...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 1. 12C framework with Brazilian and Japanese markets………………………………………16 2. Factor effecting...
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...what is Wal-Mart? Wal-Mart is an American retailer that sells groceries to people on a worldwide scale. Each week Wal-Mart has more than 245 million customers and members visiting their more than 11,000 stores that are spread over 27 countries. To run a corporation this big more than 2,2 million people are employed by Wal-Mart. All this is accomplished since the first store opening in 1962 in USA (Wal-Mart 2015). It has taken Wal-Mart five decades to reach their market position and the success can be devoted to Wal-Mart’s philosophy and cornerstone of business; delivering low prices to their customers and Wal-Mart is operating with slogans like; “Always low prices, always.” and “Every day low price”. Furthermore Wal-Mart operates with great availability in products and therefore Wal-Mart operates with supercentres with square feet area around 182.000 each. This means that a one-stop shopping experience is offered to all customers at all times as Wal-Mart centres are open 24/7 (Wal-Mart 2015). Wal-Mart offer its customers unique low prices like no competitors and this is due to their unique supply chain management. One important element in delivering cheap prices to customers is to cut links in the supply chain and Wal-Mart has managed this well. In the 1980’s Wal-Mart offered vendors and suppliers long-term partner- and relationships by purchasing huge volumes in exchange of low prices. From here suppliers worked in collaboration on managing the inventory of Wal-Mart...
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...technology is Wal-Mart. Wal-mart Wal-Mart is operating in as many as 10 countries outside the United States. Asian market has provided Wal-Mart with diverse opportunities. The company has already started its operations in Japan, Korea, and China. In the European Market, Wal-Mart has started its operations in British and German market. In addition, the company is also operating in Mexico, United States, Canada, and Puerto Rico (Lohr, pp. 10). Wal-Mart has operated successfully in the United States market. The aggressive supply chain strategy of Wal-Mart i.e. ‘pile it high and sell it cheap’ has not worked successfully in all foreign markets (Cassidy, pp. 6). The differences in market conditions and consumer preferences had a significant impact on the expansion plans of Wal-Mart. The structure of European markets differs from that of North American markets. The productivity of European markets is less than that of North American markets (Freeman et al, pp 486). The differences in market-structure have influenced the success of Wal-Mart operations in different countries. German market has been characterized with an oligopolistic structure. The German market has been concentrated by key market players. In addition, the market structure of Germany does not offer profitable opportunities to retail stores. Wal-Mart failed in the German market because of its blunders including entry-by-acquisition strategy and bad publicity (Gosman and Mark, pp. 179). Wal-Mart also confronted...
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...Recently, Tesco 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...
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...Activity 2.3 Case Study: Wal-Mart and the yuan debate Why is the value of the yuan so important? Wal-Mart’s business strategy relies on low production costs which it can pass on to its customers. If Wal-Mart were a country then it would be China’s eighth largest trading partner ahead of Russia, Australia, and Canada. Wal-Mart’s non-Chinese owned suppliers operating in China number nearly 5,000 and all of them benefit from a low valued yuan compared to the dollar. The 176 million worldwide customers of Wal-Mart also benefit from the low valued yuan. With nearly 70% of Wal-Mart’s products coming from China a sharp increase in the value of the yuan against the dollar can be devastating for the company as the increased costs for Wal-Mart and would most likely passed on to customers. It could also hurt American customers whom Wal-Mart claims it saves the average household roughly $2,500 dollars every year. (Peng, 2011) If you were the CEO of Wal-Mart and were preparing for a meeting with the most vocal members of the US Congress on China’s currency “manipulation”, what would you say to them? I would point out that while it may be politically easy to blame China especially when it comes to an uniformed electorate, the rise in costs associated with policies aimed at encouraging China to lets its yuan to appreciate against the dollar will do harm in other ways. Average Americans (also known as voters) will feel an appreciated yuan in their wallets. China may be an easy target...
