Walmart's Global Strategy: Analyzing Expansion into Australia

This report delves into Walmart's global strategy for expanding its operations into Australia. It examines the reasons for internationalization, highlighting the opportunities and challenges Walmart faces in a new market. The report employs Porter's Diamond Model to analyze Australia's competitive landscape and explores various internationalization strategies, including transnational, multi-domestic, global, and international approaches. A PESTLE framework and Porter's Five Forces analysis provide a detailed understanding of the Australian market's political, economic, social, legal, and competitive dynamics. The report further discusses suitable entry modes for Walmart and addresses potential managerial and organizational problems, offering solutions for successful implementation. Ultimately, the report aims to provide a comprehensive overview of the strategic considerations for Walmart's expansion into Australia.

Global Strategy Development
and Implementation

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK 1............................................................................................................................................3
Reason for internationalism and the explanation of Porter's diamond model.............................3
TASK 2 ...........................................................................................................................................6
Strategy for internationalisation of business...............................................................................6
TASK 3............................................................................................................................................7
Analysis of Australia with the help of PESL framework and Porter's five forces......................7
TASK 4............................................................................................................................................8
Mode of entry .............................................................................................................................8
TASK 5 & 6 ....................................................................................................................................9
Three problems from managerial and organisational and solutions for the defined problems...9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Global strategy refers to the techniques implemented by the company in the functions in
order to effectively expand their operations in the global market. These strategies are developed
by the managers to help the research and implementation process done of the new country in
which the business is looking to expand (Blum and Neumärker, 2021). This report cover the
expansion of Walmart's operations into new country. Walmart is a US based multinational chain
of supermarket which was established in the year 1962. Walmart has more than 10,000 stores
located in around 24 countries, they are considered as world's largest business in terms of
revenue. Their estimated revenue till date in the year 2021 is around $559,151 Million
(WALMART COMPANY PROFILE, 2021). Their employee count is around 2.3 million around
the world, they have hired people for several roles in their company. Walmart is thinking of
expanding into Australia as the country has lot of opportunities and potential in terms of growth.
In this report the strategies considered by Walmart while expanding in Australia is discussed.
MAIN BODY
TASK 1
Reason for internationalism and the explanation of Porter's diamond model
Walmart is a successful organisation in terms of revenue generation and scale of
operations. They have a good command over the market of United States, they are dominating
the market share of US with good margin. The company has their operation in several countries
but still there is a lot of scope for the company to expand their operations. Internationalism refers
to the process of expanding the operations of the business out of the origin country. This helps
the business in making a good presence in the global market and further achieving the desired
goals (Deng and et. al., 2021). Internationalism gives ample of opportunities to the organisation,
therefore this technique is helpful for every firm operating in the world. Australia has a lot of
potential but there are some market players that Walmart needs to deal with if they want to
establish a good presence. Few of the Major market players in supermarket indusrty-

 Woolworths Group Limited- They are the biggest retailer supermarket chain in the
Australia and they are the major competitor of Walmart. They have more than 1000
stores across the australia. Coles group limited-They are the second biggest competitor of Walmart, they primarily
deal in the sale of grocery and food items.
Reason for internationalism- Opportunity to increase revenue- Expansion into new countries always bring good
amount of sale for the company and therefore the business gains good amount of
advantages (Destek, 2018). Entry into a whole new market- Entry into a market like Australia where the customer
base is good and the chance of succeeding is high, the company always looks for these
kind of factors.
Porter's Diamond Model-
This model is developed to evaluate and analyse the reason behind the factor why some
industries in a particular country is competitive where as other lack this factor and enjoys
competition free industry. This model evaluates the company whoa are able to develop and bring
innovation in the course of business (Díaz and et. al., 2020). This model has some factors which
determine the abilities of the company to compete in the market, these factors are discussed
below:

