...Tim Driscoll Wal-Mart Foreign Expansion Case Both of these readings were rather small, but they really gave a lot of information about Wal-Marts foreign expansion ventures and how those quite often didn’t work out too well. Germany and Korea being some of Wal-Mart’s biggest failures abroad, they are perfect examples of how Wal-Mart’s extremely Americanized and streamlined approach really doesn’t match the shopping habits of people around the world. Many different nations have developed extremely polar opposite methods and preferences when it comes to shopping, often in Europe buying at smaller more specialized stores and spending more for higher quality, and in Asian countries looking at pre-packaged foods like meat and fish as “sub-par” and “old”. These are just a few of the specific practices that made it extremely tough for Wal-Mart to enter these foreign markets with its current policies and methods of delivering product to the consumer, and ultimately some of the things that led to its failures in countries like Germany and South Korea. Where Wal-Mart found its stride internationally, though, was when it penetrated the international markets not by aggressively building and expanding stores, but when it purchased already established major competitors and slowly used them to alter the consumer culture in a country. Some prime examples of this are Mexico and Great Britain, where it bought current chains and used them to slowly start introducing Wal-Mart’s discount culture...
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...place on the world where you could replicate Wal-Mart's success in the U.S." Davis Glass former CEO of Wal-Mart Stores said. However, reality indicates that Wal-Mart is facing many difficulties in Asia. Wal-Mart and other foreign organizations are subject to a number of adverse situations and government restrictions. Some of those difficulties are: rigorous cost control in comparison to local companies, toll fees and charges, high transportation and distribution costs and lack of IT reliable infrastructure among others. In addition, domestic stores have existed for long and enjoy support from the government. Many foreign chains exist in the market, and were performing better than Wal-Mart. As a result, Wal-Mart expansion in China was slow. In this case, we will address the main issues that Wal-Mart China is facing and propose possible solutions and recommendations. Issues/Problems Currently, Wal-Mart is facing a range of challenges in China's retail market. Chinese business environment is changing rapidly. In the last two decades, China’s retail industry and its distribution and logistical infrastructure have significantly decreased government regulation. Wal-Mart will need to identify what issues it will face in the short and long term to set up the new business vision and strategy in this market. The U.S business model will not be able to be implemented in the Chinese market since for instance U.S., Wal-Mart places stores in small towns to gain a competitive...
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...CASE: Wal-Mart’s Global Expansion Summary The closing case describes Wal-Mart’s international expansion strategy. Wal-Mart, today the largest retailer in the world, was a purely domestic company until 1991. When the company decided to expand into Mexico, critics warned that the company was too American, that its model would not work in other where markets where infrastructure, consumer tastes and preferences vary, and where established retailers already dominated. Wal-Mart went ahead with its expansion plans anyway, opening a joint venture operation in Mexico with local retailer Cifera. Discussion of the closing can revolve around the following questions: QUESTION1: How does expanding internationally benefit Wal-Mart? ANSWER 1: Wal-Mart really had no choice but to expand internationally if the company was to continue to grow. The company had reached a saturation point in the U.S. market, and needed to expand elsewhere in order to grow revenues. However, other benefits have accrued as a result of the international expansion including the ability to reap significant economies of scale from its global buying power, and gains from the cross-flow of ideas across the thirteen countries in which the company now competes. QUESTION 2: What are the risks that Wal-Mart faces when entering other retail markets? How can these risks be mitigated? ANSWER 2: While Wal-Mart is often considered to be the biggest retailer of its kind, competition is strong in foreign markets...
