University of Beira Interior

Management and Economics Department2007/2008

Marketing Graduation – 2nd year

Negotiation of Process:Acquisition of Portuguese Carrefour by Sonae group

Work accomplished by:Claúdia LealMaria Pires

Outline: Presentations of the Carrefour Group and

Sonae Objectives and strategies:

• Sonae

• Carrefour Integrative negotiation 5 C`s Dual model of concerns Games theory

• Decision tree

• Payoffs Matrix Conclusions

Companies's PresentationCompanies's PresentationCarrefour Group The Carrefour group is a

business retail store of apportionment founded into France;

Biggest worldwide network and the first in Europe;

Splits up into four important areas:hypermarkets, supermarkets, hard discount and convenience stores;

The group is in Portugal for about sixteen years but never afforded to reach its aims: being leader on the market

Sonae

• Sonae is one of the biggest economic Portuguese groups which activities are taken care by five sub-holdings, among that the Modelo Continente (Sonae Distribuição);

• The Modelo Continente is the market leader in Portugal;

• Modelo holds six brands that have mention positions in their respective market segments from specialized retail.

Objective and strategy of Objective and strategy of SonaeSonae

Aim: to grow and to reinforce the leadership by acquiring new commercial units in the market;

Strategy: acquire all opportunities that exist on the market for to achieve your objective.

Objective and Strategy of Objective and Strategy of CarrefourCarrefour

Aim: to assure market leadership;

Strategy: bet on the strengthening of the bunch through the positioning into direct marketplaces in order to exercise their strength in the international market;

When the group reaches the conclusion that they wont achive their specific objectives for a given location their course of action is to relocate to more suitable countries where they can have a more dominate position.

Source: APED (Portuguese Association the enterprises of distribution)

5 C`s5 C`sIn this process deal, we didn’t

have access to all the necessary information. We’ve estimated the following:

ConsultationIn January of 2007 the Sonae

collected information, evaluated the potential of the purchase, the position of the Carrefour in the market and defined its initial edges

Contact

In February of 2007, the Sonae after the study of the three P `s (product, people and promotion), which are referent to the Carrefour, enters in contact with the interlocutor of the same.

Confrontation On the June of 2007, the interlocutors of the two groups, in simultaneous, discover that their interests among proposals and counterproposals were similar, therefore, there is the possibility of an agreement amongst themselves.

ConciliationOn the 27th of July, 2007, an agreement was made for the purchase valued 662 million Euros

ConclusionCompletion of this transaction is subject of the approval by Authority of Competition, the closing of the contract is expected for January 2008

Integrative Integrative negotiationnegotiation

The negotiation process: Sale of the Portuguese Carrefour to the Sonae group, relate to a process of integrative negotiation therefore, both parts benefit of the accord.

That is, the Carrefour earns with the business as much as Sonae.

MAX- MAXCooperate

MAX- MINBrother

MIN- MAXCompete

MIN- MINAvoid

Dual model of concerns• The situation between these two companies is of MAX-MAX (gain-gain), this means, both the groups have collaborated between themselves until they arrived at an accord.

• The reason for the collaboration is mutual interactive.

Theory Games - Decision Theory Games - Decision treetree

Sonae

Carrefour

Carrefour

B

BL

L

L

(3526, 505)

(7052, 0)

Sonae: Buy (B) Carrefour: Leave (L) Don't buy (B) Don't leave (L)

Payoff unity:

Sales volumes

Optimal of Pareto

Decision of treeL

(14104, 662)

(14003, 763)

Payoffs MatrixPayoffs Matrix

Leave Don't leave

Buy (14104, 662) (14003, 763)

Don't Buy (7052, 0) (3526, 505)

Carrefour strategy

Son

ae

str

ate

gy

Variables:Sales volume of Carrefour : 505 millionSales volume of hard discount: 505*0.2=101Sales volume of Sonae: 3 526 millionTransaction value: 662 million

Optimal of Pareto•This payoff (14 003, 763) is the best situation for both.

ConclusionsConclusions Sonae continues to grow specifically by acquiring

new unities, and Carrefour leaves Portugal and goes to countries where it can operate as a leader.

Sonae gets stronger in relation to it is clients, providers and rivals in the market.

Carrefour doesn't leave the market totally and continues operating in Portugal with the brand Dia and Minipreço.

We consider that this is a great deal to both sides, because Carrefour leaves the market and relocates to more profitable regions, and Sonae grows in the Portuguese market.

ConclusionsConclusionsThe goals of our work have been reached, with some limitations, particularly in the elaboration of the 5 C`s mainly because of the lack of information that was given to us, based on the confidentially of the same.

Another point, that we cannot grant an application, is the definition of the negotiation amplitude, therefore we only have reference to the value of the non present transaction and the reserve price, maximum and minimum, acceptable for the purchaser and the salesman.