Walmarts Global Strategy

In: Business and Management

Submitted By ballygirl
Words 306
Pages 2
1. Case summary
2006 was one of the years that marked the biggest retrenchment in Wal-Mart’s history. It was the year that Wal-Mart had decided to exit the German market after trying to penetrate it for about eight years. The company undertook its international expansion in the early 1990s to rejuvenate sales and growth. However, on July 30th, 2006, Wal-Mart had announced that it was selling its operations to German retailer Metro. In May of same year, Wal-Mart had also announced that it was selling its 16 stores in South Korea, admitting another internationalization failure.
What went wrong with Germany? Wal-Mart had underestimated its German competitors, the power of German shoppers, cultural differences and the power of labor unions in Europe. The company did not expect that these differences would impede its ability to apply in Germany what worked so well in the United States. German competitors offered very low prices, while German shoppers had shown how demanding they can be and that they buy products predominantly based on price; even if that meant going to a few different retail stores during their shopping trip. German shoppers were also not accustomed to workers putting their groceries in shopping bag. Moreover, German regulations limited Wal-Mart’s ability to offer extended weekend hours and sell merchandise below cost. Strong labor unions limited the ability to contain operation costs.
During its time in Germany, Wal-Mart had four presidents in eight years, which marked an organization disaster. But it is also not the only company that found German retail market challenging. Uniliever and Nestle also had to retrench from the German market. However, Wal-Mart today operates in 11 countries, comparing to Carrefour of France which operates in 29 countries or Metro of Germany which operates in 30 countries. Wal-Mart wants to…...

Similar Documents

Global Strategy

...Global Strategy: An Organizing Framework Sumantra Ghoshal Strategic Management Journal, Vol. 8, No. 5. (Sep. - Oct., 1987), pp. 425-440. Stable URL: http://links.jstor.org/sici?sici=0143-2095%28198709%2F10%298%3A5%3C425%3AGSAOF%3E2.0.CO%3B2-L Strategic Management Journal is currently published by John Wiley & Sons. Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://www.jstor.org/about/terms.html. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at http://www.jstor.org/journals/jwiley.html. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. The JSTOR Archive is a trusted digital repository providing for long-term preservation and access to leading academic journals and scholarly literature from around the world. The Archive is supported by libraries, scholarly societies, publishers, and foundations. It is an initiative of JSTOR, a not-for-profit organization with a mission to help the scholarly community take advantage of advances in technology. For more information regarding...

Words: 10708 - Pages: 43

Walmart Going Global

...Walmart's history is one of the best examples of innovation, leadership and success. Walmart was founded by Sam Walton in 1962; it was incorporated on October 31, 1969, and listed on the New York Stock Exchange in 1972. It started with a single store in Rogers, Arkansas in 1962 and has grown to what is now the world’s largest and the most emulated retailer. Some researchers refer to Walmart as the industry trendsetter. Today, this retailing pioneer has annual revenues of over $100 billion, 3,000 stores and more than 750,000 employees worldwide. Walmart operates in each store, from the products it stocks in the warehouse, to the front-end that helps speed checkout. Walmart’s philosophy: provide everyday low prices and superior customer service worked the best. Lower prices also eliminated the expense of frequent sales promotions and sales are more predictable. Walmart has invested heavily in its cross-docking inventory system. Cross docking has enabled Walmart to achieve economies of scale which reduce its costs of sales. With this system, goods are continuously delivered to stores within 48 hours and often without having to stock them. This allows Walmart to refill the shelves 4 times faster than its competitors. Walmart controls its buying power through purchasing in bulks and distributing the goods on time. Walmart guarantees everyday low prices and considers them the one stop shop.  Walmart operates in Mexico as Walmex, in the UK as ASDA abbreviation of Asquith and......

Words: 5332 - Pages: 22

Global Strategy

...Global Strategy and Leadership is the capstone segment for the CPA Program professional level. This segment consolidates your learning in the other three compulsory segments, Ethics and Governance, Financial Reporting and Strategic Management Accounting. In the increasingly complex business environment in which organisations operate, characterised by change, uncertainty and escalating competition, the disciplines of strategy and leadership have become critical to successful organisational performance. The aim of this segment is to link the knowledge of management and financial accounting to the concepts of strategy and leadership. Accountants use a variety of technical information to make decisions for the future of the business within an ethical framework of operation. This segment shows that accounting information, ethics, strategy and leadership are applicable to accountants working throughout the world in diverse organisations. As discussed in Ethics and Governance, accounting as a profession is respected internationally and CPAs are employed worldwide. The segment materials address the needs of candidates operating in different international markets in varying roles. This segment builds upon knowledge gained in the other three compulsory segments of the professional level. The concepts of professional ethics and good governance underpin the segment. Candidates who have previously undertaken the Advanced Audit and Assurance or Strategic Management Accounting segments......

