Global and Transitional Business Assignment 2022

[GLOBAL AND
TRANSITIONAL
BUSINESS]
2019
Walmart

GLOBAL AND TRANSITIONAL BUSINESS
1
Table of Contents
Introduction................................................................................................................................2
Overview of Walmart.............................................................................................................3
PESTLE Analysis...................................................................................................................3
Political Factors..................................................................................................................3
Economic Factors...............................................................................................................4
Social Factors.....................................................................................................................5
Technological Factors........................................................................................................6
Legal Factors......................................................................................................................7
Environmental Factors.......................................................................................................8
Porter Five Force Framework................................................................................................8
Threat of Substitute products.............................................................................................8
Threat of New Entrant........................................................................................................9
Competition among Existing Players.................................................................................9
Power of Buyers...............................................................................................................10
Power of Suppliers...........................................................................................................10
Market Structure...................................................................................................................10
Entry Modes and Obstacles..................................................................................................11
Lessons from Mexico have informed Walmart’s decision to enter Germany.....................12
Recommendation for Future................................................................................................13
Conclusion................................................................................................................................13
References................................................................................................................................15

GLOBAL AND TRANSITIONAL BUSINESS
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Introduction
Those days are gone when organizations used to restrict their operations to the
regional or local areas. With the fast advancement in the technologies and expanding
international trade, organizations are incentivized to vend their services and products in the
international market. This supports businesses operating at the global level to expand their
share in the market, decrease costs, and become more competitive (Peng, 2016). A global
company is the one that at least operates its business in one foreign or outside country other
than its origin country. Even expanding operations in other nation is considered as a great
undertaking. However, it is also a fact that the company that operates successfully in one
country does not necessarily compulsory that it will be successful in other nation. This
happens due to the situation of transition business under which the business has transforms its
strategies and servings according to the environmental factors of the specific country (Bower,
Leonard & Paine, 2011). The changes in the strategies and serving can be rejected by the
customer which also raises hurdles in the existence of the business in that specific market.
This report intends to discuss one of the global company that is Walmart which presently
operates its business in almost all the countries. However, its success in one country does not
define its survival and success in another country. The paper is discussing the success of
Walmart in Mexico which established it as the global force operating in several nations and
its failure in the German market due to which it has to withdraw its business from that
market. The report is providing an analysis of the market structure and competition, market
demand characteristics in two markets in comparison to the US. In addition to this, the paper
is also highlighting the entry modes the company has selected and the hurdles it experienced
in their foreign markets.

GLOBAL AND TRANSITIONAL BUSINESS
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Overview of Walmart
Walmart is one of the famous multinational corporations of America that run a chain
of grocery stores, hypermarkets, and discount department stores. Headquarter of the company
is established in the Bentonville, Arkansas. In the year 1969, the company was established by
Sam Walton. The company is also owned and involved in operating Sam’s Club retail
warehouses. According to the annual report of the company by 31 July 2019, the company
has around 11,389 stores and clubs in 27 nations, running under 55 diverse names (Merriman,
Persky, Davis & Baiman, 2012). In the Canada and United States market, the company
operates its business under the name Walmart, in Mexico and Central America as Walmart de
Mexico y Centroamerica, in the United Kingdom as Asda, and in India as Best Price. The
investment of the company outside the US has been observed to provide mixed results.
Company's subsidiaries and operations in China, Central America, the United Kingdom, and
South America are very successful, but its operations in South Korea and Germany market
have failed (Schuetz, 2015).
PESTLE Analysis
Political Factors
The political forces are considered as most essential for brands like Walmart that are
exerting their efforts to operate successfully at a global level. The global/international
landscape of the business is characterized by diverse political erections and opposing
governance models (Cadle, Paul & Turner, 2014). The governing bodies of every country are
not equally open to international business and trade. In the case of Mexico, the poverty of the
country is influenced by the national and local government. The local government influences
the survival and success of the local businesses. If the government feels that they are being
benefited with the operations of the company they provide incentives and special benefits to
the small as well as large businesses. This practice of the countries local government