Motivate Foreign Expansion of Companies

Added on - 16 Sep 2019

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Programme:BABSModule Level (3,4,5 or6):5Module:International BusinessModule code:Contribution to OverallModule Assessment (%):Assignment No(s):Individual Case StudyAssignment 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 yourwork 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 ofauthor and initials, year of publication,title of book, edition, publisher: place of publication).Please reference all your sources as per theHarvard Styleof referencing.Disclosure:Please include the following statement on the title page of the submitted assignment, followedby your name:I declare that this assignment is all my own work and that I have acknowledged all materialsused from the published or unpublished works of other people. All references have been dulycited.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 astudent 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 thatmotivate foreign expansion of companies.2.Identify general, and special problems, issuesfacing managers of international businessoperationsAn analysis of the potential risks wheninternational 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 managementof the cross cultural environment is importantfor international/ global for business success.2
TASK DESCRIPTION – Case study analysis(50%)Read the following case study and answerALLthree questions:Wal-Mart Foreign ExpansionWal-Mart, the world’s largest retailer, has built its success on a strategy of everyday low prices, and highlyefficient operations, logistics, and information systems that keep inventory to a minimum and ensuresagainst both overstocking and understocking. The company employs some 2.1 million people, operates4,200 stores in the United States and 3,600 in the rest of the world, and generates sales of almost $400billion (as of fiscal 2008). Approximately $91 billion of these sales were generated in 15 nations outsidethe United States.Facing a slowdown in growth in the United States, Wal-Mart began its international expansion in the early1990s when it entered Mexico, teaming up in a joint venture with Cifra, Mexico’s largest retailer, to open aseries of supercentres that sell both groceries and general merchandise.Initially the retailer hit some headwinds in Mexico. It quickly discovered that Mexicans shopping habitswere 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). Manyconsumers 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 theMexican culture, letting those managers control merchandising strategy, building smaller stores thatpeople could walk to, and offering more fresh produce. At the same time, the company believed that itcould 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 atsmall 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 passedthese 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 thecountry 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 headagainst well-established local rivals who had nicely matched their offerings to local shopping habits andconsumer preferences. Moreover, consumers in all three countries seemed to have preference for higher3
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