company offers these special groups a high level of assortment competency both in food and nonfood as well as attractive wholesale prices. An efficient and internationally conferrable concept ensures success in entering new markets. METRO Cash & Carry – A story of expansion The self-service wholesale trade came to Europe in the year 1964 when METRO SB-Großmärkte GmbH & Co. KG was founded in Mülheim/Ruhr. The initiator and driving force behind this concept was Prof. Dr. Otto Beisheim. In 1967 the Franz Haniel & Cie. company became a partner in the new venture. Prof. Dr. Otto Beisheim, the Franz Haniel & Cie. GmbH company and the Schmidt-Ruthenbeck family then each held one third of the shares in the German METRO activities and thus constituted the “original group of partners”. As from the year 1968 the concept was extended beyond the German borders, with the Dutch company Steenkolen Handelsvereeniging N.V. (SHV) as a new partner. The two sides jointly established Makro Zelfbedienigsgroothandel C.V. with the original group of partners holding 40 percent of the shares in this activity. Within the framework of a first major expansion drive METRO/MAKRO Cash & Carry entered the market in nine Western European countries by 1972. In the nineties, METRO Cash & Carry expanded its activities to Portugal, Turkey, and Morocco and to Eastern Europe.

In July 1996 METRO Cash & Carry merged with Kaufhof Holding AG and Asko Deutsche Kaufhaus AG and the METRO Group was founded. That year also saw the group’s going public. The Metro stock is the only retail stock listed in the German blue-chip index “DAX 30“. The first step into Asia was taken when METRO Cash & Carry moved into China in 1996. Today the company is present in 5 Asian countries: China, India, Japan, Pakistan and Vietnam. The METRO Cash & Carry business is going to be further internationalized and expanded with the focus on Eastern Europe and Asia. Already by today, more than 80 percent of the staff is working outside of Germany. In many countries the company is on of the major employers. What is METRO Cash & Carry? METRO Cash & Carry – this name stands for one of the great success stories in modern commerce. The unique wholesale business-to-business model of METRO Cash & Carry is focused only towards professional customers such as hotels, restaurant and caterers as well as small and mid-sized retailers. METRO Cash & Carry offers this target group a greater efficiency than the multilayered supply chain thus helping them to improve their business: By offering them a one-stop solution for their purchases, by helping them to improve their assortment, by offering them high quality products at reasonable and transparent prices and by offering them a consistent supply source. What does METRO offer? METRO Cash & Carry is a reliable partner for more than 20 million professional customers worldwide. It gives them a clear competitive advantage in their own markets. Professionals can purchase everything they need to run their

business: A restaurant owner, for example, can buy food like fish or vegetables as well as kitchen equipment and office supplies. METRO Cash & Carry offers an exceptionally wide range of high-quality products under one roof. Depending on the size and type of wholesale center, the assortment includes up to 20,000 items in the food range and 30,000 items in the nonfood sector. As the name implies, METRO Cash & Carry customers select their own items and take them with them to their restaurants and shops. With this unique business-to-business concept, the company has grown to become a leading international player in self-service wholesale. METRO Cash & Carry Pakistan Wholesale Centers METRO Cash & Carry is successfully operating 5 wholesale centres in Pakistan i.e. 2 in Lahore, 1 in Karachi, Faisalabad & Islamabad respectively. Opening Dates: Canal Bank Wholesale Centre, Lahore: October 30, 2007 Capital Wholesale Centre, Islamabad: April 03, 2008 Lyallpur Wholesale Centre, Faisalabad: January 14, 2009 Airport Wholesale Centre, Lahore: January 14, 2009 Safari Park Wholesale Centre, Karachi: March 26, 2009 10 METRO Cash & Carry principles The success of the company is based on the following principles:  Focus on professional customers  One-stop shopping  Efficient store concept designed for professional needs  Advanced customer service  Enhanced customers’ competitiveness  Excellence in supply chain and quality management  Strengthening of local suppliers  Development of national infrastructure  Career opportunities  internationally transferable concept

10 good reasons why you should become a customer of Metro          

Low cost possible prices Stock availability One-stop shop Extensive business house Quality guarantee Free parking After sales services Promotional activities Simple but comprehensive billing system Great value for money

Product range Each store is tailored to address the needs of professional customers. We offer a wholesale price that leaves the customer room for healthy margins and provide a one-stop-shop for the customer. In the food range, freshness is our first priority. This is guaranteed by the efficient supply-chain and quality control management we have in-place. In non-food, we offer only products that are up-to-date in terms of technology and design, and meet all safety standards.

Food At the METRO wholesale center you can find a wide range of food products  Dairy, Frozen

 Meat  Fresh Fish & Seafood  Fruits & Vegetables  Edible Groceries, Canned Goods and Bakery  Sweets and Confectionary  General Grocery  Tobacco and Beverages  Detergents  Cosmetics & Toiletries

Non Food Office Equipment Media , Radio & Accessories Home Electronics/House Hold Household Goods        

Pots & Pans (Tefal, Sonex, Majestic, Prestige) Tableware (Luminarc, Clayworks) Glass (Pasabache, Bormioli Rocco, Toyonasic, Ocean) Cutlery & Cutting Tools (Cocktail, Kiwi) Kitchen Utensils & Serving Articles (Fackleman). The range also include decoration products (Walther Glass), Candles Cleaning items.