Source: What is Porter's Diamond Model of National Advantage? Firm strategy, structure and rivalry- This defines the structure on which the company
works, this includes the strategies developed by them in order to sustain in this market.
Every business in the industry has their own set of strategies and structure which help
them in competing with the domestic competitors. This factors suggest that the domestic
rivalry is important in the industry as this pushes the business towards innovation and
efficiency (Fandrejewska, 2017). Walmart has a good grip over beating the competitors
as they were dealing with a lot of market player in United states. They will come up with
strategies and innovative piece of work in order to grab a good position in the Australian
market. Factor conditions- This factor is associated with the thinking of the local consumers of
buying products which are made in the country and local. This gives a competitive edge
to the current market players as they manufacture their products in the country and the
customers know that they exist in the local industry for a long time. Walmart while
expanding need to develop a feeling of home in Australia as this will attract the
customers. They can set up their production units in Australia and produce the goods
according to the needs of local customers. Related and supporting industries- This factor suggests the importance of
interconnectivity between the related industries in elevating and growing the prospects of
Illustration 1: What is Porter’s Diamond Model of National Advantage?

the country. Every industry should support and work together in order to enhance the
conditions of the business (Guo and et. al., 2020). Walmart can effectively operate in the
business if they co-operate with the suppliers and raw material industries. This is one of
the most important aspect while expanding the production units of the business. Demand conditions- The organisation is required to strongly evaluate the demand of
their products and match with the needs of the customers residing in the expansion
country. Higher the demand in the country, higher the scope of successful expansion in
the country. Walmart need to analyse the household requirements in Australia as this will
help them in effectively managing the product line of the business.
TASK 2
Strategy for internationalisation of business
While expanding in an international market, the organisation is required to come up with
business strategies supporting the objectives set by the business. Walmart while expanding into
the market of Australia need to analyse the situation and make strategies accordingly. Walmart
will use these strategies in order to deal with all the expected and unexpected situations: Transnational strategy: This plan is prepared by the business only in case their
globalising and expanding their operations in new countries. This strategy focuses on the
set of functions and assets that will help the business in smoothly managing the
operations (Hámori, 2021). Walmart while thinking of expanding strongly evaluated the
opportunities in several countries, Australia seemed a good opportunity to the managers
and owners of Walmart. This strategy will help in deciding the scale of operations that
will be conducted by them in the new country. They can easily maintain the resources
required in Australia with the help of this strategy. Multi-domestic: This strategy is developed by the company to evaluate the needs,
preferences and factors related to the local environment of the new expanded country.
This strategy is helpful in making a good position in the market, the manager ans owners
realise the type of the market. In context of Walmart, they have made strategies to know
the scale of operations in Australia and the household demands of the local consumers.
This will effectively help them in providing the customers with the product of their

preference. This will also give a competitive edge to the company because of the detailed
research of the local market. Global strategy: These strategies are developed by the company to integrate the functions
of the company's subunits in different countries (Kucharska and Wildowicz-Giegiel,
2017). This strategy also helps in establishing a good presence over the global market,
this helps in expanding the thought process to a bigger extent and not just local aspects.
Walmart needs to make these strategy in order to increase the productivity and integrate
functions of their every units operating in different countries. International strategy: This strategy focuses on the international aspects such as trade
policies, taxation, import and export duties. Walmart need this strategy to critically
evaluate these stated aspects of the business. The import and export duties of the product
majorly impact the revenue generation of the company.
TASK 3
Analysis of Australia with the help of PESL framework and Porter's five forces
Australia is one of most powerful country with a hug customer base, they play a major
role in the contributing to the world's economy. There are several factors that Walmart needs to
consider while they are expanding their operations (PESTLE analysis of Australia, 2017). These
four factors are discussed below which will impact the operations of business: Political factors: Australia's political structure is said to be safe and stable as they have
set laws of the business which helps the industry in smoothly operating. Australia has
good relations with the US which will positively impact the operations of Walmart. The
taxation rate of Australia is higher then the United States which negatively impact the
profitability of the business. Economical factors: Australia is 14th largest country in terms of economy, they are less
likely face recession period in the future. Their Gross domestic product is high and is
growing at a good rate, this will positively impact the operations of Walmart. Australia
has a high interest rate and wages which will negatively impact the profitability of the
company.

