Motivate Foreign Expansion of Companies
Added on 2019-09-16
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Programme:BABSModule Level (3,4,5 or6):5Module:International BusinessModule code:Contribution to Overall Module Assessment (%):Assignment No(s):Individual Case Study Assignment Title(s):Wal-Mart Foreign ExpansionLecturer:Internal Verifier:Hand Out Date:Submission deadline:Feedback deadline:Referencing:In the main body of your submission you must give credit to authors on whose research your work is based. Append to your submission a reference list that indicates the books, articles, etc.that you have read or quoted in order to complete this assignment (e.g. for books: surname of author and initials, year of publication,title of book, edition, publisher: place of publication). Please reference all your sources as per the Harvard Style of referencing.Disclosure: Please include the following statement on the title page of the submitted assignment, followed by your name: I declare that this assignment is all my own work and that I have acknowledged all materials used from the published or unpublished works of other people. All references have been duly cited.Turnitin: All assignments must be submitted to Turnitin unless otherwise instructed by the Lecturer. Note: the Turnitin version is the primary submission and acts as a receipt for the student. Latesubmission of the electronic version of the assignment will result in a late penalty mark. Penalties forlate submission: Up to one week late, maximum mark of 50%. Over one week late, Refer. Only theUWTSD Extenuating Circumstances Panel may grant an extension.YESXNO1
Learning Outcomes tested(from module syllabus)Assessment CriteriaTo achieve each outcome a student must demonstrate the ability to:1.Evaluate international business practices anddiscuss how they are being shaped by economictheories, financial, socio-cultural and politicalforces; with particular emphasis on the businesspractices of UK’s major trading partnersA critical assessment of the factors that motivate foreign expansion of companies. 2.Identify general, and special problems, issuesfacing managers of international businessoperationsAn analysis of the potential risks when international business strategies are pursued. 3. Discuss the strategies, tactics and manoeuvresof international operations as they relate tomanaging an international business enterpriseAn analysis of why the effective management of the cross cultural environment is important for international/ global for business success.2
TASK DESCRIPTION – Case study analysis (50%)Read the following case study and answer ALL three questions: Wal-Mart Foreign ExpansionWal-Mart, the world’s largest retailer, has built its success on a strategy of everyday low prices, and highly efficient operations, logistics, and information systems that keep inventory to a minimum and ensures against both overstocking and understocking. The company employs some 2.1 million people, operates 4,200 stores in the United States and 3,600 in the rest of the world, and generates sales of almost $400 billion (as of fiscal 2008). Approximately $91 billion of these sales were generated in 15 nations outside the United States. Facing a slowdown in growth in the United States, Wal-Mart began its international expansion in the early 1990s when it entered Mexico, teaming up in a joint venture with Cifra, Mexico’s largest retailer, to open a series of supercentres that sell both groceries and general merchandise. Initially the retailer hit some headwinds in Mexico. It quickly discovered that Mexicans shopping habits were different. More people preferred to buy fresh produce at local stores, particularly items like meat, tortillas and pan dulce which didn’t keep well overnight (many Mexicans lacked large refrigerators). Many consumers also lacked cars, and did not buy in large volumes as consumers in the United States did. Wal-Mart adjusted its strategy to meet the local conditions, hiring local managers who understood the Mexican culture, letting those managers control merchandising strategy, building smaller stores that people could walk to, and offering more fresh produce. At the same time, the company believed that it could gradually change the shopping culture in Mexico, educating consumers by showing them the benefitsof its American merchandise culture. After all, Wal-Mart’s, managers reasoned, people once shopped at small stores in the United States, but starting in the 1950s they increasingly gravitated towards large storeslike Wal-Mart. As it built up its distribution systems in Mexico, Wal-Mart was able to lower its own costs, and it passed these on to Mexican consumers in form of lower prices. The customisation, persistence and low-prices paidoff. Mexicans started to change their shopping habits. Today Wal-Mart is Mexico’s largest retailer and the country is widely considered to be the company’s most successful foreign venture. Next Wal-Mart expanded into a number of developed nations, including Britain, Germany and South Korea.There its expenses have been less successful. In all three countries it found itself going head to head against well-established local rivals who had nicely matched their offerings to local shopping habits and consumer preferences. Moreover, consumers in all three countries seemed to have preference for higher 3
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