Home Improvement/DIY (Do it Yourself)    

Lamp fixtures, lamps & bulbs (OSRAM, PHILIPS) Electrical items (BUSH) Bathroom & Sanitary (Faisal & ICL) Flooring (Krono Flooring) Paints and painting accessories (ICI,Master Paints)

  

General use and specialized hand tools (Stanley) Power tools (BOSCH, Black & Decker) Generators (Honda) and operating equipment.

DIY also offers a wide range of car interior and exterior equipment, car care solutions (MOTHERS, COSMIC) and good quality tyres at low rates (GOODYEAR, NEXEN). Home Textile/Home Decoration Ladies wear/Men’s wear/Children’s wear/Shoes/Luggage Sports & Seasonal

METRO own brands In several food and non-food product categories METRO Cash & Carry offers a wide range of its own brands. These brands are highly popular across the globe. The availability of these brands allow our customers to save money without compromising on the quality for which we are famous and feel proud of it. Their brands are following Alaska Fairline Enhil All of these three are related to electronics equipments. SWOT Analysis of Metro: They have ATM facility at their store, they also offer installment plans in which bank is involved. (HABIB BANK LIMITED) IT is also their strength that they do not have strong competitor at their level. The registered business person can refund GST (General sales tax which he has paid on metro) when paying the tax to FBR (FEDERAL Board of Revenue). Competitive analysis: There are many competitors of Metro in Faisalabad and in other cities respectively. But focusing on Faisalabad there are Al-Fateh shopping store, SB store, Family Mart, City Mega Mart, E-Mart, Bambino Mart and Rachana Departmental Store. Availability of such competitors has created a strong

competitive environment in Faisalabad. Because all of them are providing almost same type of services so there is a tough competition. There are many disadvantages that Metro has to face but the main issue with Metro is that it is situated far away from the center of the city while many of its competitors are situated in ideal places in potential market so they are taking advantage of this and providing same facilities as Metro provides. On the other hand Metro has the advantage of low prices. The potential customers of Metro are wholesalers and restaurants so other stores targeting the normal grocery customer and competing Metro in this regard. But due to its low prices it is also attractive for daily based customer. So it has a strong position in regard of customers having both types of customers. Organizational Structure of Metro: The Metro classifies itself as business to business wholesaler. They are following vertical organizational structure with proper hierarchy. At each level the authority and span of control is predefined. Store Manager

Floor Manager

Floor manager

Floor manager

Department

Department

Department

Manager

Manager

Manager

Assistant Department Manager

Store Associates

Floor manager

Department Manager

The hierarchy starts with store manager and there are Four Flour managers and each manager controls 10 Departments and there are total 40 Departments. The proper authority and moderate Spam of control make it possible to operate functions efficiently.

Metro’s Management: They have almost all famous companies with them. They directly purchase through companies in very huge bulk quantity. They contract with companies and get best quality and quantity. On the other hand the companies also save their cost, because companies put their stock in METRO at once. And they purchase on debt, the terms of debt vary company to company. When they purchase in huge bulk they got reasonable discount as compared to others. On other Metro is self services wholesaler, so they reduce their cost in customer services. But most of the companies send their own sale representative to Metro on their own stall to facilitate the customer I purchasing the product They have adopted market penetration strategy. They are now working hard to create more and more business. They are now investing more on their business retailer. The Metro is accommodating divers workforce at their working area their training is carried out to manage them properly. They evaluate their employs on the basis of their Task. The Monthly performance reports are prepared. After evaluation the hardworking employs are promoted as well as rewarded. Metro also have a teaching staff to train their existing and new staff. The shop lifting is common all over the world. Metro has created a strategy to minimize this loss. They place a tag or Sticker on every single piece of product. When shop lifter try to take any product without billing. The Automatic scanner

on Exit gates are activated and detect the bar code (which is pasted or tagged on product). The shoplifters have to pay double of the price. Otherwise they are given in the custody of Police. Normally incentives are given to them on basis of their performance. The incentives in the form of bonus are mostly given in Metro store. On quarterly Basis the performance is analyzed and rewards are given to employees. Metro says in its management policy: 1. Trust and Respect • Everybody's opinion counts • We treat every person the same way 2. Open Door Policy • We avoid organizational barriers • Two-way communication • We encourage change and sharing of ideas 3. Empowerment to Personal Responsibility • We allow people to take risks • We consider "making mistakes" as part of the game 4. Be a Role Model • We demonstrate commitment and enthusiasm 5. Setting Clear Personal Objectives and Tasks • We have implemented a management-by-objectives concept 6. Recognition and Reward • We consider honest and transparent feedback as a "must" • We reward high performance (not only with money) 7. Team Spirit • We encourage maximum team engagement and knowledge 8. Positive Working Environment

• We guarantee a safe and healthy working environment • We encourage innovation and creativity 9. Corporate Social Responsibility • We are committed to the principles of social responsibility Questions: Q: Should Metro continue its business as wholesale only or should they pay attention to the household customer? Explain your answer. Q: What steps Metro should take to increase its sales volume? Q: How does the Metro motivate its employees does it help in retaining them? Q: In your opinion entrepreneurship is the reason of Metro’s success or not?