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Walmart 2

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maria Mora

on 7 March 2014

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Transcript of Walmart 2

“Walmart's overall operations, with 4.081 stores and more than 4.000 associates in 14 countries outside the continental U.S."

Walmart always offer to the countries that they want to expand:
* Low prices to costumers
* Model Big Box

Walmart expand their business to different countries, where they were really successful and in others they didn't.
*Waltmart became international when they open the first Sam's Club in Mexico (1991).
* In 2001 they had such a great succeed that they changed the name a Walmart de Mexico (Wal-Mex)
* Wal-Mex keeps growing around Mexico, so they decided to open Walmart Banks and Bodegas.
Why Walmart was so
successful in Mexico?
* Walmart has found decent success in China
* 1996 they opened a Supercenter and Sam's Club
in Shenzen
* "In China in 2010 and in the future the Chinese market is expected to have the most Walmart stores worlwide, exceeding even its domestic America market"
"China's cultural, linguistic, and geographical distance
from the United States represented relatively high entry
barriers, so Walmart decided to use two beachheads as
learning vehicles for establishing an Asian presence."

They overcame these problems and they were
really successful because the Culture of the country.
" Europe Market had certain characteristics that made it less attractive to Walmart as a first point of entry"
"The European retail industry was mature, implying that a new entrant would have take market share away from an existing player - a very difficult task"
Walmart operations in Germany turned into
a costly struggle:
* The store of acqured German retail chain
were geographically dispersed and often in
poor locations.
* They also faced some cultural differences:
Example: ( American managers)
Nowadays Brazil places 3rd in the Brazilian Economy and operates on their several names. Brazil offers fewer barriers to business than Russia, India, and China.

"Brazil is more developed in terms of infrastructure and wealth creation"

"Consumers are used to shopping in hypermarkets, whereas retail in China is more traditional"
Why Walmart was so
successful in Brazil?
... It matched perfectly
with the company strategies
Global Strategies...
*July 2, 1962, when Sam Walton opened the first Walmart store in Rogers, Ark.
*Today Walmart operates 8,500 stores around the globe, in 15 different countries and with 55 different names.
Organizational culture
*Walmart’s organizational culture emphasize on serving the customer and providing excellent service with ethical behavior all the time
*Three basic beliefs: service to our customers, respect for the individual and striving for excellence.
Walmart had several market options for expansion
However Walmart lacked the financial, managerial and organizational resources to expand to all the markets in a close range of time.
*They decided to move into Latin America and Canada first and then continue to Europe and Asia.
*“Our plan of growth is clearly intended to increase shareholder’s value…..In the US we’re building new stores and accelerating the pace of our remodels….. We are stepping up growth in out International operations to take advantage of growing economies such as China and Brazil.” (Tom Schoewe, Executive vice president).
*Use of E-commerce
*Sustainable strategy and improving its nutritional values of the store’s brands.
*Retail industry.
*high competition
*new entrants
1. What was Walmart's early global
expansion strategy? Why did it choose
to first enter Mexico and Canada rather
expand into Euro and Asia?
2. What cultural problems did Walmart face in some of the international markets it entered? Which early strategies succeeded and which failed? Why? What lessons did it learn from its experience in Germany and Japan?
3. How would you characterize Walmart´s Latin America strategy? What countries were targeted as part of this strategy? What potential does this region brings to Walmart future global expansion? What cultural challenges and opportunities has Walmart faced in Latin America?
4. What group of countries will be targeted for Walmart´s future growth? What are the attractiveness and risk profiles of these countries? What regions of the world you think will be vital for Walmart´s future global expansion?
Wal-Mart was offering "one stop shopping", including groceries, clothing, and banking-while featuring low prices, to appeal to a broad range of customers. They were also allowed to insure lower income families through their bank, which is the majority of their client base in Latin America.
Wal-Mart also took on an online presence. Although they didn't have adequate funds to open globally at once, this gave them a larger spectrum of customers, and they were able to market more goods.
(cc) photo by medhead on Flickr
1. Primary Problem.
The primary problem is finding an effective strategy to become a global company and expanding to foreign markets. These problems are options that the company could take as first steps to become global. The evidence and effects of this problem are as follow:
*Walmart had several markets as first step options, including Europe, Asia and other countries.
-Effect: Walmart decided to focus first in Latin America, Canada and China. Canada had the closest cultural organization and business environment to the U.S.
*The European market was mature, so a new participant would have to take market share away from other companies.
Walmart lacked managerial and financial resources to enter multiple markets at the same time. Also due to the growth rates of Latin American and Asian markets a delayed entry would have meant a costly loss of opportunities for the company.

