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Wal-Mart in Japan

Winning in foreign Markets

Wal-Mart's Japan Strategy

The Wal-Mart entry in Japan

Wal-Mart Strategy

Wal-Marts Partners

Seiyu

- Second largest consumer market

- Recovering economy

- Possibility to work with valuable partners

- fifth largest supermarket retailer

- focused on city centre grocery stores

- Acquiring a minority stake, progressing to majority stake

- Eliminating middlemen from the supply chain

- implementing their own distribution system

- focus on sociocultural differences of consumers and employees

Sumitomo

- leading trading company

- solid business base and knowledge about retail sector

Wholesaler

The Store

Supplier

Agenda

Walmart Warehouse

The Store

Walmart Trucks

Occuring problems

The progress

- working with wholesalers

- competition reacted due to slow entrance

- high staff costs

- Decreasing numbers in the first years

- cutting costs, increasing revenues

- Marketing adjustments

Foreign Strategies

1 General information

2 Foreign strategies

3 Analysis of the Japanese Retail Market

4 Wal-Marts Japan Strategy

5 Recommendations

Market situation?

Cultural differences?

Acquiring a weak player

Acquiring a dominant player

Joint-venture

Recommendations

- Human resource management

-> Educate the workforce, but adapt to their culture

- Marketing

-> Educate the customer

-> Otherwise: "Act global, act local" - adapt to the premium-loving japanese society

- Distribution network

-> Combat the prevailing supplying system

Analysis of the japanese retail market

General information

Porter's Five Forces

PEST Analysis

Potential Entrants

Buyer Power

- Many international competitors have failed already

- Carrefour entered Japan in 2001

- Carrefour left Japan in 2005

- Experience and capital are vital

- Wealthy population

- Low switching costs

- High variety of similar stores

- Wide range of alternatives

New entrants don't have to be feared

Economic

The buyer power is very high

Political

- Democratic country

- Favourable entry regulations

- Low degree of violence & corruption

- Distress among the residents

- 2nd largest economy in the world

- GDP per capita $33,100

- The lost decade

- Unemployment rate of 4.1%

- Mature Market

Substitute Products

- Wal-Mart is a unique brand in the U.S.

- Lots of local retailing shops

- Downtown areas are heavily saturated by retail stores

- Brand loyalty has to be questioned

Wal-Mart faces lots of substitutes in Japan

Samuel Moore Walton - The man behind Wal-Mart

Industry Rivalry

Supplier Power

- Emerging stores such as Uniqlo increase the rivalry

- Extreme rivalry in the city centres

- Lots of traditional local retailers

- Multi-layered distribution networks

- Supplier tradition is very ensnared

- Many international competitors collapsed on this

- Aeon shows how it could work

Technological

Social

Supplying network is complex

- Population of 127,400,000

- Aging and shrinking population

- Government encourages birth rates

- Low fertility rates

- 99% literacy rate

- 2nd largest budget for research & development

- Leading nation in:

- Scientific research

- Technology

The Wal-Mart

Mission

Successfactors in the United States

- forwarding low prices to customers

- initially located in small towns

- own distribution system

- marketing of american products

- always low prices

History

Vision

Top Competitors

"We save people money so they can live better."

”If we work together, we’ll lower the cost of living for everyone…we’ll give the world an opportunity to see what it’s like to save and have a better life.”

“To be the best retailer in the hearts and minds of consumers and employees.”

- Purchasing power due to 50% market share

- In-bound logistics

- Store location

- Human resource management

- Marketing

Costco

Metro

Target

Carrefour

-Born March 29th 1918 in Oklahoma

- College life in Reserve Officers' Training Corps

- Purchase of a Ben-Franklin store 1945

- 1962 opening of the first Wal-Mart Store

- Died 1992 at the age of 74

- Left a rich heritage

... and tons of local competitors

- 1962: First store in Arkansas

- 1968: Oklahoma and Missouri store openings

- 1969: Incorporating as Wal-Mart Stores Inc.

- 1977: First acquisition: 17 Mohr-Value Stores

- 1991: First international store in Mexico

- 1998: Acquistion of 21 Wertkauf stores

- 2005: 6200 Facilities worldwide

Porter's National Diamond

Result

Factor Conditions

Demand Conditions

- Strong workforce

- Manufacturing know-how

- Balanced skilllevel of workers

- Strong transport system and infrastructure

- High labour costs

- 2nd largest consumer market

- Wealthy nation

- Low prices reflect inferiour quality

- Different shopping behaviour

- Prefer different sales management

- High market potential

- Mature market

- Sophisticated customers

- Complex distribution & supplier network

- Expensive property

- Extreme cultural differences

- Favourable economic climate

Structure of firm and rivalry

Related and Supporting Industries

- Multi-layered distribution networks

- Make merchandise more expensive

- Unfamiliar territory for Wal-Mart

- Fairly moderate rivalry

- High rivalry in city centres

- Small and medium shops

- No supercentres outside towns

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