Case 1: How Successful is Carrefour's Joint Venture in the UAE?
Overview: While gaining access to an emerging market such as the UAE in1995, Carrefour decided to enter into a joint venture with Majid AlFuttaim after the evaluation of laws and market conditions. One ofthe major reasons for this kind of agreement was that in order toenjoy exclusive presence in the region and be protected from contracttermination, the foreign companies needed to have a joint venturewith nationals or commercial entities owned solely by UAE Emiratis.Carrefour saw the qualifying condition as a plus point since it wouldentail sharing the liability of ownership between the parties involved.In addition, the UAE is characterized by a strong food culture withreligious and cultural restrictions; thus, if it operated as a joint undertakingwith a local sponsor, it would be easier to obtain food healthcertificates, and to importfood. Furthermore, Carrefour would be subject to the same barriersas the sponsors, or none at all, on most inventories.
1. What are the reasons behind Carrefour choosing joint venture as a method of entry?
2. Why do you think Carrefour chose the UAE as a stepping stone to expand into the Middle East?
3. State Majid Al Futtaim's (MAF) characteristics that allow it to be a good partner.
4. Do you think Carrefour's joint venture was a good choice? Please validate your