 Social factors: The social culture of the country is one of the most essential thing to
evaluate in the process of expansion. Analysing of this factor and problems can lead the
business to new heights (Lohmer, Kossmann and Lasch, 2021). Australia is said to be the
most multiracial and multicultural country in the world. Australia has good tourist spots
which attract the tourists. High number of visits in Australia would positively impact the
sales of Walmart. The frequent change in the demand of the consumer will negatively
impact the course of business in Walmart. Legal factors: Legal aspects of any country is essential as they decide the ways in which
the businesses are supposed to operate (Milovanović, Milovanović and Radisavljević,
2017). Australia has imposed fair trading and consumer laws which help in smooth
working in the industry. Proper following of The Fair Work Act 2009 in Walmart would
not lead to any kind of legal complication in the business which is positive for the
business. Transgression of any laws imposed by the government for the businesses can
lead to legal complication which will negatively impact the image of the company in the
society.
Porter's five forces analysis of Australia: Threat of new entrant- New entrants in the grocery industry is a major threat as there are
less restrictions on the entry of new organisation (Morales-Alonso and et. al., 2020). The
market of Australia is diversified and has a lot of potential therefore it could be targeted
by many firms in the near future. Walmart needs to make strategies to deal with these
new entrants in the market as this factors is more likely to happen. The threat of new
entrants in this business is high in Australia for Walmart. Bargaining power of suppliers- Walmart has a good image in the market due to which
several raw material dealers wants to work with them. This gives advantage to the
business as they have several options and are not dependent on a single supplier.
Therefore this threat is low for Walmart. Bargaining power of Buyers- Walmart's maintains the quality of the product along with
the reasonable pricing. They have a fixed rate which helps them in maintaining a good
brand image in the market. Bargaining power of buyers is also low in case of Walmart. Threat of substitute products- Grocery product is easily substitute able and thus the
products of the company gets easily impacted. Walmart needs to manage the quality,

quantity and price of their product otherwise the customers will shift from the company
to another company. Walmart has a high threat of substitute product in Australia.
 Rivalry among the existing competitors- Australia already has some market players who
are leading in every terms of the market. They have acquired significant amount of share
in the market. The threat of existing rivalry is high as they have been in the Australian
market for a long time and Walmart is trying to make a position in this new market.
TASK 4
Mode of entry
There are several modes of entry that are used by the Walmart in order to expand their business
in Australia. Few of them are discussed below: Licensing- Business licensing refers to the process or arrangement in which the business
gives temporary permission and access to the firm's name, trademark, copyrights, the
process of manufacturing and the patent (Osterhammel and Petersson, 2021). This
process is not permanent and can be terminated by the company according to the
mentioned clauses in the agreement. Walmart can choose this mode of entry if they are
looking to adopt the ideas of people outside the firm. This will help the business in saving
some time and resources. Franchising- This refers to the method in which the company gives access to its brand's
image and trademark to other institution and company. The company can give several
rights to someone regarding the business , this removes the factor of going by self into
that particular country. The other company pays the franchised company the charges of
acquisition of the brand image along with the certain percentage of the sales amount.
Walmart can use this kind of mode of entry as this will help the company in saving
managerial activities. Joint venture- This refers to collaboration of operations of two companies which lead to
a joint ventured firm. This helps the business in dividing the resources and efforts that
needs in the organisation. Two firms related to each other in some way can collabortate
and offer products on mutual basis.