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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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...WAL-MART IN GERMANY The case features in David Needle (2010), Business in Context, 5th edition, Cengage/South-Western, pp. 159-62. The Wal-Mart Success Story The first Wal-Mart store was established by Sam Walton in 1962 in Rogers, Arkansas. At first expansion was steady with 24 stores by 1967. The initial focus for Wal-Mart operations was small town, rural America. The company grew to 276 stores by 1980 and the Wal-Mart empire reached 640 stores by 1984. The company currently has around 4,100 stores in the USA and by 2003 it was the world’s largest retailer, three times as large as its nearest rival, the French company, Carrefour. It was also the world’s largest employer with 1.9 million employed worldwide in 2007. In terms of revenue, it remains the world’s largest company and in 2002 it was ranked number one in the Fortune 500. Wal-Mart is noted for its large and diverse product range, which includes food, clothing, electrical goods, homeware, pharmaceuticals and so on. The USA business comprised four types of operation, ‘supercenters’, ‘discount stores’, ‘Sam’s Club’ and a small number of convenience stores. The ‘supercenters’ carry the full range of goods, including food and a large variety of other types of merchandise. The ‘discount stores’ are like the ‘supercenters’ without the food and ‘Sam’s Club’ is a membership discount warehouse for bulk purchases. According to Knorr and Arndt (2003) the success of Wal-mart is based on four factors. • Low prices. • A focus on...
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...Read the case study “Wal-Mart Goes South” below and respond to the following questions: 1. How much of Wal-Mart’s success is due to NAFTA, and how much is due to Wal-Mart’s inherent competitive strategy? 2. How has the implementation of NAFTA affected Wal-Mart’s success in Mexico? 3. Faced with going out of business, what steps did Comerci take to remain competitive? What other steps do you think Comerci should take to secure its future and further compete with Wal-Mart’s operations in Mexico? APA format is required for text citations and references. You are expected to support your answer with: (1) the textbook “International business environments and operations (twelfth edition), Daniels, J. D., Radebaugh, L. H., & Sullivan, D. P. (2009). New Jersey, NJ: Pearson Education, Inc.”, and (2) news articles, internet articles, and academic source. WAL-MART GOES SOUTH Comercial Mexicana S.A. (Comerci), one of Mexico’s largest retail chains, is faced with a serious dilemma. Since Wal-Mart’s aggressive entry into the Mexican retail market, Comerci has found it increasingly difficult to remain competitive. Wal-Mart’s strong operating presence and low prices since NAFTA’s lifting of tariffs have put pressure on Comerci, and now management must determine if Comerci’s recent participation with the purchasing consortium Sinergia will be sufficient to compete against Wal-Mart. What’s caused this intense competitive pressure on Comerci, and what is likely to be its...
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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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...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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...ASDA. In 2000, Walmart opened internationally in a virtual sense – by launching Walmart.com In 2002, Walmart entered Japan through its investment in Seiyu. In 2007, Walmart added another aspect of its international expansion in the virtual world – a “Site to Store” service on Walmart.com which allowed make a purchase online and pick it up from a store. In 2009, Walmart entered Chile, by acquiring a majority stake in D&S S.A. In 2010, “Bharti Walmart” a joint venture between Walmart and Bharti – opened its’ first store in India. In 2011, Walmart acquired MassMart in South Africa. Present – Walmart owns over 10,857 stores. Of these, 6,194 stores are outside the United States (in 27 countries). Asian countries where Walmart exists – China, Japan, and India, South Korea, Thailand, Taiwan and Malaysia. (Need to double-check this.) Walmart’s regional headquarters for the Asia-Pacific region is Hong Kong. Do they do anything different overseas? Like do they not do groceries overseas? Wal-Mart has built differentiated business departments to serve different market segments. They included supermarket (1,294 stores in 2001), one-stop shopping store with entertainment facilities, so-called Sam’s Club member warehouse, (528 stores), discount store targeted family (2,348) and small scale stores selling foods and related stuff (19). In China and Mexico, Wal-Mart has used the discounted stores model quite successfully. In Asia, the model is of supermarkets supplemented by warehouses...