Words: 1714 - Pages: 7

Global Strategy

...Chapter 11 Global Strategy and Organization International Business Strategy, Management & the New Realities by Cavusgil, Knight and Riesenberger International Business: Strategy, Management, and the New Realities 1 Learning Objectives 1. The role of strategy in international business 2. The integration-responsiveness framework 3. Distinct strategies emerging from the integration-responsiveness framework 4. Organizational structure 5. Alternative organizational arrangements for international operations 6. Building the global firm 7. Putting organizational change in motion International Business: Strategy, Management, and the New Realities 2 What Is Strategy? • Strategy is a plan of action that channels an organization’s resources so that it can effectively differentiate itself from competitors and accomplish unique and viable goals. • Managers develop strategies based on the organization’s strengths and weaknesses relative to the competition and assessing opportunities. • Managers decide which customers to target, what product lines to offer, and with which firms to compete. International Business: Strategy, Management, and the New Realities 3 Strategy in an International Context • Strategy in an international context is a plan for the organization to position itself vis-a-vis its competitors, and resolve how it wants to configure its value chain activities on a global scale. • Its purpose is to help managers create an international vision, allocate......

Words: 6005 - Pages: 25

Global Expansion of Walmart

...Global Expansion of Wal-Mart: Established in Arkansas in 1962 by Sam Walton, over the last four decades Wal-Mart has grown rapidly to become the largest retailer in the world with 2004 sales of $280 billion, 1.5 million employees, and more than 4500 stores. Until 1991, Wal-Mart’s operations were confined to the United States. There it established a competitive advantage based upon a combination of efficient merchandising, buying power, and human relations policies. Among other things, Wal-Mart was a leader in the implementation of information systems to track product sales and inventory, developed one of the most efficient distribution systems in the world, and was one of the first companies to promote widespread stock ownership among employees. These practices led to high productivity that enabled Wal-Mart to drive down its operation costs, which it passed on to consumers in the form of everyday low prices, a strategy that enabled the company to gain market share first in general merchandising, where it now dominates, and later in food retailing, where it is taking market share from established supermarkets. By 1990, however, Wal-Mart realized that its opportunities for growth in the United States were becoming more limited. Management calculated that by the early 2000s, domestic growth opportunities would be constrained due to market saturation. So the company decided to expand globally. In 1991 Wal-Mart started to expand internationally with the opening of its......

Words: 768 - Pages: 4

Walmart's Global Strategies

...Walmart’s Global Strategies Jennifer D. Wright National American University: Management Across Cultures 1 March 2015 Abstract Walmart is one of the world’s largest and most well-known retailers in the world today. It has achieved great success in areas like Mexico and Canada; however it has also seen failures in other areas like Germany and Hong Kong. This paper will discuss a brief history of Walmart’s global expansions and the strategies it chose to enter these markets. It will answer the following specific questions:  When did Walmart enter the global expansion?  What international markets did Walmart enter?  What cultural challenges has Walmart faced?  How did Walmart overcome these challenges?  Where future expansions and opportunities are possible? To answer these questions, this paper will have four basic sections: A brief history of Walmart’s global expansion, what was their strategy with each expansion, cultural differences they faced, and where is Walmart going in the future. This paper will attempt to examine the strategies of its global expansion and how it used the challenges to continue success in future expansions.   Walmart is the most well-known and largest retailer in the world today; with sales worth more than $200 billion, $35 billion of that from Walmart’s International Division. The company grew incredibly fast both in the United States and abroad. By tweaking entry modes, and studying the cultural differences and local......

Words: 2945 - Pages: 12

Global Strategy

...Pattraporn Jaowatana Global strategy class3 January 19, 2015 Five Forces Model of Industry Environment 1. Threat of new entrants 2. Threat of substitute. * Availability of a product that the consumer can purchase instead of the industry’s product. * Substitute products are goods or services from outside a given industry that perform similar products and services. 3. Bargaining power of customers (buyers) 4. Bargaining power of suppliers 5. Intensity of competitive rivalry. What lesson do you learn from this video in light of strategic management? (Context of substitute) * Focus too much on yourself that you may miss out opportunities. * Company is priorities their products than the competitor. * Gorillized (different category that you might never interested), it could bring you the threat. * There is a goal and procedures to follow but in some case if there is no directive, employees could be more innovative and creative. * External factors may help company to fight with the substitute. Sometimes company doesn’t see yourself, you need some external people for guidance. What are the possible reasons that Kodak did not pay attention to digital camera? * Biggest part of the Kodak products and it well known for the film. If changing to the digital camera, it will contradict their core products. * It will change the mode of the company that they are well known since the beginning of the establishment of......

