...reasons why Wal-Mart‟s business model failed in South Korea, such as Consumer preferences and culture, Location, and Marketing arrogance all contributed to what one economist referred to as a failure. But under these basic economic decisions were a host of basic cross-cultural mistakes that fuelled the company’s poor strategic planning. 1. Consumer preferences and culture Most individuals believe that Wal-Mart failed to understand South Korean’s consumer preferences. Wal-Mart had relied on its proven business model and its strategy in offering low prices for products. However, low prices alone were insufficient to make a successful business case in South Korea. South Koreans have different consumer preferences than Americans do; they are not necessarily interested in the same products. For instance, South Koreans like fresh vegetables and fresh food rather than dry products and the type of clothing that Wal-Mart sells. The South Korean culture is also very tied into its markets; they are one of the largest countries that are deeply involved in local markets. 2. Location Most Wal-Mart outlets in South Korea were placed outside instead of in the cities. South Koreans expect easy accessibility to shopping facilities within the larger cities without the need to travel. Also, South Korean consumers shop more frequently than most Americans do. They may not purchase many things at once, but they will usually get at least one item. Some individuals felt that Wal-Mart should have...
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...Case Analysis: “Retail Internationalization: Gaining Insights from the Wal-Mart Experience in South Korea Southern States University Mauricio Antunes Alvarenga Peggy Bilbruck 07/20/2014 The Case Analysis brought one of the most important business failures of the history, when the world’s giant retailer company faced a huge fail attempting to establish their own model business in South Korea. Wal-Mart simply applied their own and very well-known way of management in a foreign country, without paying attention on the local culture and costumes. A list of reason speculate the reason of this withdraw of Wal-Mart in South Korea. One of them was the Distribution, despite the fact that in America, Wal-Mart likes to be located a little away from the cities, probably they want costumers to think that to shop at Wal-Mart as a family program, where you spend the whole day shopping with your kids and relatives, but not South Koreans. They are accustomed to buy in places nearby and come back a couple times every week. The product mix was another; South Koreans like to see local products and local produces on the shelves. Pricing and promotion were the last reason for the failure, Wal-Mart tried to use the same sales strategies and low prices to seduce the South Koreans, but that was not enough. In the 21st century, I believe that any business can succeed globally, the company just have to respect the local culture, like McDonald’s, the giant fast-food chain have a different menu across...
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...Table of contents: 1. Introduction………………………………………………………………………………………………………….3 2. Critical review a well managed organization with culture of learning and innovation in international markets…………………………………………………………………….3 2.1 Literature review of a well managed organization with culture of learning and innovation in international markets………………………………..……………………………3 2.2 Examining Wal-Mart’s characteristics to the extent of learning culture and innovation …………………………………………………………………………………………………….4 3. Critical review internationalization theories and the case of Wal-Mart from 1994 onwards……………………………………………………………………………………………………….7 3.1 Theories of internationalization…………………..……………………….……………………...7 3.2 Wal-Mart’s internationalization strategies from 1994 onwards……………..……9 4. Wal-Mart entry Brazilian and Japanese market……………………………………………….10 4.1 Considerable issues of the company………………………………………………………… 11 4.2 Opportunity in those markets……………………………………………………………………13 5. Wal-Mart’s entry modes in international markets - Examining with Brazilian and Japanese markets…………………………………….…………………………………………… ….13 5.1 Mode of entry to Brazil ………………….…..……………………………………………………..13 5.2 Mode of entry to Japan……………………………………………………………………………….14 6. Summary……………………………………………………………………………………………………………15 7. References………………………………………………………………………………………………………….15 8. Appendices…………………………………………………………………………………………………………16 ...
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...In May 2006, Wal-Mart decided to leave South Korea by selling its 16 stores to a major local discount chain, Shinsegae Co., at $882 million. Wal-Mart’s stores in Korea lost approximately $10 million in 2005 on sales of $720 million. Wal-Mart’s failure in the South Korean market was due to many reasons but the main issue was the ability to adapt to a new culture which Wal-Mart failed to do on many different levels. Although its’ strategy of low costs is a great competitive advantage in numerous markets, its’ ability to perceive a new foreign market was blurred and therefore Wal-Mart was not able to recognize the different expectations and market conditions that South Korea encompassed. Wal-Mart’s strategy fits well in North America where consumers are willing to compromise service and quality for low price however it had critical shortfalls in enabling Korean consumers to see the value in this approach to shopping because of the different tastes and preferences in their culture. Compared to Americans, who would rather make fewer frequent trips to supermarkets and purchase bulk sized products for longer storage, Koreans consider the freshness of food products very seriously and are willing to make frequent trips to the markets and buy in small volumes. Korean’s hypermarkets have live seafood, local delicacies, and on site packaging services that have the same features as outdoor markets and their merchandise mix is heavily focused on food and beverages. They have mastered their...