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...presented in the case Sam Walton opened his first Wal-Mart store in 1962 in Rogers, Arkansas. He believed in the action of selling quality goods for low prices. Kmart and Target also started their operations around that time. Walton took advantage of the opportunity and established a discount retail company. Soon after opening his first store, he expanded into the south where not many other retailers would go. Walton strived to have a retail store that others would seek after for their continuing low prices. Just five years after opening the first Wal-Mart, Walton decided to expand quickly and strategically so that he could edge out his competition. In 1970s, the retail industry became extremely competitive, but in addition, the economy became weak because of inflation. Sears was the leading retailer in the nation during the 1970s, however, the recession of that time and inflation affected Sears negatively. While Sears appealed to the masses, Wal-Mart was able to keep its overhead low and continued to offer even lower prices. Wal-Mart has continued to only grow during their long tenure as a major retailer. Wal-Mart has proven to have a strong business strategy and is still the biggest retailer in the world. It has the highest gross profits of any company and the highest net profits. Wal-Mart has also topped the Fortune 500 4 times. Identification of the major issues surrounding the organization or individuals involved With the organization Wal-Mart has been very successful...
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...9-704-027 REV: JULY 20, 2004 GUNNAR TRUMBULL LOUISA GAY Wal-Mart in Europe “Never resist change… We have to be able to place a store or club side-by-side with the competition and beat them every time.” —!David Glass, Director and Chairman of the Board, Wal-Mart1 “In Germany, we know how retail is spelled.” —!Holger Wenzel, Director, German Retail Federation Introduction “What are the 10 worst things we can do to fail?”2 This was how Lee Scott, CEO of Wal-Mart, summarized Wal-Mart’s approach to working in Germany. Wal-Mart had entered the German retail market in 1997, with the acquisition of the failing German retail chain Wertkauf, and had quickly encountered problems. Wal-Mart’s EveryDay Low Price (EDLP) guarantee, inventory control, and efficient distribution strategy, so strong in the United States, had each been a source of headaches. Wal-Mart went through protracted struggles with labor unions, with suppliers, and with local zoning boards. It also weathered a major pricing scandal, had been fined for failing to return used bottles to producers, and, in a case that was on appeal at Germany’s constitutional court, faced a 330,000 euro fine for failing to release financial data for Wal-Mart Germany. This was not the first time that Wal-Mart International had run into problems with overseas expansion. It had quickly pulled out of Indonesia after a disappointing ‘test project’ in the early 1990s. Yet in most cases, time had worked in its favor. In Mexico, where it was now...
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...the best. Lower prices also eliminated the expense of frequent sales promotions and sales are more predictable. Walmart has invested heavily in its cross-docking inventory system. Cross docking has enabled Walmart to achieve economies of scale which reduce its costs of sales. With this system, goods are continuously delivered to stores within 48 hours and often without having to stock them. This allows Walmart to refill the shelves 4 times faster than its competitors. Walmart controls its buying power through purchasing in bulks and distributing the goods on time. Walmart guarantees everyday low prices and considers them the one stop shop. Walmart operates in Mexico as Walmex, in the UK as ASDA abbreviation of Asquith and Dairies, and in Japan as Seiyu. It has wholly owned operations in Argentina, Brazil, Canada, and Puertorico. Walmart's investments outside North America have had mixed results: its operations in South America and China are highly successful, while it was forced to pull out of Germany and South Korea when ventures there were unsuccessful. Consumers can also shop Walmart through their...
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...disadvantages to Wal-Mart of working with unions? Wal-Mart is not known to be union friendly here in the United States. The advantages of Wal-Mart working with unions are most notably the ability to expand into China. With a population of over 1.3 billion people the need to work with China’s union, which our text book notes is a communist monopoly, (Decenzo and Robbins pg 364), is imperative to opening stores there. With this first wave of union employees we can be hopeful that Wal-Mart will start to accept Unions in United States stores and in Canada. Perhaps Wal-Mart can educate the United States Unions on how it would need to be structured in order for Wal-Mart to allow their presence. Wal-Mart being such a large retailer and employer in the United States could potentially revolutionize as well as revitalize the union movement if it would work more closely with it instead of closing stores who speak of unionizing. The disadvantages to Wal-Mart of working with the Unions can include- Higher wages- our text book states that it is common to find 30% higher wages in union businesses. Medical Benefits- Most unions push for medical benefits for its members Loss of the Sam Walton way- By allowing Unions to enter into the Wal-Mart business model the concept of how Wal-Mart does business could change dramatically. Wal-Mart is accustomed to being the Big Dog. They are able to tell suppliers and vendors to change their practices if they want to continue to supply Wal-Mart...
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