Words: 469 - Pages: 2

Walmart Global Expansion

...1 How does expanding internationally benefit Walmart? After its beginning in 1962 Walmart ever since had constant growth rates and successfully gained market share in the merchandise and food retailing markets. “By 1990, however, Walmart realized that its opportunities for growth in the United States were becoming more limited”. To keep steady growth rates and profits the company decided to expand globally. The core competency of Walmart is the price. Selling merchandise and food for low prices made them earn market shares and continue the growth rates. Going global gives companies the opportunity of using location economies to secure the quality, use economy of scale to lower the productions costs per unit and benefit from learning effects. A global supply chain and global markets will lower the production costs since more volume is ordered following a higher demand trough international markets. Especially for Walmart expanding internationally supports and secures their core competency: Selling everyday life goods at a low price. 2 What are the risks that Walmart faces when entering other retail markets? How can these risks be mitigated? The strategy for success worked very well in the United States. That does not mean that it works very well in other countries. There are different preferences and consumer patterns in different countries. Adding to that Walmart may face strong competition from already established retailers that have a better understanding in local......

Words: 303 - Pages: 2

Walmart Strategy

...Wal-Mart’s winning strategy in the U.S. was based on selling branded products at low cost. In its early years, Wal-Mart’s strategy was to build large discount stores in small rural towns. By contrast, competitors such as Kmart focused on large towns with populations greater than 50,000. Wal-Mart’s marketing strategy was to guarantee “everyday low prices” as a way to pull in customers. Traditional discount retailers relied on advertised “sales.” To analyze the specific activities through which firms can create a competitive advantage, it is useful to model the firm as a chain of value-creating activities. The goal of these activities is to create value that exceeds the cost of providing the product or service, thus generating a profit margin. The value chain also is useful in outsourcing decisions. Understanding the linkages between activities can lead to more optimal make-or-buy decisions that can result in either a cost advantage or a differentiation advantage. By using the SWOT (strengths, weaknesses, opportunities, threats) analysis for Wal-mart, we will be able to assess the needs of the corporation. First, a quick look at the strengths. Wal-Mart is the giant in retail industry having high purchasing power of goods from supplier in bulk quantity at lower prices. The good thing about Wal-mart that its shifts the low cost advantage to customer and available the products at lower prices. Customers feel very convenient to find most of the products under on......

Words: 532 - Pages: 3

Walmart Strategy

...Executive Summary Walmart is one of the largest retailers in the United States and dominates the discount retailing business. It has historically outperformed and continues to outperform its competitors. To improve slowing growth, Walmart must focus on retaining its strengths in I.T implementation, distribution planning and vendor and store management but implement these skills in growing internationally and including organic products in its merchandise. Analysis Walmart succeeded in the US by selling branded products at a lower cost that other options available to customers. Walmart’s centralized purchasing system allowed it to have better economies of scale than its competition. It is also never too dependent on a single vendor so it maintained its bargaining power. Its logistics set up was also much more efficient with about 80% of all merchandise going through its own distribution system .Also its electronic hook ups to its vendors allowed both Walmart and the vendors to reduce inventory costs and transfer the savings to its customers. Walmart also grew initially by building stores in small rural towns and saturating the market. These locations resulted in lower operating expenses but the towns were not big enough for another store, this effectively created a barrier for competitors to enter these saturated markets. Walmart’s financial performance favors comparably compared to its competitors and by 1993 had achieved an ROE of 33% annually since inception. In the......

Words: 1084 - Pages: 5

Global Marketing in Walmart

...According to the case, Walmart was the largest retailer in the world with sales of $330 billion, 1.8 million associates and almost 7,000 stores. Up to now, Walmart has developed the business in different countries and locations. Of course, the global expansion must involve the risks such as operational management and customer behavior and so forth. By 1990, Walmart realized that the market would limit the business development, the management calculated that by the early 2000s, domestic growth opportunities would be constrained due to market saturation. Thus, they plan to expand the business to other countries in order to against the saturated market and the limitation. In 1991, Walmart started to expand internationally, the first stores opened as a joint venture with Cifera in Mexico. Walmart adopted the operational management directly from United State to Mexico, it is one of the problems for replicating the distribution system. However, the system did not suit in those market, because the poor infrastructure, crowded roads, and lack of leverage with local suppliers, it cause the goods could not deliver directly to Walmart stores or distribution centers. The prices and costs increased by that condition, the products must be set at the higher level to face the negative impact, it would affect Walmart’s ability to gain market share. Undeniably, Walmart was the lack of the market research when they enter into the new market. They misunderstand the customer behavior and...

