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Wal-Mart’s failure in matching the countries cultural tastes, problems with distribution and strong loyalties to other retailers.
Forced into using a logically sequenced approach in its market entry strategy
Wal-Mart has 4081 stores and more than 664000 associates in 14 countries outside the US.
Moving from an ethnocentric predisposition to more of a polycentric predisposition
Wal-Mart's new organization “Global.com”. Question 1 Question 3 How would you characterize Wal-Mart’s Latin America Strategy? •Barriers to entry
•Financial capital, manager and organizational resources were lacking to successfully enter the European Markets.
•Higher growth rates and relatively close geographically What countries were targeted as part of this strategy? •Initially Mexico, Brazil and Argentina “3 largest populations in LatinAmerica”
•2nd phase included Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica
•Final step was expanding into Chile What potential does this region brings to Wal-Mart’s future global expansion? •Many consumers
•By quickly strengthening their position in Latin America it created the additional resources to help with their expansion into the European and Asian markets. What cultural challenges and opportunities has Wal-Mart faced in Latin America? •Not many cultural difficulties in Latin America
•Expansion relatively easy with government support
•Created a financial banking system to offer low income families a bank account
•Acquired several different companies that were already established in Latin America to become the largest retailer in Latin America. Question 4 What was Walmart's early global expansion strategy? Offering one stop shopping while featuring low prices to appeal to a broad range of customers.
Wal-Mart also took on an online presence
Wal-Mart lacked the financial, managerial, and organizational resources to expand to all markets in a close range of time. They planned to apply the learning gained from initial entries to subsequent ones. Canada had the closest cultural organization and business environment to the United States.
Mexico as the first to enter because it had the largest populations of the Latin American countries and Walmart wanted to take advantage opportunities in growing economies.
The European market was mature, so a new participant would have to take market share away from other companies which would have been a difficult task.
At the time Wal-Mart launched globally Asian countries were the most distant geographically and different culturally and logistically from the Unites States market. Why did it choose to first enter Mexico and Canada rather than expand into Europe and Asia? What cultural problems did Walmart face in some of the international markets it entered? Which early strategies succeeded and which failed? Why? What early lessons did it learn from it's experiences in Germany and Japan? -Offered to bag groceries in German stores
-Instructed clerks to smile at customers in German stores
-Offering bulk products to Japanese Mexico was the first and huge success entered into business with Mexican retail conglomerate Cifra.
Germany failed because stores were geographically dispersed and often in poor locations. They lacked presence in towns around Germany where competitors were strong. Wal-Mart was losing millions a year and had to sell 85 stores to competitors.
United Kingdom was a success by acquiring Britain’s third largest food retailer ASDA.
Japan succeeded after spending about 1.2 billion dollars, closing 20 stores, cutting 29% of corporate staff, and slashing expenses. Started offering meals-to-go, and everyday low prices instead of weekly specials.
China’s cultural and linguistic, and geographical distance from the United States represented relatively high entry barriers, so Wal-Mart decided to use two benchheads for establishing an Asian prese and ended up being successful
Brazil consumers were used to shopping in hyper markets, whereas retail in China is more traditional. In Germany Wal-Mart learned it could not solely rely on its low prices to be successful.
In Japan they learned that not all customers equate low prices the same and that bulk items did not work well with every consumer. Walmart should target developing and emerging countries, particularly the emerging nations known as the BRIC. These nations are Brazil, Russia, India, and China. These nations are important for several reasons. These countries are growing quickly and it is important for Walmart to enter these markets now so they can become key players in these markets. They can gain an edge on competing companies, as well as expanding their international market. China and Brazil have very rapid economic growth which makes them very attractive for expansion. Russia and India are extremely important because they are among the world's fastest-growing retail markets. However, they cause problems for foreign retailers because they have several regulations against foreign retailers such as bans against foreign stores selling multiple brands or limits against expansion by retailers. Walmart has managed to avoid some of these by teaming up with domestic companies to access these markets. These countries can be great areas for Walmart to expand into, but countries that aren't friendly to foreign retailers like Russia and India may make it harder for Walmart to enter the market. One region that Walmart should consider expanding into is South America. We believe this because they have a couple developing countries like Brazil and Chile that could help spark surrounding nations. Walmart could become a key player in the developing of South America. 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 do you think will be vital for Walmart's future global expansion?