Disc 6: Walmart

Set 1 1. What were some of the cultural issues Walmart faced as it entered each of the international markets it entered?

In Mexico, China and United Kingdom the effort to offer lower prices initially backfired because of resistance from established companies. In Germany, they were not able to fit its model to the local taste and preference. They also offered to bag groceries and instructed clerks to smile at customers which weren’t common in the culture. In Japan, bulk products were offered which was not helpful because of the small living spaces.

2. Which early strategies succeeded and which failed? Why?

Germany failed because stores were geographically dispersed and often in poor locations. They also lacked presence in towns where competitors were strong.

South Korea failed because they were not able to match consumer taste, destitution problems arose and customer strong loyalties to other brands.

Mexico succeeded by entering in a joint venture with the Mexican conglomerate Cifa.

United Kingdom succeeded by acquiring Britain’s third largest food retailer ASDA.

Japan succeeded after spending about 1.2 billion dollars, closing stores, cutting corporate staff and slashing expenses. They started offering meals to go and everyday low prices instead of weekly specials.

China succeeded when they decided to use a two beachheads approach for establishing a presence in Asia.

Brazil succeeded by purchasing 331/3 percent interest in Central America’s largest retailer.

3. What lessons did Walmart learn from its experience in Germany and Japan?

In Germany Walmart learned is 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 customer.

Set 2 1. How would you characterize Walmart’s Latin American strategy?

Walmart was lacking financial capital, manager and organizational resources to enter other locations. The strategy to enter Latin America was that there were less barriers to enter and was geographically closer. They also felt they could take advantage of the growing economy and one of the largest growth rates.

2. What countries were targeted as part of this strategy?

Initially they targeted Mexico, Brazil and Argentina. Second phase included Guatemala, El Salvador, Honduras, Nicaragua and Costa. Final step was to expand into Chile.

3. What potential does this region bring to Walmart’s future global expansion?

There is a large customer base and little barriers to deal with. They were able to quickly strengthen their position in Latin America which created additional resources to help expand in to other global markets.

Set 3 1. What group of countries will be targeted for Walmart’s future growth?

Walmart will target developing and emerging countries, particularly the emerging nations known as the BRIC. There 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.

2. What are the attractiveness and risk profiles of these countries?

China and Brazil have a 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 can 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.

3. What regions of the world do you think will be vital for Walmart’s future global expansion?

One region Walmart should consider is South America. They have a few developing countries, Brazil and Chile, which could help expansion into surrounding countries. Walmart could become a key player in the development of South America.