Case study Wal-Mart around the world

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CasestudyWal-Mart around theworld

Wal-MartInternational didwellin three majorcountries,includingtheUnited Kingdom, Mexico, andCanada (Alcacer 1). Thesuccessof Wal-Mart in three regionswasdeterminedby multiplefactors,includingthecapacityof themanagementto adaptto thelocalbusinesspracticesquickly,enteringthemarketsthrough acquisition,andtheabilityof theWal-Mart to offergoodsat competitivepricescomparedto otherretailers operatingin thesecountries.

Wal-Martstruggledto succeedin two majormarkets,includingBrazil andChina (Alcacer 1). Wal-Mart struggledin China becauseitwasslowto adaptto localtastes.In thecaseof Brazil, thecompanydecidedto enterthemarketby startingnewstores,which sloweddown theprocessof growth.In addition,Wal-Mart usedtheU.S. formatin its stores,assumingthatitcould workin Brazil, butitfailed(Alcacer 3).

Someof theWal-Mart competitiveadvantagesusedin theU.S. succeededwhileone of them failed.Thelowpricing strategy,diversesupplychain,andawidevarietyof productshelpedWal-Mart succeedin severalmarkets,includingCanada, Mexico, andtheU.K. (Alcacer 6). However,theapplicationof similarlogistics forthosethat areusedin theU.S. could not workin somemarkets.Forexample,theU.S. styleparking lotscould workin Mexico wheremanycustomersvisitedstoredby bus(Alcacer 2).

Entrymodels

Theacquisitionof thelocalretailfirms isthe mostsuccessfulmethodof enteringinto theinternationalmarket.Itis evidentthatWal-Mart enteredintothemostsuccessfulmarketsthrough theacquisitionof establishedretailstoredin thetargetmarket,which helpedWal-Mart in experiencinga rapidgrowthandadaptationto thelocalmarkettrends.Forexample,Wal-Mart acquiredCifra in Mexico, 120 Woolco storesin Canada, and200 storesownedby Asda in U.K. (Alcacer 6). In addition,Wal-Mart hadfailedto makeprogressin Brazil since thedecisionto enterthemarketby constructingnewstoreswastooslow.Thedecisionto acquireestablishedstoresonthesouthernsideof Brazil gavethecompanysomehopeof succeeding(Alcacer 3). Itis evidentthatthe jointventureis theonlysuccessfulmethodof entry.

Thecharacteristicsof thetargeted foreignmarketinfluencedthemodeof entryinto severalcountries.Forexample,thedecisionto acquirelocalretailfirms in Canada andretainallemployeeswasdrivenbytheneedto helpWal-Mart adaptquicklyto thecharacteristicsof thelocalmarket(Alcacer 2). China`sgovernment hasthepowerto controlthelocalmarketby forcingtheforeigncompaniesto enterby partnering with thelocalinvestors. ThisforcedWal-Mart to usepartnershipandjointventuresto entertheChinese Market (Alcacer 4).

Wal-MartentersAfrican market

ThefactthatAfrican is currently risingsuggestthatWal-Mart can succeed,butitshould ventureinto theAfrican marketwith caution.TheGhemawat`s CAGEDistance Framework indicatesdifferentfactorsthat companiesshould considerbefore enteringtheinternationalmarket.ThemoistrelevantfactorsthatWal-Mart should considerwhenenteringtheAfrican marketincludetheadministrativedistance(suchas politicalhostility),geographicaldistance(includingclimateanddiseaseenvironment),andeconomicdistance(includingthewidegapexistingbetweenthepoorpeopleandtherich)(Walt 1).Based on thesefactors,there are two recommendationsthat can helpWal-Mart succeeds.First,thecompanyshould onlyinvestin countrieswith thepoliticalstabilityin orderto reducetheriskof failure.

Secondly,Wal-Mart should applyits EDLP modelin targeting themiddleclassandthepoorconsumersin theurbanareas,whoformthelargestproportionof theAfrican population(Walt 1). Third,Wal-Mart should promotethelocalsuppliers by givingthem a priorityto supplyits African storeswith localgoods.In thecaseof South Africa, localsuppliers andthegovernmenthaveexpressedconcernsregardingthedangerof thelossof businessandjobsshould Wal-Mart deniesthem an opportunity(Walt 1). In addition,allowingthelocalsuppliers to supplygoodsto storeslocatedin Africa will ensurethatWal-Mart stockgoodsof theAfrican tasteandmeettheneedsof thepeoplelivingin Africa.

Workscited

Alcacer,J., Agrawal, A., and Vaish, H. Wal-Martaround the world.Boston, MA: Harvard Business School.

Walt,V. Is Africa’s rise for real this time? Fortune.18 September. 2014. Web. 15 April 2015.