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International Business Prep.
The Globalization of Walmart
Walmart’s name is widespread everywhere in the biosphere, specially in the U.S. It has become an increasingly industrialized into prime company in the world. Walmart’s globalization hard work has happened quickly and has conquered the retail marketplace. There is more than 6,357 international merchandizing stores and around 900,000 employees that work for Walmart. But so many people wonder why Walmart has been so internationally successful? This main topic is going to be discussed in this case study before us. The questions I will be attempting to answering are based on the case called “The Globalization of Walmart” from the book of International Business written by Geringer, McNett, Minor, and Ball. There are so many questions. Some of these questions are as the following: Has Walmart seen international growth as a serious part of its strategy? Do you know what Walmart did to allow the corporation to attain success in Latin America and China? What do you feel should Walmart do-or not do-to possible help guarantee that the company attains success in India?
Like all businesses, everyone is trying to grow they are no exception. Walmart is a domestically recognized business and has been viewing outside the U.S. for greater chances. Globalization efforts occurs rapidly despite the fact that many people were skeptical about Walmart’s opportunities in the international marketplace. Globalization is described as global integration of international trade, investment, information technology and cultures. (J. Micheal Geringer, 2016) In 2014, Walmart’s international sales were accounted nearly 30% and more than $480 billion in revenues. As Kerby Anderson put it in his article “Globalization and the Wal-Mart Effect – How Wal-Mart Changes the Way Products are Sourced and Sold”, the world has embraced “the Walmart effect”. (Anderson, 2006) Sam Walton thought of a single idea: sell merchandise at the lowest price possible. (Anderson, 2006) This idea was a smart concept, but the stigma with low prices means cheap products. This concept is how most of the world view a “Walmart” product and why Walmart’s headquarters had to come up with a global strategy. As you know, Walmart dominated the retail market in the U.S., but for Walmart to survive it need to go international. So when Walmart wanted to expand internationally, they needed to decide which countries or country they should start in. Targeting emerging markets was a crucial first step to the success of going internationally. When targeting internationally offices are expected to adopt the most efficient strategies found within the entire corporation. (J. Micheal Geringer, 2016) They had a focus on Latin America-more specifically in Mexico, where they established their first international store; Argentina, Brazil, Asia (China), Canada, and Europe were next on the list.
Walmart wanted to expand their retail to a more stable and larger market. Everybody loves lower priced products, discounts, and the impact it will have on the economy. The first international store was opened in Mexico City in1991. By forming a joint venture with the Mexican retail conglomerate, Cifra, using a 50-50 joint venture, Walmart was able to overcome cultural differences and income between the U.S and Mexico. (J. Micheal Geringer, 2016) After some experience with Mexican partners Walmart succeeded to expand further in Mexico, and entered Brazil and Argentina. Once the challenge succeed in Latin America, Walmart got the China bug. To ignore the allure of China would be damaging on Walmart global expansion. Walmart had to abide by Beijing restrictions like foreign retailers, including requirements for government-backed partners and limits the number of locations of stores. (J. Micheal Geringer, 2016) Competitive strategy is played a big part of how Walmart succeed in China. Walmart was able to reduce cost and adapt to local markets. Walmart was pressured into sourcing out to local manufactures but maintaining the “American shopping experience”. Walmart sourced out 85 percent of the Chinese stores and mass-marketed Chinese products from coconut juice from the Guangdong province to hams, and mushrooms from rural Yunnan. Building relationships with Chinese agencies played an importance role in Walmart’s success.
Like China, India was hard to get into. India has the population on 400 million people with disposable income. India’s retail sale sector is well known and more than 95 percent of their retail sales are made through almost 15 million tea stands, newspaper stalls, and mom-and-pop stores. (J. Micheal Geringer, 2016) Not only did Walmart have to think about people and small businesses they also had to consider the hindrance bureaucracy, poor infrastructure, bad road systems, frequent power outages, difficulty in acquiring plots of land, and lack decent distribution and cold-storage systems. (J. Micheal Geringer, 2016) Walmart has a competitive advantage with a unique and valuable position in India. Once Walmart got through all the red tape they opened there first store in Amritsar in 2009. The stores are called “Best Price” stores. They have membership-based wholesale store, offers best prices with unmatched convenience, choice, quality and hygiene. The mission of Best Price is to “Enable small businesses to prosper.” A typical Best Price store spans approximately 50,000 sq. ft. and sells a wide range of fresh, frozen and chilled food, fruits and vegetables, dry groceries, personal and home care, hotel and restaurant supplies, clothing, office supplies and other general merchandise items.
As you can see there is a process of global strategic planning when a business plan to go international. Walmart took their time in Mexico and learn what works and what doesn’t. With that being said what works in Mexico might not work in China or India. Analyzing international and foreign environments is a crucial step. Walmart figured out the customers’ needs and wants, the value of the product to the customer, and how the customer values the products being sold to become a global name. Globalization does not happen overnight, it takes years of strategic planning and communication on everyone’s part. By answering the three questions you not see how Walmart globalized the retail market.
- Anderson, K. (2006, 04 24). Globalization and the Wal-Mart Effect – How Wal-Mart Changes the Way Products are Sourced and Sold. Retrieved 09 04, 2018, from Probe for Answers: https://probe.org/globalization-and-the-wal-mart-effect/
- J. Micheal Geringer, J. M. (2016). International Business (1 ed.). New York, NY: McGraw-Hill Education. Retrieved 08 13, 2018
- Yazdanifard, L. Y. (2012, January). WALMART SUCCESS IN MEXICO, CANADA AND CHINA: GLOBAL EXPANSION, STRATEGIES, ENTRY MODES, THREATS AND OPPORTUNITIES. Retrieved 09 04, 2018, from Research Gate: https://www.researchgate.net/publication/234167019_WALMART_SUCCESS_IN_MEXICO_CANADA_AND_CHINA_GLOBAL_EXPANSION_STRATEGIES_ENTRY_MODES_THREATS_AND_OPPORTUNITIES
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