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...Wal-Mart’s Foreign Expansion Abstract Wal-Mart is the world’s largest retailer because it learned to successfully translate its merchandising strategy into foreign countries. Initially they tried the same techniques that worked in the U.S. They quickly learned that in order to be successful, they’d have to change their strategy to support the local market. Although some may not agree with their method of entering into joint ventures with local competitors and then taking over their companies, they must agree it was a successful strategy that made Wal-Mart the power house company it is today. Their strategy allowed them to learn the culture while establishing a bond with the community. They gained full access to the competitors’ way of doing business along with their resources. Wal-Mart’s Foreign Expansion How did Wal-Mart become the largest retailer in the world? It started out on a small scale level in Rogers, Arkansas. Sam Walton put his mind and his savvy business practices to work on a vision that most of us never even dream of. Even after his death, Wal-Mart’s financial status continues to climb higher every day. Due to its rapid expansion in the U.S, it quickly ran out of room to grow. The U.S. has 260 million shoppers, but expanding globally allowed Wal-Mart to reach 6 billion shoppers (Kavilanz, 2007). It did not take a rocket scientist to realize it was time to develop a plan to expand globally. The issue was could they translate their merchandising strategy wholesale...
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...week #2 – case (1) Walmart Team/Country selection Designing and Managing International Organizations (1) Based on Wal-Mart’s successes when first opening and then subsequently operating in markets outside the United States, what should Wal-Mart do when determining how they should open and then how they should operate in any new market? Wal-Mart’s success will be able to determine the best practices concerning international expansion; it is possible to learn from mistakes and success. Firstly in Mexico and Canada Wal-Mart’s implementation seems to confirm that international retail expansion is more likely to succeed if the retailer in question is the “first-mover”, which means the first foreign company of it’s type to enter the new market. Wal-Mart international’s experiences have shown us how important the evaluation of market attractiveness and the need for local customization is. Additionally the format that the retailer will want to apply in the foreign market is very important as well. However there are also factors such as market trends, the size and scale of the potential market and the timing of the expansion. All these factors depend on the actual economic situation of the foreign market. The case allows us to suggest that entering economically developed markets through acquisitions or joint ventures seems to be the smartest choice for Wal-Mart. Their model as a low cost operator is more exportable to markets that are economically developed and have small customization...
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...Wal-Mart is the number one retailer in the United States. Geographical growth opportunities are shrinking within the boundaries of the United States.The company needs to evaluate multiple options to determine the best strategy to deploy. The challenge is “keeping the world’s biggest retailer on its phenomenal roll and delivering the huge sales and earnings increases that investors had come to expect from Wal-Mart over the years” (Camerius& Hunger, p. 19-30, 2006). The company’s current strategic plan is tothrive in the followingareas: • Low costs, high customer service, and always low prices • Product mix • Logistics and supply-chain management • International markets • Domestic growth • Public relations I have developed multiple strategic alternativesfor the company. They are as follows: • Stability – Pause And Proceed: Pause physical growth then proceed with growth domestically and globally • Growth – Concentration: Concentrated Internet program to target domestic and foreign markets • Growth – Concentration: Horizontal Growth with International Entry for global geographical internal expansion The plan deployed must be consistent with the corporate strategy. Per Sam Walton (1918-1992), the company’s founder, “Our goal has always been in our business to be the very best and, along with that, we believe that in order to do that, you’ve got to make a good situation and put the interests of your associates first. If we really do that consistently, they in turn...
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...CASE STUDY Professor: Dr. Mary Flannery Teaching Assistant: Jia-Yuh Chen ECON 136 – Business Strategy February 27, 2006 INDUSTRY ANALYSIS The retail industry is dominated by few retail giants, with Wal-Mart competing in several retail categories. Wal-Mart competes against Kmart and Target in the general merchandise retailing; against Costco in the warehouse club segment; and against Kroger, Albertson’s and Safeway in the supermarket retailing. Competition among retailers centers on pricing, store location, variations in store format and merchandise mix, store size, shopping atmosphere, and image with shoppers. Further analysis provided by the following figure diagnoses the competitive environment of the retail industry. Five Forces Model of Competition Threat of Substitute Products Weak: Substitutes for big box retailers are smaller grocery stores; substitutes are higher priced relative to the performance they deliver. Supplier Bargaining Power Weak: Industry members account for a big fraction of suppliers’ total sales and continued high volume purchases are important to the wellbeing of suppliers. Rivalry among Competing Sellers Fierce: Competing sellers have triggered heated price competition and are active in making fresh moves to improve market standing and business performance. Buyer Bargaining Power Weak: There is a broad base of buyers so no single buyer can demand price concessions; buyers purchase merchandise in small quantities; buyer loyalty for...