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...International Business Case Study Quiz (Wal-Mart) Prepared by: Salem Saeed Ali Al Hafri Instructor: Dr. SUDHAKAR KOTA 1. What did Wal-Mart learn from its experiences in Mexico? How if at all, did Wal-mart apply those lessons to its expansion in Europe and South Korea? Wal-Mart starts business with right decision to hire Mexican managers as they understand the culture, preferences dislike of the Mexican people. Multinational compares should always understand the culture harms and lifestyle of the people in the countries. They operate and this is what Wal mart did right in Mexico. Being a US based firm, just opening a branch in Mexico would have done no success in such business. Therefore, they should apply same strategy at other project expansion at Europe and South Korea to gain same success story of this company. Wal-Mart was not able to apply demons to the European and south Korean market because they were not able to offer what the consumers required in addition they're already established competitors. 2. Why has Wal-Mart been so successful in china? How have similarities between American shopping habits and Chinese shopping habits facilitated its success there? Wal-mart have successful story in china because it found the parallels between shopping habits and attitude among two countries Chinese and American. In addition to that, they depend adapted on their strategy to fit the local market now not only allows unions but is also selling a product mix designed...
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...BENTONVILLE, ARK. - Wal-Mart may not have been successful in Germany but the lessons learned during a struggle that lasted nearly a decade in Europe's largest economy are evident today throughout the retailer's global operations and its approach to acquisitions. It was an expensive lesson. The decision to sell its 85 stores to German retoiler Metro AG will result in a $1 billion pretax loss during the second quarter, but the move is in keeping with WaIMart's renewed focus on achieving higher rates of return on its invested capital. Successful execution of that strategy, even if it means shedding pieces of its business, is viewed as a key to helping the company's long-suffering stock price break out of its six-year slump. "As we focus our efforts on where we can have the greatest impact on our growth and return-on-investment strategies, it has become increasingly clear that in Germany's business environment it would be difficult for us to obtain the scale and results we desire," said WalMart vice chairman Mike Duke in reference to the decision to exit Germany. Those comments are nearly identical to a statement in late May when Wal-Mart announced the sale of its 16 stores in South Korea. "As we continue to focus our efforts where we can have the greatest impact on our growth strategy, it became increasingly clear that in South Korea's current environment it would be difficult for us to reach the scale we desired," Duke said. Both decisions were viewed positively by...
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...BENTONVILLE, ARK. - Wal-Mart may not have been successful in Germany but the lessons learned during a struggle that lasted nearly a decade in Europe's largest economy are evident today throughout the retailer's global operations and its approach to acquisitions. It was an expensive lesson. The decision to sell its 85 stores to German retoiler Metro AG will result in a $1 billion pretax loss during the second quarter, but the move is in keeping with WaIMart's renewed focus on achieving higher rates of return on its invested capital. Successful execution of that strategy, even if it means shedding pieces of its business, is viewed as a key to helping the company's long-suffering stock price break out of its six-year slump. "As we focus our efforts on where we can have the greatest impact on our growth and return-on-investment strategies, it has become increasingly clear that in Germany's business environment it would be difficult for us to obtain the scale and results we desire," said WalMart vice chairman Mike Duke in reference to the decision to exit Germany. Those comments are nearly identical to a statement in late May when Wal-Mart announced the sale of its 16 stores in South Korea. "As we continue to focus our efforts where we can have the greatest impact on our growth strategy, it became increasingly clear that in South Korea's current environment it would be difficult for us to reach the scale we desired," Duke said. Both decisions were viewed positively by...
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...announced that the firm was ending its US venture. Indeed, Tesco appears to be the most recent British retailer to have encountered with failure in the US. Indeed, over the past decades, several major firms such as Sainsbury’s have been compelled to review their overseas ventures (Butler, 2012). These firms have incurred significant deficits in their quest for a new market. However, there seems to be evidence that some of these companies have been able to establish themselves in some foreign markets. For example, Tesco has failed in Japan but has proved to be a success in South Korea. Over this past century, there has been an evident emergence of multinational retail corporations. The general philosophy of these companies has been economically driven, that is, to prosper in terms of sales revenue and to expand globally while acquiring maximum market shares. The most dominant firm in this aspect is U.S. based Wal-Mart that leads with sales revenue exceeding $466.1 billion in 2012, followed by French based Carrefour with income of $112.6 billion (Forbes, 2013). They are trailed by U.K based Tesco at $96.8 billion and by Germany’s Metro in fourth place with sales of $90.5 billion (Forbes, 2013). The common strategy of these stated firms has been to target their marketing efforts towards rapidly emerging countries by investing in the establishment of foreign branches. An emerging market can be defined as an economy which is in the process of a shift into an open and global economy. There...
