This website uses cookies to ensure you have the best experience. Learn more

Wal Mart Foreign Expansion Essay

2169 words - 9 pages

Taking Wal-Mart Global
Lessons From Retailing's Giant
Vijay Govindarajan and Anil K. Gupta
During 1992-93, Wal-Mart agreed to sell low-priced products to two Japanese retailers, Ito-Yokado and Yaohan, that would market these products in Japan, Singapore, Hong Kong, Malaysia, Thailand, Indonesia and the Philippines. Then, in 1994, Wal-Mart entered Hong Kong through a joint venture with the C.P. Pokphand Company, a Thailand-based conglomerate, to open three Value Club membership discount stores in Hong Kong.
Once Wal-Mart had selected the country or countries to enter, it needed to determine the appropriate mode of entry. Every company making this move faces an array ...view middle of the document...

So, the company chose to form a 50-50 joint venture with Cifra, Mexico's largest retailer, counting on Cifra to provide operational expertise in the Mexican market.
For further expansion in Latin America, Wal-Mart targeted the region's next two largest markets: Brazil and Argentina. The entry into Brazil was also accomplished through a joint venture - with Lojas Americana, a local retailer. But Wal-Mart was now able to leverage its learning from the Mexican experience and chose to establish a 60-40 joint venture in which it had the controlling stake.
The entry into Brazil gave Wal-Mart even greater experience in Latin America, and so it chose to enter Argentina through a wholly owned subsidiary. This decision was reinforced by the fact that there are only two markets in Argentina of significant size.

Wal-Mart had developed several major capabilities in the United States. Thus Wal-Mart's ability to clone its domestically grown DNA and insert it into its global operations would be a key to success, as illustrated by its entry into Canada.3
Wal-Mart acquired Woolco Canada at a time when a combination of high costs and low productivity had driven the Canadian company into the red. Wal-Mart quickly reconfigured Woolco along the lines of its successful United States model, a strategy facilitated by the similarity between the United States and Canadian markets. This transformation occurred in four central areas:
1. Work force: Once the purchase was finalized, Wal-Mart sent its transition team to Canada to familiarize Woolco's 15,000 employees with the Wal-Mart way of doing business. The team was successful in clarifying and defining Wal-Mart's core beliefs and practices to the new Woolco associates.
2. Stores: At the time of the sale, many of Woolco's122 stores were in poor shape. Wal-Mart brought every outlet up to its own standards and renovated each plant within three to four months. It took an additional three to four months to restock each store.
3. Customers: Although the Woolco acquisition was Wal-Mart's first entry into Canada, the company had a head start in building a consumer franchise because most Canadians live near the United States border and were already familiar with Wal-Mart. Wal-Mart leveraged this high brand recognition into customer acceptance and loyalty by introducing its "everyday low prices" approach to a market accustomed to high/low retail pricing.
4. Business Model: A broad merchandise mix, excellent customer service, a high in-stock position and rewarding employees for diminished pilferage were among the United States core attributes that were successfully transplanted into Wal-Mart's Canadian operation.
The transfer of Wal-Mart's corporate DNA to Canada produced dramatic results. Between 1994 (the time of acquisition) and 1997, sales per square foot increased from C$100 to C$292 and market share rose from 22 percent to 45 percent. During the same period, expenses as a...

Other assignments on Wal-Mart Foreign Expansion

Wal-Mart Experience In South Korea Essay

279 words - 2 pages Wal-Mart, the world’s largest retailer, has failed and pulled out its operations in two countries in 2006. This is a good case to discuss about how regional dynamics may effect internationalization as Wal-Mart is successful in countries like Mexico, Canada and UK while it faced a failure in South Korea and Germany. Wal-Mart entered South Korea in 1998 when the South Korean Government opened up retail markets to foreign investments (Ramstad

Wal-Mart Essay

348 words - 2 pages $42,500. Also, Wal-Mart said it still is grappling with allegations that surfaced last April that it failed to notify law enforcement that company officials authorized millions of dollars in bribes in Mexico to gain favors. The Foreign Corrupt Practices Act forbids American companies from bribing foreign officials. The company has launched an internal investigation and is working with government officials in the U.S. and Mexico. In November, Wal

Walmart Analysis

1312 words - 6 pages customers depending on their age in a certain region. 3a. The four key issues are culture differences, stiff competition, lack of scales and stores being located in undesirable locations. 3b. Because of culture differences, Wal-Mart does not understand the countries’ common practices; this will lead to misunderstandings and unhappiness among consumers, which will affect the success of Wal-Mart’s expansion. For example, misunderstandings arose

Ethics And Complaince Fin370

1825 words - 8 pages History – In the ending of the economic year of 2012, the SEC report Wal-Mart’s examined the role of the establishment, how “Every Day Low Pricing or EDLP” attracted new clients, examines the corporations three reportable corporation’s (Wal-Mart U.S., Wal-Mart International and Sam’s Club) involving how many establishments established, sealed and expanded since 2008 and expansion of the corporation. • Organizational Structure – Records the