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...Business Strategy April 2012 Wal-Mart Stores Inc. in 2008 Introduction: Wal-Mart has become the number one retail store in both the United States and the World. Wal-Mart’s success started with the foundation and principals set forth by the company’s creator Sam Walton who believed that his store could be the low cost leader by scrutinizing its value chain to deliver the lowest priced items to its consumers, ultimately increasing sales and providing strong revenue. As one can see Sam Walton was right in his ideas resulting in profits of $374.5 billion in 2008 with Wal-Mart following Sam Walton’s strategy as a guide for the company. In the following paper the strategies of Sam Walton and Wal-Mart will be analyzed in depth. The paper will start by presenting the current issues at Wal-Mart including their current mission statement, current objectives, and current strategy. The paper continues with a further breakdown of the strategy using Porters 5 Forces Model, a SWOT analysis and financial analysis to evaluate the strategy’s efficiency and effectiveness. The paper the continues with what this writer has determined to be the key elements of Wal-Mart’s strategy that have resulted in their current market position and what they must to do remain at the top of the retail industry. The paper concludes with alternative strategic options for Wal-Mart and this writers recommended strategy for Wal-Mart. Current Issues: The current issues Wal-Mart faces can be gleaned from the threats...
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...Context: 1. Introduction 2 2. Background of Wal-Mart stores Inc. 3 3. Retail organization internatinalization expension 4 4. International Expansion of Wal-Mart in Maxico,china and canada 5 5. Comparison of Entry Modes 6 6. comparison of Opportunities 7 7. Final touch 8 8. Conclusion 9 9.Bibliography 10 1. Introduction: Being present and having to enter foreign markets is for many companies natural, while for other it is a new challenge that they have to face. This challenge, known as market entry, consists of three major decisions: where to enter, when to enter and how to enter different markets. Some companies are forced to internationalize in the early stages of their life due to small saturated home markets, while other companies choose to go abroad because of the great opportunities new markets might bring (Peng, 2006). Once deciding to go abroad and choosing the target market and timing, companies' need to consider the choice of entry modes. Generally, to choose international firm there are six different entry modes: exporting, turnkey projects, licensing, franchising, joint ventures, wholly owned subsidiary (Hill, 2004). Each entry mode its distinctive characteristics (see, e.g., Hill, 2004; Hill, et al, 1990; Hill and kim, 1988; Anderson and Gatignon, 1986; Madhok, 1997; Brouthers and Brouthers, 2000; Bishop 2006. Selecting a suitable entry mode is a difficult decision for firms interested in entering a foreign market (Agarwal and Ramaswami, 1992). Sometimes...
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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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...Case Study: Wal-Mart in China (2012) In 1996, China’s national economy was growing at a rapid pace. The gross domestic product reached over US$1064.4 billion, an increase of 9.7% over the previous year. To further increase and attract foreign investment, the Chinese government increased its number of experimental, special economic-zoned cities in which foreigners could operate a business. There were, however, restrictions set forward by the government, in that all foreign businesses would have to be in a joint venture or other type of cooperative agreement with at least one Chinese partner, with that Chinese partner getting a stake greater than 51%. In August 1995, Wal-Mart, the great American retain chain and Middle America success story, arrived in China, establishing a joint venture with Shenzhen International Fiduciary Investment Co, Ltc, China. In 1996, Wal-Mart opened its first supercentre and a Sam’s Club in the special economic zone of Shenzhen. In 2007, Wal-Mart acquired a 35% stake in Trust-Mart, a Taiwanese-owned chain of retail supercentres operating in the Middle Kingdom. By 2010, Wal-Mart’s presence in China grew to 189 units in 101 Chinese cities, with the creation of over 50,000 local jobs. By 2012, the company nearly doubled its presence with 370 stores in 140 cities. As the U.S. and European economies slumped in late 2011 and into 2012, the world’s number-two economy became an even more important growth market. In the first quarter of 2012, China’s...
