...Young OTMT 618-14 (1968) Written assignment for 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...
Words: 767 - Pages: 4
...International Business, 7th Edition CLOSING 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...
Words: 659 - Pages: 3
...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...
Words: 1540 - Pages: 7
...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...
Words: 5462 - Pages: 22
...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...
Words: 1895 - Pages: 8
...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...
Words: 1692 - Pages: 7
...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...
Words: 1408 - Pages: 6
...STEPS IN STAGE I STAGE I: STEP I - Brief Summary Founded in 1945 and based in Bentonville, Arkansas with 10,773 retail units under 69 banners in 27 countries, Wal-Mart Stores, Inc. is a department store chain of retail goods and services operating in various formats worldwide. The company’s operation is divided in three main segments: Wal-Mart U.S., Wal-Mart International, and Sam's Club. It operates retail stores, restaurants, discount stores, supermarkets, supercenters, hypermarkets, warehouse clubs, apparel stores, Sam’s Clubs, neighborhood markets, and other small formats, as well as walmart.com; and samsclub.com. The company’ s retail stores produce, deli, bakery, dairy, frozen foods also offers meat, alcoholic and nonalcoholic beverages, and floral and dry grocery; health and beauty aids, baby products, household chemicals, paper goods, and pet supplies; and electronics, toys, cameras and supplies, photo processing services, cellular phones, cellular service plan contracts and prepaid service, movies, music, video games, and books. Its stores also provide stationery, automotive accessories, hardware and paint, sporting goods, fabrics and crafts, and seasonal merchandise; pharmacy and optical services, and over-the-counter drugs; shoes, jewelry, accessories, and apparel for women, girls, men, boys, and infants; and home furnishings, housewares and small appliances, bedding, home décor, outdoor living, and horticulture products. In addition, the company’s stores offer...
Words: 4030 - Pages: 17
...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...
Words: 872 - Pages: 4
...in some kinds of products. Take contraband cigarettes, for example. Not only is contraband cigarettes killing small businesses and threatening the livelihoods of many convenience store owners, but it is also robbing government millions of dollar every year because these are cigarettes that are being illegally imported among countries with absolutely no government inspection, testing, oversight and taxation. Moreover, many organized crime groups use the lucrative trade in contraband tobacco to finance other, more serious criminal activities such as contraband drugs and guns. As a result, we should avoid this type of business that causes severe damages to the development of worldwide economy. WAL-MART INTRODUCTION Wal-Mart's history is one of innovation, leadership and success. Wal-Mart was founded...
Words: 3198 - Pages: 13
...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 are numerous factors contributing to firms opting for ventures in these countries. According to Forbes (2013), emerging markets may contribute to nearly three quarters of the...
Words: 3036 - Pages: 13
...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...
Words: 8588 - Pages: 35
...Walmart name about more than just retailing. The suggested strategy in the 2008 Walmart supplier meetings shows that it’s heading in that direction (Business Week). This also follows Gome’s strategy of renaming its suppliers to their own brand (Business Week), but goes beyond it as the foreign brand in China is already associated with higher reliability and quality assurance. This actually holds true in China were retailers do a better job of enforcing supplier quality than the local regulations. With that, Walmart is still able to use its expertise and knowledge in supplier negotiation and distribution system to keep costs down. Although Walmart is a Joint-Venture, the sources do not mention any attempt to leverage the local partner to meet the local market, which seems the opposite to some other joint ventures discussed like Danone and Wahaha. Working together with the local partner to understand where and how the local regulations can be used or adjusted for Walmart’s success and gaining a stronger hold of the potential customer’s heart might help Walmart’s growth and dominance in the Chinese market (The Economist). Most of what we mentioned about the Chinese consumer habits in previous cases is especially relevant for Walmart. The Chinese consumers go shopping to get out of the house, not necessarily to shop. They’re more impulse driven and like on-site promotions. They’re brand conscious but not loyal. They’re frequent shopper of small amounts and especially...
Words: 5066 - Pages: 21
...Short Case Report CASE 2 – LAND-RESERVES TO SUPPORT WAL-MART´S GROWTH IN LATIN AMERICA Objective – Analyze Wal-Mart’s growth in Latin America to anticipate company´s needs for land reserves and evaluate potential gains and risks for Baja-Land Co. Situation – You are working for Baja-Land, a real state agency operating in Latin America (Mexico City based). Your company has been contacted by Wal-Mart (International Division) to look for new cities in Latin America where new stores units can be installed. The CEO of Baja-Land is unsure about getting involved in this project because Wal-Mart has created a reputation as a hard-to-deal giant company in Latin America. The project will require Baja-Land to invest in the entire search in eight Latin American countries plus all the costs of pre-negotiation arrangements with land owners before presenting adequate options to Wal-Mart´s executives who will decide whether or not to consider Baja-Land’s proposals. You have been assigned to this project by the CEO of Baja-Land. Your first task would be to analyze Wal-Mart’s recent growth in Latin America. Your boss has the impression that Wal-Mart’s growth in the region has decreased substantially in the last years. So you need to determine the importance of Latin American markets for this giant multinational and anticipate potential company´s needs for land reserves in the region. You also are asked to consider other significant factors of Wal-Mart’s business model mainly types...
Words: 509 - Pages: 3
...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...
Words: 1571 - Pages: 7