Recommendation- Walmart is recommended to go for a joint venture scheme as this will enable
them to easily make a position in the market. They can collaborate with the current market
players as this will help them in strengthening their expanded operations.
TASK 5 & 6
Three problems from managerial and organisational and solutions for the defined problems
There are several challenges that the organisation face in terms of managing and
organising activities in the business, few of the challenges faced by Walmart while globalising
are as follows:
Decreased performance level: Due to the globalisation and expansion process, the employees
may feel like that are burdened with work due to which the productivity and performance of the
employees also decrease (Rowley, Ishikawa and Oh, 2019). This lead to low productivity in the
overall performance of the businesss
To address this issue Walmart needs to develop performance plan for the employees, the
managers will review and motivate them. This will increase the productivity in the employees
and interaction will develop a feeling of oneness in the company.
Absence of structure: The company who lack in a proper structure in the business leads to
conflicts and problems. This will create confusion between the employees regarding the roles
and responsibilities they need to address in the organisation. Walmart needs to have a proper
structure in the country of expansion as this will bring efficiency in working of that country.
To address this issue the company should follow a proper structure that defines the roles and
responsibilities of the employees along with the authority associated with their role.
Weak workplace culture: Culture is one of the most important aspect in the industry that helps in
driving successful results in the business. A bad culture in the organisation can lead to problems
in the working. Walmart while expanding needs to establish a good sense of culture in the
expanded country as this will drive them good amount of results in business.
To address this issue the company can
conduct sessions and seminars regarding a healthy work culture. This will help the employees in
understanding the need of proper communication between the co-workers and manager.
Hofstede model of cultural dimensions-

This model helps in evaluating the culture of the country and the differences that impact the
working of the organisation. There are six dimensions of this model which helps in critical
evaluation of the culture: Power Distance Index: This refers to the hierarchy and distribution of power in the
company. A low power distance index suggests that the power is shared and
decentralised. A high PDI suggests that bureaucracy is high in the business and the power
of decision is only in the hand of top authority. Walmart has a high power index as the
power and authorities is only in the hands of top authority.

 Individualism versus collectivism: Individualism refers to the concept in which the
employees are more focused on the personal objective and gains. Collectivism refers to
the work which the team members do in collective nature. In this concept the objectives
are attained by the team as one. Walmart possesses the quality of collectivism which
helps them in attaining the business goal effectively. Masculinity versus femininity: This refers to the distribution of the roles and
responsibilities between the male and female staff (Shen and et. al., 2017). Masculinity
appreciates the factors such as assertiveness and materialistic achievements. Femininity is
inclined towards factors such as modesty and nurturing. Walmart focuses more on the
masculinity as most of the employees are male in the company. Long term orientation vs short term orientation- Long term orientation refers to the
conduct in which the future is the most important part and the growth aspects of the
company are considered. Short term orientation focuses on the factors which needs to
fulfilled in short period of time. They avoid the long term approach and goes in with the
mentality of achieving short term perspective. Walmart focuses on the long term aspects
as they wishes to expand their operations in Australia. Uncertainty avoidance index- This indicator is helpful in analysing the capability of the
business to deal with the uncertain and risky situations. A high of this index suggests that
the company has low tolerance and a low suggests that the company is highly capable in
dealing with the uncertain situations (Soares, 2018). Walmart has a low of this index as
they are good I handling the uncertain situations.
 Indulgence vs Restraint: Indulgence refers to the situation in which the culture is free
from the restrictions. Restraint refers to the culture where there are high restrictions
imposed.
CONCLUSION
From the above discussion it can be concluded that the process of expansion brings a lot
of threat and opportunities in the business. There are several factors in the external environment
of the business that impacts the operations of business. The company is expected to evaluate the
industry and the country in which they are thinking of expanding. Competitive analysis helps in
determining the level of threat the business has from the existing and new competitors. There are

several ways through in which company can choose to enter in the market, these mode of entries
have their own benefits and disadvantages.

REFERENCES
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Online:

WALMART COMPANY PROFILE. 2021. [Online] Available through:
<https://fortune.com/company/walmart/global500/>./
PESTLE analysis of Australia. 2017. [Online] Available through:
<https://howandwhat.net/pestel-analysis-australia/>./