Managing in Troubled Times Case Study

Metro Cash and Carry India in Rough Waters

OR

Abstract:
In 2003, India had the largest density of retail population in the world with around 12 million retail outlets of which about 2% were in the organised sector. The $200 billion retail market was moving at 5% annually which was mainly attributed to the rise in the annual incomes and shift in wants and desires. The Foreign Investment Promotion Board in India played an important role for foreign direct investments (FDI). To safeguard the interest of wholesalers and retailers, the FDI guidelines prohibited 100% retail investment and global players could enter the Indian soil only through the cash and carry means, franchisee operations or through a special license. In order to take advantage of the situation, in 2003, Metro Cash and Carry, a German distributor and retailer, started its operation in India. Since its entry into the Indian market the company has faced contentions from the wholesalers, retailers and farmers. This case discusses in detail the Indian distribution set-up and the operations of Metro in India. The case further discusses the measures taken by Metro in lieu of allegations against them.

Pedagogical Objectives:

• To the state of the wholesale industry in India with and without foreign companies.
• To the decision of Metro to enter early into the Indian market.
• To the challenges that Metro was facing in lieu of allegations against them.
• To the membership wave carried out by Metro.

Keywords : Metro Cash and Carry; German distributor in India; Foreign Investment Promotion Board; Foreign direct investment; Indian distribution set-up; Indian wholesale industry; Indian retail industry; Organised retailing; Global players in India; Hans-Joachim Koerber; Membership cards; Government of India; Wal-Mart