Words: 290 - Pages: 2

Global Strategy

...Hard Rock Café’s Global Strategy Hard Rock Café’s Global Strategy Identify the strategy changes that have taken place at Hard Rock Café since its founding in 1971. Hard Rock brings the concept of the “experience economy” to its café operation. The strategy incorporates a unique “experience” into its operations. (Heizer & Render, 2014, p. 53). According to Heizer and Render (2014), providing an experience or theme at the different Hard Rock Café’s that cannot be found anywhere else in the world is a succeeding strategy. Even though many other restaurants have not survived Hard Rock continues to grow. They have done this by catering to local tastes and have expanded to “destination” cities since 70% of its guests are tourists. Another strategy used is having added music venues worldwide since they feel music is universal. Collection memorabilia has also been added and is changed throughout the corporation to provide a fresh experience to its visitors. The music and collection angle is used to target different age demographics and has been successful. (Amer, 2004) Merchandising shops with logos specific to that location is an excellent strategy. Customers can only get a specific shirt from a specific place. Consumers may view the shirts as a collector’s item and this in turn generates revenue for Hard Rock since 48 % of its revenue is made from merchandising alone. (Amer, 2004) Hard Rock is always researching new sites and new markets and takes a lot into......

Words: 432 - Pages: 2

Global Strategy

...1. Briefly describe the content of your poster and how it was organised (400 words) Consider the theme, flow of content, connections with pictures, graphics and illustrations, layout, colour consideration, special features (if any), text, fonts, etc. Basically, you should talk about your group’s poster in words. My group’s poster talked about global strategy of Tata company in motors industry entering to UK market. In the global strategy of Tata motors, the macro-environment and micro-environment factors were presented to indicate the influence of external and internal factors to the succeed of company in UK market. In the poster, the recession was referred to demonstrate that Tata firm overcame challenges and difficulties to succeed. The UK flag theme showed that my group would present the penetrated country from India. To explain my poster, the its content showed clearly the factors influent in the successful strategy of Tata company, the targeted country as well as the international strategy. Based on the content which my group wanted to present, the pictures did not indicate the content of international strategy in Tata motors that made the audients not predict what my group would present. The font in my poster was designed to audients could read and follow my group in presentation. My group did researches together to find out the cause of success in entering UK market of Tata and 2. Which are the skills, in your opinion, that you developed through the......

Words: 296 - Pages: 2

Human Resource Strategy of Walmart

...human resourse strategy of University of Salford Salford Business School Course: MSC Management Module title: Human Resource Management TITLE OF ASSIGNMENT: Human Resouce Strategy of Wal-Mart inc Name: Agbasimelo E. Ifeanyi Roll no: @00316215 Instructed by: Abdoulie SALLAH Table of Contents Table of Contents (This page) ------------------------------------------------------------------------2 1.0 Introduction ------------------------------------------------------------------------3 2.0 Wal-Mart Human resource strategy ------------------------------------------------------------------------4 2.1 Recruitment and selection ------------------------------------------------------------------------4 2.2 Training and development ------------------------------------------------------------------------6 2.3 Employee motivation and Reward / benefits ---------------------------------------------------------7 2.3.1 Financial benefits ------------------------------------------------------------------------8 2.3.2 Health and awareness benefits ------------------------------------------------------------------------8 2.4 Performance management -------------------------...

Words: 4668 - Pages: 19

Walmart Strategy

...Walmart’s strategy fits and achieves it’s value proposition, and how the company has created a differentiated, sustainable competitive position through leveraging its key resources and capabilities. Porter argues that the basis for competitive advantage is performing activities differently than competitors. “A company can outperform rivals only if it can establish a difference it can persevere. It must deliver greater value to customers, or create comparable value at a lower cost, or do both” Porter, (1996) He continues by arguing that the essence of strategy lies in a company’s ability to create a unique and valuable position involving a different set of activities. Walmarts value proposition can be summed up as “every day low prices for a broad range of goods that are always in stock in convenient locations.” The question, however, is how does Walmart formulate strategy consistent with its low cost leadership strategy? The answer lies in Walmarts key strategic choices and it’s abilities to use its resources and capabilities better than competitors. First, Walmart has achieved HETEROGENEITY by its different type of geographic market. It’s choice of location gave it a clear competitive advantage in underserved markets. Competitors wishing to enter those markets will have to expend large amounts of resources to hope and take away market share in a relatively saturated market. The early movers advantage in these markets should continue to deter against entry.......

Words: 712 - Pages: 3