Walmart around the world

In general, what do you think is the best way to enter a new market: acquisition, join t venture, or greenfield investment? What are the location characteristics that affect this decision? What are the firm characteri stics that affect this decision? What indust ry characteristics affect this decision? _In general, what do you think is the best way to enter a new market: acquisition, joint venture, or gree nfield investment?

Exhibit 3 Walmart’s Market Entry Strategy by Country/Region

Country/Region

Year

Market Entry

• Mexico

1991

Joint Venture

• Canada

1994

Acquisition

• Argentina

1995

Organic

• Brazil

1995

Joint Venture

• China

1996

Joint Venture

• Germany

1997

Acquisition

• South Korea

table, we can deduce that Walmart’s most used and successful strategy around the world is the Acquisition of a local retailer which often opened for Walmart doors for the local Markets. Usually those retailers have some quite similar operations strategy and core competencies that Walmart wisely used to maintain existing customers and steal some others from competitors.

What are the location characteristics that affect this decision?

_Canada: In January 1994, Walmart announced its entry into Cana da by acquiring 120 of 142 Woolco discount stores, run by the Woo lworth Corporation. This market was characterized by existing com petitors and threat of new entrance.

_Chile: Walmart entered Chile in 2009 by acquiring a controlling 58 .2% stake in successful domestic payer, Distribución y Servicio (D& S), which was Chile’s largest food retailer. D&S stores had a large c ustomer following and ran operations similar to Walmart’s U.S. stor es.

_U.K: Walmart entered the United Kingdom in June 1999 through th e $10.8 billion acquisition of Asda which operated over 200 stores.

_Africa: Walmart entered Africa in May 2011. Despite fierce opposition from trade unions, the South African competition tribunal approved Walmart’s $2 .4 billion bid for a controlling stake in Massmart, which operated 377 stores across various African countries, with 288 of them in South Africa.

Three do mestic chains controlled up to 90% of South Africa’s supermarket sector an d Walmart’s entry promoted much-needed competition in the retail sector. Additionally, South African suppliers viewed Walmart’s entry as their ticket i nto a wider market across the globe, making them eager to participate in it s success.

_Central America: Walmart expanded into Central America in 2005 when it acquired a 33.3% stake in the Central American Retail Holding Company (C ARHCO) from Dutch retailer, Royal. Germany: Walmart entered Germany in 1997 by acquiring the Wertkauf ch ain (24 stores) and the unprofitable Interspar chain (74 stores). Unfortunate ly, Walmart faced intense competition from powerful local retailers such as Aldi and Lidl, which ran extremely efficient operations, had a loyal customer base, and also maintained strong relationships with important suppliers.

_Japan: Walmart entered Japan in 2002 by acquiring a 6% stake in Seiyu, a struggling supermarket chain. By 2008, Walmart had conv erted Seiyu to a wholly owned subsidiary In Japan, Walmart struggl ed to replicate its successful EDLP model. Japanese consumers ass ociated low prices with low quality, and were not attracted to Wal mart’s principal value proposition.

The retailer also found it difficult to achieve leverage in the highly fragmented and relationship-driv en supplier base in Japan. Additionally, in Japan, Walmart faced a h ighly competitive market where even the two largest domestic gro ups, Aeon and Ito-Yokado, were struggling to improve earnings. _South-Korea: Walmart entered the South Korean market in 1998 a fter acquiring a handful of stores from Dutch retailer Makro. Howev er, the Walmart model was a poor fit for Korean consumers, who v alued a luxurious, service-oriented shopping experience more than low prices.

What are the firm characteristics that affect this d ecision? What industry characteristics affect this d ecision? Most of the firms acquired by Walmart around the world in their ge ographical diversifications were either characterized by a similarity in their operation management or an opportunity to access new m arkets.

Walmart used the firms core competencies (D&S in Chile for exam ple) Or their strategic locations advantage (Bompreço in Brazil to stren gthen their position in the country’s core southern markets).