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...Wal-Mart's Foreign Expansion Strategy Wal-Mart the worlds' largest retailer has built its success on a strategy of everyday low prices, and highly efficient operations, logistics, and information systems that keep inventory to a minimum and ensures against both overstocking and understocking. The company employs some 2.1 million people, operates 4,200stores in the United Starts and 3,600 in the rest of the world, and generates sales of almost $400 billion (as of fiscal 2008). Approximately, $91 billion of these sales were generated in 15 nations outsides of the United States: Wal-Mart began its international expansion in the early 1990s when it entered Mexico teaming up with a joint venture Cifra, Mexico's largest retailer to open a series of supercentres that sell both groceries and general merchandise. Initially the retailer hit some headwinds in Mexico. It quickly discovered that shopping habits were different. Most people preferred to buy fresh produce at local stores particularly, items like meat, tortillas and pan dulce which did not keep well over night (many Mexicans lacked large refrigerators). Many consumers also lacked cars and did not buy in large volumes as customers in United States did. Wal-Mart adjusted its strategy to meet the local conditions, hiring local managers who understocking Mexican culture, letting meet those managers to control merchandising strategy, building smaller stores that people could walk to, and offering more fresh produce. At the same...
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...profits and overall net income of these multinational corporations. McDonalds, Exxon and Wal-Mart are among many global companies that have been able to increase their revenues by operating in international markets. Wal-Mart’s international ventures accounts for 20.1% of their total revenue which is estimated at $60 billion annually. The purpose of this paper is to select a company and discuss their business model. The company we will be looking at through out this paper is Wal-Mart. Wal-Mart’s slogan “Saving people money so they can live a better life” is what Wal-Mart’s business model is all about. Selling thousands of quality merchandise to low-income consumers at extremely low prices has been responsible for their success in the United States. Achieving success domestically is quite different from succeeding internationally. Doing business globally requires different business models. For a successful transition into the global environment, each business model must be designed to adhere to the preference or norms of each individual country. Both Wal-Mart and Ikea realized that success in the global market goes beyond offering low priced items when they moved into the global market. Its failure in Germany and South Korea made them realize that culture is a factor that must be considered when operating in international In this paper I will also look at some the factors affecting Wal-Mart and based on my opinion offer recommendations. Some of the factors that will be discussed...
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...Wal-Mart: Global Market Strengths and Weaknesses Option C Donnitia Decembly Rodney Emery Lynne Johnson Central Michigan University MSA 601: Organizational Behavior Introduction According to CNN Money, Wal-Mart Stores Inc., is a Fortune 500 and has topping the list for many years. It is the largest retail company Wal-Mart is a worldwide corporation with stores in all U.S. states and in 15 other countries (The New York Times, 2013). The company started with one small store in Arkansas and has since blown up into the biggest-earning corporation in the world. It has the most employees of any non-government company in the world. It has made its reputation and built its customer base on the basis of low prices (Business Insider, 2012). Wal-Mart is a huge, successful corporation that can serve as a useful case study for anyone who wants to build a successful business. There are a variety of factors that have impacted Wal-Mart’s international success. In order to properly understand this success, it is useful to perform a competitive analysis that looks at the firm's successes and weaknesses globally. Mexico Market Adapting to cultural differences in countries like Mexico has opened up a very prosperous international venture for Wal-Mart. Wal-Mart hired locals to manage their stores, let manager’s control the merchandise strategy, made sure that the merchandise they carried reflected the local surroundings, and built smaller stores in local neighborhoods to accommodate...
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...A Comparative Study of Asia Strategy: Wal-Mart versus Carrefour Miao-Que Lin Fu Jen Catholic University, China. Wen-Kuei Liang Tatung University, China. Abstract Wal-Mart, the number one retailer in the world, persistently maintain three fundamental beliefs—respect everyone, total-solution service, and in search of highest quality—to shape their unique corporate culture. They insist lowest price every day, carry out total solution services, effectively control the cost of global logistics, fully leverage information technology to become e-company, powerfully motivate employees to work and share knowledge and adopt a play-safe strategy in internationalization. As for the number two player—Carrefour, they provide customers with one-stop shopping, lowest price, fresh products, self-served shopping in a hypermarket with free parking lots. In contrast to Wal-Mart’s internationalization strategy, Carrefour expands to foreign markets faster and more flexible than their counterpart. This study investigates the configuration in Asia, marketing service, product procurement, logistics management, digitalization and human resource management of Wal-Mart and Carrefour. The authors then propose strategic implications for global retailers to increase their management effectiveness and efficiency. Introduction Wal-Mart founded by Sam Walton adopted circumventing strategy by starting her operations in small towns and then expanding to bigger cities. She maintains lowest price everyday...