Wal-Mart Mis Strategy

1763 words - 8 pages are growing rapidly (Wal-Mart Annual Report, 2012, p. 6). As a trusted brand serving millions of customers while operating thousands of stores weekly, Wal-Mart is keen on investing in capabilities and people. In addition, Wal-Mart continues expansion into markets that are growing rapidly, and investments to leverage additional opportunities in e-commerce will continue. Outsourcing/ In-House IS/IT One of the underlying principles of “game


1501 words - 7 pages 1970, Wal-Mart’s discount operations mushroomed. At the end of 1985, Wal-Mart operated 859 “Discount City” stores, with distribution centers in five locations. (Exhibit 4 traces the pattern of store expansions, and Exhibit 5 maps Wal-Mart’s discounting network at the end of 1985.) In describing the pattern of expansion, David Glass (later Wal-Mart’s president and chief operating 1 E. G. May, C. W. Ress, and W. J. Salmon, Future Trends in


2126 words - 9 pages employers in the nation. Major Issues The key issues discussed in this particular case are: Wal-Mart's and America community, Small merchants and the community's environment, Wal-Mart's Corporate Social Responsibility (CSR) programs, The Company’s responsibility to employees who lose their jobs and loyal customers when Wal-Mart pulls out of a community and International expansion of the company. SWOT Analysis Walmart has many strengths, weakness

Term Paper

2258 words - 10 pages . Cash, Jr. Roland A. Hernandez, Chair Christopher J. Williams SWOT Analysis: Strengths Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store. Wal-Mart has developed significantly over the recent years, and has experienced global expansion. The company has a core competence involving its use of information technology to support its

Audit Engagement Letter

2891 words - 12 pages always been to refuse collective bargaining agreements. As foreign operations grow, unionization is common and management is receiving great pressure in the U.S. to reconsider its position. Management is concerned with all of these issues and their impact on U.S. operations. As such, you have asked us to assist Wal-Mart in assessing the success of the four-point plan, to determine if improvements need to be implemented at the store level to

How International Business Has Afftected The Busines World

2124 words - 9 pages huge success doing business domestically, but once they expand the business internationally the success is not the same some even resulting in huge failures. Wal-Mart, a very well-known established business here in the United States has failed when it comes to expanding internationally. According to Nelson Fraiman, a Colombia business school professor, “large firms like Wal-Mart have gone to countries like Brazil and failed—the same way they’ve

Walmart’S Expansion In Africa: A New Exploration Strategy

3069 words - 13 pages authorities approved Wal-Mart Stores Inc.’s 16.5 billion rand ($2.4 billion) takeover of Massmart Holdings Ltd. with the same conditions proposed by the retailers, angering labor unions. “This was a very important test case” for foreign direct investment into South Africa, “All this will go to show whilst South Africa is open for business, the costs and difficulties of investing are great.”( Attard Montalto P.) South Africa's Competition Commission

Similar Documents

Haha Essay

320 words - 2 pages facilitate their entry to the new markets. The growth was not limited to the number of stores that the company opened, but it extended to the areas of operation for the store. For example, Wal-Mart entered new areas of business as it grew like pharmacies and jewelries. Wal-Mart followed an aggressive expansion strategy that was the model for their business for years, redefining concepts as they grew. But what is Wal-Mart. The store can be

Team Leadership Memo Essay

906 words - 4 pages Business", 2012).  The cost savings is pass down to the consumers. Wal-Mart will still rely on foreign suppliers for some that have a high labor input such as clothing. What Wal-Mart is analyzing is what U.S. made products will benefit this strategy? The company decided to procure products that are big and bulky such as furniture and products that can be quickly produce to meet demand. Apple is now producing computers and I Pods in the U.S

This Crazy Essay

1175 words - 5 pages with their organizational plan. Wal-Mart is influenced by pressures such as competition, cost of insurance, trends of the market, economics goods as well as unemployment (Wal-Mart Corporate, 2013). When dealing with the foreign exchange rates Wal-Mart must be careful because it could become an issue when it comes to the monetary and financial resources (Wal-Mart Corporate, 2013). In 2009 the foreign exchange rates had a bad effect among the

Walmart Batting Essay

953 words - 4 pages nation's economy. But now, Hindery says the Business Roundtable -- and most of the corporate world -- focuses almost exclusively on profits for stockholders. Wal-Mart leads and embodies the trend in three ways, he says: The "clobbering" of Main Streets when Wal-Mart moves to one of its usual edge-of-town locations. "The miserable wage and benefits package offered by Sam Walton's creation." Wal-Mart's buying strategy, focused on cheaply produced foreign