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...its competitors and have the capability to conquer the foreign market. However, when entering to unfamiliar territories there are many challenges that companies ought to overcome such as cultures, regulation, communication barriers, and so forth. Currently, Wal-mart and Carrefour are dominating in China as the foreign discount stores but they have different strategy to compete in China. Background In 1959, Carrefour was created in Southern France and became international by 1969. “It innovated with the hypermarket format in France in 1963 where it introduced the idea of one stop shopping for food, clothing, electronics, appliances, etc. Although it does not compete in the USA, it has adapted successfully to Latin American and Asia markets” (Arnold, 2002, p. 563). “Now, it serves over 2 billion clients per year in its more than 9,000 stores, which are present in 32 countries across 3 geographic zones. Carrefour is not only the second but also the most internationalized retailer worldwide” (Shiue, Der-Juinn, & Yeh, 2006, p. 171). In 1962, Wal-mart began its story in Northwest Arkansas as the discount store and quickly expanded to the largest family owned business. “It is active in 11 countries and has stores in North and South America, Europe and Asia. It has over 4,400 stores, of which three quarters are in the USA and that still account for 80% of its growth” (Arnold, 2002, p. 564). Currently, Wal-mart Stores is the...
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...Analyse The Wal Marts Case Study Management Essay ukessays.com /essays/management/analyse-the-wal-marts-case-study-management-essay.php Wal-Mart Stores, Inc. opened in 1962 by Sam Walton and his brother. Nowadays, it is ranks as the largest corporation in the World. In early 1990s, the company announced that it would initiate the international operations, which commenced in 1991 in some countries like Canada, Puerto Rico, Argentina, China, etc. (Reference for Business, 2012). PEST Analysis In order to analyse the Wal-Mart's case study we are going to apply the PEST analysis which is 'A type of situation analysis in which political-legal, economic, socio-cultural and technological factors are examined to chart an organization's long-term plans' (Business Dictionary, 2012). II.1. Political Factors When a firm desires to undertake businesses in a foreign country there are some factors to investigate before taking a final decision, for example, the system of the government, law and local trade unions, language, religious and ethical values. Wal-Mart faced numerous complications on the legal and political front in many countries. For example, in Mexico the company participated in an aggressive lobbying campaign to amend the long-standing U.S. anti-bribery law that the company might have violated. The 1977 law, well-known as the Foreign Corrupt Practices Act, prohibits U.S. firms from offering fees or gifts to foreign officials to advance corporate interests (Hamburger, Dennis & Yang...
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...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 1. 12C framework with Brazilian and Japanese markets………………………………………16 2. Factor effecting the foreign market entry mode decision…………………………………19 1. Introduction Traditionally, an appropriate marketing strategy is badly needed for a company...
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...WAL-MART’S PROBLEMS IN Wal-Mart’s Problems in International Market Patiporn Kitlertphiroj University College of University of Denver Abstract Wal-Mart, the biggest retailer in the world, is spreading its power throughout the world, starting with nine countries in Asia, Europe and South America. The expansion has planed for more in the near future. With its attempt to penetrate hypermarket culture in every country which it enters, many severe problems are come into play. Acquisitions and joint venture with local businesses became a problem in nationalism country. Thus, strict governments’ rules and regulations blocked business operations. Misreading competitors and late in entry destroyed location opportunities the same as harmed relationship with local suppliers. Inadaptable to local culture become a big problem in global business. Moreover, low wages, unions and sex discrimination brought Wal-Mart to be an evil in employees’ perspective. Literature Review Wal-Mart is the largest Discount Store in the United States. Its magnitude is not only recognized domestically but also expanded to International Market. The company believes that one day this one will replace the United States position when the trend down (Molin, 2004). With this goal Wal-mart is encouraged to expanding stores into nine countries around the world and more in its plans (About Wal-Mart, 2001). Being number one in the United States does not always guarantee for being number one...
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