*The company faced resistance from established retailers and had difficulties due to cultural differences.
According to C. Douglas McMillon, “Walmart is progressing from being a domestic company with an international division to being a global company.”
Effect: Walmart has become the biggest retailer company around the globe with presence in 15 countries.
2. Secondary Problem.
Secondary problems include the challenges Walmart faced due to the lack of research made when entering new markets.

Stores in Germany were geographically dispersed and often in poor locations.
Lack presence in towns around Germany, where competitors were strong.
Effect: Walmart was loosing about 200 million, and finally chose to sell 85 stores to the competitor.
Also, Walmart faced cultural differences in new countries’ market.
-Japanese customers associated low prices with low quality.

- German consumers are among the most parsimonious and price-conscious in Europe.

- Walmart initially installed American managers, who lacked knowledge about German culture.

-Effect: In Japan, the CEO slashed expenses, closed 20 stores and cut-off 29 percent of corporate staff.
*Walmart failed to realize that loyalty to other brands was big in new markets
*Walmart’s relatively small seize and newcomer status prevented it from creating local customer relationships in the European arena.
Strategic Alternatives for solving Problems.
The strategic alternatives aim to solve the challenges presented when trying to become a global company and expanding to new markets. The three strategies are different directions that the company could take in order to grow. The impact that the strategy chosen would have on the company depends on the efficiency of the same.
III. Strategic Alternatives for solving Problems.

The strategic alternatives aim to solve the challenges presented when trying to become a global company and expanding to new markets. The three strategies are different directions that the company could take in order to grow. The impact that the strategy chosen would have on the company depends on the efficiency of the same.

Strategic Alternative 1: Tactical approach Strategy.
The first strategy would be to focus in the countries that have similar business environment making it easier to position the brand. This means focusing in Latin America and Canada first and then trying to expand to Europe an Asia.

Losing time and money by waiting to enter new markets and failing to do so in Latin America or Canada.
Resistance from established retailers causing further expenses.

Canada had the business environment closest to the U.S.
Focusing in the countries with the biggest population in Latin America
Similar culture would make it easier for Walmart to enter these markets, without jeopardizing financial resources.
Strategic Alternative 2: Polycentric Predisposition strategy.
Another strategy would be to tailor the company to fit each specific market, and open offices in each country with national managers and national workers.


Opening offices and having multiple managers in the company is financially inefficient.
Tailoring strategies to fit specific markets would be time consuming.

Match consumer taste of each countries ‘market
Better cultural understanding to overcome cultural differences.
More adaptable strategy.
*Strategic Alternative 3: BRIC Strategy
The third alternative strategy is to focus more on emerging markets such as China, Brazil, Russia, and India. This would give the company a head start in these markets, and an advantage to further competitors.
The BRIC countries are known for being highly bureaucratic, therefore operation would be highly complicated and the process would be slowed down.
Having an impact in emerging markets does not mean having a strong position worldwide as compared to having an impact in already strong economies.
BRIC countries have large population, which makes them attractive markets.
Emerging and strong economies that were not devastated by the crisis, and have a big consumer power.
Brazil offers fewer barriers and has less restrictions on brands
India and Russia have two of the world’s fastest-growing retail markets.
Thank You!!!
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