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...Z01_JOHN2020_09_SE_EM18.QXD 10/13/10 9:09 Page 658 CASE STUDY Tesco: from domestic operator to multinational giant Michelle Lowe and Neil Wrigley This case considers the emergence of Tesco plc as one of the world’s leading multinational retailers. In a remarkable 10-year period, Tesco has transformed itself from a purely domestic operator to a multinational giant – with subsidiaries in Europe, Asia and North America – and in 2009 had 64 per cent of its operating space outside the UK. Examining market entry into Asia in more detail, the case compares ‘success’ in Thailand and South Korea with ‘failure’ in Taiwan. It also considers ‘a high risk gamble’ in Tesco’s entry into the US market, long considered to be a graveyard of overambitious expansion by UK retailers. ● ● ● Introduction In April 2009, Tesco, the UK’s largest retailer and private sector employer of labour, announced annual sales for 2008/09 of almost £60 billion (x66bn or $90.2bn) together with profits of £3 billion (x3.3bn or $4.5bn). After a dramatic decade-long transformation from purely domestic operator to multinational giant, Tesco now had a remarkable 64 per Source: Getty Images. cent of its operating space outside the UK, was developing increasingly strong businesses across 11 Asian and European markets, had a rapidly expanding ‘start-up’ subsidiary operating in the western USA, and had announced its entry into the Indian market. Moreover, as signalled in both the title of its Annual Report...
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...Z01_JOHN2020_09_SE_EM18.QXD 10/13/10 9:09 Page 658 CASE STUDY Tesco: from domestic operator to multinational giant Michelle Lowe and Neil Wrigley This case considers the emergence of Tesco plc as one of the world’s leading multinational retailers. In a remarkable 10-year period, Tesco has transformed itself from a purely domestic operator to a multinational giant – with subsidiaries in Europe, Asia and North America – and in 2009 had 64 per cent of its operating space outside the UK. Examining market entry into Asia in more detail, the case compares ‘success’ in Thailand and South Korea with ‘failure’ in Taiwan. It also considers ‘a high risk gamble’ in Tesco’s entry into the US market, long considered to be a graveyard of overambitious expansion by UK retailers. ● ● ● Introduction In April 2009, Tesco, the UK’s largest retailer and private sector employer of labour, announced annual sales for 2008/09 of almost £60 billion (x66bn or $90.2bn) together with profits of £3 billion (x3.3bn or $4.5bn). After a dramatic decade-long transformation from purely domestic operator to multinational giant, Tesco now had a remarkable 64 per Source: Getty Images. cent of its operating space outside the UK, was developing increasingly strong businesses across 11 Asian and European markets, had a rapidly expanding ‘start-up’ subsidiary operating in the western USA, and had announced its entry into the Indian market. Moreover, as signalled in both the title of its Annual Report...
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...Z01_JOHN2020_09_SE_EM18.QXD 10/13/10 9:09 Page 658 CASE STUDY Tesco: from domestic operator to multinational giant Michelle Lowe and Neil Wrigley This case considers the emergence of Tesco plc as one of the world’s leading multinational retailers. In a remarkable 10-year period, Tesco has transformed itself from a purely domestic operator to a multinational giant – with subsidiaries in Europe, Asia and North America – and in 2009 had 64 per cent of its operating space outside the UK. Examining market entry into Asia in more detail, the case compares ‘success’ in Thailand and South Korea with ‘failure’ in Taiwan. It also considers ‘a high risk gamble’ in Tesco’s entry into the US market, long considered to be a graveyard of overambitious expansion by UK retailers. ● ● ● Introduction In April 2009, Tesco, the UK’s largest retailer and private sector employer of labour, announced annual sales for 2008/09 of almost £60 billion (x66bn or $90.2bn) together with profits of £3 billion (x3.3bn or $4.5bn). After a dramatic decade-long transformation from purely domestic operator to multinational giant, Tesco now had a remarkable 64 per Source: Getty Images. cent of its operating space outside the UK, was developing increasingly strong businesses across 11 Asian and European markets, had a rapidly expanding ‘start-up’ subsidiary operating in the western USA, and had announced its entry into the Indian market. Moreover, as signalled in both the title of its Annual Report...
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