Case Study:
Wal-Mart's Foreign Expansion

Brief Summary of the Case:
The case explores the expansion of the world’s largest retailer, Wal-Mart, internationally. Wal-Mart began its international expansion in the early 1990s in an effort to continue its growth. The company began with a joint venture in Mexio. Initially, the company tried to implement strategies similar to those that had proved so successful in the United States, however Wal-Mart quickly realized that to succeed, it would have to adapt to local demands. The company hired local managers who understood the Mexican culture and buying preferences, and changed its strategies accordingly. Wal-Mart continued its international expansion by establishing operations in Europe and South Korea, but in these markets, the company had less success. Not only did Wal-Mart compete head-to-head with established retailers, but its product offerings did not match the needs of consumers. Wal-Mart has had much greater success in China where it has found some similarities between the shopping habits of the Chinese and Americans.

1. Do you think Wal-Mart could translate its merchandising strategy wholesale to another country and succeed? If not, why not?
No, I don’t think Wal-Mart could translate its merchandising strategy wholesale to another country and succeed because their merchandising strategy is based on the methods and culture of retailing of the United States. Also, as we learned in the text many countries and have different cultures and background so the company moving into a new country needs to adapt to the differences and find the right technique that works in that market as opposed to sticking with the original strategy in its country. Basically, Wal-Mart cannot just go into any country and simply implement the same strategy used in the U.S. for that new country without doing some research first to see if it would work. Most often than not, it will not and that is because it is a completely new environment and culture.

2. Why do you think Wal-Mart was successful in Mexico?
Wal-Mart was successful in Mexico because they adapted their merchandising strategy to the Mexican culture by doing research on retail market in Mexico, their shopping behavior and the local cultural norm. This helped Wal-Mart learn the unique shopping behaviors of the Mexicans, which allowed them to rejuvenate their strategies accordingly. For example, Wal-Mart noticed that most of the Mexican customers did not own a car unlike most of the American customers and they found that the Mexican consumers preferred buying fresher since they usually cooked the food that day; therefore, they stocked their stores with more produce and meats. Basically, adaption is the key to survival is different environments and economies.

3. Why do you think Wal-Mart failed in South Korea and Germany? What are the differences between these countries and Mexico?
Wal-Mart failed in South Korea and Germany because they didn’t adapt to the culture as well as they did with the Mexican culture. In addition, the products that Wal-Mart offered weren’t up to the standards of South Korean and German culture. The cultures that are in countries like Germany, and South Korea have a preference of high end and higher-quality merchandise than what was offered by Wal-Mart. The low price strategy is fantastic in some cultures; however, it is gratuitous in a place to where paying more is accepted. Therefore, key difference between these countries and Mexico is that Mexico accepts the low price strategy.

4. What must Wal-Mart do to succeed in China? Is it on track?
In order for Wal-Mart to succeed in China it must do proper research to gain an understanding of the consumers and their shopping culture. To ensure its success in the country, Wal-Mart has strayed from its traditional strategy to embrace the notion of unions. This decision has led the company to purchase a stake in China’s Trust-Mart chain, which should allow Wal-Mart to expand even further. Wal-Mart now considers China its most important growth market. With that, Wal-Mart does appear to be on track in the country. They just need to continue maintaining and adapting to the Chinese culture by meeting the needs of the consumers.

5. To what extent can a company such as Wal-Mart change the culture of the nation where it is doing business?
A company such as Wal-Mart can change the culture of the nation where it’s doing business only to a limited extent by providing and offering different products and goods to its consumers; therefore, changing the way they shop and buy merchandise. However, most countries such as China, already had successful discount chains like Trust-Mart when Wal-Mart entered the market so the culture wasn’t changed much and in Mexico, consumers weren’t changed by Wal-Mart either but instead by the global economy. Lastly, Wal-Mart wasn’t even successful or able to change the culture of Germany and South Korea where consumers preferred higher quality merchandise. Therefore, Wal-Mart has the ability to change the culture of some nations but it’s still very limited as proven the countries we read about in the text.