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94 2014 Registration Document
Corporate governance
3
Risk management
3.5.1.3
Operations
◗
Relevance and performance of economic
and business models
In a highly competitive environment with very unstable markets, the
relevance of economic and business models and their rapid adjustment
to changing consumption habits and patterns, as well as efficient and
effective purchasing, can have a significant impact on the Group’s
operational and financial performance, in its organisation and design as
well as in the ability to deploy in stores.
Adapting business models to customer expectations is a major challenge
for the teams in charge of development and concepts, using a forward-
looking approach and constant oversight. Careful oversight and numerous
pre-deployment studies are also used to fully account for all factors and
effects involved in establishing the economic models.
◗
Operational and financial control of growth
and expansion
In a significant competitive environment with cost pressure and
increasingly scarce high-quality locations in certain countries, the Group
faces the inability or difficulties in identifying, obtaining or developing
the best sites, in a constant search for higher profitability based on valid
and reliable assumptions while taking into account all risk factors. This
may impact its financial performance and fulfilment of its objectives,
along with inadequate identification, assessment and integration of new
assets or companies.
All of these elements are considered in the dossiers analysed by the
country-level Financial departments, in connection with the Development
department and, where applicable, with the Carrefour Property teams.
The most significant dossiers are reviewed and approved by the Group
Investment Committee (CIG).
◗
Partnerships and franchising
Since most of the Group’s stores under banner are operated as franchises
and the Group’s growth relies on partnerships in several countries, the
evaluation, selection, support and oversight of these various franchisees
and partners may have a positive or negative impact on financial and
operational performance, and on its reputation in the event the partners’
practices do not comply with regulations or with the Group’s standards
and values.
Looking beyond the contractual framework and the well-controlled
process of awarding banners under franchise, relations with our partners
and franchisees are maintained and developed through numerous regular
exchanges, with oversight by franchise advisers and support by business
experts. Establishment of standards and regular inspections enable us
to effectively support our partners and franchisees.
◗
Control of the supply chain
In an interdependent global market with a large number of suppliers
and increased cross-docking, the performance of logistical processes
and continuity of supply to the Group’s stores are essential to customer
satisfaction and the fulfilment of operational and financial objectives, with
greater risk in emerging markets and multinational corporations’ growing
responsibility for their supply chains.
Although purchasing is a key aspect of standing out from the competition,
the Group’s organisation is adapted to its international scope (delete)
while capitalising on its knowledge of local markets and relying on entities
dedicated to sourcing new products.
Over a number of years, the Group has developed expertise which ensures
that its stores are supplied, relying on integrated logistics platforms and
service providers, along with business continuity plans in the event of
an unusual situation.
◗
Product quality, compliance and safety
With regulatory authorities and customers increasingly attentive to
health and quality issues, ensuring product safety and complying with
health standards in stores is a major issue which can significantly impact
reputation and financial performance, and which may in some cases
result in liability for the Group.
The Group Quality department has developed a number of standards and
tools which are deployed in all countries where the Group operates. The
country-level Quality departments are also part of the Quality network,
with regular meetings and discussions aimed at increased sharing of best
practices and ensuring a consistent approach. The Group also launched
a significant employee training programme and regularly communicates
with customers about food safety.
In addition, the system includes a procedure for the rapid withdrawal of
any potentially dangerous product inventory.
Carrefour brand products are subject to more stringent procedures and
controls, from design to marketing, as part of a comprehensive approach
presented in detail in Section 2.2.4 (page 49 and following pages).
◗
Safety of people and property
Compliance with health and safety regulations and the protection of
Group assets are important factors. Insufficient consideration of these
issues could negatively impact the Group’s reputation, activities and
financial performance, and may also have legal consequences.
An appropriate crisis management system in case of a major event is an
important part of limiting its potentially significant negative consequences,
especially with regard to business continuity.
The Group’s risk prevention organisation ensures the safety of people and
property at all Group sites by using human, technical and organisational
resources which are appropriate to the risks.
Coordinated by general management, each country has an organisation
which enables rapid information reporting in the event of an incident,
and utilises the appropriate resources. The crisis management system
is briefly presented in Section 3.5.4.